The decision, made by the FRA's Board of Directors headed by Dr. Mohammed Farid, aims to provide more diverse financing options for consumers and bolster financial inclusion.
Under the new rules, a single customer can receive up to EGP
50,000 in pre-cash financing from a consumer finance company, irrespective of
their overall credit limit, provided they meet creditworthiness criteria.
To prevent misuse, the resolution stipulates that customers
cannot obtain additional pre-cash financing until they present documents
proving the previous funds were used for their stated purpose and the prior
financing has been fully repaid. This requires customers to provide invoices or
other supporting documents for their purchases.
The FRA's move also emphasizes digital transformation within
the non-banking financial sector. The resolution mandates the use of digital
applications for data storage and requires companies to categorize
transactions, including details of goods, services, and cash disbursements.
Furthermore, all financing disbursements and installment
collections must now largely be conducted via non-cash (electronic) payment
methods. This aligns with Law No. 18 of 2019, which regulates non-cash payments
in non-banking financial transactions.
While cash disbursements for financing are capped at EGP
2,000 and cash installment repayments at EGP 500, any amounts exceeding these
limits must be processed electronically.
Consumer finance companies are now required to obtain prior
FRA approval before offering cash financing products and must ensure customers
use the funds for their intended purpose, verifiable by invoices. Companies
have three months from the resolution's effective date to apply for approval
and demonstrate compliance with existing regulations.
The FRA reiterates its continuous commitment to market oversight and developing the regulatory framework to suit market requirements and economic challenges, thereby ensuring the achievement of its goals in protecting all parties and developing non-banking financial activities.