CIC finally gets underway

MANILA, Philippines - By the first quarter of 2012, the Credit Information Corp. (CIC) will bid out the software and hardware paraphernalia that will run the country’s centralized credit information system.

The CIC was formed through the Republic Act No. (RA) 9510 otherwise known as the Credit Information System Act (CISA).

 It will be a comprehensive and centralized depository of credit information system for dissemination of fair and accurate information from credit and credit-related activities critical for the country’s economy, in general, and financial system, in particular.

CIC president and chief executive officer Baltazar N. Endriga said that they hope to get the entire system going before the end of 2012.

“The CIC is ordered by law to privatize the credit information bureau five years from its conception,” Endriga said.

Presently, the bureau is predominantly government controlled or 60-percent of the total equity while the private sector accounts for 40 percent. The private segment is composed of the trade organizations of the country’s banking system.

These are the Bankers Association of the Philippines (BAP), the Chamber of Thrift Banks (CTB), and the Rural Bankers Association of the Philippines (RBAP).

The government stakeholders are: the Securities and Exchange Commission (SEC), the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission (IC), Department of Trade and Industry (DTI), and the Coooperative Development Authority (CDA).

The CIC chairman will be the SEC commissioner.

Endriga said that they are looking at office space at The Fort area, since the enabling law stated that it was to utilize a “state-of-the-art” building.

“The price of office spaces in these area is cheaper than that of the Makati central business district,” he said, adding that majority of the structures in The Fort are “smart buildings” or infrastructures designed for modern telecommunications and electronic devices.

 Meanwhile, Endriga explained that they are moving forward after the Governance Commission of GOCCs (GCG) has ruled that the CIC need not register with the SEC. The CIC fell under the supervision of the GCG early this year.

That created some legal confusion since it was not clear whether the central depository of credit history had to register as a corporation under the existing laws.

It also triggered financial issues since the CIC could not tap the funds allocated for its operations since it was not yet a “legal entity.”

 The funding came in two tranches, the first was P32.5 million released after Endriga was appointed early this year, and the balance of P42.5 million only last November. Both tranches were deposited with the LBP.

The CISA law was formalized in 2008, and in the following year, the implementing rules and regulations (IRR) was released. Discussions at the legislature level started as far back as 2003.

A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers.

An efficient credit information system will also enable financial institutions to reduce their over all credit risk, contributing to a healthier and more stable financial system.

Presently, the largest credit information system is run by the BAP, or the trade organization of the country’s commercial banking system.

Lately, it has partially opened its services to the thrift and rural banking system.

It is also test piloting another model for the country’s thriving microfinance industry.