MEMORANDUM CIRCULAR No. 2019-01
SUBJECT : ESTABLISHMENT, MAINTENANCE AND SUBMISSION OF BASIC CREDIT DATA BY COOPERATIVES PURSUANT TO REPUBLIC ACT NO. 9510 OTHERWISE KNOWN AS THE CREDIT INFORMATION SYSTEM ACT (CISA)
DATE : November 5, 2018
Section 1. Title. This Memorandum Circular (MC) shall be known as the “Establishment, Maintenance and Submission of Basic Credit Data by Cooperatives Pursuant to Republic Act No. 9510, otherwise known as the Credit Information System Act (CISA)
Section 2. Legal Basis. The legal basis is RA 9510 otherwise known as “CREDIT INFORMATION SYSTEM ACT (CISA)”
Section 3. Definition of Terms.
- Authority – shall refer to the Cooperative Development Authority (CDA).
- Basic Credit Data – refers to positive and negative credit information provided by a borrower to a submitting entity in connection with the application for and availment of a credit facility and any information on the borrower’s creditworthiness in the possession of the submitting entity and other factual and objective information related or relevant thereto in the submitting entity’s data files or that of other sources of information: Provided, That in the absence of a written waiver duly accomplished by the borrower, basic credit data shall exclude confidential information on bank deposits and/or clients funds under Republic Act No. 1405 (Law on Secrecy of Bank Deposits), Republic Act No. 6426 and Foreign Currency Deposit Act), Republic Act No. 8791 (The General Banking Law of 2000) and their amendatory law;
- Borrower – refers to a member of a cooperative, that applies for and/or avails of a Credit Facility;
- Corporation – refers to the Credit Information Corporation (CIC) that is mandated by law to implement RA 9510;
- Credit Facility – refers to any loan, credit line, guarantee or any other form of financial accommodation from a submitting entity and any other facility that provides credit: Provided, that for purposes of RA 9510, deposits in banks shall not be considered as credit facility extended by the depositor in favor of the bank;
- Exposure Profile – refers to the types of loan provided by the cooperative to its members, the payment method of members in settling its obligations, and other information relevant in tracing the members exposure to loans;
- Micro-finance Activity – refers to the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to the poor and low-income households and their microenterprises. By definition, it is important to note that Microfinance is not subsidized credit, not a dole-out, not salary or consumption loans, and a cure-all for poverty.
- Negative Credit Information – refers to information/data concerning the poor credit performance of borrowers, such as, but not limited to, defaults on loans, adverse court judgments relating to debts and reports on bankruptcy, insolvency, petitions or orders on suspension of payments and corporate rehabilitation;
- Positive Credit Information – refers to information/data concerning the credit performance of a borrower, such as, but not limited to, information on timely repayments on non-delinquency.
- Submitting Entity – refers to an entity which provides credit facilities and required by the law and these Rules to submit information or data about a borrower including, but not limited to, banks, quasi-banks, trust entities, investment houses, financing companies, COOPERATIVES, non-governmental, micro-financing organizations, credit card companies, insurance companies and government lending institutions;
Section 4. Scope. This shall apply to all cooperatives considered as submitting entity under RA 9510 that is engage in lending and/or micro-finance activities.
Section 5. Objective. To guide the cooperatives engaged in lending and/or micro-financing activities and/or extending credit facilities, submit a comprehensive, accurate current, objective, factual Basic Credit Data of all their borrowers, relevant to, or arising from their credit and credit related activities pursuant to the provisions and implementation of RA 9510.
Section 6. Basic Credit Data. The following are the Basic Credit Data need to be maintained by cooperatives covered under this rule:
For Individual Borrower:
- Personal circumstances such as complete name (last, first, middle), date of birth, sex, civil status, present residence, employer and position or business, as the case may be;
- Number of children depending for support
- TIN, SSS or GSIS No.
- Net Income for the last year
- Residence for the last 2 years
- Employer/s or business/es for the last 5 years
- Owner or lessee of house occupied
- Car/s owned
- Name of Bank/s where accounts are maintained, including types of bank accounts, and
- Other assets, real or personal
For Cooperative Borrower:
- Number and date of registration
- Cooperative Identification Number
- Primary purpose of business
- Term of Existence
- Principal Place of business
- TIN/SSS Number
- Directors and officers
- Number of Employees
- Average Net Surplus for the last 2 years
- Monthly Expenses
- Bank/s where accounts are maintained, including types of accounts
- Other assets, both real and personal, and
- Board Resolution authorizing the borrowing of fund from a credit institution/submitting entity
Section 7. Cooperative’s Exposure Profile. The following are the exposure profile to be maintained by every cooperative covered in this Guidelines:
- Types of obligation or account (loan, whether commercial loan, mortgage, secured);
- Type of transaction (maturity, revolving, open, Letter of Credit, Installment)
- Account No.
- Client ID No.
- Date account was opened;
- Originating unit/branch/ department for each transaction; and
- Payment Method
The payment method referred to in the preceding paragraph refers to the following information:
- Initial loan amount;
- Outstanding balance;
- Mode of payment;
- Remaining period of obligation on the specific exposure;
- Pre-termination (both a “tag” and date of payment, if applicable);
- Maturity of obligation was settled;
- Date of last account activity;
- Date when account entered in arrears;
- Amount past due: 1 to 30 days; 31-60 days; 61-90 days; 91-120 days; 121-150 days; 151-180 days; over 180 days;
- Restructuring (both a “tag” and date of payment, if applicable);
- Payment history vis-a-vis the frequency of payment (i.e. Any pattern of delinquency);
- Aging of receivables (past due within one year, past due over one year, accounts under litigation); Write-off date (if applicable); and
- Disputes and resolution of disputes
Section 8. Cooperative Members’ Negative Credit Information Data. The negative information to be maintained by every cooperative from its members shall include, among others, the following:
- Past due;
- Default/s on loans/s;
- Details of the settlement of loans that defaulted;
- Adverse court judgements relating to debts;
- Report on bankruptcy or insolvency;
- Petition or order of suspension of payments. Other pending court cases related to credit transactions or cases that will affect financial capacity of borrower;
- Inclusion in a bouncing check checklist. Such other info that may be determined by CIC
Section 9. Compliance Period. All cooperatives engage in lending and/or micro-finance activities shall establish and submit all the Basic Credit Data of their Borrowers as provided for in the Credit Information Circular No. 2016-04, Series of 2016.
Section 10. Notice to Cooperative Members. All cooperatives covered by this MC shall notify its members of its obligation to submit their Borrower’s Basic Credit Data and other information to the Corporation subject to the provisions of RA 9510, its Implementing Rules and Regulations, and guidelines to be issued by the Corporation. Thus, the following templates pursuant to the Corporation’s Circular No. 2015-01, may be adopted:
A. Notification Letter
“Dear Cooperative Member:
This is to notify you that pursuant to Republic Act (R.A.) No. 9510 and its Implementing Rules and Regulations (IRR), creating the Credit Information Corporation (CIC) we are mandated to submit your basic credit data (as defined in R.A. No. 9510 and its IRR), as well as any regular updates or corrections thereof, to the CIC for consolidation and disclosure as may be authorized by the CIC. Consequently, your basic credit data may thus be shared with other lenders authorized by the CIC, and other credit reporting agencies duly accredited by the CIC, for the purpose of establishing your creditworthiness.
For more information, please contact (name of the Submitting Entity) or visit our website (website of the Submitting Entity).
[Name of the Cooperative]”
4.1 Notification Clause to be inserted in the cooperative’s loan/ credit applications for Borrowers to sign:
“I hereby acknowledge and authorize: 1) the regular submission and disclosure of my basic credit data (as defined under Republic Act No. 9510 and its Implementing Rules and Regulations) to the Credit Information Corporation (CIC) as well as any updates or corrections thereof; and 2) the sharing of my basic credit data with other lenders authorized by the CIC, and credit reporting agencies duly accredited by the CIC.”
Section 11. Submission of Credit Information Data. The submission of required data shall be in accordance with the guidelines issued by the Corporation.
Section 12. Confidentiality of Credit Information. The cooperatives covered under this MC shall hold the credit information under strict confidentiality and shall use the same only for the declared purpose of establishing the creditworthiness of their Borrowers.
Section 13. Repealing Clause. All previous circulars and/or guidelines issued by the Authority, which are inconsistent with these guidelines, are hereby repealed or modified accordingly.
Section 14. Separability Clause. Should any part of this Memorandum Circular be declared as invalid, the validity of the remaining sections hereof shall remain in full force and effect.
Section 15. Effectivity. This Circular takes effect fifteen (15) days after publication from the Office of National Administrative Registry (ONAR).
Approved: Pursuant to Board Resolution No. 413, Series of 2018, dated October 12, 2018.
For the Board of Administrators
(SGD) ORLANDO R. RAVANERA