info.afrindex.com
China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
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New guidelines for the formation and licensing of consumer finance providers have been published by Egypt's Financial Regulatory Authority (FRA).
The goal of the FRA's decision, which was reached after reviewing Law No. 18 of 2020 on consumer finance regulation and Law No. 10 of 2009 on the regulation of non-banking financial markets and products, is to give the consumer finance market more structure and clarity.
Companies looking to establish themselves as consumer finance providers must submit an application to the FRA along with a bank deposit certificate proving that the full issued capital has been paid and a certificate from one of the authorized central depository and registration companies proving that the company's securities have been deposited with them, as per the first article of the regulations.
According to the second article, in order to be eligible for a license, a company must be organized as an Egyptian joint stock company with a minimum issued and paid-up capital of EGP 75 million, at least 50% of the capital being made up of legal entities, and no more than 25% coming from financial institutions.
In accordance with the third article, the firm must provide its articles of association, bylaws, commercial register entry, and tax card as well as proof that it satisfies the requirements stated in the first article.
Consumer finance companies whose main business is the distribution or sale of financed goods are eligible for licensing under the fourth article if their financing activities, as shown by their most recent audited financial statements, total no less than EGP 25 million and they set aside no less than EGP 10 million for consumer finance activities.
The FRA is given the authority to accept or reject a license application in accordance with the fifth article within 30 days of receiving all necessary paperwork. If rejected, the choice must be supported by evidence.
The cost to obtain a license is established at 0.5% of the company's issued capital in the sixth article, with a minimum fee of EGP 100,000 and a maximum fee of EGP 500,000.
The consumer finance industry in Egypt would benefit from these new regulations by becoming more stable and transparent, which is anticipated to accelerate sector growth and open up new opportunities for investors.
