Credit profiles for individuals and companies will be made available to creditors within six months, the Federal National Council was told on Tuesday.
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, provided an update on the Dh200 million project after FNC members' concerns about a lack of credit information in the banking sector.
"[It will] be launched in less than six months and it will be liable for organising, collecting, keeping and classifying credit information," he said.
The move, aimed at bringing more transparency to the UAE market, will help banks and financial institutions to assess credit risks while approving loans and extending credit facilities to individuals and corporations.
But Al Tayer also stressed that the process involved a great deal of work and should not be pushed through too quickly.
"We hope that the bureau is formed in less than (the six month) period," said the minister, adding that the "establishment requires many procedures including electronic systems" to kick-start.
He pointed out that its board was only appointed last Sunday. "We should not rush things as this entity is very important for the country," he said.
FNC member Ali Al Nuaimi said the lack of credit information will badly affect the economy and the banking sector and that the government should act promptly.
In the absence of a credit information system, lenders remain uncertain of the companies and individuals' credit exposure and their ability to repay. Excessive exposure to credit resulted in a number of consumers being jailed when the financial crisis hit in 2008.
Hammam Shamma, a consultant at Al Fajr Securities, welcomed the news yesterday. "Such a company should have been established two years ago but now the many defaults of clients made it necessary to compile and classify information about bank clients," he said.
Shamma said the establishment of the credit body would prevent customers with debts taking multiple loans.
"Clients [sometimes] approach more than one bank to get loans and in some cases their payment capabilities are not enough for the loan amount, which leads to defaults," he said.
Speaking on the specifics of the bureau yesterday, Al Tayer said it will be established with a capital of Dh200 million divided into two million shares with a nominal value of Dh100 per share and the paid-up capital will be Dh120 million.
"The ministry had also taken the necessary measures to issue licences from the Security and Commodities Authority and the Department of Economic Development in Abu Dhabi to establish the entity," he said.
In reply to a question on the auditing process and structure, Al Tayer said: "Since auditing is very important, we have prepared decentralised auditing methodologies and updated them."