BSP warns public vs use of ATM card as loan collateral

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) on Friday warned the public against the "Sangla ATM" scheme to secure quick and easy loans from some informal lenders or loan sharks.

Under the "Sangla ATM" scheme, borrowers use their ATM (automated teller machine) cards and personal identification number as collateral for their loans.

In an advisory, the BSP said this practice traps financially struggling Filipinos as they are exposed to unauthorized withdrawals.

"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 and PIN were given," BSP warned.

"Creditors may also withdraw amounts higher than the cardholder's debt," BSP added.

In addition, the BSP advised the public to understand the terms and conditions of their loan agreements to protect themselves from unreasonable demands.

As early as 2018, the BSP said no law exists prohibiting pawning of ATM cards in exchange for securing loans.