The Bankers Association of the Philippines (BAP), a nonprofit organization that was established in 1949 to represent the interest of banks throughout the country, has announced plans to launch an online credit information bureau that will be run by microfinance institutions (MFIs). BAP intends to develop the online platform by June. MFIs will be able to provide information pertaining to their clients and will also be able to access information on clients of other participating MFIs. The platform is intended to identify borrowers with bad credit histories and to prevent multiple borrowing. While it is being developed, rural banks can still access credit information through a database that is being used by commercial banks, a privilege granted to them in January 2011. The advantages of using an MFI-only system instead of the existing one have not been enumerated.

Leonilo Coronel, managing director of BAP, commented on the need for MFIs to use credit reports as follows, “The problem here is information asymmetry, as lenders do not know whether the borrowers have multiple loans.”

MFIs in the Philippines that report to the Microfinance Information Exchange (MIX), the US-based data provider, have an aggregate loan portfolio totaling USD 590 million and aggregated assets of USD 869 million as of 2009.

By Julie Moksim, Research Associate

About Bankers Association of the Philippines: Bankers Association of the Philippines is a nonprofit organization that was established in 1949 to represent the interest of banks throughout the country. In 1964, BAP registered with the Securities Exchange Commission (SEC). BAP works in collaboration with local legal entities and the Philippines Chamber of Commerce to advocate regarding laws that relate to banking. Members of BAP include Asia United Bank, Development Bank of the Philippines, Philippine Veterans Bank and Union Bank of the Philippines.

Sources and Additional Resources:

Business World Online: “Microfinance Players to Get Their Own Credit Info Bureau”, April 4, 2011, http://www.bworldonline.com/content.php?section=Finance&title=Microfinance-players-to-get-their-own-credit-info-bureau&id=29190

MicroCapital.org Brief, January 19, 2011: Bankers Association of the Philippines-Credit Bureau Incorporated (BAP-CB) Offers Rural Banks, Microfinance Providers Access to Credit Information System, http://www.microcapital.org/microcapital-brief-bankers-association-of-the-philippines-credit-bureau-incorporated-bap-cb-offers-rural-banks-microfinance-providers-access-to-credit-information-system/

MicroCapital’s Microfinance Universe Profile: Bankers Association of the Philippines

http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bankers+Association+of+the+Philippines+%28BAP%29

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