Arab Finance: The Financial Supervisory Authority has stopped receiving applications from companies wishing to obtain a license to practice consumer financing and micro-enterprise financing activities for a period of one year, subject to renewal, according to what the authority announced. In his statementa.
The decision – which took effect on October 11 – applies to companies that operate through traditional methods, but excludes their counterparts that rely on financial technology.
The decision comes in light of the significant increase in new licenses granted over the past two years — 10 microfinance licenses and 15 consumer finance licenses — which has raised concerns about the financial solvency of current service providers. It also comes “within the framework of the Financial Regulatory Authority’s continued keenness to achieve financial stability for markets and non-banking financial institutions.”
The decision applies to companies that have already obtained initial approval to practice consumer financing or microfinance activities. The Financial Supervision Authority will also review the extent to which non-banking financial services companies adhere to the minimum capital, and will also conduct a community dialogue with the companies within days before applying financial solvency standards in accordance with Basel 3.
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