PAWNSHOPS

 Non-bank financial institutions supervised by the Bangko Sentral ng Pilipinas that grant loans by
accepting personal property as collateral or security

FUNCTION

 Pawnshops provide an alternate source of credit, particularly for small borrowers who are
underserved by the country's banking and financial institutions.

NATURE

 Single Proprietorship – only Filipinos may establish and own a pawnshop

 Partnership – at least 70% of its capital shall be owned by Filipino citizens
 Corporation – at least 70% of the voting capital stock shall be owned by Filipino citizens

REGISTRATION

a. Bureau of Commerce (Single Proprietorship) or the Securities and Exchange Commission

(Corporation or any association)
b. Secure a license from the appropriate city or municipality
c. Filing of information sheet and under oath with the Central Bank

CAPITALIZATION & AMOUNT OF LOAN

 The minimum paid-in capital of any pawnshop shall be P100,000.00

 Amount of loan shall be in no case, less than thirty per cent (30%) of the appraised value of the
security offered for the loan

RATE OF INTEREST

 Rate should not be of higher rate or greater sum or value for any loan or forbearance than the
rate allowed by the Usury Law
 In addition to interest charges, pawnshops may impose a maximum service charge of P5.00, but
in no case to exceed 1% of the principal loan

REDEMPTION

 The pawner who fails to pay his obligation on the date it falls due may, within ninety days from
the date of maturity of the obligation, redeem the pawn by payment of the principal of the debt
with interest
 For computing interest due after maturity of the obligation, the basis shall be: principal of the
obligation + interest earned at the time the obligation matured

GOVERNING LAWS

 PRESIDENTIAL DECREE No. 114 dated January 29, 1973 – Regulating the Establishment and
Operation of Pawnshops
 BSP Circular No. 1039 dated May 3, 2019 – Amendments to the N and P Regulations of the
Manual of Regulations for Non-Bank Financial Institutions
 BSP Memorandum No. M-2019-019 dated July 2, 2019 – Guidelines on the Submission of
Application for License/Authority to Operate a Pawnshop and Activities Requiring Prior BSP
Approval or Notification
 BSP Memorandum No. M-2019-013 dated April 25, 2019 – Guidelines on the Electronic
Submission of the Annual Consolidated Statement of Condition and Consolidated Statement of
Income and Expenses to BSP-Supervision Data Center (SDC)