Jaime Garchitorena, president and CEO of Credit Information Corporation. (CDN PHOTO/VICTOR ANTHONY V. SILVA)
Financing institutions will soon be able to easily distinguish one borrower from the other with the country’s first credit information system (CIS) set to be made accessible by the first quarter of 2017.
Jaime Garchitorena, president and CEO of the Credit Information Corporation (CIC), stressed that they still need to obtain substantial amount of data and density per submitting type of entity before the system goes live.
“We still need a significant amount of data from commercial banks, rural banks, thrift banks, co-ops and micro finance,” he told reporters at the sidelines of the CIC’s credit information roadshow at the Marco Polo Plaza Cebu on Tuesday.
The two-day activity gathered close to 60 large and medium-scale cooperatives from Central Visayas for an in-depth discussion on the benefits of using credit information in portfolio risk management.
The event is one of the many educational campaigns CIC held over the last three years, in accordance with the provisions of Republic Act No. 9510 or the Credit Information System Act (CISA) enacted in 2008, to implement a financial literacy campaign for its stakeholders.
Garchitorena said the system will help financing institutions differentiate “bad payers” from “good payers” based on data that factor in a borrower’s credit history.
The CIC has partnered with six credit bureaus to help financing institutions analyze data pulled from the system, he added.
When borrowers fail to produce collateral for a loan, they may opt to present their credit footprint.
The system, he said, can be accessed both by financing institutions and borrowers who wish to see their personal credit history.
Garchitorena emphasized the role of cooperatives in the financial ecosystem, saying that they are one of the first-touch lending institutions for many Filipinos.
In some instances, he said the use of credit data can reduce non-performing loans (unpaid loans) by up to 75 percent and can double lending amounts without significantly increasing the risk of default or over-indebtedness.
“The resulting increase in revenues from interest and the reduction in provisioning for bad accounts will give co-ops greater latitude in lending more to those deserving of it,” he said.
He said the deadline of submission for data from big financing institutions such as commercial banks is in November this year.
The deadline for cooperatives and rural banks, which are lagging behind due to variable states of technology, has been extended to June 2017.
The CIC is currently establishing a penalty structure for non-complying financial institutions, he said.
The mandate of the CIC is to “establish a comprehensive and centralized credit information system for the collection and dissemination of fair and accurate information relevant to, or arising from, credit and credit-related activities of all entities participating in the financial system.”
Dr. Mario Lamberte, team component leader of the USAID COMPETE project, said that greater access to credit has improved the financial situation of other Southeast Asian countries.
“We see big benefits for the Philippines once a credit information system is operational,” he said.
The United States Agency for International Development (USAID) COMPETE Project and the International Finance Corporation (IFC) are among the foreign partners of the CIC.