Banks across the country will be required to supply credit information about their customers to a central database under a Federal law designed to improve the transparency of borrowing.
The creation of a credit bureau has been approved by Sheikh Khalifa, President of the UAE, said Zaid Kamhawi, the chief business officer at Emcredit, a credit bureau based in Dubai.
"This will strengthen the credit information legal infrastructure of the UAE by requiring banks and other financial institutions to provide their credit information," he said.
Obaid al Tayer, the Minister of State for Financial Affairs, said last night officials from the Finance Ministry and Central Bank were preparing the bylaws for the Federal credit bureau, which is expected to start operating within six months.
The establishment of a Federal credit bureau follows a period of turmoil in the country's financial system during the global financial crisis linked to the non-payment of consumer debts and business loans.
Many banks have remained reluctant to increase lending - required to spur economic growth - over recent months due to uncertainty about the build-up of bad loans on their balance sheets.
Officials hope a dedicated credit bureau will provide the financial services industry with better credit information, helping to assist banks with their lending decisions.
No government ruling has yet been made about whether the law will involve expanding the existing remit of Emcredit or require the creation of a new bureau.
A law was passed by the Dubai Government in July requiring local and international lenders operating in the emirate, as well as organisations outside the financial sector such as utilities and telecommunications companies, to share client information within the UAE with Emcredit.