FRA suspends issuance of consumer finance, microfinance licenses for 1 year
Updated 10/14/2024 8:19:00 AM
Arab Finance: The Financial Regulatory Authority (FRA) has decided to suspend issuing new licenses for companies seeking to engage in consumer finance or microfinance for one renewable year starting October 11th, according to a statement.
Under the decision, the FRA also suspended granting licenses for associations and civil institutions to practice microfinance activities.
The decision applies to traditional financing methods, excluding fintech-based services.
Also, it does not apply to companies that already have obtained the preliminary nod to begin operations in consumer finance or microfinance activities.
This move comes in response to the recent notable increase in the number of licenses, as the FRA granted 10 microfinance and 15 consumer finance licenses over the past two years, which raised concerns over the financial solvency of existing service providers.
Moreover, the decision aims to ensure that markets and non-banking financial institutions remain stable.
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