Banks in the UAE have begun using credit reports issued by Al Etihad Credit Bureau (AECB) to approve loans and credit cards. Once the consumer’s consent is obtained, a bank can assess reports detailing his or her two-year credit history with all financial institutions.
Marwan Ahmad Lutfi, CEO, AECB, tells GN Focus, “In our soft launch phase we allowed banks to subscribe to our systems. Of the 30 or so banks that control more than 98 per cent of the retail and consumer lending market, we’ve crossed 50 per cent subscriptions. We’re seeing an uptake in enquiries on a daily basis.”
National Bank of Fujairah was one of the early adopters of the credit reporting system that allows financial institutions to access information such as an individual’s repayment patterns and loan details. Sharif Mohammad Rafei, Head of Retail Banking and Fujairah Region, National Bank of Fujairah, says, “Our retail credit team has started using these reports to verify customers’ debts with other banks. They help to identify their full exposure, thus ensuring the Central Bank guidelines on maximum permissible customer debt burden ratio of 50 per cent are met.”
Owing to operational issues of integrating credit reports into existing systems, not all banks are on board. “The UAE has almost 70 lending institutions, and a lot of smaller ones won’t join quickly. They will probably adopt the system as we develop more products,” says Lutfi.
However, consumers can expect banks to assess details of their credit behaviour when processing loan applications by year end. “Banks are slowly coming on board, getting to know the system and use it efficiently,” says Lutfi.
Consumer consent is a key element here. “Every customer is required to sign a declaration consenting to the request for their credit reports,” says Rafei. The procedure by which consent is obtained may vary in each institution. Lutfi says, “Banks may already have a lot of consents in place depending on how they are reacting. They may already get forms signed when activating this facility. But right now, they are trying to understand how these reports will integrate into the financial system going forward.”
Individuals can also now access their credit reports at a cost ofDh110 at the AECB’s offices in Abu Dhabi and Dubai. Lutfi says these are already in demand. “Though the soft launch is for operators and subscribers, anyone can walk into our centres and ask for their report. Several individuals have come to our offices and successfully acquired credit reports. Some residents have even used them internationally.”
There’s no getting away from your past any more.
