ISLAMABAD: In a significant move towards promoting responsible lending and consumer safety, the Securities and Exchange Commission of Pakistan (SECP) issued an all-encompassing set of requirements for Non-Banking Financial Companies (NBFCs) offering digital personal loans via mobile applications.
The requirements set a maximum limit for the annual profit rate and total cost that can be charged by a Nano lender to the borrower. The total cost cap for Nano loans will encompass all associated fees, including processing charges, service fees, verification fees, loan handling fees, interest charges, late payment penalties, and any other applicable charges.
The cumulative price of a loan shall not exceed the aggregate amount of the principal loan amount.
Moreover, limits have been set for loan rollover. To ensure the uniformity and standardization for the profit rate calculation formulas and brief illustration has been specified in the circular issued by SECP.
SECP is actively evaluating and adapting policies to improve financial access and combat manipulative business practices.
The measures, developed through consultation with stakeholders and industry participants, aim to balance financial inclusion and consumer protection against excessive debt burden. The Circular is available at the SECP website.
Copyright Business Recorder, 2023