Emcredit made official credit bureau in Dubai

His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, issued a decree to this effect on Monday.

Welcoming the move, economists and businessmen said an official credit bureau would ensure improved credit availability in the country.

The decree lays out the legal and operational framework for Emcredit, set up by Dubai Department of Economic Development in 2006.

It makes Emcredit the entity responsible for credit-reporting services in Dubai, with responsibility of collecting, storing, analysing and disseminating credit information.

Credit bureaus are a centralised database that give users access to credit behaviour sourced from all approved credit providers. With a bureau in place, a credit provider can look at any borrower’s report and find out the borrower’s history, experts said.

Dr Nasser Saidi, Chief Economist at Dubai International Financial Centre, described the move as very timely because local credit market has been constrained over the past one year.

“The UAE, like other GCC countries, lack proper credit information,” he said. “Lack of reliable information on creditworthiness of individuals or businesses will lead to increased credit cost. Therefore, the move is excellent. This will certainly improve the credit market by ensuring more availability.”

A local credit bureau is much-needed facility for the corporates and financial institutions, said Krishna Murthy, chief executive of Financial Services Division of Dubai International Securities LLC.

“This is the best practice prevalent in most developed markets,” he said. “This will, no doubt, strengthen risk management in various entities now caught in a trap — especially the small and medium enterprise sector. Both for corporates and financial institutions, there is no more shooting in the dark.”

In processing credit information, Emcredit will comply with the criteria and instructions stipulated by Dubai’s Department of Economic Development and the guidelines issued by the UAE Central Bank, said a statement by the Dubai Government Media Office.

This decree will help enhance transparency in Dubai’s economic sectors and complement Dubai’s economic infrastructure, drive growth and improve the assessment capabilities of lenders operating in the emirate.

The move will help foster a conducive environment for data sharing. “It will bring greater confidence to all stakeholders of the credit reporting industry, enhance the privacy of data on individuals and companies, and support credit decision-making,” the statement said.

The decree also mandates all credit information providers such as banks, financial institutions and government bodies in Dubai to provide Emcredit with all the required credit information records required by it to render its credit information services.

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