MFIs Express Both Support And Apprehension Over CISA

While the microfinance sector is supportive of initiatives to establish a credit bureau, it is equally concerned about the implications of the recently passed Credit Information System Act (CISA) on their operations. Sector representatives expressed this during a forum organized by the Microfinance Council of the Philippines, Inc. (MCPI) on March 17, 2010 at the Diamond Hotel in Manila. Passed on October 21, 2009, the law calls for the establishment of a central repository of credit data about borrowers.

The forum served as an opportunity for participants to raise questions and/or issues on the CISA and its implementing rules and regulations. Securities and Exchange Commission Chair Fe Barin served as resource speaker. She provided a background and timeline on the status of implementation of the CISA.

The CISA will require lenders to submit information on their potential clients. Particularly for the larger MFIs, there is a substantial amount of work that needs to be done to allow MFIs to comply with the reporting requirements. Microfinance players request for guidelines on the stages of implementation of the law so they could make operational adjustments accordingly.

The law also calls for the establishment of a central Credit Information Corporation (CIC). The CIC shall be considered a public corporation with 60% of shares owned by the government and 40% shares owned by the private sector. In five (5) years, the government must begin to divest itself from the corporation until it only holds minority shares.

The law named the SEC Chair as the ex-officio Chair of the CIC so SEC is taking lead in ensuring that the CISA is going to be implemented and the CIC organized.

Since the law has been enacted, the next crucial steps will be the appointment of the members of the CIC board and the approval of government appropriation to fund the needed resources for implementation. Stakeholders are being engaged on the development of a code of ethics for the CIC and private investors to the corporation will have to be identified although some sectors have already signified their intention to invest into the CIC.