UAE bank customers, among the most indebted in the world, will soon be able to get hold of their credit reports, the head of the nation’s nascent credit bureau said.
Al Etihad Credit Bureau has collected 98 per cent of two years’ worth of customer data from the 70 financial institutions that lend to individuals in the UAE. The task will be completed before the end of the year, said Marwan Ahmed Lutfi. For a fee, clients would be able before the end of the year to start accessing their credit reports, he said.
“We have a major role to play in bringing awareness to the borrowers,” he said. “A lot of the borrowers have carte blanche in accessing easy money, whether it was through a credit card or a personal loan.”
A federal law was passed in 2010 to establish the bureau, which requires all banks to participate, but it has gained traction only in recent months.
The bureau is creating a database of the credit history of all retail borrowers, enabling banks to build an accurate picture of a potential borrower’s indebtedness, allowing them to assess his or her ability to honour the debt. Currently, banks cannot check the credit history of customers relating to other lenders.
Experience in other countries shows credit bureaux can help to stop individuals with a poor credit history from amassing further debt, while easing the flow of credit to those able to repay loans. Banks benefit by generally not having to build such large provisions, or money put aside to cover bad debts, against the risk of defaults. A credit bureau has become especially urgent in the country, where debt per capita stands at about US$95,000 per head, higher than global norms, industry executives say.
Mr Lutfi said he was not concerned about rising credit growth and pointed to measures apart from the credit bureau, such as higher down payments for mortgages, as evidence the authorities were making sure that loans don’t spiral out of control as happened before the country’s 2009 debt crisis. Last year, loans grew 9 per cent and analysts expect that figure to reach 10 per cent this year. Credit grew 41 per cent in 2008, according to figures from the central bank.
As well as helping to prevent another boom-and-bust cycle, Mr Lutfi said that he was also keen to promote financial responsibility among Emiratis. He said consumers must become savvier when taking on debt to see how it can be most efficiently done. While personal loans are available with interest rates of about 5 per cent, credit card debt can cost six times as much to maintain. Often, banks will offer Emiratis better interest rates because the risk of flight is much less than for expatriates.
“The easy money is specifically targeted at UAE nationals,” said Mr Lutfi. “What happens with UAE nationals is that the system has to deal with it. That’s why you’ve seen a lot of intervention, whether from the government or the central bank to alleviate a lot of the debt from UAE nationals. One of the major focuses is to make sure we don’t indebt the UAE national population.”
Eventually the credit bureau will add to its reports other forms of consumer obligations, such as telephone bills and other utilities and may even one day expand to the bank accounts that expatriates hold abroad, Mr Lutfi said.
“Exchanging data cross borders involves a lot of legalities, especially when you are dealing with more developed countries in Europe and the US,” said Mr Lutfi. “These things always run in the back of our minds, but I think we need to take the first step and start walking before running.”
mkassem@thenational.ae
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
UAE - India ties
The UAE is India’s third-largest trade partner after the US and China
Annual bilateral trade between India and the UAE has crossed US$ 60 billion
The UAE is the fourth-largest exporter of crude oil for India
Indians comprise the largest community with 3.3 million residents in the UAE
Indian Prime Minister Narendra Modi first visited the UAE in August 2015
His visit on August 23-24 will be the third in four years
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, visited India in February 2016
Sheikh Mohamed was the chief guest at India’s Republic Day celebrations in January 2017
Modi will visit Bahrain on August 24-25
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
A%20QUIET%20PLACE
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
The%C2%A0specs%20
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ARSENAL IN 1977
Feb 05 Arsenal 0-0 Sunderland
Feb 12 Manchester City 1-0 Arsenal
Feb 15 Middlesbrough 3-0 Arsenal
Feb 19 Arsenal 2-3 West Ham
Feb 26 Middlesbrough 4-1 Arsenal (FA Cup)
Mar 01 Everton 2-1 Arsenal
Mar 05 Arsenal 1-4 ipswich
March 08 Arsenal 1-2 West Brom
Mar 12 QPR 2-1 Arsenal
Mar 23 Stoke 1-1 Arsenal
Apr 02 Arsenal 3-0 Leicester
COMPANY%20PROFILE
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The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Places to go for free coffee
- Cherish Cafe Dubai, Dubai Investment Park, are giving away free coffees all day.
- La Terrace, Four Points by Sheraton Bur Dubai, are serving their first 50 guests one coffee and four bite-sized cakes
- Wild & The Moon will be giving away a free espresso with every purchase on International Coffee Day
- Orange Wheels welcome parents are to sit, relax and enjoy goodies at ‘Café O’ along with a free coffee
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EU's%2020-point%20migration%20plan
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SRI LANKS ODI SQUAD
Perera (capt), Mendis, Gunathilaka, de Silva, Nissanka, Shanaka, Bandara, Hasaranga, Udana, Dananjaya, Dickwella, Chameera, Mendis, Fernando, Sandakan, Karunaratne, Fernando, Fernando.
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How to get exposure to gold
Although you can buy gold easily on the Dubai markets, the problem with buying physical bars, coins or jewellery is that you then have storage, security and insurance issues.
A far easier option is to invest in a low-cost exchange traded fund (ETF) that invests in the precious metal instead, for example, ETFS Physical Gold (PHAU) and iShares Physical Gold (SGLN) both track physical gold. The VanEck Vectors Gold Miners ETF invests directly in mining companies.
Alternatively, BlackRock Gold & General seeks to achieve long-term capital growth primarily through an actively managed portfolio of gold mining, commodity and precious-metal related shares. Its largest portfolio holdings include gold miners Newcrest Mining, Barrick Gold Corp, Agnico Eagle Mines and the NewMont Goldcorp.
Brave investors could take on the added risk of buying individual gold mining stocks, many of which have performed wonderfully well lately.
London-listed Centamin is up more than 70 per cent in just three months, although in a sign of its volatility, it is down 5 per cent on two years ago. Trans-Siberian Gold, listed on London's alternative investment market (AIM) for small stocks, has seen its share price almost quadruple from 34p to 124p over the same period, but do not assume this kind of runaway growth can continue for long
However, buying individual equities like these is highly risky, as their share prices can crash just as quickly, which isn't what what you want from a supposedly safe haven.
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
Sanju
Produced: Vidhu Vinod Chopra, Rajkumar Hirani
Director: Rajkumar Hirani
Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani
Rating: 3.5 stars
Racecard
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A Prayer Before Dawn
Director: Jean-Stephane Sauvaire
Starring: Joe Cole, Somluck Kamsing, Panya Yimmumphai
Three stars
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Company%20Profile
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GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5