Credit Information System Law is Congress' early Christmas gift to the people
Tacloban City (November 1 2008) -- The Credit Information System Law is an early Christmas gift of Congress to the people, President Gloria Macapagal Arroyo said as she signed into law the proposed Credit Information System Act of 2008 on October 31.
The new law, among others, broadens the credit access especially for the under-serviced sectors, the small borrowers including small and medium enterprises as it reduces reliance on collaterals of credit facilities.
The law also protects the consumers' rights as it opens a system of fair competition in the financial system.
The President noted that amidst the current credit crunch and the high prices of food and fuel, the Philippines was able to withstand the full negative impact of the crisis because the Executive, Congress and the Central Bank have put in place economic and fiscal reforms even before the crisis.
"When some governments were cutting taxes, we raised them. When some governments were giving free rein to easy money adventures, we were bringing more discipline and order to our financial regulatory environment. When some governments were going deeper into debt, we were fiscally prudent, building up reserves, investing in infrastructure, but paying our debts," President Arroyo stressed.
These were not easy decisions but it needed to be done, the President said.
The President commended the legislators saying, "your valuable and timely legislations are seeing us this period of tremendous change as we prepare for the lower global fuel and food prices that are now beginning to happen."
The Credit Information System (CIS) measure authored principally by Sen. Edgardo Angara and Quezon City Congressman Vincent Crisologo, was approved by both Houses of Congress last month.
The Credit Information System seeks to improve the quality of human resources, and build a seamless infrastructure network which are all crucial for the Philippines to remain competitive and attractive to investments.
The legislation also seeks to lower the cost and risk of financing, reduce the cost of gathering credit information and the amount to be passed on to borrowers, and thereby reduce interest rates on loans.
This is a major step towards unlocking money because lenders will now be more comfortable to assess their risk of lending; while banks will now know beforehand the credit history of their borrowers.
Part of the shyness of some banks to lend is the scarcity of credible, complete and comprehensive information about borrowers and users.
Credit Information System Act will create the Credit Information Corporation (CIC) headed by the Securities and Exchange Commission which will set the standards for credit reporting operations that will improve not only the ability of creditors to assess risk and allocate credit more efficiently, but will also promote the protection of the rights of consumers against irresponsible use or erroneous reporting of credit information.
The operations and services of the CIS is expected to greatly improve the overall availability of credit, especially to small borrowers; lower the cost of credit to responsible debtors, reduce dependence on collateral to secure credit facilities and enable financial institutions to lower their overall credit risk, thus contributing to a healthier and more stable financial system. (PIA
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