NBFIRA Warns Pawnshops On Compliance

Correspondent | Monday January 11, 2021 15:06

This follows last February’s notice issued by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) requesting all exempted pawnshops to provide certain information.

The information required included the pawnshops’ operational status, change in shareholding, management, contact persons, physical and postal addresses amongst others. However, 30 entities failed to provide the information required hence the latest warning. “Pawnshops that do not provide the requested information will be considered to be operating illegally, and regulatory action may be instigated against them,” NBFIRA said in a statement.

The regulatory authority through the lending Activities Department is responsible for regulation and supervision of micro lenders, pawnshops, finance and leasing entities as mandated by the NBFIRA Act of 2016. The Authority regulates and supervises the micro lenders in accordance with the Micro Lending Regulations of 2012. Systematically Important Entities are further subjected to the Prudential Rules for Systemically Important Entities of 2018.

Pawnshops, Finance and Leasing companies are granted exemptions to operate pending promulgation of the industry specific legislation.

The lending industry comprises 376 non-bank lenders of which 230 are micro lenders, 87 pawnshops, 54 finance companies while five are leasing companies, according to NBFIRA’s 2020 annual report. During the year under review, NBFIRA licensed 16 new entities to operate micro lending businesses while two other micro lenders withdrew from the industry. Seven new entrants were granted exemptions to operate pawnshop businesses and 16 were granted exemptions to operate finance businesses.

This resulted in a total of 376 licensed and exempted entities in 2020, representing a 9.9 percent industry growth from the previous year. Micro lending assets rose by 14.3% from P4.8 million in 2018 to P5.5 million in 2019 which was attributable to the increase in the total loan book values which ballooned by 14% from P3.9 million in 2018 to P4.5 million in 2019 indicating an increase in demand for loans.