By Raymund Luther B. Aquino

Credit bureau fully operational by 2015

Posted on June 26, 2014

ALMOST six years after receiving its mandate by law, the government-controlled Credit Information Corp. (CIC) has finally inked a deal that would provide the country a national credit information system by end-2015, its top official said Wednesday.

The CIC, created in 2008 to be the central registry or repository of credit information, has given the green light to a contractor to build an IT system that will be the backbone of the centralized system.

“The Notice to Proceed was issued today, June 25, 2014, to TIM-CRIF Joint Venture, the winning bidder, after contract [was] signed and notarized yesterday, June 24,” CIC President and CEO Jaime P. Garchitorena told members of the Chamber of Thrift Banks (CTB) at its general membership meeting yesterday.

The winning bid -- a joint venture by Italian lending solutions provider CRIF and its local partner Total Information Management Corp. (TIM) -- is worth P124 million, Mr. Garchitorena later told reporters.

The 2015 target for the credit bureau’s operations to go full blast is a revised goal.

Mr. Garchitorena’s predecessor, Baltazar N. Endriga, had earlier set a December 2014 target for the full operation of CIC.

Procurement issues -- with government’s first try to bid out the contract a failure, according to Mr. Garchitorena -- as well as delays in capitalization and lack of manpower have bogged down the credit bureau’s operations.
CIC started out with just 10 staff. “How can you run a corporation like the CIC with 10 people?” the bureau official said.

CIC is 60%-held by the government, while 40% of the firm belongs to CTB, the Philippine Cooperatives Center, the Bankers Association of the Philippines, the Credit Card Association of the Philippines, and the Rural Bankers Association of the Philippines.

Mr. Garchitorena claimed there was a delay in putting together CIC’s capitalization.

Under the Credit Information System Act (CISA), or Republic Act (RA) 9510, minted in 2008, the credit bureau should have an authorized capital stock of P500 million -- P125 million of that should be paid up.

But both the government and its private partners stalled in putting together the 60% and the 40% of the amount respectively required of them, Mr. Garchitorena pointed out.

These logistical challenges hindered the CIC from getting its tax identification number (TIN) and headquarters in its early years, Mr. Garchitorena added.

“When I took over, we had just finished most of the paper work of the company,” said Mr. Garchitorena who took over as president and CEO of the corporation as an appointee of the current administration in May 2013.

He entered the corporation earlier, in November 2011.

The award of the contract for the IT system comes as the CIC pushes banks and other creditors to prepare for full compliance with the credit information law, once the centralized system is in place.

“Data gathering will happen by late this year, and so will testing using sample data in different scenarios. By mid-2015, all aggregation from financial institutions begin,” Mr. Garchitorena said.

“What we’re hoping for is by 2016, we have at least 80% of the data out there. [But] by end-2015, there should be large enough data [for the system] to be usable,” he added.

Mr. Garchitorena said that 288 organizations are expected to contribute information to the database. The largest of these contributors include government financial institutions like GSIS and the industry groups that partly control CIC.

However, he admitted that there is a “difference in thought” that leaves some banks having reservations about CIC’s project.

“The area of concern is... how the historical data is used to reject or deny [requests for loans],” Mr. Garchitorena said.

The CIC, he said, maintains the position that there should be no real obstacle to borrowing for individuals who have had a clean credit history for at least the last three years - something some banks are not comfortable with.

“The fact that it’s no longer in your credit report [for the last three years] should be telling these financial institutions that you’re qualified for credit... The law seems to be very strict in saying that,” Mr. Garchitorena said.

“But banks are saying we can look as far back as 10 years [into your credit history],” he said.

CISA stipulates that “the negative information on the borrower as contained in the credit history files of borrowers should stay in the database of the Corporation unless sooner corrected, for not more than three (3) years from and after the date when the negative credit information was rectified...”

As for the price of accessing the database, Mr. Garchitorena said that “the CIC has envisioned the basic cost” to be P65. That is the fee banks and other creditors - and even individuals, if they want their data - would pay for every view of an individual’s credit score and history.

Despite the concerns of some banks, however, Bank of the Philippine Islands Family Savings Bank and CTB President Jose Teodoro K. Limcaoco said in a mobile text message in reply to a question by BusinessWorld that “banks will comply with the law which requires the submission of the data.”

“I think banks just want to be assured that everyone complies,” he said.

When the law was signed in 2008, a provision stated that the government has to sell a portion of its stake after five years.

“The national government shall continue to hold sixty percent (60%) of the common shares for a period not to exceed five (5) years from the date of commencement of operations of the Corporation,” the law said.

“After the said period, the national government shall dispose of at least twenty percent (20%) of its stockholdings in the Corporation to qualified investors which shall be limited to industry associations of banks, quasi-banks and other credit-related associations, including associations of consumers,” it added.

The count to five years did not begin in 2008, however. Mr. Garchitorena said that the timetable was “reset” using the government’s opinion that the date of start is when the board first convened.

Using this criteria, this deadline mentioned in the law lapses in November 2016, Mr. Garchitorena explained. Though it is not exactly such, he said CIC sees this as “the deadline for the implementation.”