ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has defined “Qualified Financial Institutions” covering local or an international multilateral financial institution rated-AAA by a credit rating agency registered with the SECP.
The SECP has issued an SRO 2120 (I)/ 2025 to amend Non-Banking Finance Companies and Notified Entities Regulations, 2008.
The SECP has also revised the definition of “Micro-enterprises”, which means projects or businesses in trading or manufacturing or services or agriculture that lead to livelihood improvement and income generation. These projects or businesses are undertaken by micro entrepreneurs who are either self-employed or employ few individuals not exceeding 25 (excluding seasonal labour).
Micro-enterprises may include carpentry, electrical works, food stalls, farms (crops & non-crops), lathe machine workshops; etc., which have traditionally lacked access to formal financial services.
The SECP has also introduced the definition of “Nano Loans” in the NBFC regulations. The “Nano Loans” are unsecured, short-term cash financing facilities, subject to maximum limits as determined by the Commission from time to time.”
According to the revised regulations, the “Contingent Capital” means long term commitment for finance that, in terms of a written agreement entered into between the NBFC and a Qualified Financial Institution(s), is provided as a second loss facility on the following terms and conditions: -
(i) At any time, the Contingent Capital, in aggregate, shall not exceed one and a half (1.5) times of the sum of paid up share capital and Callable Capital of the NBFC.
(ii) The commitment shall, in accordance with the terms thereof, be irrevocable, confirmed and fully committed.
(iii) The long-term commitment and the finance there under shall be available on a revolving basis.
(iv) The finance under the commitment shall be callable on demand upon a Capital Event and at the sole discretion of the NBFC or on a direction by the Commission (after giving the NBFC a reasonable opportunity of a hearing), which shall be binding on the NBFC; and (v) the commitment shall be replaced by the NBFC if the financing entity ceases to be a Qualified Financial Institution.
Copyright Business Recorder, 2025
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