The UAE’s Central Bank is working on a local credit rating agency to create credit ratings for individuals seeking bank loans, sources told the Gulf News.
Currently, there is no system to measure the creditworthiness of individuals, although the financial institutions and banks have ways of assessing the financial standing and history of corporations in the country.
Several banks “burned their fingers” about two years ago on a corporate funding deal exceeding Dh1 billion, said the paper, adding that banking experts blamed it on the lack of availability of coordinated data on the borrower.
The sources said the Central Bank had already entrusted the job of drawing up a master plan for the credit bureau with a consultant, and that it would not be long before the agency was set up.
At a recent meeting with the Emirates Banking Association (EBA), top Central Bank officials stressed the need for a credit rating agency that could offer details on the financial strength of borrowers to banks.
While credit bureaus, including private agencies, are common in the West, many Gulf countries have yet to establish them, the sources told the paper – Albawaba.com
