SECP Introduces Digital Lending for NBFCs

The Securities and Exchange Commission of Pakistan (SECP) has introduced the concept of “Digital Lending” for the Non-Banking Finance Companies (NBFCs) covering finance through digital, technology-based, or internet-based channels or tools, with limited or no human interaction for a loan application, approval, disbursement, and repayment of the loan.

The SECP has notified S.R.O.603(I)/2022 on Monday to issue draft amendments to the Non-Banking Finance Companies and Notified Entities Regulations, 2008.

• Lending NBFCs shall comply with such requirements as may be specified by the Commission through circular, for all or a specific class of Lending NBFCs, including but not limited to the digital lending;
• Fair treatment of consumers/borrowers including devising appropriate pricing policies and disclosures;
• Adequate and accurate disclosures including but not limited to the offered products, services, and applicable terms and conditions, to borrowers, customers and other stakeholders;
• Minimum disclosure requirements for digital applications, websites and any other platform used by the NBFCs for the licensed activity;
• Information technology, systems and information security measures.

The SECP has also specified the definition of the “Digital Investment Advisor” meaning an NBFC licensed by the Commission to provide investment advisory services using automated, algorithm-based tools which are client-facing, with limited or no human adviser interaction in the advisory process.

Moreover, the “Robo advice” means investment advice through digital platforms that provide automated, algorithm-driven advice in an online environment using innovative technology tools; and “Robo Advisor” means a person involved in providing Robo Advice, it added.