Credit rating system soon for IT dealers

A credit rating system and credit insurance for IT dealers will be launched this week by the Dubai Computer Trading Group (DCTG) and the Chamber of Commerce and Industry.

The initiatives follow the loss of between Dh13 million and Dh14m in the past three weeks in cases of fraud involving runaway traders.

The credit rating system is targeted at members of the IT trading community.

"This kind of system in the trading community will bring in a screening process," Shailendra Rughani, Presiden, DCTG and owner of Expert Computers, told Emirates Business.

"Basically traders who want to join the DCTG will undergo a process where their finances will be checked and relevant information collected. This will help members to conduct business only with other members and be secure."

The association has a membership of 150 and the new system will apply to existing and new members.

At present a Dubai-based IT channel partner becomes a member by paying a Dh250 registration charge and annual membership fees of Dh1,000.

"We plan to extend our membership base to 500 this year," added Rughani.

"The new credit rating system and insurance will encourage traders to join. In terms of information we are not asking for invoices but basic financial details."

There are up to 700 IT channel partners in Computer Street, while across Dubai there are 2,500.

Rughani was not able to give information about the insurance, which will be taken out by the DCTG as a group. The details will be finalised at the group's second annual assembly on July 8.

DCTG does not intend to use an external credit rating agency and will carry out the checks itself.

Rakesh Bohra, the group's Communications Secretary and owner of Wifi Zone, said: "Agencies will not be able to verify trade licences, which can be out of date and can be used to conduct fraud like the recent cases at Computer Street. We know the trading community and members inside out and will be able to give a better analysis. The grading or credit rating system will be based on the amount of data provided by the channel partner."

Both personal and business information will be collected. "Personal data would be required from back home, including family details, and on the business level complete information on wealth will be required.

"The grades have to be finalised but they will vary from an A for a channel partner giving basic information to A++++ for one providing complete information.

"Members will be assured that their data will not be sold or used in any other manner."

The association has no plans to expand its grading system beyond Dubai.

"The chambers in other emirates do not give permission to form associations or groups," said Bohra. "It's only in Dubai that the chamber supports such groups and therefore as an association we cannot support businesses outside the emirate.

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