The 6.9km stretch that normally takes 4 minutes to cross, is now taking motorists on the route up to 35 minutes
The ministry has initiated a study to create a Federal Credit Bureau that will be a center for individual and corporate credit information services at the level of the government, a statement from the ministry said.
“A federal corporation is being envisaged to provide comprehensive services and solutions related to credit information. It will be tasked with preparing reports, statements and credit ratings to help the financial institutions take appropriate lending decisions,” it said.
The bureau will collect and document credit information from various financial authorities, companies, establishments, individuals and banks in the UAE, in addition to classifying and analysing them, it said.
“It will prepare clear and precise reports and maintain databases with the maximum protection and safety with a view to assess repayment capabilities of current and potential creditors,” the ministry said.
Banks, which saw rise in difficult times in the wake of financial crisis, had made specific provision for non-performing loans amounting to Dh33.6 billion at the end of February 2010 against Dh20.9 billion, a year ago. The general provisions rose to Dh12.8 billion at the end of February 2010, up against Dh6.1 billion.
Financial and legal experts have welcomed the move, calling it a long ‘overdue’ step that was required to boost macroeconomic stability of the country.
Younis Haji Al Khoori, Director General of Ministry of Finance, said that the bureau will be a huge support for lenders, borrowers and the macroeconomic stability of the UAE.
“It will also enable public and private sector lenders to have a clearer and more comprehensive view during their decision making on lending,” Khoori said.
The credit bureau, which is expected to have a positive implication on credit risk management, will help lenders and clients obtain complete information and accurate and transparent data about the financial situation of the borrower and their payment behaviour.
Isabella Roberts, a partner at law firm Simmons & Simmons in Abu Dhabi, said that the need for the creation of a credit bureau in the UAE has been the subject of quite a lot of discussion over the last few months.
M.R. Raghu, Head of Research at Kuwait Financial Centre, or Markaz, saw its importance in the light of increased cross-border credit flow in recent years, warranting a more sophisticated approach to credit analysis. He said that the reverberations of Saad and Algosaibi was felt throughout the region and with the increasing cross-border credit, it is pertinent to conceptualise and launch a GCC wide credit bureau and fund this institution.
Ashruf Hassaballa, General Manager of Orion Analytics, a Dubai-based firm involved in financial data analysis, said that the credit bureaus went from a conceptual stage to action with the establishment of Emcredit some years ago.
Hassaballa said that the federal credit bureau will play a vital role in making sure things move in the right direction.
“There is already increased transparency and more information is available. This has been made possible by institutions like Emcredit and statistical bureaus,” the general manager said.
Establishing the bureau will have a positive impact on the UAE economy as it would enable supervisory authorities to obtain a precise vision for lending to individuals and institutions. They will be able to take suitable fiscal decisions and set policies for sustainable development with more confidence. It will also support lender plans to enter new markets by improving lending risk evaluation for new businesses. Furthermore, it will give a better impression of the financial sector and its performance.
The 6.9km stretch that normally takes 4 minutes to cross, is now taking motorists on the route up to 35 minutes
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