After close to 5 years of being passed into law, the opportunity of having a national credit bureau will become a reality with the support of the investment arm of the World Bank, the International Finance Corporation in assisting the government agency tasked to implement this task. Let’s hope we can see something happening in the next 6 months (or earlier).
IFC, CiC ink accord on credit bureau mechanism
MANILA, Philippines – Credit Information Corp. (CiC) signed yesterday a memorandum of understanding with the International Finance Corp. (IFC) to establish a mechanism that will help establish a credit information system to support lenders in making better loan approval decisions.
CiC president Baltazar Endriga said there was an urgent need to put in place a centralized credit information bureau within the country’s financial system and other credit facilities.
“There is a need for Philippine financial institutions to make sounder and faster decisions regarding loans and credit applications, and that is what a centralized credit information bureau offers,” Endriga added.
Better access to credit information about borrowers allows lenders to make correct decisions in lending, thus reducing the risk of loss.
In turn, legitimate borrowers with good credit standing need not wait long for loan approvals.
A good centralized credit information is one of several factors that makes putting up and running business easier.
The IFC said accurate and accessible credit information is helpful in developing economies.
IFC director for East Asia and Pacific Sergio Pimenta said developing economies oftentimes show that only one of every four people has access to credit.
“Widening access to credit unleashes the productive power of micro-, small and medium enterprises, which in turn will facilitate their integration into the mainstream economy and create jobs,” Pimenta added.
There are several credit information bureaus in the Philippines, but these are all private sector driven and selective.
However, a centralized and state-support bureau will have the clout to collate all credit information.
The CiC was formed by Republic Act (RA) 9510 or the Credit Information System Act of 2008.
The remaining 40-percent is owned by the Bankers Association of the Philippines (BAP), the Philippine Cooperative Center, the Credit Card Association of the Philippines, the Chamber of Thrift Banks, the Rural Bankers Association of the Philippines, and the Philippine Credit Reporting Alliance.