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PIA Press Release
2008/10/23

PGMA set to sign Credit Information System Act

Manila (23 October) -- President Gloria Macapagal-Arroyo is set to sign into law the proposed "Credit Information System Act" (CISA), which would fine-tune the prevailing credit market practices and "make it a vibrant tool to sustain economic growth."

House Speaker Prospero Nograles on Wednesday said the proposed CISA is expected to be signed into law possibly within the month, as he congratulated the proponents and members of the House committee on Banks and Financial Intermediaries chaired by Manila Rep. Jaime Lopez for their swift and diligent work in approving the credit information system measure.

"It was bad credit practices that spawned the current international financial meltdown. We should learn our lessons from the experience of the US. If a bad credit system can bring down a powerful nation like the US, how much more for developing countries like the Philippines," he said.

"The ultimate objective of the CISA is to promote a sound, healthy and vibrant credit market and thereby foster a sustained economic growth," he added.

According to Rep. Edgardo "Sonny" Angara, one of the authors of the proposed measure, the bill seeks to establish a "comprehensive and centralized credit information system for the collection and dissemination of the fair and accurate data relevant to, or arising from, credit and credit-related activities of the financial system."

"At the core of the system is a corporation which shall be created under the law as a government entity with an authorized capital stock of P500-million," he said.

Under House Bill no. 4260, the Chairman of the Securities and Exchange Commission (SEC) shall be chairman of the corporation, while nine members of the board to be appointed by the President of the Republic will represent the government and six from the private sector.

In the implementation of the law and in the formulation of rules and regulations, the SEC shall consult the relevant government agencies like the Departments of Finance (DoF), Trade and Industry (DTI), Bangko Sentral ng Pilipinas (BSP), among others.

"Banks, quasi-banks, their subsidiaries and affiliates, including insurance companies, credit card companies and other entities that provide credit facilities are required to submit basic data and updates on a regular basis to the Corporation," said Angara.

Inclusion of other credit providers are subject to compulsory participation; provided, that all other entities may participate subject to the acceptance by the Corporation, he added.

The Corporation may also access credit and other relevant information from government offices, judicial and administrative tribunals, prosecutorial agencies and other related offices, as well as pension plans administered by the government.

All players in the system, including outsource entities which may process and consolidate basic credit date are absolutely prohibited from releasing such data received from the Corporation other than the corporation itself.

However, the borrower has the right to know the cause or causes of refusal of the application for credit facilities or services from a financial institution that uses credit information from a submitting entity as a basis or ground for such refusal.

The negative information on a borrower as contained in the credit history files of borrowers shall be updated within 15 working days provided the record shall stay in the database for not more than three years.

Other authors of the proposed measure are Reps. Monico Puentevella and Deputy Speaker Raul del Mar. (PNA) [top]

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