NBFS firms are going to need bigger buffers: Non-banking financial services (NBFS) companies have one year from 18 May to increase their paid and issued capital to EGP 75 mn to comply with new capital requirements, according to a Financial Regulatory Authority (FRA) statement. This is a 50% increase from the previous minimum requirement of EGP 50 mn, Aman Financial Services CEO Hazem Moghazi told Enterprise yesterday.

Newly-established companies have less time to comply: New NBFS firms have three months from the date the FRA issues their operating license to meet the new minimum requirement.

The rationale: The new capital requirement is meant to ensure non-banking financial services firms have a buffer against external financial shocks and mitigate risk in the sector, the FRA said.

More credit: Higher capital requirements will allow NBFS firms to access more credit from banks, a source with first hand knowledge of the matter told Enterprise yesterday on condition of anonymity. These companies can borrow up to nine times the value of their capital in credit from banks, the source added.

And in turn extend more finance to SMEs: The new requirement will allow NBFS companies to extend bigger loans to small businesses, since current regulations put a cap on the value of total loans NBFS firms can extend to SMEs at 10% of the lender’s paid and issued capital, Moghazi told us.

It’s not just NBFS firms facing higher capital requirements: Foreign-exchange bureaus are facing tough new capital requirements under central bank regulations designed to crack down on the parallel market. Bureaus will have to have at least EGP 25 mn in capital by the middle of September, a 5x increase from current requirements.

Tags: