Friday, October 31, 2008 Arroyo to sign into law credit information system
PRESIDENT Gloria Macapagal-Arroyo will sign into law on Friday the Credit Information Act, or Republic Act (RA) 9510, that stands to ensure the credibility of credit standing borrowers.
A priority bill certified as urgent by Malacañang, RA 9510 will lead to the establishment of the Central Credit Information Corporation, which will compile data from financial institutions in an effort to facilitate creditworthiness checks.
The bill, one of the priority measures listed by the Legislative Executive Development Advisory Council (Ledac), was ratified by both Houses of Congress last month.
With the implementation of the law, information on the credibility of credit standing of borrowers will be available.
Presidential Management Staff (PMS) Director Cerge Remonde said: "In view of the current financial crunch, the measure is very relevant as if there is credit information, there would be transparency and banks would know the financial standing of an institution."
Remonde, also the Cabinet oversight official for micro-finance, said the bill would allow small businesses easier access to funds.
"This will address the lack of reliable information on the credit standing of borrowers and thus facilitate decisions of financing institutions, thereby improving access to credit of borrowers," he said.
He added that it will also lower the cost of financing and interest rates with good and efficient credit information system because credit risk will be lower.
The measure gives access to the credit market now that the banks are expected to be more selective because of recent global developments.
The Central Credit Information Corporation (CCIC), to be headed by the chairman of the Securities and Exchange Commission (SEC), will consolidate data from banks, quasi-banks and their subsidiaries and affiliates, life insurance companies, credit card firms, government lending institutions and other entities that provide credit facilities.
The bureau will provide credit data to "accessing entities" or the financial institutions, "special accessing entities" (those engaged in the business of credit reports and other information products/services), "outsource entities" (accredited third party providers which will handle data processing), and the borrowers themselves.
The CICC will have an authorized capital stock of P500 million, divided into common and preferred shares, with the National Government owning 60 percent of the common shares while the remaining 40 percent can be owned by associations of banks, quasi-banks and other credit-related associations.
The measure also requires the government to spend P75 million from the national budget to pay for its share, while private investors should shell out P50 million.
The measure's implementing rules will be drawn up by the SEC and other agencies, and will be reviewed by a congressional oversight committee composed of seven members each from the Senate and the House. (JMR/Sunnex)
