Japan example to help PH spur risk-based lending

Japan will assist the Philippines in crafting a credit risk database (CRD) aimed at eventually providing collateral-free financing to small businesses.

In a statement, the Japan International Cooperation Agency (Jica) said it entered into a deal with the Philippine government to put up a first-of-its-kind CRD system—a statistical credit scoring model currently unique to Japan.

“This project aims to establish a CRD, which consists of a database of anonymously collected financial statements and default information of companies held by financial institutions, and a statistical scoring model generated from the database,” Jica explained. The three-year project will be implemented by the Bangko Sentral ng Pilipinas nationwide starting this month.“It makes it possible for financial institutions to estimate customer’s probability of default by using the scoring model, and will enhance the credit risk assessment information of each financial institution. In addition, it is expected to promote risk-based credit that does not rely on collateral,” the Japanese government’s aid arm added. —BEN O. DE VERA INQ