The Dubai Department of Economic Development (DED), hailed on Monday the UAE Ministry of Finance's (MoF) study for creating a federal credit bureau as a significant step in fostering a conducive environment for prudent lending decision-making across industry sectors in the UAE. In early 2006, DED established Emcredit, the UAE's first government-backed credit information services company, to offer credit reporting services in the UAE. Ali Ibrahim, deputy director general at DED, and managing director of Emcredit, said a federal credit bureau will bring confidence to all stakeholders in the credit reporting industry, and strongly facilitate the sharing of credit information. “The federal credit bureau coming into force will strengthen the UAE's credit reporting infrastructure. Greater participation by banks will lead data coverage levels that will provide instant value through comprehensive credit reports,” said Ibrahim. “Emcredit has so far invested in building a robust technical infrastructure, developing multiple value-added product, services and credit reporting skills.” Ibrahim added that under the current challenging global business environment, comprehensive credit information plays an especially vital role in supporting risk management in the UAE. Moreover, the regional head of global ratings giant Standard & Poor's has welcomed a move by the UAE that would provide greater clarity to local institutions that lend to clients. “We believe it (the credit bureau) is a necessary and positive step forward in further developing the data collection infrastructure in the UAE; other countries with well-developed financial sectors have the same facilities,” Standard & Poor's (S&P) regional head Jan Plantagie said. “The Saudi Credit Bureau - with which S&P has entered into a data consortium to collect and process default data of all Saudi banks for the purposes of the Basel II regulations - is a good example how a well-functioning national credit bureau is important.” After almost two years of a crisis that has hit the country's financial sector hard, the Ministry of Finance (MoF) hopes that a new Federal Credit Bureau would help firms take lending decisions by preparing reports, statements and credit ratings from its own collected data. By collecting information from various sources, including financial authorities and banks in the UAE, the agency would be in a position to assess the repayment capabilities of current and potential creditors. The ministry added that the bureau would “help avoid inaccurate decisions or stave off corruption that may arise in borrowing requests”. “Establishing a federal credit information centre is a positive step and will be a huge support for lenders, borrowers and the macroeconomic stability of the UAE,” said MoF director general Younis Haji Al Khoori. .”It will also enable public and private sector lenders to gain a clearer and more comprehensive view during their decision making on lending.” In its Doing Business Report 2010 recommendations to the UAE, The World Bank highlighted that “Emcredit's operational experience, infrastructure, market penetration and existing relationship” will prove to be valuable in creating a federal credit bureau in the UAE. Established in 2006, Emcredit has a rich database on individuals and companies in the UAE, including 5.6 million consumer identification records, payment behavior information on consumer and commercial borrowers and 35 percent of mortgage data in the UAE. It has established data-sharing agreements with several government departments, to power its information solutions. These government entities include Dubai e-Government, Dubai Police, DED, Dubai Land Department and its subsidiary, the Real Estate Regulatory Authority.
