Al Etihad Credit Bureau, which had its soft launch last July, is an organization that aims to help the banking industry collect, analyze and make recommendations based on the data it has collected from the market. Suvo Sarkar, Emirates NBD Retail Banking General Manager explained what a credit bureau does, “A credit bureau ensures that high-debt burden or an over-leveraged situation is avoided proactively, thus helping clients to avoid debt traps and financial difficulties. Credit bureaus also help banks to manage credit losses optimally thus reducing overall cost of credit, which eventually benefits clients with lower pricing.”
The credit bureau will be rolled out in four phases. The first step, which has already commenced, is to collect consumer credit data from a group of UAE financial institutions in order to help make the lending process more transparent. The second phase is to put together a similar database for the commercial sector. The third phase will rollout value added services for the lenders. Finally, historical data will be compiled as a final step.
In early September, Al Etihad Credit Bureau held a workshop that was meant to raise awareness of its operations, the latest developments, policies and procedures as well as its value added services. It also disclosed a detailed explanation of a credit report to be issued for both individuals and companies alike. Commenting on the workshop and on the bureau’s initiative, Vice Chairman Younis Al Khoori said, “In line with our strategic plan, we are working closely with our partners to ensure we achieve Al Etihad Credit Bureau’s core objectives. We are committed to increasing transparency in the lending process by providing accurate and comprehensive credit reports on individuals and companies operating in the UAE to financial and credit providing agencies. Also the credit report will support the market by assisting lenders in making faster and more accurate credit and financial decisions along with providing a deeper understanding of customer credit merits and reducing non-performing loans.”
Al Etihad Credit Bureau is currently awaiting final approval from the UAE cabinet. It will then proceed with signing contracts with the major banks and lending institutions across the UAE and also issuing credit reports for its clients. The first stage of the four-phase plan is currently underway.
Banks will be using Al Etihad Credit Bureau’s data to analyze the credit worthiness of prospective credit card, personal loan, home loan and auto loan applicants. No longer will the three month pay slip or credit card statement be the barometer to measure one’s credit history.