By Andy Sambidge
Marwan Ahmad Lutfi calls for strengthening communication, collaboration to improve approach to credit risk
The CEO of Al Etihad Credit Bureau, the UAE government company mandated to operate a credit reporting system across the UAE, has called for collaboration across the Gulf to improve regional approach to credit risk.
Marwan Ahmad Lutfi, speaking at the World Consumer Credit Reporting Conference, stressed the importance of strengthening communication, collaboration and knowledge exchange between GCC countries.
He said this approach would "support the regional credit reporting industry and in turn enhance GCC economies and credit markets".
The Al Etihad Credit Bureau said last mohth it had begun the issuance of consumer credit reports to banks and financial institutions following delays in starting operations in the UAE.
The credit reports will include records about consumers' debt levels, financial obligations, credit payments, history of default payments and late payments.
Until now, banks in the UAE have often been unable to access data on consumers at other financial institutions when making lending decisions. Borrowers could obtain money from many lenders and run up debts they sometimes could not repay.
Lutfi said: "In light of the GCC's continuing economic recovery and the ongoing development ofthe region's financial infrastructure, there is a need for certain precautions to be taken in order to protect the lending sector, by providing a clear picture of credit behaviour patterns and minimising any risks to the credit market.
"This will help banks and financial institutions to reduce costs and lower provisions for credit losses, as well as allow individuals and companies withgood credit profiles to accessbetter loan terms and interest rates."
He added: "The banking sector in the GCC, and particularly in the UAE, has experienced a number of positive developments in recent years, through the implementation of high quality credit reporting and enhanced transparency.
"Credit bureaux will provide reliable and accurate credit information to help banks and financial institutions effectively evaluate risk, enabling them to make positive decisions in order to reduce credit losses from non-performing loans.
"This will, in turn, enhance the financial and regulatory infrastructure across GCC countries."