BSP wants more banks to join credit rate database

The Bangko Sentral ng Pilipinas (BSP) wants more banks to participate in the establishment of a credit rate database, particularly for small and medium enterprises (SMEs), with the help of the Japan International Cooperation Agency (JICA).

BSP Governor Benjamin Diokno said in an interview on ABS-CBN News Channel that a total of 18 banks have committed to participate in the project by providing data to build the credit rate database.

Diokno said the list of banks include state- owned Land Bank of the Philippines and Development Bank of the Philippines, Security Bank and Rizal Commercial Banking Corp., among others.

“We would like other banks to join us also to make the database more comprehensive. They are very encouraged by this because this will actually help them push more loans to small and medium enterprises,” he said.

The BSP has been working with JICA for the establishment of the database to produce scoring models predicting the creditworthiness of SMEs, lessening the dependence of banks on collaterals.

“This will provide banks with robust credit assessment tools that support risk based lending. Lending right now is based on collaterals,” Diokno said.

The BSP chief said data from SMEs are now being gathered until 2021 that would pave the way for the establishment of a model to measure the creditworthiness of small and medium-sized companies.

The credit rate database consisting of anonymously collected financial statements and default information of companies held by financial institutions, and a statistical scoring model generated from the database.

It makes it possible for financial institutions to estimate customer’s probability of default by using the scoring model, and would enhance the credit risk assessment information of each financial institution.

This will contribute to improving the efficiency of financing for SMEs and strengthening the country’s financial system.

As of end-August, data from the central bank showed lending to the sector amounted to P527.2 billion as the BSP allowed lending to MSMEs to be used as alternative compliance by banks to the reserve requirements.