RIYADH, 19 October 2004 — The newly established Saudi Credit Bureau, the only one of its kind in the Middle East, has announced that its database would in future help small and medium enterprises (SMEs) qualify for bank loans.

In a joint interview with Arab News, Nabil A. Al-Mubarak, general manager of Saudi Credit Bureau, and James Kavanagh, said the bureau, established and funded by the Kingdom’s commercial banks, has already stored data on thousands of customers in the first phase of their operations which began in March this year.

Two new banks — the Gulf International Bank and the Emirates Bank — will be co-opted on SCB’s board of directors in conformity with the instructions of the Saudi Arabian Monetary Agency (SAMA), which inspired the launch of the bureau.

Kavanagh, who also works as the compliance and audit manager of SCB, said the commercial banks in the Kingdom felt the need to gather information on the individuals to make it easier to process their loan applications. The system had already been in place, but they were not using foolproof methods to evaluate the loan applicants in terms of risk managements.

“The bureau is a repository of information from all banks. Here we refine that information and transmit it back to the bank to expedite its decision-making process,” Kavanagh said, adding that it provides authentic data on each customer after cross-checking the information to make sure that it is authentic and accurate.

Speaking on the future plans of the bureau, Al-Mubarak said that in the next stage it would concentrate on collecting data on the commercial entities before moving on to the next phase concerning money laundering. An important element in the assessment of commercial entities would be the scoring system. This will enable the banks to establish the credit worthiness of the individual or the commercial establishment. “We are also working on a scheme called ‘Know your customer’ in which the data will focus on the identity fraud and the financial fraud.”

In the case of identity fraud, the thrust of the exercise would be to ensure that the loan applicant and the recipient is the one and the same person. Confidentiality of the data will be strictly maintained and will not be given out to others in line with its code of conduct.

Asked about the modus operandi of the bureau, Al-Mubarak said that in the case of individuals the data would be compiled on the basis of their iqama and other relevant information gleaned from different sources. “The customer has a right of access to information supplied by the bureau. In that case, he will have to pay a certain fee. Nonetheless, we’ll be introducing a greater element of transparency in the banking operations,” he observed.

Elaborating on his statement, Kavanagh said if the bank declines the applicant’s request for loan, then he has a right to free access to information from SCB within 28 days of applying for loan. However, he may have to pay if his request for information falls outside the exemption period. The amount of fee has not yet been determined by the banks. Also under consideration is the fee to be charged to corporate customers for making use of its database.

He continued: “The type of information that we provide will help the bank to determine whether he honors his financial commitments or whether he is overcommitting himself. Thus we safeguard the interests of the bank and also protect the customer himself,” said Kavanagh.