Angara proposes Credit Information System

A draft law filed in the senate seeks to shield the Philippine banking system from risky loans and mortgages which have recently roiled mortgage lending in the United States, a development that has caused panic in financial capitals across the globe.

Senator Edgardo J. Angara, chairman of the senate committee on banks, financial institutions and currencies, said that his bill - the proposed Credit Information System Act - is aimed at establishing a national data base for borrowers which can greatly help banks reduce their credit risks.

Angara said the centralized information that will be pooled under the draft law will cover credit history and repayment record and this information will be made available to all banks to guide them in their lending operations.

At present, no such central credit information system exists and the incomplete credit history has made lending riskier to banks and more tedious to borrowers, said Angara.

Angara said that under the draft law, borrowers, just like the banks, also stand to be big beneficiaries.

Angara said that once the banks are shielded from credit risks, they can lend money at cheaper interests and the processing of loans will be faster.

With a lower credit risk and a healthier banking system, "credit which before was unavailable will be unlocked and this will be a great driver of enterprise," said Angara.

The draft law aims to create a corporate entity, the Credit Information Corporation, which shall build the data base and make the credit information accessible to the financial system.

The CIC will make sure that no false and erroneous data is entered into the system and credit information and history is comprehensive, according to the draft law.

"This is a win-win formula for both the banking system and borrowers. They both benefit in a big manner," said Angara.

Earlier, the lawyer Francis Lim, president of the Philippine Stock Exchange, urged Congress to pass the Angara bill, citing the protection the proposed law will give to both banks and borrowers alike.

The banking community has also expressed full support for the speedy passage of the draft law.

The proposed Credit Information System Act is just one of the major bills that Angara has filed to reform and boost the country's financial sector.

Some of the finance-oriented bills Angara has filed include the Corporate Recovery and Insolvency Act, amendments to the Pr-Need Code of 2003 and the Real Estate Investment Trust Act or REIT.