The Financial Regulatory Authority (FRA) has held a community dialogue session with representatives from factoring and leasing companies, which fall under its supervision. The session, attended by FRA Vice Chairperson Islam Azam, focused on presenting Basel III solvency standards and gathering feedback from stakeholders prior to implementing these standards.
This meeting reflects FRA’s approach under the leadership of Mohamed Farid, fostering continuous dialogue with key development partners to enhance the regulatory impact of FRA’s policies. This dialogue aims to support companies’ growth and the Authority’s strategic goals, including the effective enforcement of legislation. Throughout this week, the community discussions will extend to other non-banking financial companies licensed by the FRA to gather their insights and suggestions.
The initiative underscores the FRA’s commitment to adopting these standards across the non-banking financial sector to ensure financial solvency and meet necessary technological requirements. This approach fosters a more collaborative and interactive environment with relevant parties, promoting direct engagement aligned with global best practices.
Azam emphasized the importance of adopting Basel III solvency standards as they incorporate best practices in supervising the non-banking financial sector and strengthen risk management frameworks, which are crucial for ensuring financial stability and a sound economic environment.
He encouraged non-banking financial companies to implement the announced standards and report their findings to the FRA for discussion. Azam also noted that all non-banking financial companies will be given a transitional period to adjust to these standards.
Rehab Taha, Senior Advisor to the FRA Chairperson, presented an overview of Basel III solvency standards tailored for non-banking financial companies, marking the first such application in the sector. She explained that the FRA has set different capital adequacy thresholds and introduced safeguards against economic fluctuations, ensuring financial stability and resilience for companies operating in this sector.
Taha further explained that the FRA made substantial adjustments to the operational risk buffer, added a new market risk margin, and updated provisions for doubtful debts and individual and sectoral concentration risks.
According to an FRA statement, Basel III solvency standards will help ensure the financial robustness of companies, thereby supporting their financial standing and achieving stability within the sector.
In line with its strategic partnership with non-banking financial institutions, the FRA has opened a public consultation on Basel III solvency standards for non-banking financial companies. This initiative is part of the FRA’s ongoing efforts to improve direct communication channels and achieve its core objectives, foremost among them being the financial stability of non-banking financial transactions.
The proposed solvency standards for non-banking financial institutions under Basel III include capital adequacy, leverage ratios, liquidity measures, and other risk management requirements. These standards enable regulators to assess the financial stability of non-banking markets and institutions, thus enhancing the sector’s competitiveness, attracting investments, and sustainably supporting financial inclusion, insurance, and investment efforts while providing extensive protection for non-banking financial service users.
