- City Fajr Shuruq Duhr Asr Magrib Isha
- Dubai 04:27 05:45 12:20 15:47 18:49 20:07
Court adjourned to next month. (File)
The UAE’s credit bureau has begun covering retail customers and plans to extend its work to companies next year, its chief executive said on Wednesday.
The much-delayed Al Etihad Credit Bureau now has financial information on 2.8 million individuals or 97 percent of the total population with a credit history, Marwan Lutfi said.
The UAE government is seeking to strengthen the banking system against bad debt. Until now, banks have often been unable to access data on consumers at other financial institutions when making lending decisions, meaning borrowers could take on huge debts with multiple lenders without any of them knowing.
Together with tougher mortgage lending rules and caps on lending to government-linked companies, the credit bureau is one of several tools aimed at guarding against a repeat of the crisis that paralysed the financial system in 2009 and 2010.
"The credit reports will play a key role in helping banks and financial institutions to assess risk accurately, enabling them to make informed lending decisions and lower lending risks," Lutfi told reporters at the Abu Dhabi headquarters.
The bureau had previously set the end of the first quarter of 2014 as the deadline for starting operations but the plan was delayed due to inaccurate information or errors in the consumer credit data being submitted by banks.
About 99 percent of the required correct data on consumers had now been supplied by banks, Lutfi said. To date, 43 banks and financial institutions had submitted their customers' credit data and 29 of them had subscribed to the bureau's credit reporting services. In total, 51 banks operate in the UAE.
Starting next year, the bureau will also offer credit reports on all companies operating in the UAE, including any details of bounced cheques.
Some banks are unsure about how much difference it will make to their lending practices.
"If we would have been getting it this wrong for this long then we would have been suffering much larger credit losses than we have," said the chief executive of one lender.
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