الهيئة العامة للرقابة المالية

• The Authority confirmed absolute non-compliance as these entities failed to provide financing services, invalidating their license’s core purpose.
• The violating entities refrained from submitting regulatory reports to the Authority, did not adhere to the credit inquiry system and lost their membership in the Egyptian Union of Microfinance.

Dr. Mohamed Farid, FRA Chairman:

• The Authority proceeded only after using all formal warning and communication channels with the non-compliant entities.
• Entities were granted a grace period to comply, but their lack of response necessitated intervention to safeguard dealing parties’ rights and market stability.
• The Authority aims to regulate the market and support serious compliant institutions.
• FRA consistently work to foster a strong, flexible and sustainable microfinance sector, supporting operating entities rather than penalizing them.

In a decisive regulatory step, FRA Board of Directors chaired by Dr. Mohamed Farid, issued resolution No. 258 of 2025, revoking microfinance licenses of approximately 258 civil associations and Institutions (Category C). This action was taken to enhance market discipline, protect clients and boost the efficiency and transparency of the microfinance sector. The revocation followed an extended period of monitoring and inspection which confirmed these entities had fundamentally failed to comply with the regulating rules and requirements governing microfinance, specifically Law No. 141 of 2014 and Law no. 201 of 2020.

This resolution aligns with FRA’s continuous strategy to strengthen the stability of non-banking financial activities, safeguard the rights of all dealing parties and ensure the market is efficient enough to support the most vulnerable segments of society. This enforcement action is expected to positively impact Egypt’s broader economic and social development goals.

Currently, there are 754 licensed microfinance entities registered with FRA and they are classified by the size of their financing portfolios. The distribution is as follows: 23 entities fall under Category (A) (over EGP 50 million), 33 are in Category (B) (EGP 10 million to EGP 50 million), and the remaining 698 are Category (C) (EGP 10 million or less).

Dr. Farid affirmed that the Authority resorted to license revocation only after exhaustive measures. The violating entities were granted sufficient time to rectify their status and meet licensing requirements and FRA used all channels of communication and warning. The entities’ lack of response necessitated this intervention to safeguard the sector’s stability and protect the rights of clients.

The regulatory inspection found that license revocations were mandated by the entities’ complete absence of activity and neglect of duty. Their failure to provide financing services to targeted groups nullified the license’s fundamental purpose.

The violations also included a gross breach of regulatory requirements by continually refraining from submitting periodic reports and financial statements. This prevented the Authority from assessing their financial positions and monitoring their performance.

The regulatory review confirmed that the violating entities were not integrated into the microfinance sector’s infrastructure. Specifically, they ignored adherence to the credit inquiry system and had lost their essential membership in the Egyptian Microfinance Federation. Both adherence to the credit system and Federation membership are crucial requirements for practicing the activity and ensuring market discipline and accountability.

Dr. Farid clarified that the Board’s philosophy is not punitive, focusing instead on supporting and building a strong, flexible and sustainable microfinance sector. He emphasized that the presence of undisciplined or inactive entities actively harms the sector’s reputation and introduces risks that could severely threaten its stability.

FRA Chairman clarified that this measure is expected to regulate the market and enhance support for serious institutions committed to professional rules and regulatory controls. This action will strengthen the protection of clients’ funds and contribute to raising levels of financial and investment inclusion.

Furthermore, FRA emphasized its ongoing commitment to provide technical support and specialized training for compliant associations, in partnership with relevant entities. This assistance aims to enable their expansion and the absorption of new client segments. The Authority affirmed it will not hesitate to take any additional actions necessary to guarantee market discipline and safeguard the rights of all stakeholders.