ISLAMABAD: A deposit-taking Non-Banking Finance Company (NBFC), which has a valid permission to raise deposits, should have maturity period of such ‘certificates of deposit’ not less than 12 months.
The Securities and Exchange Commission of Pakistan (SECP) has issued SRO 1408 (I)/2021 to issue draft amendments to the Non-Banking Finance Companies and Notified Entities Regulations, 2008, here on Tuesday.
According to the revised regulations, the maturity period of the deposit shall not be less than 12 months.
Earlier, the said maturity period of the deposit was not less than three months.
As per new regulations, the certificates of deposit shall be redeemable after 45 days of its issuance subject to such penalty that the NBFC shall specify for premature redemption under the terms and conditions laid out in the deposits agreement or product disclosure statement.
Provided further that the NBFC shall submit monthly reports to the commission with respect to premature redemptions of certificate of deposits made by it, on the format as may be notified by the commission, the draft amendments added.
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The relevant regulation is related to the permission to issue certificate of deposit by a lending NBFC.
Lending NBFCs, excluding those NBFCs, which already have valid permission to raise deposit, may apply to the commission for permission to raise deposit, after complying with the laid down conditions.
Under the existing regulations, a deposit taking NBFC, which has a valid permission to raise deposit shall comply with the following conditions: The maturity period of the deposit shall not be less than three months.
The certificate of deposits shall not be redeemable before expiry of the maturity period, provided that the existing certificates of deposit shall be redeemable after 45 days of its issuance on the terms and conditions laid out in the deposits agreement or product disclosure statement, it added.
Copyright Business Recorder, 2021
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