Atty. Jacques Obias of the Credit Information Corporation addresses the hesitation of many cooperatives in complying with the Credit Information System Act and lists the benefits of enrolling with the CIC and submitting credit data of borrowers.

Of over 5,000 operational credit cooperatives in the Philippines, only 338 cooperatives are submitting credit data to the Credit Information Corporation (CIC). This figure was revealed by Atty. Jacques Michele R. Obias of the CIC Continuing Compliance Unit during the online Ownership Meetings of the NATCCO Network, held from November 5 to 14.

Obias expressed concern over this low participation rate, noting that it falls far short of the ideal, especially since BSP-regulated financial institutions boast 100% compliance with the Credit Information System Act (CISA).

The Credit Information Corporation (CIC) was established under Republic Act 9510, or the Credit Information System Act (CISA), in 2008. The law mandates financial institutions, including cooperatives, to submit borrowers’ basic credit data to the CIC. Acting as the central repository of credit data, the CIC collects and processes credit information from various financial entities, including banks, leasing companies, lending institutions, and cooperatives.

Obias urged credit and multi-purpose cooperatives to register as submitting and accessing entities under the CIC. This registration allows cooperatives to both contribute to and access the CIC's credit database. He outlined the significant benefits for cooperatives, including the ability to:

1.    Evaluate loan applications based on reliable credit information.

2.    Assess the creditworthiness of borrowers by reviewing their financial habits, such as payment timeliness.

3.    Make informed lending decisions to channel funds effectively to responsible borrowers.

4.    Minimize the risks of delinquency or non-payment, a major challenge for many credit cooperatives.

Access to credit information also helps prevent borrowers from falling into a debt trap, as cooperatives can guide them based on their financial capacity.

The NATCCO Network supports cooperatives in complying with the CISA through its eKoopBanker core banking software. This software handles cooperative transactions, including deposits, lending, and payments, while securely storing transaction records.

One of eKoopBanker’s key features is its ability is to facilitate gathering and submitting credit data to the CIC. This streamlined process enables cooperatives to meet regulatory requirements without disrupting their operations.

Many cooperatives have expressed hesitation about complying with CISA, citing concerns such as:

1.    Client poaching: Fear that other lenders might access and "pirate" their borrowers.

2.    Privacy issues: Perceived conflicts with the Data Privacy Act of 2012 (DPA).

3.    Unnecessary compliance: Belief that cooperatives already “know” their members’ financial situations.

Atty. Obias dispelled these misconceptions:

•    On client poaching: Other lenders can only access credit data with the borrower’s explicit consent, ensuring that the system is secure and fair.

•    On privacy concerns: The Data Privacy Act explicitly allows for exceptions in cases where the processing of personal data is necessary for regulatory and public authority functions. Section 4(e) of the DPA states that it does not amend or repeal the provisions of CISA.

•    On financial familiarity: Many cooperatives still struggle to meet industry standards for PAR (Portfolio at Risk). Simply "knowing" members' financial situations is often insufficient and impractical in today's complex financial landscape.

Obias emphasized that compliance with CISA is crucial for cooperatives aiming to improve their portfolio management and optimize lending practices. By participating in the CIC’s system, cooperatives can strengthen their financial operations while contributing to a more transparent and reliable credit ecosystem in the Philippines.