Chiz questions proposed ban on pawning ATM cards

Senator Francis Escudero on Monday expressed his opposition to the proposed ban on using automated teller machine (ATM) cards as collateral for loans.

Escudero, the chairman of the Senate Committee on Banks, said poor folk should have access to credit in the same way wealthy people do.

“Wala akong nakikitang rason para ipagbawal sa ngayon iyan," Escudero told reporters after the hearing on the matter.

"Masyado naman tayong takot at concerned sa mga kababayan natin na kulang na nga o salat na sa credit e lilimitahan pa natin ‘yung pwede nilang gamiting collateral,” he added.

“Ang mayayaman walang humpay sa pangungutang, minsan sobra sobra pa sa asset at collateral nila, ‘yung iba nga mukha lang ang collateral pwede na, bilyon na,” Escudero said.

Escudero said it would be difficult to ban the practice of pawning one's ATM card to a creditor.

“Nabibigyan nito ng access sa credit ang ating mga kababayan na walang access  sa credit. Tutal naman walang pumuwersa sa kanya na ibigay ang ATM niya o isangla kung ayaw niya,” Escudero said.

He said even the Bangko Sentral ng Pilipinas could not provide a convincing argument for its prohibition.

“Maski sila (sa BSP) hindi kumbinsido na ipagbawal ‘yun.  Sabi lang nila tinitignan nila, minamatyagan nila pero wala silang intensyon pa rin sa ngayon na ipagbawal ‘yan,” Escudero said.

During the hearing of the Senate committee on banks, financial institutions, and currencies, Escudero asked the BSP officials if using ATM card to secure a loan was illegal.

It took the officials several minutes before they finally answered.

Melchor Plabasan, BSP deputy director, said the card should not be surrendered to another person as it was the property of the bank.

He said the BSP discouraged giving the card and its PIN to another person because the bank would have a hard time determining responsibility during unauthorized withdrawals if the PIN and the card were accessible to other people.

"Giyera ‘yan pag hindi alam ng asawa ko ang PIN ko," Escudero said.

BSP assistant governor Restituto Cruz said using ATM card as a collateral was not illegal per se but added that it had many implications.

“It is not illegal per se but we are trying to prevent over-indebtedness. The impact of indebtedness is something that cannot be quantified," Cruz said.

Senate Resolution 632 cited a BSP survey stating that usage of ATM cards as a loan collateral is at 39.3 percent, the highest among collaterals used on loans.

Also used as loan collaterals are land (22.5 percent), appliances (11.7 percent), vehicle (7.7 percent), and harvest (6 percent).

The resolution said that the "sangla-ATM" scheme was prone to abuse and it had been reported that unscrupulous lending institutions have withheld debt payments for the ATM account at usurious rates, or have delayed or outrightly refused to return the ATM cards even after the debt has been paid.

Plabasan said they are now closely monitoring the situation.

“We have a regular meeting on that but, right now, there is no explicit prohibition (on ATM use as collateral,” Plabasan said. —NB, GMA News