The pawnshop industry posted total assets of P96.9 billion in 2021, up by 4.7 percent compared to P92.5 billion in 2020, based on Bangko Sentral ng Pilipinas (BSP) data.

BSP Governor Benjamin E. Diokno said on Thursday, June 9, that the pawnbroking sector is growing not just in terms of assets, but also in capitalization and network size amid the pandemic.

Pledge loans or “sangla” in Filipino, increased by 2.7 percent year-on-year to P54.5 billon from P53.07 billion, as pawnshops have more reach and range of products and services for the public. Items being pawned have also evolved and includes -- besides jewelry pieces -- high value electronic gadgets, watches, musical instruments, designer bags and accessories.

Diokno said capital remains to be the primary funding source for the industry. Pawnshops’ capitalization grew by 2.6 percent year-on-year to P42.15 billion from P42.10 billion, supported by the industry’s cumulative 2021 earnings of P3.9 billion in 2021.

“The pawnshop industry has evolved through time amid continuous diversification, innovation and digitalization,” said Diokno in an online press briefing. He said that the big pawnshops have become “multi-product” or multi-service institutions “with group structures and multiple financial service access touchpoints.”

“Pawnbrokers now also provide remittance services, money changing or foreign exchange dealings, and bills payment. They also serve as cash-in or cash-out stations of electronic money issuers, or as cash agents of banks,” said Diokno.

As of end-2021, the BSP has registered 14,705 pawnshops that also have cash agency operations. Its network is broken down as 1,156 head offices and 14,350 branches nationwide. Pawnshops are present in 1,361 of 1,634 cities and municipalities, or 83.3 percent of all local government units across the country.

“The industry’s multiple financial access points, wide geographical reach, and role of providing accessible loans to households and small entrepreneurs, including the unbanked, all underscore the crucial role of pawnshops in promoting financial inclusion,” said Diokno.

The BSP is currently implementing a network-based supervision approach for the industry to assess risks and other supervisory issues at the group level rather than on a per entity or pawnshop basis.

The BSP is likewise adopting a reporting governance framework to ensure the industry’s “safety and soundness” while “safeguarding the customers’ interest and the financial system in general.”

“Also underway are efforts to reinforce the requirement for conducting pawnshop self-assessments, and to further digitalize the processing of licenses and applications. These are aimed at enhancing the efficiency of onboarding new players while ensuring that only qualified industry players are granted a license to operate,” said Diokno.

The BSP is also improving regulations on money service business or MSBs. “These have an impact on pawnshops engaged in this business. Said enhancements are aimed at setting clear supervisory expectations and standards for MSB operations,” he added.