Getting accurate, timely and objective credit information in a cost efficient way is one of the serious challenges that rural banks with microfinance operations face in making credit decisions. The long-standing practice of pre-screening a loan application through field information gathering is costly and slow, and delays loan approval process. It is anticipated that a national credit information system mandated by the Credit Information System Act (or CISA) will help in addressing this challenge. However, getting the system up and running may still take sometime.
Meanwhile, rural banks can turn to the existing credit information services offered by the Bankers Association of the Philippines – Credit Bureau Inc. (BAP-CB). During the 53rd RBAP Charter Symposium on October 14-15, 2010 BAP-CB officer Manuel Batallones, reiterated the strong interest of the BAP-CB to support rural banks’ credit information needs as their way of supporting the rural banks and especially the microfinance sector. BAP-CB has also reduced the fee for inquiry from P11 to P5.60 and is waiving the fee to join the system. Currently, over 20 rural banks are subscribing to the BAP-Credit Bureau.
With strong support from the USAID-supported RBAP-MABS Program since its pilot testing with rural banks in Mindanao, the online services of the BAP Credit Bureau paves the way for an effective credit information system.
What benefits can Rural Banks get from an online Credit Information System?
Rural banks can take advantage of the vast online information available from the BAP-CB data base to save them time and cost in information gathering, avoid lending to potentially risky borrowers, and, hence, better manage credit risks by weeding-out loan applicants with poor credit histories. The BAP Credit Bureau database contains more than 3.8 million accounts with negative information (such as unpaid loans, loans under litigation, bouncing cheque cases, and mishandled credit cards). Commercial banks have been using this tool as part of their screening process for all borrowers. The time has come for more rural banks to take advantage of the existing credit information system as a tool for improving their credit screening process as well.
And, very important for microfinance, rural banks can help avoid lending to borrowers with existing loans in other banks and, thus, potentially avert client over-indebtedness. Multiple borrowings and over indebtedness are harmful to microfinance clients and are now seen as potential threats to the sector due to stronger competition amongst rural banks and other microfinance players.
RBAP President Corazon Miller, who is also president of Country Bank of Taguig, shares her experiences utilizing the BAP-CB: “This is a very important tool for rural banks to use in processing loans as well as screening new checking account applications as it provides information whether they have credit cards cancelled, checks bounced, mortgaged (properties) repossessed, loans in litigation, etc.” Ms. Miller also shares that her rural bank had been able to get payments from delinquent clients whose names had been submitted to the BAP-Credit Bureau.
How to subscribe to the Credit Bureau
A Memorandum of Agreement (MOA) between RBAP and BAP-Credit Bureau was signed back in May 2004. With this, all rural banks in good standing with RBAP can gain access to the Negative File Information System (NFIS) web portal of the BAP-Credit Bureau. With the annual subscription and membership fees waived and inquiry fee reduced to P5.60 (inclusive of VAT) from P11.00, rural banks will now find it easier to become a member of and utilize the existing BAP Credit Bureau.
To activate subscription and access BAP-CB’s online services, rural banks need to prepare the following documents:
- Participation Application (2) copies
- A copy of the bank profile including a listing of the bank’s directors, principals and senior officers with their respective residential addresses and date of birth;
- A copy of each applicant rural banks articles of incorporation and by laws;
- A copy of the latest General Information Sheet submitted to SEC;
- Latest audited comparative financial statement for CY 2009;
- Two copies of a duly accomplished participation application form typed in the rural bank’s letterhead;
- Original RBAP certification that the applicant rural bank is a member in good standing and an RBAP endorsement to the BAP Credit Bureau, Inc; and,
- A similar certification and endorsement from the federations where the rural bank belongs.
Applications can be submitted to Ms. Josie Salaveria or to Mr. Manuel Batallones at BAP-Credit Bureau Inc, 10/F Export Bank Plaza, Sen. Gil Puyat Ave corner Chino Roces Ave Makati City with Tel No. (2) 812.1639 and Fax No. (2) 812.2870.