2.03 PM Tuesday, 19 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 05:07 06:20 12:29 15:54 18:33 19:47
19 March 2024

Will UAE Credit Bureau defaulters get a loan?

Published
By Parag Deulgaonkar

Banks in the UAE will use the Al Etihad Credit Bureau data to make credit decisions, but lenders may not limit assessment of new loan applications based merely on credit ratings, believes a top banker.

“I think most banks will take an approach where they would try to understand what went wrong and if there is a logical reason for that then consider pouring money again,” Peter England, Chief Executive Officer, Rak Bank, told Emirates 24|7.

The Al Etihad Credit Bureau, a federal government institution, will commence issuing consumer credit reports to financial institutions that have submitted historical credit data to the bureau from September.

About 5.2 million credit facilities of individuals residing in the UAE have been added to the bureau’s credit reporting system with the credit reports including records about consumers’ debt levels, financial obligations, credit payments, history of default payments and late payments.

“At the moment banks have the discretion as to whether they want to use the [credit bureau] data or not. It is not that we have to use the data to make credit decisions, but in most cases, most banks will utilise the data to ensure they make the right decisions,” England reveals.

“But I think as long as the customer has made every attempt to clear that debt or settle that debt and explain to the new lender what exactly went wrong it would not be something that we would completely close the accounts as well. In our case, we don’t intend to use the rating element of the bureau, which will come in due course, we intend to purely look at customer’s indebtedness and performance with other banks.”

Asked how one can improve his/her credit worthiness, England asserts: “Make sure you pay your debt.”

Hailing the formation of the bureau as “something that is very important for the country,”

The Rak Bank CEO, however, says it is important that banks don’t use the credit bureau for their marketing activities.

And that’s because there is always a possibility of banks using the data with the available with the credit bureau to acquire information of the “good” clients of their competitors.

“One thing is very important with credit bureau is that they should not be used for marketing activities. They should only be used to assess a genuine credit application that somebody has in the hand… so if someone applies for credit the bank can use the information to make a sound decision.”

England reveals that the bank has had discussion with the bureau on this issue, adding, “It is extremely important that it is used for that purposes than other purposes.”

[Homepage Image Courtesy: Shutterstock]