P2P, Crowd Lending framework: SECP proposes major amendments to potential

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed major amendments to the potential of Peer-to-Peer (P2P) and Crowd Lending framework in Pakistan.

The SECP has invited feedback on a comprehensive Consultation Paper on the Challenges and Potential of Peer-to-Peer (P2P) and Crowd Lending in Pakistan. The paper also included proposed amendments to the Non-Banking Finance Companies & Notified Entities Regulations, 2008, aimed at expanding access to alternative finance.

The rapid evolution of financial technologies and the growing demand for inclusive and innovative financing solutions has led SECP to conduct an in-depth review of the existing P2P lending framework. The paper presents a comparative analysis of international regulatory models and best practices to inform policy development.

The review identifies several structural and regulatory challenges currently constraining the growth of P2P and crowd lending platforms in Pakistan. These challenges include the absence of securitized lending mechanisms, restrictions on eligible participants, limited options for credit risk diversification, and operational difficulties related to escrow account management.

To address these challenges, the SECP proposes a series of amendments to the P2P lending framework. These proposed changes include increasing loan ticket sizes and exposure limits, strengthening governance requirements for NBFCs operating as P2P service providers, ensuring the financial sustainability of P2P platforms, introducing a trust account structure for fund management, enhancing risk disclosures, and introducing IT and cybersecurity standards for platforms.

The SECP has invited comments and suggestions from all stakeholders, including P2P platforms, fintech innovators, financial institutions, investors, and the general public. Stakeholder feedback will play a critical role in shaping a forward-looking, risk-sensitive, and enabling regulatory environment for P2P lending in Pakistan.

In addition, the SECP also proposed amendments to revise the definitions of SME/MSME and micro-enterprises, enhance credit bureau reporting requirements for lending NBFCs, amend the Code of Corporate Governance applicable to lending NBFCs, and relax the Fit and Proper Criteria for Fintech Startups in the lending space.

The Consultation Paper and draft notification of the proposed amendments are available on the SECP website. Comments may be submitted by June 20, 2025, via email to [email protected].

Copyright Business Recorder, 2025