Credit Information System in the Philippines

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Questions and Answers

Which indicator is NOT used to assess character in the risk analysis process?

Stability

Banking History (correct)

Reputation

Repayment Behavior

What should the Account Officer consider when determining the maximum loan entitlement?

Business projections only

Personal assets only

Cash Flow Analysis (correct)

Current loan interest rates

Which group is NOT typically consulted during the character/risk analysis?

Other microfinance institutions

Suppliers

Local business associations (correct)

Barangay officials

What happens if the applicant does not meet the minimum loan criteria during the CI/BI process?

The loan application is rejected Signup and view all the answers

Which aspect is NOT addressed during the Cash Flow Analysis?

Loan repayment history Signup and view all the answers

What is the primary function of the Credit Information Corporation (CIC)?

To monitor loan transactions by individuals and financial institutions. Signup and view all the answers

Which law established the Credit Information Corporation (CIC)?

Republic Act No. 9510 Signup and view all the answers

Who supervises the operations of the Credit Information Corporation?

Governance Commission for GOCCs (GCG) Signup and view all the answers

What percentage of shares does the government own in the Credit Information Corporation?

60% Signup and view all the answers

Which of the following associations does NOT own shares in the CIC?

Philippine Stock Exchange (PSE) Signup and view all the answers

Why are credit registries developed, according to the World Bank?

To support the state's role as a supervisor of financial institutions. Signup and view all the answers

What kind of data does the CIC collect from financial institutions?

Basic credit data. Signup and view all the answers

What threshold requirement is often associated with loans registered in national credit registries?

Loans at least a certain amount must be registered. Signup and view all the answers

What role does a credit registry primarily serve in financial transactions?

It keeps track of loans made by regulated financial institutions. Signup and view all the answers

What is the primary purpose of conducting a CIBI?

To prevent potential loan delinquency and assess borrower risk. Signup and view all the answers

Which step in the CIBI process comes first?

Loan Application Signup and view all the answers

What can result from a poorly conducted CIBI?

Loss of income due to non-collection of installments. Signup and view all the answers

Which information does a credit registry typically track?

Loan transactions and credit card activity. Signup and view all the answers

What aspect does CIBI assess regarding the applicant?

The applicant's character and capacity to pay. Signup and view all the answers

What is a major consequence of loan delinquency for banks?

Legal proceedings against borrowers. Signup and view all the answers

How does a credit registry benefit individuals?

By providing a clearer picture of one's financial health. Signup and view all the answers

Study Notes

Credit Information Corporation (CIC)

Established by the Republic Act No. 9510 (Credit Information System Act, CISA)
Acts as a central credit registry in the Philippines
Collects and provides standardized credit information on borrowers
Supervised by the Governance Commission for GOCCs (GCG)

Purpose of a Credit Registry

Monitors loan transactions by individuals and financial institutions
Supports the state in supervising financial institutions
Requires registration of loans above a certain amount in the national credit registry

Importance of Credit Information and Background Investigation (CIBI)

Prevents loan delinquency and ensures profits
Protects lenders from losses due to non-collection of installments and loan defaults
Helps determine the character, reputation, and repayment capacity of loan applicants

Steps Involved in a CIBI

Loan Application: Account Officer (AO) interviews applicant, assesses eligibility based on bank criteria
Character/Risk Analysis: AO gathers information from references to assess character and reputation using indicators like stability, entrepreneurship, reputation, and repayment behavior
Repayment Capacity Analysis: AO uses Cash Flow Analysis to determine the applicant’s maximum loan entitlement considering their ability to repay
Prepare/Finalize CIBI Report: AO summarizes findings and recommendations based on the analysis of loan application, character and risk assessment, and repayment capacity

Components of a CIBI Report

Applicant’s character and reputation assessed through interviews with references
Applicant’s repayment capacity is analyzed using a Cash Flow Analysis
The final report includes findings and recommendations regarding the applicant’s suitability for a loan

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Description

This quiz covers the establishment and purpose of the Credit Information Corporation (CIC) in the Philippines, as mandated by the Credit Information System Act. It explores the importance of credit information and background investigations in preventing loan defaults and aiding financial institutions. Test your knowledge on the regulations and processes involved in the credit registry.