The Securities and Exchange Commission of Pakistan (SECP) has unveiled proposed amendments to the Non-Banking Finance Companies (Establishment & Regulations) Rules, 2003, inviting public feedback. These amendments aim to enhance the regulatory framework for the non-banking finance sector, reflecting a comprehensive review of the existing rules and adapting to the evolving NBFC ecosystem.
Key changes in the draft include the removal of approval processes for profit rates on subordinated loans and their repayment. The mandatory license application within six months of the Rules’ notification has been eliminated as outdated.
Additionally, the requirement for an undertaking by company promoters or majority shareholders for share sale or transfer without prior Commission approval has been scrapped as no longer necessary.
Acknowledging technological advancements, specific licensing requirements for lending and microfinance services through digital channels, including mobile applications, have been introduced. These include identifying major shareholders and funding sources and providing an undertaking on fund sources.
The amended rules will mandate NBFCs to maintain membership in the relevant microfinance association. Schedule-I has been amended to facilitate existing companies’ conversion to NBFCs, providing a conducive environment for such transitions.
These proposed amendments follow extensive internal and stakeholder consultations, with SECP emphasizing their significance for the long-term sustainability of the NBFC sector in Pakistan. Public comments are invited to contribute to the refinement of these regulatory changes.
