ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has actively supported the development of the SIP–sector-specific hybrid credit rating, which will help microfinance providers in improving their focus on social impact, governance, and sustainability.
This was stated by SECP Chairman Aamir Khan during his speech as chief guest on the PACRA’s webinar titled, “Social Impact and Performance (SIP) Rating”, held here on Thursday.
He added that this new rating regime would also assist microfinance providers in better access to private capital and serve as a great source of information for potential investors interested in social impact of their investments.
The chairman informed of several reforms that the SECP had recently introduced, targeted at improving liquidity and governance of the NBMFCs. These foremost included amendments in the NBFC Regulations, which have been introduced after broad-based consultation with all the stakeholders.
The amendments are targeted at improving risk management, as well as implementation of uniform ways of dealing with liquidity and credit underwriting for the NBMFCs.
Thereby facilitating NBMFCs to maintain a growth trajectory in a measured and responsible manner. Second, the SECP has facilitated the NIT and the PMIC’s joint initiative for setting up first ever microfinance sector specific Social Impact Fund, under the mutual fund structure. The proposed fund will be available to institutional as well as retail investors, and will invest in debt instruments to be issued by the NBMFCs, to support their liquidity and funding requirements.
The SECP also introduced amendments to Credit Rating Companies Regulations, 2016 in 2020, which led to conducive regulatory environment by removing certain requirements, such as reduction in new license fee from Rs1 million to Rs100,000; abolishment of licence renewal fee; disengagement period for two years subsequent to private ratings and enhancement of collective individual shareholder limits from 25 percent to 40 percent, to encourage new professional entrants to join the credit rating business.
Moreover, considering the inherent issue of access to capital for some NBMFCs due to their non-profit corporate structure, the SECP in consultation with the Pakistan Microfinance Network, is providing guidance to such NBMFCs to transform from non-profit to for-profit status.
Copyright Business Recorder, 2022
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