PH National Credit Information System takes shape with Credit Bureaus

Six firms are seeking to be accredited as special accessing entities (SAE) or credit bureaus for the envisioned national credit information system. These credit bureaus have already submitted their applications for accreditation with the Credit Information Corp. (CIC) to start the gathering of credit information of bank clients to come up with their respective credit scores.

The CIC announced those who passed the initial stage for accreditation as the following: Credit Bureau Singapore, Credit Information Bureau Inc., Compuscan, CRIF, Dun and Bradstreet South Asia Middle East, and the local credit bureau TransUnion.

The credit bureaus are applying to play the role of a Special Accessing Entity (SAE) under Republic Act 9510, or the Credit Information Systems Act. An SAE is defined by law as a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services.

Once accredited, these entities are granted access to CIC’s pool of consolidated basic credit data, from which the SAEs will formulate the credit scores of bank clients. SAEs may also use other data that they have access to, aside from the CIC’s database, in coming up with the credit scores.

CIC President and CEO Jaime P. Garchitorena said that SAEs would play a critical role in the improvement of public’s and MSMEs’ (micro, small and medium enterprises) access to credit with the development of products in the form of credit scores and other value added services.

Finance Secretary Cesar V. Purisima earlier said MSMEs, which comprise the bulk of businesses in the Asia-Pacific region, do not have the appropriate access to capital because banks are averse to lend money to them without collateral.

But Purisima said MSMEs in the Asia-Pacific region are actually in possession of some $9 billion worth of properties that they could not use as collateral, because banks do not consider these properties, mostly personal properties, as allowable collaterals.

Credit scores are expected to be the first products released by the SAEs and will be based on the credit reports accessed from the CIC as well as other data the SAEs may get from various sources, CIC added.

Once CIC finalizes the accreditation of qualified credit bureaus and opens its database for qualified inquiries sometime in 2016, MSMEs, the general public, corporations, and financial institutions can start benefiting from the credit scores and reports provided by these credit bureaus.

Credit scores and reports to be provided by CIC are expected to expedite the process of loan applications, increase the lending potential of financial institutions, potentially decrease the need for collateral, and help manage the risk of default.

CIC earlier said it targets to launch by the end of the year its credit data system, which will provide access to over three million records. By 2016, Mr. Garchitorena had said, CIC aims to scale up the system to 12 million records.

Under the Credit Information System Act, lending institutions need to forward both the positive and negative credit information of their borrowers to CIC.

Voyager Innovation, Cash Credit collaborate for consumer microloans

Voyager Innovations and Bulgarian-based finance technology company Cash Credit are collaborating in bringing easier and more convenient consumer microloans to mobile subscribers in the Philippines.

Under the strategic deal signed recently, Voyager Innovations will be using Cash Credit’s proprietary credit-scoring system to offer Filipino consumers quick credit decisions, with convenient service and billing through Voyager and Smart Communications Inc.

“As a global leader in financial technologies, we’re particularly excited at Voyager Innovations for this service. This is about technology extending an economic lifeline to the great majority in emerging markets,” said Orlando B. Vea, president and CEO of Voyager Innovations.

“Voyager Innovations has a clear vision and commitment in the role of financial-technology platforms in providing people with access to consumer microloan services. This partnership will help us expand our reach,” said Georgi Krumov, Cash Credit founder and CEO.

“This provides our informal sector access to finance through their mobile devices which is part of our commitment in promoting inclusive growth and development,” said Lito Villanueva, Voyager Innovations vice president and head of Financial Innovations, Digital Inclusion and Alliances.

Voyager Innovations is the digital innovations unit of Philippine Long Distance Telephone Co. and Smart. Cash Credit partners with platform providers like Voyager Innovations and mobile-network operators in bringing micro consumer loans.

The partnership is in line with the vision of Voyager Innovations together with affiliate unit Smart eMoney Inc., in further promoting digital financial inclusion among the unconnected, unbanked and uncarded segments of the population through mobile and digital technologies.

BPI Family Savings seeks to expand lending by 15%

BPI Family Savings Bank, the thrift banking arm of the Bank of the Philippine Islands, is seeking to expand its lending portfolio by 15% next year on the back of strong growth seen in the provinces and as mortgage and auto loans are seen to drive the growth.

The bank is currently “tracking Php200 billion” in loans and it targets to “cross” that level by yearend,” BPI Family Savings Bank, Senior Vice-President, Retail Loans Cristina L. Go told reporters in a briefing yesterday.

“Our numbers show really fast growth in the last five years, which mirrored -- double the size of retail loans... [for] 2016 we’re still targeting 15% loan growth,” Ms. Go said.

BPI Family ended 2014 with a Php173-billion loan portfolio, accounting for 25% of BPI’s total loan portfolio.

As of the first half, BPI Family’s retail loans were already up 20% with 54% or Php107 billion of the total coming from housing loans.

“Growth is more broad-based with loans more affordable -- housing, micro enterprises, auto dealership... in value, housing loans are big but in terms of volume, auto dealerships is higher,” Ms. Go said.

She noted that Php60 billion or 30% of the Php200-billion loan portfolio target for 2015 will come from provincial, attributed to real estate development booming outside Metro Manila, car dealerships rising in provinces and small and medium enterprises “more alive” in the countryside.

“We’ve seen growth in provincial -- at 25% -- outpace the general Metro Manila area, which is at 15-18%,” Ms. Go further said.

The bank continues to be “positive and optimistic” given the country’s current scenario where “forecasts are very positive” and as overseas Filipinos “have more propensity to avail of house, car, and business [loans], she added. “Home, car and business are their top priority in investments. They’re hoping to come here, retire here.” BPI Family has around 180,000 clients.

Moving forward, Ms. Go said BPI Family plans to put up 19 branches, mostly in areas outside Metro Manila to service the growing market in the provinces.

The thrift arm of Ayala-led BPI currently has 185 branches. Earlier, BPI Family Savings Bank President Natividad N. Alejo said putting up a single branch is estimated to cost the bank about Php8-10 million.

Although she declined then to disclose BPI Family’s net earnings in 2014, Ms. Go noted that BPI Family Savings Bank has always posted good earnings since it is BPI’s consumer unit and “the consumer market is very strong.”

BPI Family’s listed parent BPI posted Php9.3 billion in net earnings in the January to June period, up 16% from the year-ago level of Php8 billion.

Shares in BPI closed at Php86.10 each yesterday, up 50 centavos or 0.58%.

-- Business World

Banks report tighter credit standards in Q3

Even tighter credit standards were noted across real-estate loans in the third quarter this year, as banks passed on to their borrowers the more stringent oversight exercised by regulators on real-estate loans during the period.

In a recent report, the central bank said lenders across the country reported a net tightening of their overall credit standards for real-estate loans in the July-to-September period.

This was the 13th consecutive quarter that the banks indicated a net tightening of standards in real-estate lending under the diffusion index  approach, where the number of banks that indicated tighter credit standards proved more numerous than banks that indicated otherwise.

“The net tightening of overall credit standards for commercial real-estate loans was attributed by respondent banks largely to perceived stricter oversight of banks’ real-estate exposure,” the central bank said.

The Bangko Sentral ng Pilipinas previously implemented a number of measures to help monitor the banks’ exposure to real estate as part of the larger effort to keep the financial system stable and avoid asset bubbles and asset erosion down the line.

These included more detailed reports on real-estate exposure and stress tests on the banks, the maiden of which report was seen released later this year.

In particular, respondent banks reported of stricter collateral requirements and loan covenants, along with wider loan margins, reduced credit-line sizes, shorter loan maturities and increased use of interest-rate floors for commercial real-estate loans.

Demand for commercial real-estate loans were steady during the month but a number of banks indicated increased demand for real-estate loans on the back of improved economic outlook, as well as increased customer investments in plants or equipment.

For the next quarter, banks that anticipate a slight tightening of their credit standards outnumbered those expecting the opposite.

-- Business Mirror

Home Equity Lines of Credit

Have you ever looked around your home and felt it could use a little update? Perhaps the kitchen could needs new granite counter tops or maybe the bathroom is too small or even worse, the den is still sporting that shag carpeting from the 1970’s. If this sounds familiar to you but you are wondering how you might pay for the remodeling, a home equity line of credit might be what you are looking for.

What Are Home Equity Lines of Credit?

Simply put, a home equity line of credit is a line of credit secured by your home. Most homes have equity – meaning they are worth more than what you owe on them. A portion of the difference between the value of your home and the outstanding mortgage amount is the equity available to you. As opposed to receiving one lump sum of cash as you would in a home equity loan, you will have access to a line of credit, similar to a credit card.

First, your mortgage company will establish a total available loan balance from which you can draw. You can draw the amount you need or want up to the total available. For example, if you receive a home equity line of credit of $50,000.00, you can take as little as the minimum withdrawal amount and all the way up to the entire $50,000.00 or make several withdrawals as needed.

Home equity lines of credit use a variable interest rate which is often based on the current prime interest rates.

What Are Home Equity Lines of Credit Used For?

There are several uses for a home equity line of credit. Many people use them to update or renovate their homes. From a new backyard and swimming pool to updated wiring, this type of line of credit is a good option for covering the costs. In addition, some individuals use home equity lines of credit to pay off or consolidate debt from credit cards and other sources.

Another use you can use a home equity line of credit for is college tuition. This is a good option as the money will be available when tuition comes due twice a year as opposed to receiving a lump sum.

How Do Home Equity Lines of Credit Benefit You?

One benefit of home equity lines of credit is that the interest may be tax deductible. Your tax advisor can provide insight into your personal circumstances. In general, IRS guidelines allow  interest as a tax deduction as long as your line of credit is less than $50,000.00 for an individual and $100,000.00 for a couple filing jointly. If you use a home equity line of credit for any other purpose than home improvements, the interest is not tax deductible.

A second benefit of home equity lines of credit are the repayment options it affords you. You may pay a small amount of principal plus interest, which may help your monthly finances if you find yourself in a rough spot.

What Is the Easiest Way to Obtain Home Equity Lines Of Credit?

Having a good payment history is a necessity when it comes to obtaining a home equity line of credit. Like any home equity loan, certain criteria must be met before a bank or mortgage leader will grant you a line of credit.

If possible, review your credit score and clean up any inaccuracies. Be sure all of your payments are on time and above the minimum payment to improve your overall credit standings.  Your debt does not need to be entirely erased, however, all of your credit accounts should be current and in good standing. Secondly, ensure you have a solid employment history. Typically, lenders like to see at least two years of employment at your present company.

Once you feel you have your financial house in order, contact your current mortgage holder or the bank from which you obtained your original loan. Having a personal relationship with your banker or mortgage lender can aid in obtaining the home equity line of credit you are looking for. A local bank has a personal stake in the community, and that might make it easier for you when going through the loan process.

Home equity lines of credit can be a ready source of money for home improvement projects, both large and small. Whether you need a new roof, or plan to finish your basement, a home equity line of credit can help you increase the current value of your property. With a little planning and research, you should be able to find the right home equity line of credit for you.

This post was written by Holly Wolf of Conestoga Bank, a community bank servicing Philadelphia and its surrounding regions for over 120 years. This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

5 Creative Ways to Be Frugal, Save Money and Live an Abundant Life

The current economic environment has contributed much to a feeling of unease among many Americans. Savings are near an all-time low among the nation's citizens, and many people have excessive amounts of debt. Credit repair companies can be helpful for these people. Are there any ways to beat the system and have a great life? Living frugally and saving money is still possible for many. Here are five creative ways to save money.

Start a Savings Account

This might not be the most creative way to save money, but saving a bit of money out of a paycheck on a weekly or monthly basis is a great way to get started in having a good amount of savings.

Make Household Items at Home

Cleaners and detergents can cost quite a bit at the store. The name brands and store brands will both have significant markups. It is possible to make some of these cleansers with items that are probably already in most households. In many instances this can save a substantial sum over the course of a year.

Take Lunch to Work

Just about anyone with a job has to eat lunch at some point during the day. Those who eat out daily will usually spend between $5 and $10 each day if they are reasonably frugal. Taking lunch from home can frequently cost $2 or less. This could conceivable save around $20 to $40 per week. Added up over the course of a year, this can be a large amount of money.

Sell Items that Are Not in Use

Just about everyone has some items lying around the house or apartment that have not been used in months or years. Yard sales or internet sites are great opportunities to get rid of these items and make some money in the process. The profits can then go to savings or into buying more cheap items for sale. Both of these ideas will add to the bank account over time.

Find Online Work

Most people waste many minutes or even hours during the day doing frivolous things. Why not get paid? There are several online sites that offer work. Of course, it is important to be careful when doing work for online sites. Sites that do not have a strong and lengthy reputation should be avoided because there are many scams on the web. Over time, these small tasks can add up to fairly sizable sums of money.

Using just one or two of these options can improve the financial situation of just about any home.

Advantages and Disadvantages to an IVA

Image Source: flickr

The Individual Voluntary Agreement, or IVA, has just reached its twenty-fifth birthday, after being introduced in 1986 as a type of debt management solution. Available to people in England, Wales and Northern Ireland, IVAs can help debtors escape insolvency. They are designed to assist people with unaffordable, out-of-control debts by arranging a reduced monthly payment plan with creditors.

More details about IVAs

IVAs are legally binding, but they are generally considered to be a more attractive insolvency scheme than bankruptcy. If followed properly, IVAs can support you in clearing your unsecured debts by providing you with the opportunity to make lower monthly payments into the managed IVA scheme, for an agreed period of time, which is usually five years.

Provided that you stick to the arrangement, which typically means honouring a reduced-rate monthly repayment plan, the remainder of the original debt will be written off at the end of the term and you'll be free from unsecured debt. The scheme is designed to assist people who owe significant levels of unsecured debt to a number of lenders who they cannot afford to repay. It's essential that you are still able to meet the new, reduced payments each month and commit to the scheme for five years. The agreement is legally binding and will be managed by an insolvency practitioner.

What are the benefits of an IVA?

There are several key benefits. An IVA can freeze the interest on your debts, which can otherwise mount up. It also protects you from further action or legal intervention from your lenders. This can greatly relieve pressure. It also allows you to avoid experiencing some of the more challenging aspects of bankruptcy, which can include the repossession of your property. It also means that you have a clear date for becoming debt free, which is usually a five-year period and you only need to deal with one scheme and one IVA company, rather than an array of lenders.

Are there downsides to an IVA?

With all insolvency schemes there are important points to consider. First, you may find that you're obliged to release equity from your property in month 54 of the IVA arrangement. You will also be prevented from taking out additional credit during the IVA period. You'll be forced to enter bankruptcy if you fail to adhere to the agreed conditions and terms of the arrangement, in which case your IVA will fail. Your IVA will also stay on your credit record for a year after it has finished, which can make it difficult for you to obtain credit.

If you feel that this scheme is appropriate for your requirements, you can find a company who provide IVAs pretty easily, as there are plenty of online and high-street firms offering such services. It's worth asking at your citizen's advice bureau for advice before entering into an IVA.

What next?

As with any kind of debt solution, it's essential that you get advice that is relevant to your situation. Speak to a qualified debt adviser and find out whether you meet the terms and conditions of the scheme. Check too that you understand the full implications of taking out an IVA and seek a reputable organisation with good feedback to manage the scheme for you.

Written by writer of a company who provide IVA's.

Commercial and retail banking revealed

I find it very strange, when people do not know how do commercial and retail banks work. They seem to think, that banks just "make" money, literally. That's why i decided to explain the main concepts of banking and present them really simply.
When people have more money than they need to spend, they may choose to save it. They deposit it in a bank account, at a commercial or retail bank, and the bank generally pays interest to the depositors. The bank then uses the money that has been deposited to grant loans - lend money to borrowers who need more money than they have available. Banks make a profit by charging a higher rate of interest to borrowers than they pay to depositors. (Now that's business!)
Commercial banks can also move or transfer money from one customer's bank account to another one, at the same or another bank, when the customer asks them to. Well, this is basically how a bank works. It gets money from some people and then lends it to other people. Could not be any more simple, but the best thing about it - IT WORKS!

Banks also create credit - make money available for someone to borrow - because the money they lend, from their deposits, is usually spent and so transferred to another bank account. (They sure think ahead of it.)
The capital a bank has and the loans it has made are its assets. The customers' deposits are liabilities because the money is owed to someone else. Banks have to keep a certain percentage of their assets as reserves for borrowers who want to withdraw their money. This is known as the reserve requirement. For example, if the reserve requirement is 10%, a bank that receives a $100 deposit can lend $90 of it. If the borrower spends this money and writes a cheque to someone who deposits the $90, the bank receiving that deposit can lend another $81! As the process continues, the banking system can expand the first deposit of $100 into nearly $1000!!! In this way, it creates credit of almost $900! Wow!

Before lending money, a bank has to assess or calculate the risk involved. Generally, the greater the risk for the bank of not being repaid, the higher the interest rate they charge. Most retail banks have standardized products for personal customers, such as personal loans. This means that all customers who have been granted a loan have the same terms and conditions - they have the same rules for paying back the money. (We're all equal before God, aren't we?)
Banks have more complicated risk assessment methods for corporate customers - business clients - but large companies these days prefer to raise their own finance rather than borrow from banks.
Banks have to find a balance between liquidity - having cash available when depositors want it - and different maturities - dates when loans will be repaid. They also have to balance yield - how much money a loan pays - and risk.

Well, there you have it. I hope i pointed out the main points and have most of the questions answered.. If there is anything else you wanted to know, feel free to ask anything.