A federal credit bureau — that will rate individuals and business establishments based on their credit worthiness — is long overdue and will help banking and financial institutions to better assess the risks of financing and help in more responsible lending activities.
Although a credit bureau is not new in the UAE, the latest move will extend the scope of the credit bureau to include individuals. Banks will have better information on customers applying for loans and the risks attached to the person.
It will also help reduce loopholes in the system — where certain individuals used to take advantage of lack of information and secured loans from a number of banks without them knowing the extent of risks involved. This overexposure to loans sometimes result in insolvency of the person and leads to criminal proceedings.
The move will help increase transparency and accountability in economic activities that will also raise the country’s position in global ratings, especially in business and competitiveness reports and will enhance investor confidence.
As the nation moves forward to the next level of growth, a federal credit information bureau comes as a natural development.