Republic Act 95101, otherwise known as the Credit Information System Act, was signed into law by President Gloria Macapagal-Arroyo on October 31 2008.
This law created the Credit Information Corporation (CIC), whose primary purpose is to receive and consolidate basic data on the credit history and financial condition of borrowers. The data is required to be provided by banks, credit card companies, insurance companies and other lenders or credit providers. Excluded from the reportorial requirement is information on bank deposits and client funds, which is treated as confidential under the Law on Secrecy of Bank Deposits, the Foreign Currency Deposit Act and the General Banking Law of 2000.
The basic credit data can be accessed by any entity authorised by the Securities and Exchange Commission. However, a borrower is entitled to dispute and correct any inaccurate information about him. There is a simplified procedure to fast track the resolution of disputed credit information.
Credit information accessed from the CIC is confidential and is to be used only for the purpose of establishing the creditworthiness of the borrower. There is a penalty for breach of confidentiality.
The CIC is expected to improve the availability of credit to small and medium-scale enterprises (including microfinancing institutions), as well as to make credit more cost-effective and reduce the excessive dependence on collateral to secure credit facilities. The guiding principle is to have an efficient credit information system that will enable financial institutions to reduce their overall credit risks and thereby contribute to a more stable financial system in the Philippines.
Rafael A Morales