Just recently, the Credit Information Corp. (CIC) reported that it is “fairly on track” in establishing a domestic credit data registry that is expected to become fully operational and accessible by financial entities by year-end.
CIC earlier set a December 2014 target for full operation but certain delays in capitalization and lack of manpower have bogged down the process.
Nevertheless, the rural banking industry fully supports the credit bureau in the establishment of a centralized Credit Information System (CIS) that aims to reduce asymmetry of information between borrowers and financial institutions.
In the initial stage, some member-banks of the Rural Bankers Association of the Philippines were tapped to join the ‘first and second movers’ of financial institutions that attended a series of seminars and submitted their credit data for testing and reviews.
Among the first movers were Quezon Capital Rural Bank Inc. and GM Bank of Luzon Inc., while Camalig Bank Inc., Valiant Bank Inc., Bangko Kabayan Inc. and Cantilan Bank Inc. joined the second movers.
As first and second movers, select financial institutions were able to enjoy the new customer segment, improved efficiency, better risk control and potential expansion of customer base, while incurring no additional cost.
Further, the CIC will also conduct a series of roadshows to educate financial institutions across the country—with rural and thrift banks as its first locus for this quarter—on the manner and date of submission of credit data.
With the changing financial landscape and the development of credit reporting and
scoring, processing of loan applications may be eased.
By knowing applicants’ credit history better, banks will be able to choose appropriate terms for loans, increase their lending to smaller firms and individuals and make good credit judgments with reduced default risk.
Similarly, individuals, micro-enterprises and small and medium-enterprises (SMEs) that lack access to financing will now be able to prove good credit record as the database would not only show bad credit hits but the whole credit history of borrowers for at least three years.
Other stakeholders of CIC include Bankers Association of the Philippines, Philippine Cooperatives Center and the Credit Card Association of the Philippines.