BSP to prohibit use of ATM cards as loan collateral

UNTV

Bangko Sentral ng Pilipinas

MANILA, Philippines — The consumer finance survey which Bangko Sentral ng Pilipinas (BSP) released last week shows that almost 40 percent of Filipinos use the so-called “ATM Sangla” scheme for loans.

Under this, borrowers use their ATM cards as loan collateral.

The Senate Committee on Banks, Institutions, and Financial Currencies has expressed alarm over the rising number of individuals using the said loan scheme.

“Is it something that we should prohibit,  prevent,  regular,  lessen?” asked Senator Chiz Escudero.

Although it is still studying the legality of using ATM cards as collateral, the BSP admitted that such a scheme is dangerous.

“The cardholder can anytime declare the card lost and a replacement can be sent directly to him. So, as far as the lender is concerned,  they can get nothing,” said BSP Deputy Director Melchor Plabasan.

Based on the BSP’s comprehensive circular on creditworthiness, the Central Bank tightens its regulation on loan to protect borrowers from abusive lenders.

“We will try to discourage because this practice puts a lot of borrowers, teachers to indebtedness,” said Cruz.

— Mai Bermudez | UNTV News & Rescue

 

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