Credit Information System in the Philippines
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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?

    <p>The loan application is rejected</p> Signup and view all the answers

    Which aspect is NOT addressed during the Cash Flow Analysis?

    <p>Loan repayment history</p> Signup and view all the answers

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

    <p>To monitor loan transactions by individuals and financial institutions.</p> Signup and view all the answers

    Which law established the Credit Information Corporation (CIC)?

    <p>Republic Act No. 9510</p> Signup and view all the answers

    Who supervises the operations of the Credit Information Corporation?

    <p>Governance Commission for GOCCs (GCG)</p> Signup and view all the answers

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

    <p>60%</p> Signup and view all the answers

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

    <p>Philippine Stock Exchange (PSE)</p> Signup and view all the answers

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

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

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

    <p>Basic credit data.</p> Signup and view all the answers

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

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

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

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

    What is the primary purpose of conducting a CIBI?

    <p>To prevent potential loan delinquency and assess borrower risk.</p> Signup and view all the answers

    Which step in the CIBI process comes first?

    <p>Loan Application</p> Signup and view all the answers

    What can result from a poorly conducted CIBI?

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

    Which information does a credit registry typically track?

    <p>Loan transactions and credit card activity.</p> Signup and view all the answers

    What aspect does CIBI assess regarding the applicant?

    <p>The applicant's character and capacity to pay.</p> Signup and view all the answers

    What is a major consequence of loan delinquency for banks?

    <p>Legal proceedings against borrowers.</p> Signup and view all the answers

    How does a credit registry benefit individuals?

    <p>By providing a clearer picture of one's financial health.</p> 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.

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