Egypt’s FRA to bring SME financing under 2014 microfinance law
LEGISLATION WATCH- FRA to bring SME financing under 2014 microfinance law: Dedicated SME lenders including finance companies and NGOs could be governed under the 2014 microfinance law (pdf) after the Financial Regulatory Authority’s (FRA) board of directors approved amendments to the legislation, the regulator said in a statement (pdf). The proposed changes would see the inclusion of SMEs in the law’s name and make the necessary amendments to its articles to reflect the addition. This would mean all stipulations aimed at regulating microfinance activity — including articles pertaining to lenders’ technical and risk management capabilities — would apply to SME lenders. The changes will now make their way to the Madbouly Cabinet for review.
What else is new? The draft amendments would introduce a EGP 20 mn capital requirement for SME lenders, and keep the requirement for their microfinance counterparts at EGP 5 mn. They would also allow SME finance providers to be members of a rebranded Egyptian Microfinance Federation. Those providers will be allowed to provide financial leasing services in accordance to the recently-ratified Leasing and Factoring Act.