Plan to provide a favorable regulatory framework for the non-banking finance sector
Draft of Proposed Amendments to Non-Banking Finance Companies Rules, 2003 Released for Public Opinion
ISLAMABAD ( Web News )
Securities and Exchange Commission of Pakistan (SECP) has approved the proposed amendments to the Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003 in view of providing a favorable regulatory framework for the non-banking finance sector. The draft has been released for public comment. The proposed amendments have been suggested after a comprehensive review of the changes in the NBFC sector and the existing framework and comprehensive consultation with all key stakeholders. According to details released by the SECP, the proposed major amendments include the rate of interest on subordinated loans and abolition of the approval process for disbursal of subordinated loans. The provision mandating application for license within six months of the notification of the rules is struck out as obsolete.Furthermore, promoters or majority shareholders of a company for sale or transfer of shares without prior approval of the Commission. The need to submit an undertaking on behalf of the finders has been done away with. The requirement to submit evidence of qualifications and experience for those holding executive positions, research, or other related positions in both existing and new companies has also been eliminated. In view of the increasing use of technology in the financial services sector, digital-specific licensing requirements have been introduced for lending and microfinance services through other digital channels, including mobile applications. In addition, major shareholders and funding sources. Additional requirements have been introduced to identify and provide an undertaking relating to sources of funding. It has also been made mandatory for NFF companies to maintain membership of the respective Microfinance Association. The amendment to I-I has also provided an opportunity for conversion of a non-performing company into an NBFC. are SECP believes that these are critical to the long-term sustainability of the NBFC sector in Pakistan.