FRA issues Basel III-based solvency standards for non-banking finance sector

The Financial Regulatory Authority (FRA) has issued new solvency standards for companies and entities operating in non-banking financing activities, aligning them for the first time with the international Basel III framework, as per a statement.

The decision, approved by the FRA’s board of directors and chaired by Mohamed Farid, aims to strengthen the financial positions of non-banking finance institutions, improve their ability to address credit, operational, and market risks, and ensure liquidity to meet short- and long-term obligations.

The move is intended to bolster financial stability, sustain operations, and mitigate the effects of economic fluctuations and shocks.

Under the decision, companies must begin a pilot implementation of the standards on January 1st, 2026, submitting quarterly reports to the FRA on their progress.

Full implementation will be required from January 1st, 2027, replacing previous solvency regulations.

The standards, developed after consultations with sector stakeholders, introduce capital adequacy requirements that incorporate a risk margin and a countercyclical margin to address exceptional events and macroeconomic fluctuations.