• Dr. Omran: Forming a specialized Committee within each financing entity to estimate conditions of occasional customers and the possibility to postpone or reschedule installments or granting grace periods or exempting from delay fines or debt written-off
• Dr. Omran: By the end of each week, FRA shall be notified of the risk level of each company’s portfolio
• Dr. Omran: FRA issues a periodical memo on the precautionary measures that must be applied to maintain the safety and stability of microfinance activity
Dr. Mohammed Omran – FRA’s Chairman calls upon Heads of all entities licensed to practice microfinance activity to exercise caution and take all necessary precautions to face the economic challenges and impacts resulting from the spread of the novel Corona virus. He adds that the current period requires collaboration and cooperation between the Egyptian state entities to reduce these repercussions.
FRA issues a periodical memo on the precautionary measures that must be applied to maintain the safety and stability of microfinance activity and reduce the burden on microfinance beneficiary. In this respect, pricing policy for new funds shall be reviewed, taking into account the effects of reducing interest rate issued by the Central Bank of Egypt on 16 March 2020. That is besides any other advantages that may be obtained by microfinance entities during the coming period from the Central Bank of Egypt such as paying the credit obligations of institutional clients and approving those audits from the entity’s board / trustees within a period of three weeks at most from its date.
FRA’s Chairman also stressed on the importance of informing customers (more than 3.1 million beneficiaries with a volume of financing of more than 16.5 billion pounds at the beginning of the current year) with facilities to cancel fees and commissions set upon using points of sale and withdrawals from ATMs and electronic wallets for a period of 6 months from the date of the instructions of the Central Bank of Egypt to encourage them to use non-cash payment methods, whether through prepaid cards, mobile phone payments, as well as payment at various points of sale of companies and electronic payment destinations spread throughout the Republic.
In this periodical memo, Dr. Omran stressed on the importance of applying the rules and criteria set for practicing microfinance activity issued by the Authority. He emphasized that companies shall not overburden customers. Also, it shall check the validity of the mandatory insurance policies against the risks of death and total sustainable disability for clients of microfinance agencies of categories (A and B) and the companies all the time. Companies shall ensure the daily follow-up of rates of irregularity at all branches in all governorates. In case of the emergence of stumbling indicators arising from the current crisis, urgent measures shall be taken to confront the stumbling block in order to avoid any loss.
FRA’s Chairman stressed on the formation of one or more specialized committees at the level of the microfinance donor to estimate the current exceptional circumstances of clients who are not able to pay their obligations regularly, especially owners of micro-enterprises who are the most affected by the crisis. Also, the committee shall ensure applying the Client Protection Principles in terms of good treatment and respect. That is besides estimating appropriate treatment solutions according to the mechanisms and principles of microfinance activity such as delaying installments, rescheduling, granting grace periods, exempting from delaying fines and debt written-off . Each microfinance company, NGOs, and private institutions of categories (A and B) shall provide the Authority by the end of Thursday of every week of the portfolio in danger according to calculations of allocation base approved by the Authority indicating the geographical areas with the largest arrears rates.
In addition, FRA’s Chairman called for providing more flexibility upon activating scheduling mechanism for irregular funds at an appropriate time in order to avoid faltering and according to a study for each case separately, in a manner that will not put more burdens on the clients.
Moreover, FRA’s Chairman stressed on the importance of enhancing the developmental role of microfinance institutions in society in light of these challenges by working to provide clients with financial and non-financial services appropriate to the current circumstances. He suggested that companies shall activate micro-insurance services, prepare and distribute awareness leaflets among clients for medical prevention purposes, identify medical centers that provide necessary medical services geographically close to the clients’ headquarters. Also, microfinance companies shall provide various contributions related to health care aspects, other services and benefits that can be offered according to the capabilities of each company.
On the other hand, the periodical memo carried a number of preventive measures to face the spread of the coronavirus. The periodical memo states that each entity shall approve an emergency response & business continuity plan in order to achieve effective management of human and material resources in the face of the current circumstances. Such plan shall focus on spreading sufficient awareness among its employees and customers through following several health protection measures. In addition, a chief risk officer is assigned to follow up the set plan and prepare a weekly report on its results, which will be presented to the chairman of the board / trustees or managing director / director of financing activity to take the necessary corrective measures on an ongoing basis. That is besides reviewing portfolio growth in different branches and reconsidering the appropriateness of the set rates and its geographical distribution with the current conditions in order to maintain the quality of the portfolio. Also, microfinance companies shall strike a balance between funding operations and collection and follow-up tasks. It shall adopt a remote monitoring mechanism to follow up the portfolio performance through phone calls with clients, text messages on mobile phones and field follow-up in the necessary cases in accordance with the conditions of each entity. On the other hand, companies shall make use available electronic means and tools in dealing with daily operations and circulation of documents within the entity and its branches whenever possible.