الهيئة العامة للرقابة المالية

• The new rule mandates regular checks on client creditworthiness to ensure responsible lending practices that align with a client’s ability to repay.
• The Authority prohibits companies from charging clients any interest or fees on their unused credit limit.
• The circular aims to verify client creditworthiness and curb harmful practices that could undermine the stability of transactions.
• The new rule was issued after ongoing dialogue between the Authority and consumer finance companies to maximize its impact.

FRA has issued a new circular that requires non-banking finance companies (NBFCs) to immediately report any credit limits they approve to the Egyptian Credit Bureau, also known as I-Score. This means that companies can no longer wait until the end of the month to report. The goal is to improve the integrity of the lending process by making it easier to verify a client’s creditworthiness. Ultimately, this new measure aims to enhance the overall financial stability of the non-banking finance sector.

Non-banking finance companies must now report all approved credit limits to the Egyptian Credit Bureau (I-Score) as soon as they are granted.

This new rule applies to every client, regardless of whether they have used the credit yet. It ensures that companies make credit decisions based on a thorough and immediate assessment of  clients’ creditworthiness and their ability to repay.

In light of this, the Authority aims to ensure that clients’ credit data is updated regularly and accurately. This supports sound financing decisions within companies and enhances the stability of non-banking financial markets while reducing the risk of clients’ defaults or exposure to non-repayment risks.

The circular also makes it clear that companies cannot charge clients any fees, interest or costs on credit limits that they do not use. This means that clients only have to pay for the used amounts.

It is worth mentioning that the circular is a result of several meetings held with consumer finance companies and service providers. This collaborative process reflects FRA’s commitment to ensure new regulations have a genuinely positive impact on the sectors it regulates all while staying within the legal framework.

The new measure is part of FRA’s ongoing efforts to regulate non-banking financial markets and protect consumer rights. It fulfills the Authority’s responsibility to supervise and monitor these markets, which ensures the stability and safety of both clients and institutions. FRA is dedicated to maintain transparency across all activities it regulates.