The Financial Regulatory Authority (FRA) has introduced a Responsible Pricing Reference Index in the non-banking financial sector, which covers the financing of micro, small, and medium enterprises (MSMEs).
The FRA Chairperson, Mohamed Farid, said that the FRA has been supporting the financing entities to comply with the responsible pricing rules, which include granting a six-month reconciliation period (which ended in August 2022) and providing a technical workshop and a detailed training program for finance, risk and credit managers in various entities.
Farid said that the index includes all the prices of microfinance products offered by licensed entities, whether individual or group financing. He added that the index will benefit the customers by increasing their awareness and transparency about the price levels of different financing products in the market and giving them the freedom to choose the most suitable programs for them in terms of cost. He also said that the index will help them avoid price risks that increase their financial burdens.
Ahmed Khorshid, CEO and board member of Tamweely Microfinance, said that the index will have a positive impact on the microfinance market, by enhancing the principles of customer protection, disclosure, and transparency. He added that due to the intense competition in the sector, it is important to disclose and transparently deal with all parties, including regulators, customers, and competitors. He said that this will improve the quality of disclosures that must be provided to the customer before, during, and after the financing process, which can positively affect their decisions and financing needs.
Ahmed Saleh, Director of Business Development at Sandah, said that the index is a good step that will provide suitable price plans and inform customers about all the MSME financing companies, so they can choose what suits their needs best. He pointed out that the index will help customers verify the accuracy of the financing cost by comparing the rates with those announced in the disclosure form that they receive from the financing entity before receiving the funds.
He explained that Sandah seeks to provide the best services and prices to customers and balance these two aspects as well as provide easy payment methods.
The FRA stated that the index is important because it serves nearly 3.9 million citizens, with a total financing of EGP 45.5bn until July 2023.