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Credit Information Agency To Have Data of All Residents

ABU DHABI - The federal draft law on credit information stipulates creation of an independent company that will keep the data on every UAE national and expatriate residents. The law will be debated in the Federal National Council (FNC) session on Tuesday.

Hamad Hareth Al Madfa, Chairman of the FNCТs Financial and Economic Committee, told Khaleej Times on Sunday that the proposed company, which will run its affairs in complete confidentiality, will provide banks and financing firms licensed by the UAE Central Bank with information and data concerning the customer applying for a loan or credit card.

According to him, the committee agreed during the deliberations on the Bill that the government would hold the majority of shares in the company so as to exercise strict control and  guarantee the rights of customers and safety of data. The company, he added, would include shareholders from banks and financing institutions.

These private firms have databases and rich expertise in the industry. A public-private partnership in this regard will no doubt render success to this new entity, Al Madfa said.

СТThe committee agreed with the government to identify a safe mechanism to deliver these data to banks through a secure instrument to prevent squandering of their capital at the hands of borrowers and customers who are not eligible for these facilities.Ф

He recalled that many banks have lost their funds because they lent  money and issued credit cards to  people not worthy of acquiring them. Such people took several loans and owned multiple credit cards from different banks. This, he explained, has impacted the performance of banks amid the current global financial crisis.

СТThe proposed credit information agency will empower banks to get the correct financial records and situation of the customer and his ability to meet his commitments. This will help the banks select reliable customers, a move that will serve the national economy and cushion the banks against potential risks,ТТ Al Madfa said.

СТWhen passed, the legislation will provide assurances of confidentiality  of information. The customerТs consent will be required to pass on his  data to those who demand them. A customer who applies for a loan will automatically agree to the delivery of information. Otherwise, the agency will provide the information about him only after contacting him to take his permission,ТТ he explained.

СТThe Central Bank has a credit risk management system but it is ineffective. It keeps records of customers who receive bank funds worth more than Dh500,000. It has no statistics about the number of credit cards owned by each customer.Ф

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