New regulatory framework for SME lenders announced
REGULATION WATCH- SME lenders will need to be set up as joint-stock companies with a minimum capital of EGP 30 mn under a regulatory framework set out by the Financial Regulatory Authority (FRA) yesterday (pdf). Any company seeking an SME lending license must be at least 50% owned by juridical persons or legal entities, and financial institutions must hold no less than 25%, FRA boss Mohamed Omran said. Any given lender must also hire a chief executive with at least 10 years of experience in the banking or non-bank financial services sectors in managerial positions.
Background: Changes to the Microfinance Act signed into law last month made SME lenders subject to the legislation. The law, which has been previously only limited to microfinance companies, also brought the lenders under the FRA’s oversight. They introduced capital requirements for SME lenders, rules pertaining to lenders’ technical and risk management capabilities, and allowed lenders to be members of a rebranded Egyptian Microfinance Federation.