OF LIs, FCs and PAWNSHOPS
Source: Central Banker, A Publication of the Bangko Sentral ng Pilipinas Sept.-October 2004 Vol. II Nos. 9 and 10
|Following are some of the basic questions often asked of lending investors (LIs), financing companies (FCs) and pawnshops.
Lending investors (LIs) are in the business of granting direct loans to the public. Does BSP then supervise operations of LIs?
No. BSP does not supervise the operations of LIs as there is no specific law granting BSP supervisory powers over LIs.
Does BSP grant LIs their license or permit to operate?
While LIs grant direct loans to the public, they do not engage in financing operations like discounting, factoring and leasing activities, primary functions allowed only of financing companies under Republic Act 5980. LIs cannot undertake these FC activities without proper authority from the SEC.
LIs are not allowed to accept personal items, e.g., jewelry, precious stones as pledge or securityto the loan since these are pawnbroking activities. An LI is not allowed to engage in operations of a pawnshop and vice versa.
Does BSP supervise financing companies (FCs)?
FCs are generally supervised by the SEC.
In what way is BSP involved with FC operations
Under existing law, BSP has supervision over FCs that are granted BSP authority to engage in quasi-banking function or borrow from the public. These are known as “NBQBs” or “quasi-banks.” The BSP also has supervision over FCs that are subsidiaries or affiliates of banks or NBQBs that are engaged in allied activities.
What then is the concern of BSP regarding non-bank financial intermediaries (NBFIs), e.g. LIs and FCs, that are not affiliates of banks or NBQBs?
Where will the pawshop secure a license?