Financial Regulatory Authority Halts New Applications for Traditional Consumer and Microfinance Licenses for One Year – Fintech News Egypt

In a move aimed at strengthening financial stability and enhancing the role of non-banking financial institutions in Egypt’s national economy, the Financial Regulatory Authority (FRA) has announced a one-year suspension on accepting new applications for the establishment and licensing of companies looking to engage in traditional microfinance and consumer finance activities. This suspension also applies to associations and civil institutions seeking licenses to practice microfinance activities, in accordance with FRA Resolution No. 184 of 2024.

The decision, effective from October 11, 2024, reflects the FRA’s commitment to ensuring the financial solvency of service providers in these rapidly growing sectors. Over the past two years, the FRA granted 10 new licenses for microfinance companies, with six more applications currently under review. In total, 25 companies have been licensed in this space, alongside 10 civil society organizations. Meanwhile, 15 companies have been licensed for consumer finance activities, with four additional applications under consideration, from a pool of 30 licensed companies.

Currently, microfinance serves approximately 3.8 million beneficiaries, with total financing reaching EGP 56.2 billion, while the consumer finance sector caters to around 1.9 million beneficiaries, with a total financing volume of EGP 35.5 billion.

As part of its ongoing efforts to safeguard financial solvency and introduce technological improvements within non-banking financial institutions, the FRA will soon initiate a virtual community dialogue with stakeholders. This dialogue will focus on the implementation of Basel III financial solvency standards, ensuring the sector remains robust and resilient. Additionally, the FRA is reviewing compliance with its minimum capital requirements for non-banking financial entities: EGP 75 million for microfinance and consumer finance companies, and EGP 100 million for real estate financing companies.

Notably, the FRA’s decision excludes companies or entities looking to offer microfinance or consumer finance services using financial technology (fintech) solutions. These entities are governed by the Financial Technology in Non-Exchange Financial Activities Law (Law No. 5 of 2022), which promotes the use of digital financial tools.

Furthermore, the suspension will not affect companies, associations, or civil institutions that have already been established, received initial approval, or submitted their applications for establishment or licensing before the decision took effect.

This suspension marks a critical step in the FRA’s ongoing efforts to safeguard Egypt’s financial ecosystem and adapt to the growing digital transformation within the financial services sector.

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