The Credit Information Corp. (CIC) sees stronger credit scoring for micro, small and medium enterprises (MSME) in the Philippines after the state-owned Small Business Corp. (SBC) submitted the basic credit data of its borrowers.
In a statement late Tuesday, the CIC recognized SBC as the first to achieve compliance status for basic credit data.
CIC President and CEO Jaime Garchitorena considered the SBC data highly valuable.
“This can only mean good things for the Philippines, not just the institutions involved,” Garchitorena was quoted as saying during the recognition ceremony for SBC.
With the entry of the SBC into the CIC ecosystem, it now has access to all statistical data available through CIC’s Special Accessing Entities (SAE). The available data set is not just limited to the successful loans that SBC has, but can be benchmarked to the greater success or failure of the larger environment of lenders.
“In this way, our lenders can find nuances in their lending processes, and in all likelihood, allow them to lend more, to lend more safely, and over all, improve the return on the assets the National Government has allocated to us,” he added.
CIC said MSME data from both SBC and other data sources will be available to the SBC, either directly from the CIC or through SAEs that have the global expertise to develop credit scoring models and other value-added services to determine creditworthiness.
The four SAEs, carefully selected by the CIC through a rigorous qualifying process, are CIBI Information Inc. (CIBI), CRIF Philippines (CRIF), Compuscan Philippines (Compuscan), and TransUnion Information Solutions (Transunion).
CIC’s said its credit information system will significantly improve the loan process, as it reduces the time and cost involved in evaluating the credit-worthiness of an individual as well as provide borrowers better access to credit and reward good payers with better credit terms.
SBCs participation is timely as President Rodrigo Duterte has expressed his support for the various initiatives catering to the MSME sector.
Garchitorena noted the compliance of SBC and the inclusion of its MSME borrower data in the CIC database is not just in line with the President’s agenda of MSME activation, but also the Department of Trade and Industry’s aim to lead Filipinos towards self-sustainability via entrepreneurship.
“In the end, if we put this all together in the right manner and processes, then what we should see is the beginning of a new dawn in lending to entrepreneurs, whether it be for the reason of achieving financial sustainability for the economy, or for the reason of bringing an OFW home because he or she has a better opportunity to start a business here,” he said.
“We appreciate the developments because access to credit is hindered by the asymmetry of information and the lack of collateral of borrowers. The need for collateral will l kewise be minimized,” SBC President and CEO Bartholomew Reynes said.
Many MSMEs experience difficulties in having their loan applications approved, either because they have never obtained a loan, they have been blacklisted or have defaulted on their financial obligations, which end up as the only information available to lenders, it said.
With data from the CIC, both positive and negative data would be very useful in increasing transparency and loan opportunities for MSMEs.