The Securities and Exchange Commission of Pakistan (SECP) organized a financial reporting workshop on Non-Banking Microfinance (NBMF) sector in light of new regulatory requirements outlined under Circular 15.
The aim of this interactive workshop was to apprise participants of the measures taken for the promotion of the sector and to protect the interests of borrowers. Leading journalists from print and electronic media attended the workshop.
SECP Executive Director Khalida Habib gave a presentation on the circular that explains the digital lending standards applicable to Non-Banking Finance Companies (NBFCs) undertaking lending activities through digital channels/mobile applications (Apps). The lending standards have been issued by the SECP to tackle concerns involving mis-selling, breach of data privacy, and coercive recovery practices of licensed digital lending companies, she said.
She informed the attendees that through Circular 15, SECP has stipulated minimum mandatory disclosures for digital lenders before loan disbursement to the borrower. These include loan amount approved, annual percentage rates, the tenor of loans, installments/lump sum payment amounts with the date(s), and all fees and charges, as well as Key Fact Statement (KFS).
To discourage non-licensed digital lenders, the licensed digital lender shall be required to disclose its full corporate name and licensing status on its lending platform(s)/App(s), and ensure that any advertisement and publication shall be fair and not contain misleading information, she said, adding that SECP has also specified a comprehensive grievance redressal mechanism over and above the current NBFC grievance redressal framework. Circular 15 also mandates that digital lenders will not be allowed to access borrowers’ phone books or contacts lists or photo galleries, even if the borrower has given consent in this regard.
The SECP has liaised with the local regulators concerned (i.e., PTA, FIA, NTISB, and SBP), as well as with Google and Apple for the removal of unauthorized apps. In January 2023, 58 unauthorized apps had been reported to Google for removal.
From January 2022 to November 2022, NBFCs undertaking digital lending disbursed 2,402,301 loans of Rs. 63.589 billion, to 2.4 million borrowers in 3,738,719 loans. This results in an average loan size of Rs. 17,000.
SECP Executive Director and Spokesperson Musarat Jabeen also gave a presentation elaborating the Commission’s overall goals and future outlook, with respect to improving financial inclusion, market development, and ease of doing business.