UAE bankers call for credit bureau in the UAE in a credit roundtable summit organised by MONEYworks

Bankers and industry experts present at the summit roundtable meeting acknowledged and stressed that the effects and costs of sharing information are greater than any competitive concerns they might have.

They also agreed that effectuating a credit bureau requires simultaneous and immediate participation by all major banks operating in the country.

The credit roundtable, which was sponsored by Emcredit, the only credit information bureau in the UAE, was held at a time when credit markets, both locally and globally, had frozen up.

The participants at the summit discussed how a credit bureau could bring a difference to the working of banks, which are currently following the same standard for all borrowers in the market. Participants said that banks were lending to everybody prior to the current financial crisis, but are not lending to anybody post-crisis. They all agreed that a credit information bureau could go a long way in easing some of the dilemmas that bankers are facing today in lending money.

The roundtable also discussed the concept of data pooling by banks in the UAE. Dr. Markus Krall, managing director of Krall Demmel Baumgarten, gave a presentation on the subject.

Dr. Krall said that that a few years ago, the UAE central bank conducted a project on Basel II, the state of risk management capabilities and the Basel II preparations for all the banks in the country. "At that time, the idea of data pooling to develop instruments for banks to comply with those regulations and to enable better risk management infrastructure came up. After that, however, the idea lay dormant, even though the need for such an arrangement was obvious to everyone," Dr. Krall added.

Dr. Krall also noted that even if credit information bureau or data pooling arrangements became fully operational in the UAE in the near future, banks and other users would still need expertise and capability to handle and analyse data.

"There is also a question about how banks are able to develop and calibrate their own risk management systems from the data at hand. It's critical for them to be able to properly use the information that a credit bureau can make available to them," said Dr. Krall.

The roundtable summit also debated salient issues around data protection regulations. B.B. Tiwari, a senior consultant with Dun & Bradstreet Information Services (India), spoke about the various complexities of rights and obligations of all stakeholders when it came to pooling or sharing data. He said that a country needs to draft regulations keeping in mind the socio economic fabric of the society for which the infrastructure is being created.

While participants agreed on the immediate need for a credit information bureau in the country, they also emphasised the importance of federal government backing to such an initiative.

Zaid Kamhawi, chief business officer at Emcredit, explained that Emcredit has made every effort and continues to get the right backing from the UAE federal government. He said that various ministries and local government departments apart from the central bank have been given a full presentation of Emcredit's efforts.

The relevant details of the debate and discussion at the summit will be published in a special report that will be distributed with the March Edition of MONEYworks and will be posted to the publication's website next month.