The UAE government is gearing up to launch its long-awaited federal credit bureau in June 2014 to enable financial organizations to access authentic data about lending practices, thereby helping them to reduce the risk of lending.
Previously, banks and lending originators in the UAE were not able to access data on consumers at other financial institutions when making lending decisions.
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Due to this, the borrowers were availing loans from many lenders beyond their repaying capacity, subsequently increasing the risk of defaults.
This trend has threatened the stability of the entire UAE economy, with property prices in Dubai declining more than 50% between 2008 and 2010 after a speculative bubble burst, pushing the UAE on the brink of default.
Following the launch of the credit bureau, it is expected that approximately 10 million people, will become part of this credit database.
UAE federal credit bureau chief executive Marwan Lutfi said, "I’m confident that May will be a productive and successful month in terms of uploading data. We are hopeful that banks will increase their efforts in submitting correct data formats and that comprehensive reports will be readily accessible around June."
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By GlobalData"Even though the bureau is ready to provide its services, true value will only be extracted when all banks’ historic data is uploaded in the database and the reports are comprehensive and include data from all financial institutions in the UAE."
