UAE- Al Etihad Credit Bureau set for soft launch next week

(MENAFN- Khaleej Times)  All concerned stakeholders are set for the soft launch of the Al Etihad Credit Bureau next week in the UAE, with 12 banks initially on board and mandatory membership for all lenders required from January 2014. Emirates NBD and Mashreq have confirmed to Khaleej Times their participation in the test run of the bureau, which is expected to bring down borrowing costs by more than 30 per cent once its credit reporting system is in full swing. "Emirates NBD is part of a 12-bank working group that will go live with Al Etihad Credit Bureau in its first phase. Emirates NBD has worked closely with the bureau to work out system development, testing, report design, etc," Emirates NBD Retail Banking general manager Suvo Sarkar exclusively told Khaleej Times. "We are also working on bureau roll-out plans internally, to ensure good customer experience during transition period," he added. Credit bureaus exist in many countries across the world, and they impact all stakeholders of the banking industry positively, he said, adding that consumers are significant beneficiaries of such, as good credit performance at an individual level gets rewarded with better pricing and services. "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," Sarkar added. Farhad Irani, head of Mashreq's Retail Banking Group, said: "We are very happy to be part of the test run of Al Etihad Credit Bureau from July," adding that once fully functional, it will help to reward good consumers with lower interest rates. Standard Chartered global head of macro research Marios Maratheftis said: "The launch of the credit bureau is a positive and welcome development. The credit bureau increases information sharing, and this in turn will help overall lending in the UAE by increasing cost efficiency. " The federal bureau, which replaced Dubai-based Emcredit, consists of two working groups. The first one includes 12 banks, the UAE Central Bank. the UAE Banks Federation and the industry lobby group. The second group includes the country's telecoms providers, etisalat and du. The network could be expanded to water and power utility entities as well. The first phase will see the credit bureau commence the collection of consumer credit data from a pilot group of UAE financial institutions to improve the transparency of lending. In the second phase, it will compile another comprehensive database of all commercial companies operating in the country including joint-stock companies. Financial information on borrowing by government companies will also be included in the database. Phase three will see the introduction of value-added services for lenders, while individual scores based on historical data will be completed in phase four. Last year, the UAE Ministry of Finance established the Al Etihad Credit Bureau as a stand-alone entity with a paid-up capital of Dh200 million. It is expected to be fully functional by July next year.