UAE to roll out gov't-backed credit bureau in Q1

Delayed initiative will allow lenders to check creditworthiness of borrowers in Gulf state
UAE to roll out gov't-backed credit bureau in Q1
(Photo for illustrative purposes only)
By Andy Sambidge
Tue 07 Jan 2014 01:11 PM

The UAE is set to roll out a platform that will allow financial institutional in the Gulf state to check consumers’ creditworthiness before lending to them after a planned launch last year was delayed.

Al Etihad Credit Bureau (AECB), a federal government company specialised in providing UAE-based credit reports and other financial information, announced on Tuesday that it will be operational by the end of March.

AECB said it has approached all UAE-based banks to sign agreements and provide credit information by the end of January.

Additionally, AECB said it is currently finalising the installation of an electronic link with banks to create a comprehensive database of individuals' and businesses' credit information.

The launch was initially planned for the middle of last year but was delayed.

Until now, banks in the UAE have been unable to access data on consumers at other financial institutions when making a lending decision. This has created a situation where some have borrowed from many lenders and run up huge personal debts which proved impossible to repay.

Defaulting on debt is deemed a criminal, rather than a civil, offence in the UAE, with those unable to meet repayments facing jail sentences.

Marwan Ahmad Lutfi, CEO of AECB, said: "Effectively run credit bureaux are internationally proven to support responsible lending, enhance payment behaviour and reduce credit losses from bad or non-performing debts."

He added: "Al Etihad Credit Bureau will help to strengthen the UAE's financial infrastructure and add demonstrable value to the banking sector. To do this, we are forming solid partnerships with the banks and other financial institutions in the country to ensure the efficient and accurate transfer of information between both sides."

He said the pilot phase of testing has been successfully completed and it is awaiting formal approval from the UAE Cabinet to start operations.

The establishment of the UAE credit bureau at a federal level has been talked about for years, with a change in the law required to secure it a mandate.

A previous attempt in 2006 by the Dubai government to set up a private sector credit bureau, Emcredit, failed as banks refused to divulge customer data.

Previously, AECB said that phase two of the initiative will see the launch of a commercial bureau, as well as the phasing out of bounced cheque reporting. Phase three will include the introduction of value added services for lenders, while individual credit scores based on historical data will make up phase four.

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