PASAY CITY, 13 June 2018 – During the 6th Ease of Doing Business Summit held at Philippine International Convention Center (PICC), PCEO Jaime P. Garchitorena emphasized that the creation of Credit Information Corporation (CIC) will reduce the cost of lending in the country by way of providing reliable credit information and securing that financial institutions are extending credit facility among borrowers who are creditworthy.
Together with Congressman Arthur C. Yap, Chairperson of House Committee on Economic Affairs, and Deputy Officer Ronald A. Ortile of Land Registration Authority (LRA), a panel discussion on the development of credit infrastructure has been discussed in relation to providing MSMEs better loan opportunities.
PCEO Garchitorena said that banks should be able to have other basis to investigate if a potential borrower is creditworthy such as the character, capability of a potential borrower to pay, and the collateral which can be possible once the CIS is made available for public access.
He cleared that the CIC doesn't perform any background investigation to potential borrowers but rather gathers credit information which will soon be used both by borrowers and lenders to monitor the payment behavior and the capability of a borrower to pay for a loan.
Development of CIS
Based on the study conducted, about 5 Million Filipinos have formal records of borrowing and CIC has about 5.3 million individual records in its Credit Information System (CIS) although it has not yet captured records from small cooperatives and microfinance due to their technological issues.
Even if there is a lack of data in the system, it is already currently being utilized by one accredited credit bureau for a bank on a very limited scale, the CIC President and CEO said.
He also raised that out of 100 borrowers, 75% to 80% are rejected when they apply for loans. Rejections have high rates due to collateral dependencies of most financial institutions when they screen applicants. Once the CIS is accessible, both by borrowers and lenders, it is expected that there will less collateral requirement from the lender.
Access to CIS
The lender is not obligated to use the credit data from the CIS to assess the credibility of the borrower, so if the reason for rejecting the loan does not arise from the credit data collated by CIC, the agency will not be able to provide resolutions to queries of individuals and businesses falling under such situation.
PCEO Garchitorena also clarified that delay on the execution of the CIS was due to securing the security of the system, ensuring that credit data of all borrowers are protected.