Senate ratifies bill creating credit info bureau; House OK awaited

MANILA, Philippines - The Senate on Monday ratified a measure creating a bureau that will compile the credit history of borrowers. The House has yet to ratify the consolidated measure. Senator Edgardo J. Angara, chairman of the Senate committee on banks, financial institutions and currencies and principal author of the measure in the Senate, said he expects the bill to be transmitted to Malacañang for signing by President Gloria Macapagal Arroyo within the week. The proposed Credit Information System Act, which has been certified urgent by Malacañang, appoints the Securities and Exchange Commission (SEC) as the head of the Central Credit Information Corp., which will compile credit data to be submitted by financial institutions. Banks, quasi-banks and their subsidiaries and affiliates, life insurance companies, credit card companies, government-lending institutions and other entities that provide credit facilities are required to submit credit data and updates on a regular basis to the bureau. The bureau, in turn, will provide credit data, whether positive or negative, to "accessing entities," "special accessing entities," "outsource entities" and the borrowers themselves. Accessing entities are those that submit data to the bureau. Special accessing entities are firms "engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services." Outsource entities are "accredited third-party providers to which the bureau may outsource the processing and consolidation of basic credit data. Credit information, however, are to be held in strict confidentiality and only for the purpose of establishing the credit-worthiness of borrowers. "(The measure) will provide up-to-date, accurate and comprehensive information on each and every borrower," Mr. Angara said in an interview. ""It will also effectively reduce risks to lending institutions." The bureau’s authorized capital stock shall be P500 million, divided into common and preferred shares. The national government shall own 60% of the common shares while the remaining 40% can be owned by associations of banks, quasi-banks and other credit-related associations. The National Government will be required to shell out P75 million from the national budget to pay for its share, while the private investors must come up with P50 million. The law’s implementing rules and regulations, to be crafted by the SEC and other agencies will be reviewed by a congressional oversight committee composed of seven members each from the Senate and the House. — Bernard U. Allauigan, BusinessWorld