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CAIRO – 26 April 2020: Sarwa Capital Holding for Financial Investments SAE (SRWA), announced Sunday that Contact Credit; Sarwa Capital’s main subsidiary and the financing arm of the group, has received the first consumer financing license in line with the new Consumer Credit Act by the Financial Regulatory Authority (FRA).
“With this license, Contact Credit will be governed and regulated by the Consumer Credit Act no. 18 of the year 2020 instead of the Companies Act no. 159 of the year 1981, and will legally be authorized to operate as a non-banking financing entity regulated by the FRA rather than a trading entity,” Sarwa clarified in a filing to the Egyptian exchange (EGX).
The change brings a number of structural benefits to the company, its partners and its large and growing client base, with a more efficient legal environment helping promote both opportunities and transparency in the consumer credit market, it noted.
According to Sarwa Capital, Contact launched the first dedicated consumer finance platform providing automotive credit to consumers in 2001, and growing to become the largest provider of auto credit in the market, offering financing under various structures for new and used passenger cars and trucks.
“Contact and its subsidiaries offer a range of consumer financing services including mortgages, home finishing and furnishing financing, consumer durable credit, as well as commercial financing through its affiliates Contact Leasing and Contact Factoring,” it clarified.
In total, Contact has provided consumer financing, excluding mortgages, of LE 20 billion with an outstanding portfolio of over LE 5.5 billion at the end of 2019, Sarwa noted.
The company referred to the Consumer Credit Act that was enacted in March, saying that it represents an important milestone in the development and formalization of the large and wide-ranging non-bank consumer financing market.
“The new law comes to light as a result of a sustained and methodical process adopted by the FRA over the course of several years and which involved all stakeholders in the market,” the company said.
Under this law, new consumer finance companies would pay LE 100,000 to the Financial Regulatory Authority (FRA) to obtain a license provided they have at least LE 10 million in issued capital. In addition, at least 25 percent of the companies must be owned by a financial institution, and founded by legal persons that hold at least 50 percent of the company. Consumer finance companies established before the passage of the legislation would be exempt, unless they are acquired or a third of their issued capital is restructured.
“We are thrilled to receive our newly issued license for our largest operating business of consumer finance, bringing all of our financial activities under the FRA’s regulatory umbrella. The new Consumer Credit Act comes as a culmination of years of efforts led by the FRA in what we believe was an exemplary process to formalize a large and growing industry,” Chairman of Sarwa Capital, Hazem Moussa, commented.
Sarwa Capital Holding for Financial Investments operates within the diversified financial sector focusing on asset management & custody banking.