approved: two laws regarding the opening of competition in the credit market currently
Posted on Jan 10, 2021 by Ifi Reporter
The Ministerial Committee on Legislative Affairs today approved two laws promoted by Finance Minister Israel Katz, regarding the opening of competition in the credit market currently concentrated at the banks, in addition to the Law for the Promotion of the Fintech Sector. Will allow for regulatory flexibility and balance the playground.
"The credit market for households and small and medium-sized businesses in Israel is a highly centralized market that is almost completely controlled by the banks," the finance ministry said in a statement. "One of the main reasons for this is that banks 'funding sources are currently cheaper than non-bank lenders' funding sources."
According to the announcement, the amendment will allow lenders to diversify and expand the sources of financing for the purpose of providing credit and thus it may lower financing costs and allow these entities to compete in the banking system.
According to the draft law, it will allow large non-bank lenders who meet the conditions to increase the debt ceiling through the promissory notes from NIS 5 billion to NIS 15 billion and also raise debt through commercial securities within the limits set by law.
"This will allow lenders to significantly increase cheaper funding sources and reduce dependence on the banking system," it said. "In addition, various restrictions will be removed regarding the raising of promissory notes from all non-bank lenders. These restrictions limited the business conduct of non-bank lenders and in fact prevented some of them from raising debt through promissory notes."
The second proposal passed today is the bill to encourage the development of financial technology in Israel (the "Sandbox Law"), which according to the Ministry of Finance will help fintech companies operate in Israel and lead to improved financial regulation in Israel.
"The bill is intended to enable the establishment of a unique program - a regulatory playground (" Regulatory Sandbox "), and will constitute a significant step in increasing competition and advancing technology in financial services in Israel," they wrote.
The proposed plan is based on the conclusions of an inter-ministerial team coordinated by the Ministry of Justice and the Ministry of Finance and included representatives from the Securities Authority, the Bank of Israel, the Capital Market Authority, the Anti-Money Laundering and Terrorist Financing Authority and the Tax Authority.
"The program establishes an innovative experimental environment in Israel in cooperation with all financial regulators in Israel to support the activities of advanced technological financial entities (fintechs) in Israel," it was written.
"The regulatory playground will allow regulators to give regulatory relief to companies participating in the program while hedging risks and thus make it easier for fintech companies to try their innovative products in the Israeli market and benefit consumers. In addition, each company participating in the program will be accompanied by financial regulators The plan for the company's activities, "they concluded.