SECP Introduces Proposed Revisions to NBFC Rules, Initiates Public Review
The proposed amendments also dictate that NBFCs, once the Rules are amended, must maintain membership in the relevant microfinance association.
Karobar
The Securities and Exchange Commission of Pakistan (SECP) has unveiled a draft outlining proposed amendments to the Non-Banking Finance Companies (Establishment & Regulations) Rules of 2003, inviting public feedback through an official press release issued today.
This move by SECP reflects its commitment to creating a more favorable regulatory framework for the non-banking finance sector. The suggested changes stem from a thorough review of existing regulations, taking into account the evolving landscape of the NBFC ecosystem and evaluating the efficacy of mandatory approval processes.
Among the modifications is the elimination of approval procedures for determining the rate of profit on subordinated loans and the repayment of such loans. Furthermore, the outdated requirement mandating the submission of a license application within six months of the Rules' notification has been removed.
Additionally, the necessity for an undertaking by the company's promoters or majority shareholders regarding the sale or transfer of shares without prior approval from the Commission has been deemed unnecessary and consequently eliminated.
The demand for evidence of qualifications and experience for individuals in "executive positions, research, or other related functions" within both existing and new companies has been considered excessive and, therefore, omitted.
Recognizing technological advancements in the financial services sector, specific licensing requirements have been introduced for lending and microfinance services conducted through digital channels, including mobile applications.
An additional requirement now mandates the identification of major shareholders and funding sources, coupled with providing an undertaking on fund sources.
Moreover, Schedule-I has been amended to facilitate the conversion of existing companies into NBFCs, creating a more conducive environment for such transitions.
These amendments have emerged following an exhaustive internal and stakeholder consultation process. SECP underscores the significance of these changes for the sustained long-term growth and stability of the NBFC sector in Pakistan.
