Updates on the BAP-Credit Bureau

Mr. Leonilo ‘Topper’ Coronel, Managing Director of the Bankers Association of the Philippines Credit Bureau (BAP-CB), presented the private credit bureau’s latest changes and activities to participants of the 2011 RBAP-MABS National Roundtable last May 23-24 in Manila. He shared the latest developments in the effort of BAP-CB and a consortium of microfinance institutions’ (MFIs) to build a responsive credit information system for the microfinance sector. (see Philippine Star article)

He reported the over 60% growth in the number of participating rural banks from 28 to 46 in May 2011, attributing this increase to the BAP-CB’s efforts to reach out to rural bank federations in the country, and the assistance of the USAID-supported RBAP-MABS Program.

He also underscored the enhancements in the bureau’s Negative File Information System (NFIS) particularly its accessibility via the Internet, which allows the credit bureau to automatically process requests on a daily basis, even on non-working days. In addition, BAP-CB provides its participating institutions with (1) one-on-one training for their key officers, (2) data management modules, and (3) other data mining applications such as SNIP (or Similar Names Inquired Previously). Finally, the inquiry fee has been reduced by half – the bureau now charges P5.00 per inquiry versus P10.00 in the past.

Table 1. Comparison of NFIS circa 2004 vs. 2011.

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Mr. Coronel also presented the activities that BAP-CB is currently working on with major microfinance institutions (MFIs) that rural banks can participate in soon. In what he described as a historic meeting of minds, the leading microfinance players in the country agreed to build a ‘client at risk’ file in contrast to the traditional ‘caution list’ or negative list for delinquent borrowers. The objective is to provide reform programs for delinquent borrowers from lower income segments with the aim of rehabilitating their credit worthiness and making them ‘bankable’ again based on a better understanding of their financial situation.

The tripartite partnership for the experimental project has defined the roles for each of the partners: the group of MFIs provides the vision, strategic directions and specific business requirements; the Rafael B. Buenaventura (RBB) Foundation, a microfinance enabler, plays a key role as catalyst to match needs against resources; and BAP-CB develops solutions, operates the technology infrastructure, and provides credit bureau services for the participating institutions. This project enables MFIs to create a new category of outreach that supports former borrowers and provides a pathway for them to become financially healthy and creditworthy once more. Furthermore, as rural banks join the efforts of the BAP-CB, the client database is enriched to cover key rural areas in the country and not just urban town centers. This supports the credit risk management processes of many financial institutions and at the same time allows rural banks to explore ‘client at risk’ issues.

Interest in BAP-CB services has also prompted the Federation of Laguna Rural Banks to pilot test the sharing of positive data among its members. Furthermore, BAP-CB is now at the forefront of developing SMS-based or text-based information inquiry through the mobile phone that will open up a new venue for more accessible credit information even for banks’ field credit officers.

The USAID-supported RBAP-MABS program started its partnership with the BAP-Credit Bureau more than 10 years ago with a pilot implementation in Mindanao that allowed some rural banks to test the use the credit bureau services. BAP-Credit Bureau is a private non-government organization providing credit bureau services.

Mr. Leonilo“Topper” G. Coronel is the current Executive Director of the Rafael B. Buenaventura (RBB) MicroFinance Resource Center Foundation, which was established by the BAP to continue the vision of the late BSP Gov. Rafael B. Buenaventura in support of microfinance.