MANILA, 18 January 2019 – The Cooperative Development Authority (CDA) issued Memorandum Circular No. 2019-01 announcing to all its covered cooperatives to comply with Republic Act No. 9510, and begin submission of all their borrowers’ basic credit data to the Credit Information Corporation (CIC).
The CIC is a Government-owned and Controlled Corporation (GOCC) and the Philippines’ 1st and only public credit registry that is mandated to demand and receive both positive and negative credit information on borrowers over entities covered by R.A.9510. The CIC was established to address the country’s need for a comprehensive, centralized and reliable credit information system.
CDA, alongside Department of Finance (DOF), Department of Trade and Industry (DTI), Bangko Sentral ng Pilipinas (BSP) and Insurance Commission, is a relevant government agency identified to support the implementation of R.A. No. 9510.
The CDA is in charge of the registration and regulation of all types of cooperatives in the Philippines. Cooperatives covered by the memorandum circular are those that have the authority to lend and/or perform micro-finance activities both to individuals and cooperative borrowers.
It is reiterated in Memorandum Circular No. 2019-01, dated 5th of November 2018 signed by the CDA Chairman Orlando R. Ravanera, that cooperatives engaged in lending and/or micro-financing activities and/or extending credit facilities, have the obligation to submit comprehensive, accurate, current, objective, and factual basic credit data of all their borrowers.
President and CEO Jaime P. Garchitorena said that having the full support of the CDA, being the cooperatives’ regulatory agency, is a significant step in achieving many of the inclusive lending targets of the National Government.
Cooperatives are often designated as conduits of funding for the purpose of supporting agricultural and non-agricultural based ventures, and that cooperatives have the advantage of being closest to the underserved and un-served markets who have the potential of developing creditworthy records. Having cooperatives submit the credit behaviors of their members will also allow other Government Agencies to assess cooperatives for the ability to maintain acceptable NPL ratios and identify Cooperatives that embody best practice in lending.
“Currently, the CIC has around 600 medium and large cooperatives registered for submission of data and this is expected to considerably increase with the CDA’s Memo Circular. As part of our capacitation assistance, since 2015, the CIC has continuously provided series of technical trainings with the support of various cooperative federations across the country, we expect this to continue in 2019,” Garchitorena also said. There are roughly 1,800 reporting large and medium cooperatives as classified by the CDA as of 27 July 2016.
Having a centralized credit registry is a very crucial endeavor towards moving the Philippine lending industry away from collateralized lending practices for individuals and micro-small and medium enterprises (MSMEs). The availability of CIC’s Credit Reports, coupled with Credit Scores being offered by the CIC’s accredited credit bureaus or Special Accessing Entities, will also allow risk-based lending at par with other progressive economies for lenders and will facilitate a fact and data based roadmap for borrowers as they improve their credit behaviors.
This is also considered vital in increasing the volume of lending from 28% to 40% especially that preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on January 8, 2019 showed that outstanding loans of commercial banks have slowed down to 16.8% last November 2018 specifically in credit card loans and motor vehicle loans, and other types of household loans.
Currently, CIC’s database has more than Five Million unique data subjects and over Twenty Million contract records.
The CIC has been making Credit Reports available on a limited test basis to authorized accessing entities since late 2018 as part of its system and security testing phase. The CIC has also been making Credit Reports available to consumers since January 2019 as a part of its consumer access program.