From BusinessWorld August 18, 2011
The problem is, the GCG, established under Republic Act (RA) 10149 or the GOCC Governance Act of 2011, still needs to convene.
We target to start the operations of the CIC, which will provide credit data to subscribers, by December 2012, Mr. Endriga said.
With recent developments in the capital market, there is a need for fair, accurate and reliable credit information, he added.
The CIC was established under Republic Act No. 9510 or the Credit Information System Act of 2008. It will serve as a central registry or central repository of credit information to improve the availability of credit, especially to micro, small and medium enterprises.
The government and the private sector have pitched in the capital to set it up, but it still needs to file its Articles of Incorporation and By-laws before the Securities and Exchange Commission (SEC). A prior step to filing, Mr. Endriga said, is the go-ahead of the GCG.
â€œWe have yet to get the approval of the GCG to be able to file our corporate papers before the SEC and operate as a corporation,â€ Mr. Endriga said. â€œThe CIC, however, can’t get the endorsement of the GCG because it has not been constituted yet.
Budget Secretary Florencio B. Abad in a text message on Wednesday said the Palace still needs to appoint GCG’s chairman and two commissioners. But I understand that is forthcoming, he added.
Section 6 of RA 10149 provides that the president appoint GCGâ€™s chairman, who will have the rank of cabinet secretary, and two members, who will have the rank of undersecretary. The secretaries of the Department of Budget and Management and the Department of Finance will sit as ex officio members of the commission.
Mr. Endriga, in an e-mail last Tuesday, said he and SEC Chairman Teresita J. Herbosa, who is also the CIC’s ex-officio chairman, wrote President Benigno S. C. Aquino III last Aug. 9 to ask for his favorable endorsement.
â€œWe want to get President Aquino’s approval to allow the CICâ€™s incorporation, even without the GCG’s approval as the commission does not exist yet, he said.
Non-registration with SEC means CIC cannot operate, rent space, hire personnel, disburse funds, enter into any contract and function legally or officially.
All board meetings conducted are considered â€œpre-incorporation meetings and decisions made will have to be ratified by the board when it meets for the first time after its registration with the SEC, Mr. Endriga said.
The CIC, according to the law, must have an authorized capital stock of P500 million, divided into 1.25 million common shares with par value of P100 each and 1.875 million preferred shares with par value of P200 each.
The government must contribute P75 million, and the private sector, P50 million.
Mr. Endriga, in his e-mail, said the government has released P17.5 million this year and the remaining P57.5 million is expected to be released in 2012.
The private sector, meanwhile, has given a total of P15 million, divided equally among the six private investors, namely, the Bankers Association of the Philippines (BAP), the Chamber of Thrift Banks (CTB), the Credit Card Association of the Philippines (CCAP), the Rural Bankers Association of the Philippines (RBAP), the Philippine Cooperative Center (PCC) and the Philippine Credit Reporting Alliance, Inc. (PCRAI).
Mr. Endriga said that even without the complete capital contribution from the government and private groups, the CIC can start working, albeit informally.
Regarding his plans for CCIC, he said: â€œThe plan for the immediate future is to develop the system or work with an outside service provider on the whys and wherefores of the bureau.
The CIC will provide financial institutions both positive and negative credit data on borrowers.
However, not all financial institutions can access CIC’s database, Mr. Endriga said.
Access to our database will strictly be controlled in order to protect the privacy of individuals. Before an institution can have access to our database, it must first seek CIC’s approval, he said in his e-mail.
The amount to be charged by CIC to those who will access its data has yet to be determined, he added.
We will also study if we can allow individual borrowers to gain access in their credit profiles.
Asked how long CIC will hold on to the data it will gather, Mr. Endriga said, â€œdata will be stored for at least three years and a maximum of five years and we will collect basic credit data [from financial institutions] at least on a quarterly basis to update our database.
Mr. Endriga said his target to launch CIC in December 2012 will provide the bureau enough time to gather data, validate data, choose the right system provider and to ensure the security of the system from hackers.