FRA sets new framework for licensing, regulation of non-banking finance branches

2026-03-02 - 15:24

The Financial Regulatory Authority (FRA) has issued a new regulatory decision establishing a comprehensive framework governing the registration, transfer, amendment and closure of branches of companies licensed to undertake non-banking financial activities. The move aims to reinforce institutional discipline, improve the geographical efficiency of service delivery, and ensure that expansion-related risks are managed in a manner that safeguards market stability and protects clients’ rights. Under Decision No. 44 of 2026, non-banking finance companies are prohibited from conducting activities from any premises other than their registered head office without obtaining prior approval from the FRA and registering the branch in the designated official register. The provision underscores the Authority’s emphasis on subjecting expansion plans to supervisory scrutiny to ensure operational, administrative and credit readiness. The decision defines four categories of permitted branches. These include financing branches authorised to carry out the full scope of licensed activities; marketing branches restricted to promotional activities and document collection without granting finance or receiving instalments; mobile branches operating through movable units; and seasonal branches established for specific events or defined periods. The classification seeks to balance operational flexibility with sound governance standards. Companies are further required to adopt an organisational structure for branch networks that reflects approved geographical distribution. They must also establish clearly defined credit decision-making frameworks — whether through central committees at head office level, regional committees, branch-level committees, or delegated authorities segmented by products, financing size and risk thresholds — to ensure an appropriate balance between efficiency and oversight. The decision sets out detailed documentation and procedural requirements for branch registration. These include board approval; identification of the branch’s location, classification and manager; submission of an up-to-date commercial registry extract; proof of legal tenure of the premises; the branch manager’s curriculum vitae; and payment of the prescribed inspection fee. The FRA retains the right to conduct on-site inspections prior to issuing a registration certificate. Prior approval from the Authority is also mandatory for the transfer, amendment or closure of any branch. Companies must implement measures to protect clients’ rights and regularise the status of employees in such cases. The FRA is authorised to take appropriate administrative action in instances of non-compliance. Additional regulatory obligations apply to mobile and seasonal branches, including submission of detailed operating plans; mechanisms for the secure handling and timely transfer of client documentation; vehicle licensing and insurance requirements; and the installation of tracking systems to enable effective supervisory oversight. Existing non-banking finance companies have been granted a period of up to six months from the decision’s effective date to regularise their branch status in accordance with the new rules. The decision will enter into force on the day following its publication in Al-Waqa’i’ Al-Masriya and on the FRA’s official website.