THE PROBLEM AND ITS BACKGROUND
This chapter represents the Introduction, Background and Purpose of the Study, Conceptual Framework, Statement of the Problem, Hypothesis, Significance of the Study, Scope and Limitations and Definition of Terms. Introduction
Pawnshops (Agencia de empenos, In Spanish or bahay sanglaan in Filipino) are one of the easiest and most convenient sources of credit. They provide additional sources of credit especially to small borrowers. The word pawn is derived from the Latin pignus, for pledge, and the items having been pawned to the broker are they called pledges or pawns, or simply the collateral. It is a type of a store that operates by offering money for items with the option to redeem the item within a period of time. The customers get loans on items and are supposed to repay the money when the loan is due. A pawnshop is considered as one of the non-bank financial intermediaries. It is engaged in the business of lending money on personal property delivered as security. In many cases, pawnshops considered as “Buy and Sell” operations with “Buy Back Provision”. A duly organized and licensed pawnshop has, in general, the power to engage in the business of lending money on the security of personal property within the framework and limitations of PD No. 114 and the following regulations, subject to the regulatory and supervisory powers of the BangkoSentralngPilipinas (BSP). Pawnshop Regulation Act (Presidential Decree No. 114, Sec 1and 4) states that it is hereby declared the policy of the state to regulate the establishment of pawnshop and to place their operation on a sound and stable basis to derive the optimum advantages from them as an additional source of credit, to prevent and mitigate as far as practicable, practices prejudicial to public interest and to lay down the minimum requirements and standards under which they may be establish and do business of lending money on personal property delivered as security for loans. The new rules are designed to enhance consumer protection and foster confidence in the pawnshop industry by the pawning public. The proprietors, partners, incorporators, directors and stockholder of the pawnshop must meet certain “fit and proper” standards to ensure that pawnshops are owned and run by people without any bad record and to promote good governance. In the form of Organization, a pawnshop may be established as a single proprietorship, a partnership or a corporation. Any person or entity desiring to establish a pawnshop shall register with the Department of Trade and Industry (DTI), in the case of a single proprietorship; or with the Securities and Exchange Commission (SEC), in the case of a partnership/corporation. Pawnshops with foreign equity participation shall also register with the Board of Investments. After registering with the DTI or with the SEC, the single proprietorship or the partnership/corporation, as the case may be, shall secure a business license from the city or municipality where the pawnshop is to be established and operated, in accordance with the requirements of the pertinent ordinance in that city or municipality. Pursuant to Section 6 of P.D. 114, which requires pawnbrokers to register with the BSP before commencing actual business operations, every pawnshop shall submit to the BSP an Information Sheet on the entity (using BSP-prescribed form) duly accomplished by the proprietor/managing partner/president under oath that shall be the basis for the issuance by the BSP of an Acknowledgement of Registration (AOR). Under Section 7, every pawnshop shall have the minimum paid-in capital of P100, 000.The prudential capital ratio or the ratio of total capital to pledge loans is 50% provided total pledge loans not exceed P 3 million. If total pledge loans exceed P 3 million, additional capital of 30% of pledge loans in excess of P 3 million is required. A pawnshop shall extend a loan only if such is secured by personal property...
References: PawnTimes, International Pawnbrokers Tagged With: Pawn Shops Published: 95 days ago on June 26, 2013
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