Arab Finance: The Financial Regulatory Authority (FRA), chaired by Islam Azzam, has approved amendments to regulations governing foreign-currency non-bank financing, according to a statement.
The amendments included adding a new category of foreign-currency financing within financial leasing and SME financing, covering sale-and-leaseback transactions. This can be used for import-related transactions, purchase of assets, or the settlement of foreign-currency obligations within the client's business activities.
As for factoring activities, the new decision stipulates that factoring clients in free zones are considered external parties. It also includes facilitations for international factoring transactions in foreign currency, particularly after it became apparent that some countries do not have a correspondent factor, whose presence was previously required under factoring agreements.
Under the new rules, the correspondent factor may be replaced by a bank, insurance company, venture capital (VC) firm, foreign financing institution, or any other entity recognized by the FRA.
The FRA also expanded the funding sources available to financial leasing, factoring, and SME financing companies when providing foreign-currency financing to clients.
