The BSP said no decision has been made on who would head the special unit but BSP Deputy Governor Alberto V. Reyes said the unit would be up and running within six months.
"We will do this only until Congress has passed the legislation that would create an independent credit bureau," Reyes said.
The creation of the special unit has been approved in principle by the MB to act as a repository of credit information in lieu of an actual credit information bureau.
According to Reyes the unit will be created to gather and dispense credit information according to the rules and regulations that would be issued soon by the BSP.
"The unit will be in-house to the BSP until such time that there is an enabling law that would allow us to spin it off into a separate bureau," Reyes said.
Reyes said borrowers will be required to waive their rights to secrecy before they could qualify for loans and the information they would provide about their credit history will be held by the BSP unit.
The waiver, Reyes said, would be required of borrowers before they qualify for bank loans. This way, banks could check the BSP if a specific borrower had a bad credit history or not.
The bank secrecy law has been the major impediment for the creation of the bureau that was intended to function as a central database of borrower information to allow banks to assess the credit-worthiness of borrowers.
Once established, the credit information unit would allow banks to determine whether they were dealing with a reliable borrower or a high-risk one.
Reyes said that without a credit information body, delinquent borrowers are able to go from bank to bank since financial institutions do not have access to the full record and borrowing history of individuals protected by the bank secrecy law.
Reyes said the BSP preferred the creation of a separate agency but existing laws would not allow it unless the bank secrecy law has been amended.
"The BSP is the only institution that banks would trust with this kind of information but we can not in turn gather them unless borrowers waive their rights to bank secrecy," Reyes said.
Once in place, the official said the BSP would be able to access the relevant information about borrowers and disseminate the processed information to banks.
"What we have to determine now is what form this information would take and how to do it," the official said.
At first, the BSP hoped its role would be confined to that of a go-between for banks and the proposed credit information bureau to facilitate the collection and dissemination of credit information about corporate and individual borrowers.
However, discussions on how to create the bureau and safeguard its database has forced banks and bank regulators into a deadlock with the BSP pushing for the creation of the bureau and banks refusing to cooperate.
"We will have to do it because banks are willing to disclose client information only to the BSP," Reyes said. "The industry can not agree on any third party to handle that kind of information."
Reyes said the BSP can not legally create the credit information bureau as a subsidiary but it can add its functions to its regular operations.
"Under very restricted conditions and to a limited extent, we can do it," he said. "But in the end, we will need legislation that would allow us to create an honest to goodness credit bureau."
The BSP has been pressing the banking industry to establish the credit information bureau before the end of 2004, even threatening to raise the minimum capital adequacy requirement of banks and increase the risk-weighting of their loans if the industry failed to comply.
The BSP said the industry has been resisting the creation of the bureau because they were hesitant to share information among themselves, especially on borrowers.
The creation of the bureau was one of the country’s commitments under the Basle Convention, where banks are required to institute the mechanism that would classify and rate borrowers. This would lower the risk of default by ensuring that borrowers were property rated based on their credit history.