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2018-01-01

Board of Directors Decision No. (3) of 2018

The Financial Regulatory Authority (FRA) issued Board of Directors Decision No. (3) of 2018 to amend Decision No. (173) of 2014 by introducing new regulations governing the use of electronic payment systems by microfinance companies for financing disbursement and collection. The decision mandates that companies obtain prior FRA approval by submitting a standardized application demonstrating compliance with periodic reporting, valid contracts with payment service providers, Central Bank of Egypt approvals, simplified consumer guidance materials, and payment of inspection fees. Approved companies must secure explicit prior client consent, maintain secure transaction records for at least one year post-termination, submit quarterly usage reports, and obtain FRA approval for any contract amendments, with the Authority reserving the right to revoke approval for non-compliance.

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Financial Regulatory Authority Egypt

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Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Board of Directors Decision No. (3) of 2018

Dated 27/3/2018

Amending Certain Provisions of Board of Directors Decision No. (173) of 2014

Regarding Rules and Regulations for Companies Conducting Microfinance Activities

Board of Directors of the Financial Regulatory Authority

After reviewing the Law on Joint Stock Companies, Companies Limited by Shares, Limited Liability Companies, and Single-Person Companies issued by Law No. (159) of 1981;

And Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments;

And Law No. (141) of 2014 regulating the microfinance activity;

And Presidential Decree No. (192) of 2009 issuing the Basic Statute of the Financial Regulatory Authority;

And Board of Directors Decision No. (158) of 2014 regarding microfinance activity areas and values;

And Board of Directors Decision No. (173) of 2014 regarding rules and regulations for companies conducting microfinance activities and its amendments;

And the approval of the Board of Directors in its session held on 27/3/2018;

Decided:

(Article One)

Two new articles, numbered 29 bis (1), shall be added to the aforementioned Board of Directors Decision No. (173) of 2014, with the following text:

Article (29) bis (1): Electronic Payment Systems in Granting Financing and Collection:

Companies may use electronic payment systems for granting financing and collection related to the microfinance activity through electronic payment system services, subject to obtaining prior approval from the Authority.

(Article Two)

This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its issuance date.

Chairman of the Board of Directors
Dr. Mohamed Omran

Smart Village, Building no. B-136, Giza, Egypt
Postal Code: 12577
Tel.: +202 35345350 - Fax: +202 35370036
info@fra.gov.eg

Smart Village, Building no. B-136, Giza
Postal Code: 12577
Tel.: (00202) 35345350 - Fax.: (00202) 35370036
www.FRA.gov.eg

And companies wishing to obtain the Authority's approval to use electronic payment systems for granting financing and collection related to the activity shall submit an application according to the form prepared for this purpose, subject to meeting the following conditions:

  1. The company's commitment to submitting periodic regulatory reports on time during the year preceding the application submission.

  2. The Authority's approval of a copy of the contract signed with one of the electronic payment service providers regulating the working relationship between them regarding the microfinance activity operations service, as well as a copy of the Central Bank of Egypt's approval for the service provider regarding offering that type of services.

  3. The Authority's approval of a copy of simplified awareness and guidance materials regarding the targeted services to be provided in cooperation with electronic payment entities for microfinance activity operations, clarifying the usage and response methods, and amending them to align with the Authority's comments (if any).

  4. A commitment to obtain prior approval from the entity's operations using electronic payment system services regarding the microfinance activity (disbursement and repayment or either one).

  5. Payment of the prescribed fee for inspection and study services.

The Authority shall review and examine the application and verify that it meets its requirements, and a decision on the application shall be made within a maximum of five working days from the date of its submission with all required documents.

Article (29) bis (1): Regulations for Using Electronic Payment Systems in Granting Financing and Collection:

Companies that have obtained the Authority's approval to use electronic payment services in the microfinance activity shall comply with the following:

  1. Obtaining prior consent from each client in microfinance activity operations when using electronic payment system services (disbursement and repayment or either one) with them, as well as evidence of informing them of all rights and obligations and how to file complaints regarding them, by signing an independent consent form for this purpose according to the Authority's issued guideline form, ensuring that the client's consent and evidence of receiving a copy of the guidance instructions for using electronic payment services are kept in the client's file.

  2. Retaining the details regarding electronic payment services according to the report system issued by the service provider (electronic payment entity) on the financial transactions executed for disbursement and collection in a

secure storage (electronic or paper), according to the time period specified in the materials organizing the client file, for a period of one year from the date of termination of the relationship, and in case of a dispute regarding the financed amount subject to repayment, they shall be retained until the dispute is resolved.

  1. Submitting the attached periodic report form regarding the use of services on a quarterly basis.

  2. Obtaining the Authority's approval within a period not exceeding fifteen days for any amendment to the contract with the electronic payment entity.

The Authority may revoke the approval issued to the company to use electronic payment services in the microfinance activity in case of violating any of the conditions or regulations for granting approval.

Smart Village, Building no. B-136, Giza, Egypt
Postal Code: 12577
Tel.: +202 35345350 - Fax: +202 35370036
info@fra.gov.eg

Smart Village, Building no. B-136, Giza
Postal Code: 12577
Tel.: (00202) 35345350 - Fax.: (00202) 35370036
www.FRA.gov.eg

Chairman of the Board of Directors
Dr. Mohamed Omran

46076

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