BSP warns VS. ‘Sangla-ATM’; seniors abused in scheme

IN TIMES of emergency, many Filipinos are forced to take out fast loans and hand their automated teller machine (ATM) cards over to their creditors as collateral to ensure loan repayment.

But the Bangko Sentral ng Pilipinas (BSP) warns ATM cardholders not to patronize such “Sangla-ATM” (“pawn ATM”) loan schemes, citing the financial troubles the schemes could bring upon them.

A senator has also revealed the suffering senior citizens have had to endure as a result of the popularity of this debit card pawning scheme.

In an advisory Saturday, May 20, 2023, the BSP said once the ATM cards are handed over as collateral, it will be hard for borrowers to monitor the movement of their hard-earned money in their bank accounts linked to the ATM cards.

“It may be difficult for them to monitor withdrawals made by people to whom the ATM card and PIN (personal identification number) were given,” the BSP said.

“Creditors may also withdraw amounts higher than the cardholders’ debt,” the central bank added.

However, some “sangla-ATM” borrowers told SunStar Cebu that it was a necessity for them in order to meet their financial obligations. And they are not alone.

The 2018 Consumer Finance Survey of the BSP revealed that the “Sangla-ATM card” was the most popular collateral for consumer loans.

In a privilege speech last Feb. 27, Sen. Raffy Tulfo revealed just how much Filipinos rely on ATM cards to enable them to borrow funds.

“According to the Bangko Sentral survey in 2014, 39.9 percent of collaterals used for loans are Sangla-ATMs. This is bigger than the use of land, applicances, vehicles or harvest as collateral,” Tulfo said.


Jonna* (not her real name), told SunStar Cebu on Tuesday, May 23, 2023 that emergencies forced her to avail of these loan schemes.

She said people offering such loans offered easier application processes and fast approval, compared to the lengthy and meticulous procedure and submission of documents required by banks and other lending firms.

“If I go to the bank, it is a bit difficult because the process is long, and it is not sure if your loan will be approved or not,” Jonna said.

“Also not everyone has savings in the bank account that is also a requirement to be eligible, compared to individuals offering these fast loans which are easy to get and approved immediately without much hassle,” Jonna said.

Rica* added that in “Sangla-ATM,” she has the option to choose the loan amount and the number of months to pay, depending on capacity to repay the loan.

“You can ask for how much amount and how many months you have to pay back the borrowed money,” Rica said.

For Alyssa*, the scheme offers more flexibility since most of the time, the creditor is a friend or acquaintance.

“You are directly transacting with the creditor you’ve personally known. Cash is immediately released based on the terms agreed such as how long to pay the loan and how much. In short, less hassle,” Alyssa said.

They all admit that “Sangla-ATM” poses risks, such as unauthorized withdrawal of funds from the accounts linked to their ATM cards or even their ATM cards not being returned to them.

But they said this goes down to the trust they gave to their creditors. Also, with the advent of digital banking, they can easily access their funds via smartphone and make changes in their account.

Informal arrangement

Dr. Kei Kajisa, professor of development economics at the Aoyama Gakuin University in Japan, said “Sangla-ATM” is a mode of informal credit arrangement that increases the credit opportunities of borrowers.

Unfortuntately, it may also lead them to overborrow as it provides easy money, Kajisa said in the webinar “Does a new informal credit arrangement improve poor’s welfare? The case of debit card pawning in the Philippines” hosted by Yusof Ishak Institute on Dec. 17, 2020.

In the 2019 Financial Inclusion Survey of the BSP, Kajisa said only three percent of the 29 percent of the participants who own formal bank accounts, have taken out loans via banks. Seventy-one percent of the survey participants remained unbanked.

These participants perceived accessing formal lending channels as a difficult task, citing challenges in coming up with documentary requirements and collateral among the top reasons.

This resulted in poor savings habits and preference for informal lending options.

The survey said borrowings were sourced mostly from informal sources, particularly family and friends (44 percent) and informal lenders (10 percent), while banks remained the least used lender among borrowers.


The BSP advised borrowers to be fully aware of the terms and conditions of loans to “protect themselves against unreasonable demands.”

Directing them to safer microfinance and other small loan facilities, the central bank encouraged the public “to directly inquire with banks and other BSP-supervised financial institutions, such as pawnshops, money service businesses, electronic money issuers, and non-stock savings and loan associations.”

Pension at risk

In the Senate plenary session last Feb. 27, Senator Tulfo voiced his stand against “Sangla-ATM,” proposing a prohibition or regulation in the use of Social Security System (SSS) and Government Service Insurance System (GSIS) pension ATM cards as collateral due to the abuse that the elderly have taken from relatives because of this.

“Our elderly pensioners are being taken advantage of. Their scheming children, relatives or caregivers take their pension ATMs and take on a loan on their behalf, sometimes forging their signatures. These pensioners are unaware that loans have been taken under their name, or sometimes, they are coerced to agreeing to their able-bodied caregiver or relatives,” said Tulfo.

Then when they need money for their own food, utilities, medicine or doctors’ visits, the pensioners are the ones left with no funds, the senator lamented. (with CTL)