BSP hails creation of credit bureau

The Bangko Sentral ng Pilipinas (BSP) said the enactment of the Credit Information System Act (CISA) could not have come at a better time and would give a boost to the credit market during this time of uncertainty and confidence crisis.

The BSP was supposed to be the lead agency that would own the majority of the Central Credit Information Corp. created by the law, but as approved, the corporation would be chaired by the Securities and Exchange Commission (SEC) instead.

The difference in the actual and the proposed ownership structure, however, would not make a difference on the effectiveness on the CCIC, BSP Governor Amando Tetangco Jr. said.

Under the CISA which was signed into law last week, the CCIC will be set up with 60-percent government ownership and chaired by the chairman of the SEC.

“While ownership structure is not as originally crafted, it is believed that the compulsion for data submission would still significantly address the current lack of comprehensiveness and credibility of credit-related information,” Tetangco said.

Under the law, the CIC has the mandate to receive and consolidate basic credit data and to act as a central registry of credit information. It will provide access to reliable standardized information on the credit history and financial condition of borrowers.

With the National Government owing 60 percent of the corporation, the remaining 40 percent is to be owned and held by qualified investors such as industry associations of banks, quasi-banks and other credit-related associations.

The government has made a commitment to provide P75 million from the budget representing its equity share and P50 million would be subscribed and paid up by qualified investors.

After almost four years of sorting through legal impediments to the creation of a separate credit information bureau, CISA was finally enacted, amending secrecy laws in order to compel banks to centralize credit information.

In the beginning banks resisted the initiative until they were assured that there would be little risk that the information exchange would give their competitors access to their client information.

The Bank Secrecy Law has been the major impediment for the creation of the bureau that was intended to function as a central database of borrower information to allow banks to assess the credit-worthiness of borrowers.

Once established, the credit information bureau was supposed to allow banks to determine whether they were dealing with a reliable borrower or a high-risk one.