Chief exec says Al Etihad Credit Bureau will provide financial institutions with data in bid to limit credit bubble risks
The UAE's long-awaited federal credit bureau will start work in June, its chief executive said, providing financial institutions with data on the population in the latest move to limit the risks of a new credit bubble.
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.
This has threatened the health of the whole economy - property prices in Dubai plunged more than 50 percent between 2008 and 2010 after a speculative bubble burst, pushing the emirate close to default.
Marwan Lutfi told Reuters in an interview in Dubai that Al Etihad Credit Bureau, which was first announced last year, has so far collected 22 to 24 months of data from around 70 credit data providers like financial institutions, telecommunication companies and various government bodies in the UAE.
Once the credit bureau is launched, everyone with a UAE ID card and who is part of the active credit population, which is estimated at almost half the UAE inhabitants of some 10 million people, will be part of this credit database.
"I'm confident that May will be a productive and successful month in terms of uploading data. We are hopeful that banks will increase their efforts in submitting correct data formats and that comprehensive reports will be readily accessible around June," said Lutfi, who was appointed as the bureau's chief executive in October last year.
"Even though the bureau is ready to provide its services, true value will only be extracted when all banks' historic data is uploaded in the database and the reports are comprehensive and include data from all financial institutions in the UAE."
The bureau had previously set the end of the first quarter of 2014 as the deadline for uploading all data but the plan was delayed due to inaccurate information or errors in the data being submitted because every bank has its own system and the output has to be matching the bureau's data submission criteria.
"We are ready to start operation but it's a delicate balance that we are trying to achieve in collaboration with the financial industry," Lutfi said in an interview this week.
"We believe that consumer banks will submit the corrected data formats during the month of May," Lutfi said.
The bureau has started capturing data on consumers with less than 15 million dirhams ($4.1 million) of credit.
The next step will focus on the commercial arena which will include all companies in the UAE, especially small to medium-sized enterprises, Lutfi explained.
He said the business community in the UAE were eager for the service to start.
"I have not met a single CEO or senior executive in the UAE financial industry who does not want to see the bureau launched yesterday," Lutfi said.