The Bangko Sentral ng Pilipinas (BSP) has issued a warning to ATM cardholders to avoid participating or being involved in a rapidly-growing scheme called “Sangla-ATM,” which entails the use of ATM cards and personal identification numbers (PINs) as security for loans.
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Under this scheme, the lender would keep the ATM or debit card of the borrower and deducts loan payment from the borrower’s paycheck every payday until the entire amount has been paid back in full.
The central bank said that the practice could lead to financial troubles for the cardholder since it would be difficult for them to monitor withdrawals made by people to whom the ATM card or PIN had been given.
Withdrawals made by creditors could also exceed the cardholders’ debt, so they end up paying more than the loan amount. This could lead to further money problems later on.
Teaching Filipinos proper credit, savings, and money management
In a media advisory, the BSP urged borrowers who use their ATM cards as security to understand first the terms and conditions of the loan agreement to be able to protect themselves better from unjust claims and other unreasonable demands from lenders later on. It further stated that the advisory is in keeping with the government’s ongoing financial literacy program, which aims to teach Filipinos proper credit, savings, and money management.
The advisory read: “The Bangko Sentral ng Pilipinas advises ATM cardholders to refrain from participating in “Sangla-ATM” schemes, which require them to use their ATM cards and personal identification number as collateral for loans. This scheme may lead to financial troubles for cardholders as it may be difficult for them to monitor withdrawals made by people to whom the ATM card and PIN were given. Creditors may also withdraw amounts higher than the cardholders’ debt.”
“This advisory is issued in line with the BSP’s continuing program to guide Filipinos on safe and proper ways to handle money, credit, and savings through financial education and personal finance management lessons,” it added.
The BSP has also urged the public to directly inquire with banks and BSP-supervised financial institutions, such as pawnshops, money service businesses, electronic money issuers, and non-stock savings and loan associations if they wish to get information on microfinance, personal, and other small-loan facilities.
For a directory and list of BSP-supervised financial institutions, check out the Bangko Sentral ng Pilipinas Financial Stability website at www.bsp.gov.ph.
Gov’t policy to regulate operations of lending firms sought
In a related development, Sen. Raffy T. Tulfo has called on the government and his fellow lawmakers to support his bid in coming up with a government policy that would regulate the operations of lending companies involved in the Sangla-ATM scheme.
“We must look if there is a need to regulate the use of the pension Automatic Teller Machine (ATM) card as collateral in the Sangla-ATM system. At the moment, there is no prohibition or regulation governing these Sangla-ATM transactions,” Tulfo said in his privileged speech, even as he acknowledged the needs of poor families to fast loans, especially during an emergency.
“I am looking into proposing the prohibition or regulation of the use of Social Security System (SSS) and Government Service Insurance System (GSIS) pension ATMs as collateral and to provide corresponding penalties,” he added.
According to the senator, these Sangla-ATM lending institutions, together with some pensioners’ relatives, have been taking advantage of the elderly who usually have no idea about the dangers of this scheme.