SECP Proposes Amendments to NBFC Policies to Improve Regulatory System

The Securities and Exchange Commission of Pakistan (SECP) has directed the Non-Banking Finance Companies (NBFCs) to formulate Corporate Governance and Proxy Voting policies to strengthen the regulatory regime of these companies.

The SECP issued a draft of amendments to the NBFCs and Notified Entities Regulations, 2008 through an S.R.O. 423(I)/2023.

According to the revised regulations, an Asset Management Company shall put appropriate policies and procedures in place, approved by its board of directors, which govern trading or investment in securities by the AMC employees. Their spouses and dependent children and directors and their spouse(s) and dependent children of such directors are privy to investment committee consultations or decisions.

An Asset Management Company managing a Collective Investment Scheme, within fifteen days of the close of every calendar month of the Collective Investment Scheme, shall pay the Commission a non-refundable fee.

This fee will be a percentage of the average net assets of the Collective Investment Scheme as provided in Schedule II, provided that the fee payable to the Commission shall be chargeable by the Asset Management Company to the Collective Investment Scheme.

Lending NBFCs shall comply with such requirements as may be specified by the Commission through a circular.

For all or a specific class of Lending NBFCs, including Digital Lending and Fair treatment of consumers/borrowers including devising appropriate pricing policies and its 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.

In case the board of directors of an NBFC decides to remove its chief executive before the expiration of his term of office or the chief executive decides to tender his resignation before the completion of his term of office or replacement of chief executive on completion of his term, the NBFC shall immediately inform the Commission along with reasons for the same.

A deposit-taking NBFC shall comply with the following margin requirements, while non-deposit-taking NBFCs shall determine their own margin requirements on facilities provided by them to their borrower taking into account the risk profile of the borrower(s) in order to adequately secure their interests.