Republic of the Philippines
As part of its continuing campaign entitled “Getting Ready For Credit”, the Credit Information Corporation (CIC) held a two-day technical compliance workshop for Submitting Entities (SEs) such as cooperatives, rural banks, and financing companies. Called “Progressing to Credit Data Production,” the two-day event was designed to capacitate SEs with the knowledge and the skills to submit data successfully to the CIC in compliance with Republic Act 9510, the Credit Information Systems Act (CISA). The CISA requires all SEs to submit credit information to help lenders lend more and lend to more, as part of the inclusive growth challenge to financial institutions. Data from the CIC will also help borrowers have a greater understanding of their current credit standing, allowing those with good credit behavior to demand better rates for their loans as well as to help those new to credit take control of their credit scores. The use of data by both lenders and borrowers in the financial ecosystem using credit data is expected to reduce the non-performing loans of lenders and help prevent over-indebtedness of the borrower.
A total of 192 participants from the cooperatives and rural banking sectors took part in the workshops which were held at the Radisson Blu Hotel in Cebu City last September 7 and 8, 2017. The workshops included the participation of top-tier speakers such as Dr. Mario B. Lamberte, Ph.D, and Mr. Enrique Abellana.
Dr. Lamberte is currently the Team Leader of Component 3, Access to Credit of the Advancing Philippine Competitiveness (COMPETE) project being implemented by The Asia Foundation. He heads a team of local and foreign experts that have been assisting various institutions such as banks, business associations and government agencies such as the Department of Trade and Industry in order to facilitate the SME sector’s access to credit. In the case of the CIC, he and his team have been assisting in making its credit information system operational.
His previous assignments include being the Director of Research of the Tokyo-based Asian Development Bank Institute (ADBI) and the President of the Philippine Institute for Development Studies (PIDS). His consultancy work involves serving in several projects of the World Bank, Asian Development Bank, AusAID and USAID. He also helped the late Senator Raul Roco, Chairman of the Committee on Banking, Financial Institutions and Currency, draft financial sector reform bills that led to the passage of the New Central Bank Act (1992), the Act Liberalizing the Entry and Scope of Operations of Foreign Banks (1994), the General Banking Act (2000), and the Securities Regulation Code (2000).
Meanwhile, Mr. Abellana, speaking on the second day of the workshop, is an incumbent member of the board of directors of the CIC and a trustee of the Rural Bankers Association of the Philippines (RBAP) Foundation.
Representing the CIC were Atty. Aileen L. Amor-Bautista, CIC’s SVP for Business Development and Communications, who spoke about the legal contexts of compliance to CISA and Ma. Bernadette Bautista, Acting SVP of CIC’s Credit Information Management Services Group, who led the technical training portion of the event.
Atty. Bautista informed the participants that the CIC returned to Cebu in order to assist them into being compliant with CIC’s mandate, and also to help them progress to CIC’s Production phase. This is the CIC’s second time to visit Cebu. The CIC had previously conducted a roadshow in Cebu last August 2016. She also stressed the importance of having the Submitting Entities provide information on their mandatory ID’s to improve information flow and generate a more precise credit information.
Meanwhile, Dr. Lamberte spoke about the USAID’s presence in the Philippines through its various projects, such as the CPIP Project, the EMERGE Project and the MABS Projects. With respect to helping the SME sector, Dr. Lamberte said one of the USAID’s projects has been helping the CIC operate the credit information system for the last three years.
Dr. Lamberte also said that amid the growing loan portfolio of the countries, there remain major barriers such as problems with asymmetric information and high transaction costs. To address these issues, he stressed the importance of the sharing of credit data, where people could avail of a considerable amount of borrowers’ credit data at a very low cost.
Comparing the credit information system to Facebook, Dr. Lamberte said that people are on Facebook because they want to keep the connection with people and also want to remain in touch. Just like Facebook, all of the Submitting Entities comply with the credit information system so they would be connected in the sharing of credit information which is very important in the development of the financial system.
Mr. Abellana spoke on the second day of the technical compliance workshop, which was attended by representatives from the rural bank sector. He encouraged the participants to be straightforward with whatever queries and concerns they had regarding the technical process of data submission as they needed to produce clean data and good credit information in order to facilitate the lending process.
Ma. Bernadette Bautista, facilitated the hands-on technical workshop, which also included an overview of CIC’s credit information system.
During the technical workshops, the participants asked whether Submitting Entities could get a credit report directly from the CIC rather than the Special Accessing Entities. It was clarified that while the CIC could provide credit reports based on the credit information submitted by the SEs, it cannot provide a credit score, as well as an analysis of borrowers’ behavior based on their current and past loans. It is the CIC’s Special Accessing Entities that can provide those value-added services.
Another question that was raised was if the SEs were required to submit five years’ worth of historical data, and the borrowers’ data was still incomplete, would the SE’s still be required to complete the mandatory data even if the accounts had negative events. The response provided by the CIC was that as long as the borrowers are included in the SEs five-year historical data, the SEs were required to complete their borrowers’ information. Once the information is completed, that’s the only time the data will be loaded onto the CIC’s credit information database.
The four accredited credit bureaus or Special Accessing Entities (SAEs) of the CIC were also present during the workshop and spoke about their companies. These SAEs are Compuscan Philippines Inc., CIBI Information Corporation, CRIF Philippines, and Transunion Information Solutions, Inc.
The CIC has been conducting technical compliance workshops not only in Metro Manila but also in key cities and provinces nationwide in order to assist Submitting Entities into coming on board the CIC’s credit information system. These workshops are also an integral component of CIC’s “Getting Ready for Credit” campaign this year, which aims to prepare the public for the launch of CIC’s credit information system in 2018.
Filipino borrowers and lenders alike will be able to purchase credit reports from the CIC once the credit information system is launched next year. Since these credit reports are data-driven, and based on fresh, regularly updated data, these provide an objective, bias-free picture of a borrower’s creditworthiness, or ability to pay.
Borrowers can use their credit report not only to check their own creditworthiness, but also use this as a leveraging tool to obtain credit at more competitive interest rates and better credit terms. Meanwhile, lenders can use the credit report to gauge whether a borrower is a good borrower, a potential loan defaulter, or even a fraudulent borrower. As a result, lenders are able to reduce the incidence of non-performing loans and improve overall profitability.
The CIC will also conduct additional technical workshops for cooperatives, rural banks and financing companies that are in testing phase at the Seda Abreeza Hotel in Davao City on September 14 and 15, 2017.
The CIC also conducts technical training workshops in its office in Makati City. For inquiries, please email the CIC Events Team at firstname.lastname@example.org.