Rural banks to benefit from credit info bureau

MANILA, Philippines - Rural banks will have more confidence in lending to small borrowers in the countryside by gaining access to accurate, timely, objective and widely available credit information from the newly established Credit Information Corp. (CiC).

At a symposium of the Rural Bankers Association of the Philippines (RBAP) at the Manila Hotel last month, CiC president Baltazar N. Endriga said this lowers the risk of lending and the cost of borrowing and doing business for farmers, fisherfolk and other small enterprises primarily served by rural banks.

“This could have a far-reaching impact on the development of the countryside and the Philippine economy in general,” Endriga said.

Rural banks play a strategic role in serving the credit needs of the countryside, having over 2,500 offices nationwide and catering especially to micro, small and medium enterprises, which account for 99.6 percent of all enterprises and employ 76 percent of total employment.

However, processing loan applications and data gathering from the field still prove to be tedious and costly for many rural banks. By gaining access to CiC’s database, rural banks will be able to enhance their knowledge of the borrower’s credit history, and better manage cases of multiple borrowings and over-indebtedness.

Endriga hopes “submitting entities,” such as banks, insurance companies, utility firms, telcos and other types of institutions that extend credit, to comply with Republic Act 9510 (Credit Information System Act), which mandates them to share their data with the CiC.

The government-owned and -controlled corporation is envisioned to serve as the leading provider of independent, secure and accurate credit information in the country to address the credit information gap, thus unburdening entrepreneurs of the current long, slow and complicated processes in doing business.

It recently tapped the International Finance Corp. (IFC), a member of the World Bank Group, to serve as a consultant in setting up a national credit mechanism.

The CiC is 60 percent owned by the government, and 40 percent owned by the private sector. The private sector ownership is composed of the Philippine Cooperatives Center (PCC), Bankers Association of the Philippines (BAP), Credit Card Association of the Philippines (CCAP), Chamber of Thrift Banks (CTB), the Philippine Credit Reporting Alliance (Philcrea), and RBAP.