The Securities and Exchange Commission of Pakistan (SECP) on Saturday notified draft of proposed amendments to the Non-Banking Finance Companies (Establishment & Regulations) Rules, 2003, to solicit public comments. Through these amendments SECP aims to provide a more conducive regulatory framework for the non-banking finance sector.
The proposed changes are based on a comprehensive review of the regulation, considering the advancements in the NBFC ecosystem and the effectiveness of mandatory approval requirements. The modifications include removal of approval processes for the rate of profit on subordinated loans and the repayment of subordinated loans. Additionally, the provision mandating the application for a license within six months of the Rules’ notification has been omitted being obsolete. Furthermore, the necessity for the submission of an undertaking by the company’s promoters or majority shareholders for the sale or transfer of shares without prior approval from the Commission has been eliminated as it was no longer deemed necessary. The requirement for furnishing evidence of qualifications and experience for individuals occupying “executive positions, research, or other related functions” within both existing and new companies was considered excessive and has been omitted.
Acknowledging the technological advancements within the financial services digital specific licensing requirements have been introduced for lending and microfinance services through digital channels including mobile applications.
