The FRA’s decision aims to provide more clarity and structure to the consumer finance market.
Egypt implements regulations to boost consumer finance sector - File Photo
Egypt’s Financial Regulatory Authority (FRA) has issued new regulations governing the establishment and licensing of consumer finance providers.
The FRA’s decision, which comes after examining Law No. 10 of 2009 on the regulation of non-banking financial markets and instruments, and Law No. 18 of 2020 on consumer finance regulation, aims to provide more clarity and structure to the consumer finance market.
According to the first article of the regulations, companies seeking to establish themselves as consumer finance providers must submit an application to the FRA, including a bank deposit certificate indicating that the full issued capital has been paid and a certificate from one of the licensed central depository and registration companies showing that the securities of the company have been deposited with them.
The second article stipulates that in order to obtain a license, the company must take the form of an Egyptian joint stock company, with an issued and paid-up capital of no less than EGP 75 million, with legal persons representing no less than 50% of the company's capital, and financial institutions contributing no more than 25% of its capital.
The third article requires the company to submit its articles of association, bylaws, commercial register, and tax card, in addition to providing evidence of meeting the conditions outlined in the previous article.
Under the fourth article, consumer finance providers whose primary activities involve distributing or selling financed goods are eligible for licensing, provided that their financing activities amount to no less than EGP 25 million, as per their last audited financial statements, and that they allocate no less than EGP 10 million for consumer finance activities.
The fifth article empowers the FRA to approve or reject a license application within 30 days of receiving all the required documents. If rejected, the decision must be justified.
The sixth article sets the fee for obtaining a license at 0.5% of the company’s issued capital, with a minimum of EGP 100,000 and a maximum of EGP 500,000.
These new regulations will create a more stable and transparent environment for the consumer finance market in Egypt, which is expected to boost growth in the sector and provide new opportunities for investors.
