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Amatong questions BSP participation in credit bureau |
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By LEE C. CHIPONGIAN
The Manila Bulletin 08/25/2005 Monetary Board member and former Finance Secretary Juanita D. Amatong said the central bank policy-making arm is reviewing the proposed credit information bureau and the Banko Sentral ng Pilipinas’ participation in the agency, which should be "all or nothing." "The new MB is questioning why the BSP is providing capital or why own 49 percent of the credit bureau – either we own all of it or give it to the private sector," Amatong told reporters yesterday. There were fears that BSP is only being used to lend credibility to the bureau. Amatong is proposing the creation a government-owned and -controlled corporation to be part owner of the credit bureau instead of the BSP. She continues that in Asia, it is only in Malaysia that a credit bureau is owned by the central bank while in Hong Kong, Singapore and Thailand have privately-owned credit information agencies. BSP officials briefed the MB last Tuesday on the proposed credit bureau. "We want to study it further," she added. There is a new MB including BSP Governor Amando M. Tetangco Jr. and it is composed of new members, which assumed their respective posts last July. At the moment the proposed Credit Information System Act is still pending approval in Congress. Once the bill is approved, it will need only six months and $2 million to set up the credit bureau. The Asian Development Bank and the World Bank’s International Finance Corporation have expressed interests in the credit bureau. IFC, for example, is proposing to provide the technical assistance and set up the credit bureau. In the meantime pending Congressional action, the old MB approved the creation of a credit bureau as a spin-off unit. This could be done provided that there are waivers on the part of the borrower. Presently the Bankers Association of the Philippines has a data-sharing facility, which includes only information on delinquent borrowers. The BSP said the data could be given to the central bank, which would then give its feedback and turn the data over to the credit bureau without identifying the lenders. Besides the BSP and BAP, this credit bureau would also include data from the Department of Finance and the Credit Information Bureau Inc. Establishing a credit bureau is one of the economic reform measures that the banking sector needs since this would prevent consumers with bad credit to get more credit. Also credit bureaus, whether public or privately owned, provide information on the risk profile, credit worthiness and total debt level of the borrower. It would help financial institutions conduct credit investigation in a timely manner. Having an effective credit bureau is part of the pre-requisites to the implementation of the Basle 2 Capital Accord by the Bank for International Settlement in 2005. The BSP said that the creation of a credit bureau would improve local risk environment. Loan loss provisions cover banks’ risks but advance information on a borrower – which would prove good or bad credit – would help reduce bank costs. This will also improve credit discipline among lenders and borrowers and will also result in lower bad loans for the banking system. At the moment only large banks have the resources to conduct their own credit investigations but small financial units with limited access to credit information are often victimized by deceitful borrowers. |
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