BSP warns public against using ATM cards as loan collateral

The Bangko Sentral ng Pilipinas (BSP) on Sunday warned the public against using their automated teller machine (ATM) cards as collateral in entering loan arrangements.

According to an advisory posted by the central bank, some 39.9 percent of Filipinos use their ATM cards as loan collateral.

"They surrender their cards to, and share their personal and ATM account information with informal lenders or loan sharks. This is commonly known as 'Sangla ATM'," the advisory read.

"This may be a quick and easy way to access loans but it is prone to abuses and risks... The Bangko Sentral ng Pilipinas discourages the public to engage in 'Sangla ATM' schemes!" it added.

According to the BSP, the scheme exposes the card owner to identity theft or unauthorized use of personal data; unauthorized withdrawals from the ATM account; and the use of their personal data in fraudulent or criminal activities.

"The BSP discourages financial institutions from using a borrower's ATM card as loan collateral," it said.

"The BSP advises financial institutions to practice appropriate credit underwriting and prudent assessment of a borrower's credit-worthiness to mitigate credit risks," it added. — Jon Viktor D. Cabuenas/BM, GMA News