According to the bill, "a credit information system will directly address the lack of reliable credit information concerning the credit standing and track record of both individual and corporate borrowers."
Senator Edgardo Angara, the principal author of the bill, said that the operations and services of a credit information system would result in the improvement of the overall availability of credit especially to small borrowers, lower the cost of credit and reduce the excessive dependence on collateral to secure credit facilities.
"An efficient credit information system will also enable financial institutions to lower their overall credit risk, contributing to a healthier and more stable financial system," Angara said.
As approved by the Senate, the credit information corporation shall be established as a stock corporation primarily intended to be a central registry or repository of credit information and shall provide access to reliable, standardized information on credit history and financial condition of the borrowers.
It was clarified that profit is not the primary consideration for the establishment of the credit information corporation so the dividends paid out to shareholders for any given year shall not exceed 15 percent return on equity.
Ownership of the corporation shall be composed of the Bangko Sentral ng Pilipinas with 49 percent and 51 percent from the private sector.
An individual ceiling of 15 percent has been set initially for any multilateral international financial institutions and credit industry related associations that are interested in owning shares of the corporation.
However, the Monetary Board of the BSP was given the prerogative to increase or reduce the ceiling.
Directors of the corporation shall be composed of the BSP Governor or his designated representative and the representatives of the private sector.
Once the credit information corporation starts its operations, all banking institutions and their subsidiaries and affiliates that provide credit, would be subject to compulsory participation as submitting entities.
The Monetary Board would also determine other credit providers that may be subject to compulsory participation as submitting entities.
In defining basic credit data, the bill referred to any information on the borrower’s creditworthiness in the possession of the credit provider.
The Corporation would also have the authority to access credit information from government offices, agencies and pension funds being administered by the government and subject to conformity by the Supreme Court, from the judiciary, its courts and offices.
The corporation would also be allowed to tap outsource entities to process and consolidate basic credit data submitted.
A confidentiality clause was included in the bill that applies to all of the accessing entities in the Corporation.
Special accessing entities or private corporations engaged in the business of providing credit reports, ratings and other similar credit information products and services are prohibited from releasing basic credit data received from the Corporation to non-accessing entities.
Borrowers would be able to demand immediate access to any credit information pertinent to him and would be allowed to dispute any inaccuracies before the Corporation.
The Corporation has the obligation to investigate and verify the disputed information and if its accuracy cannot be verified then this would be deleted from the database.
The implementing rules and regulations (IRR) for the credit information system would be issued by the Monetary Board in coordination with the existing industry stakeholders.
A congressional oversight committee would be created just for the review of the IRR.
"The greatest benefit of the Credit Corporation is making credit more available, especially to small yet responsible borrowers. Their good track record in paying their obligations will be made known to financial institutions and will thus make it easier for them to borrow," Angara said.