Use of ATM card as loan collateral legal – BSP

By: - Reporter / @MAgerINQ
/ 03:25 PM March 19, 2018

There is no law prohibiting the use of an Automated Teller Machine (ATM) card as collateral in securing a loan, officials of the Banko Sentral ng Pilipinas said on Monday.

At the hearing of the Senate committee on banks, financial institutions and currencies, committee chair Senator Francis Escudero repeatedly asked the BSP officials present if there is law against the so-called “Sangla ATM” scheme.


The inquiry into the said scheme was initiated by Senator Grace Poe.

At first, BSP Deputy Director Melchor Plabasan explained that under bank terms and conditions, ATM cards it had issued to its clients are considered as bank properties and only its clients should know the PIN  (personal identification number) of the cards.


“It can’t be shared,” Plabasan said.

“Sangla ATM sounds bad but it is illegal per se?”  Escudero asked.

BSP Assistant Governor Restituto Cruz said it is not illegal but he warned of its implications.

Plabasan agreed, saying that an ATM card can not be considered a “good collateral”   as a card holder can anytime declare that a card has been lost and a replacement could  then be sent directly to him.

“So as far as the lender is concerned, wala na syang makukuha,” the official explained.

“E kung gusto nilang maglokohan, maglokohan sila hindi naman tayo apektado…” Escudero said.

Still the senator asked the BSP officials if the practice of using ATM cards as loan collateral should be prohibited or regulated.


“Right now kasi sir,  we’re are closely  monitoring the situation and let’s see if there’s a need to issue a  complimentary regulation,” Plabasan said.

“There s no explicit  prohibition, right now,” he added.

Plabasan said the  issue  was being discussed  within the BSP and   he  hopes to  come up with  recommendations  that would be to the  best interests of both  the borrowers and the lenders.   /muf

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TAGS: ATM, banks, BSP, collateral, Escudero, Loan
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