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Credit Rating Services in the Philippines

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Information on a borrower’s ability to meet financial obligations is provided by a credit rating, as evaluated by an independent entity.  In the Philippines, this service is performed by private organizations like PhilRatings (previously known as CIBI Ratings).  PhilRatings evaluates debt issues (such as commercial papers and bonds) of companies as well as a few local government units (LGUs). 

 

            There is at present however, no centralized credit bureau which provides information especially for use by the local banking industry.  Banks conduct their own credit investigation, and this practice has resulted in additional costs for the banks.  To address this need, a proposed bill in Congress seeks to create a Credit Information Bureau System (CIBS).  Endorsed by the Bangko Sentral ng Philipinas (BSP), the proposed bill provides for the infusion by BSP of 49% of the capital of the credit bureau.  Other private financial institutions will account for the remaining 51%.  This proposal has been met with criticism and a counter-proposal was made to create a government-owned and controlled corporation (GOCC) to handle the operation and capitalization of the credit bureau.  Credit information can then be sourced by the GOCC from the BSP, which is regarded to be the most credible source of credit data.  Other Asian countries like Singapore, Thailand and Hong Kong use the private sector to manage their credit information bureau.  Only Malaysia has a credit bureau run by its Central Bank.

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