Digital Banks Should Strengthen PHL’s Credit Information System

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CREDIT Information Corp. (CIC) urged digital lenders to join the public credit registry to strengthen the database and help give unbanked Filipinos access to loans.

“The registration of digital banks as depositing entities is a valuable addition to the CIC database, especially as digital banks have the potential to penetrate unbanked sectors,” said the CEO. general of the CIC.fficer Ben Joshua A. Baltazar said in a statement late Thursday.

“As a key driver of the country’s digital transformation, their participation in the credit information system can serve as a catalyst for large-scale financial inclusion and better access to credit,” Mr. Baltazar said.

CIC submitting entities are institutions that lend to borrowers, including banks, non-banks, fiduciary entities, investment houses, Ifnancing companies, cooperatives, non-governmental, micro-Ifnancing agencies, credit card companies, insurance companies and government lending institutions.

The agency’s database currently includes credit data for 33.1 million people. This equates to approximately 49% of the adult Filipino population.

The CIC, by circular letter n° 2022-05, series of 2022 dated April 11, notiIfed digital banks that they are covered by Republic Act 9510 or the Credit Information System Act.

Six entities have received licenses from the Bangko Sentral ng Pilipinas (BSP) to operate digital banks, namely Overseas Filipino Bank (OFBank), Tonik Digital Bank, Maya Bank, UNO Digital Bank, Union Digital Bank and GoTyme. OFBank, Tonik Digital Bank and Maya Bank are already operating while the others should be launched during the year.

Digital banks offer products and services through online platforms and do not need to set up branches.

CIC is also optimistic that digital banks will provide more lending opportunities to micro, small and medium enterprises (MSMEs).

“With the appeal and accessibility of Iffinancial services orffered by digital banks for MSMEs, CIC hopes digital banks will quickly comply so that MSMEs with little or no credit data on file can build and improve their creditworthiness,” Mr. Baltazar said.

MSMEs make up about 99% of all registered businesses in the country and were among the most affected by the pandemic crisis. Many small businesses have difficulty accessing formal loans due to lack of credit history.

PASB has partnered with the Japan International Cooperation Agency on a credit risk database project that aims to strengthen credit assessment models for small businesses. — Luz Wendy T. Noble

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