ATM cards most popular collateral among Pinoy borrowers —BSP survey

Nearly two-thirds of Filipino borrowers use their automated teller machine (ATM) cards as collateral for loans, according to the survey conducted by the Bangko Sentral ng Pilipinas (BSP) from 2014 to 2015.

"This simply underscores the challenges of promoting a more vibrant economy that is more inclusive as to ensure greater democratization of wealth and job opportunities as well as sustainability as to buy time for such opportunities to spread out to our people especially at the base," BSP deputy governor for monetary stability sector Diwa Guinigundo told GMA News Online on Friday.

Conducted in July 2014 to end-January 2015 with 18,000 respondent households, the 2014 Consumer Finance Survey (CFS) showed the "sangla ATM" scheme was the most used collateral for loans of 39.9 percent of Filipinos.

Aside from ATM cards, other popular collaterals used for loans—whether it is personal, salary, multipurpose, business, education, or emergency— were land at 22.5 percent, appliances at 11.7 percent, vehicles at 7.7 percent, and harvest at 6.0 percent.

"From a policy perspective, this phenomenon also raises the issue of financial literacy that includes the key aspects of savings and investment, the repudiation of debt dependency that could condemn people to years of indebtedness," Guinigundo said.

The 2014 CFS results also revealed that 86 percent of households are unbanked or did not have a deposit account, thus only 14 percent save their money in banks.

According to the BSP, the foremost reason cited by households for not having a deposit account was not having enough money to maintain an account.

Other reasons cited by the respondent households are they do not need a bank or cash account, the location of the bank is far from their home, they cannot manage an account, the service charges are too high, the minimum balance is too high, and they do not like to deal or trust banks.

The survey also showed that one in eight households or 13 percent owns other real property apart from their residence.

Moreover, majority or 50.5 percent of household respondents said their main source of income are wages and salaries.

Other sources of household income were businesses including self-employment at 18.1 percent, financial assistance from government at 13.5 percent, financial assistance from abroad at 13.2 percent, and financial assistance from other households at 10 percent.

The 2014 CFS is a nationwide quadrennial survey on consumer finances among Filipino households. It profiles financial conditions as well as credit behavior of Filipinos.

The survey covered all regions in the country except Leyte province, which was displaced due to typhoon Yolanda and the Autonomous Region in Muslim Mindanao (ARMM). —KBK, GMA News