DED plans to establish Credit Bureau in Dubai
The Dubai Department of Economic Development (DED) plans to establish a Credit Bureau in Dubai in order to facilitate credit transparency of counter-parties to commercial credit exposures and thereby increase confidence in, and volume of intra-business credit transactions.
DED will finalize its plans for the bureau by the end of 2003 based on findings of a comprehensive study to be conducted by an international organization. "The Credit Bureau will broadly provide the UAE lending market an additional tool to mitigate risk and improve services to individuals and businesses through more informed allocation of credit facilities,” said Director General of the DED, Mohamed Ali Alabbar. “The plan to establish a credit bureau is a fundamental part of our overall 2003-2004 Strategy, which aims to maximize growth opportunities for the private sector and facilitate investment in the Emirate.”
Through a detailed analysis of borrowing history with lending institutions, especially credit card agencies and later leasing companies and home mortgage lenders, the bureau would be able to establish the credibility of individuals and businesses for provision of credit facilities.
Not only will this help to improve the quality of lending assets but it will also strengthen the general business and financial sectors as a whole and provide a very valuable source of credit information for banks and other business creditors. In due course, a full fledged credit bureau will provide businesses and banks with better quality of credit information, level the playing field and do away with the need for individuals or businesses to approach unregulated or informal credit sources for funding needs.
Leading credit rating agencies regularly give the region's most prominent financial institutions superior ratings, but there is currently no mechanism for obtaining similar credit intelligence on other players in the retail commercial market. As a result, lending institutions are often hampered by the lack of information with which to reach sound lending decisions.
The establishment of a Credit Bureau is a key initiative in the new strategic program being studied by the DED as part of its overall efforts to assist local industry in the drive to diversify and spur investments in the region. — (menareport.com)
© 2003 Mena Report (www.menareport.com)