The board of directors of the Financial Regulatory Authority (FRA) has approved on Wednesday a new draft law regulating consumer credit activities, to be sent to the legislative authorities.
Mohamed Omran, chairperson of the FRA, said in a statement on Wednesday that the draft law contained provisions in 29 articles regulating all activities which provide financing for the purchase of goods and services for consumption purposes in Egypt.
The draft law excluded any consumer credit in which the term loan payment is shorter than six months.
Omran explained that the draft law doesn’t apply to the financing activities carried out by banks subject to the Central Bank of Egypt’s supervision, even if they are intended to finance the purchase of consumer goods or services, nor do they apply to activities organised under the provisions of the laws of the real estate finance and leasing through real estate developers, nor the providers of consumer finance, whose financing volume is less than the limit determined by the FRA at EGP 25m.
He added that the law regulates the practice of consumer finance activity. It states that in order to operate, a company should be licenced by the FRA, with an issued capital of no less than EGP 10m, and the company’s founder must include ‘legal persons’ whose share of the capital shouldn’t be lower than 50%, while 25% or more of the company’s capital should be from financial institutions.
In October 2018, Omran announced that the consumer credit activities in the country reached over EGP 70bn in 2018.