NBFCs dealing in guarantees: SECP amends criteria of qualified capital

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has amended the criteria for qualified capital of non-banking finance companies (NBFCs) engaged exclusively in the business of issuing guarantees, introducing “Ring-Fenced Capital” as an additional component of capital recognised under the regulatory framework.

Through Circular No. 22 of 2026 issued on Tuesday, the commission has amended its Circular No. 17 of 2019, revising the definition of qualified capital and setting out conditions governing the recognition, utilisation and investment of ring-fenced funds.

Under the revised definition, “Qualified Capital” will comprise the aggregate of Callable Capital, Contingent Capital and Ring-Fenced Capital, including any drawdowns under these categories.

Previously, qualified capital was defined as the aggregate of callable capital and contingent capital, including any drawdowns thereunder, under the framework introduced through Circular No. 17 of 2019.

The latest amendment adds ring-fenced capital to the recognised capital base, subject to specified eligibility and utilisation requirements.

The SECP has defined Ring-Fenced Capital as a non-returnable grant, funding or committed sum provided to an NBFC by the Federal Government, a provincial government, or a body or multilateral institution owned or controlled by either government.

Such funding is intended to enable an NBFC to extend guarantees to expand its portfolio outreach or provide guarantees in respect of an agreed priority sector or sectors.

The regulator has prescribed conditions to ensure that funds recognised under this category remain dedicated to their intended purposes and are not treated as unrestricted capital available for general business activities.

Copyright Business Recorder, 2026