Credit rating bureaus on way

Bahrain's plan to create a credit rating bureau follows a similar announcement by Dubai Department of Economic Development in July.

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By  David Ingham Published  September 11, 2003

The Benefit Company, an electronics services company created by seventeen of Bahrain’s commercial banks, plans to set up a credit rating bureau in the country. The company says it’s currently in the final phases of studying the idea and is ready to have it running by the end of the year.

A statement from Benefit says: “The credit reference bureau will… improve services to businesses and individuals by enabling creditors to lend to better risk borrowers (i.e. clients who have a good history of repaying extended credit).”

Benefit says the bureau will work closely with the Bahrain Monetary Authority and the country’s financial services institutions. It will initially provide its services to financial institutions and credit card companies, extending them to other agencies and businesses later on.

Bahrain’s announcement follows confirmation in July that Dubai’s Department of Economic Development (DED) will oversee the creation of a credit bureau there. DED says it will finalise its plans for the bureau, which will be focused on facilitating commercial transactions, by the end of 2003.

“The proposed credit bureau will work in close co-ordination with the UAE Central Bank and will establish an exclusive link with the bank’s established credit information bank, which is currently selectively available to banking institutions in the country,” says Mohammed Al Abbar, director general, DED.

“In addition, the proposed bureau will work in close co-ordination with all government departments and institutions to ensure that businesses are able to access credit information on counter parties to business transactions.”

The arrival of credit ratings agencies in the region is long overdue. Arabian Business magazine has long argued the need for such organisations, commenting in an August 2003 editorial that “an absence of credit agencies makes it harder for companies to access the cash they need to grow.”

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