The Non-Banking Finance sector (NBFC) is one of the major sections of the overall financial markets and infrastructure of the country, showing persistent growth in a variety of businesses and operations with the value of assets surging by Rs. 76 billion in the financial year 2022-23.
According to the SECP’s annual report, the NBFC sector also witnessed a substantial 35.9 percent growth in assets during the year. As of June 20, 2023, the collective asset base of the NBFC sector stood at Rs. 2.87 trillion, posting a promising growth of 35.9 percent as compared to assets totaling Rs. 2.11 trillion on June 30, 2022.
The sector offers immense growth potential, especially to supplement our national efforts to include the un-banked demographic clusters into the main financial stream. It completes the comprehensive product suit financial along with banking, stock market, insurance, commodity market, futures, and private pension funds.
The breakup of the total assets of the NBFC sector is presented in the schedule below:
Within the NBFC sector, the Fund Management segment of the mutual fund industry emerges as a key player. As of June 30, 2023, the Assets under Management(AUM) of the Mutual fund industry stood at Rs 1,675 billion, showing substantial growth from Rs 1,281 billion in June 2022, marking a remarkable 30.8 percent increase.
Another important area in the NBFC sector which is the cardinal element for capital markets is Private Fund Management. Currently, there are Eleven entities holding licenses as Private Funds Managers, out of which seven (7) entities also have licenses for Asset Management /Investment Advisory services. Furthermore, there are thirteen (13) Private Funds registered with SECP. The total asset size of the Private funds stands at Rs 8.79 billion as of June 30, 2023.
In the current year, SECP exceeded its targets by registering a total of 6 (six) new funds, all of which also have been launched. Moreover, Trust Deeds for two (2) more funds have been approved, underscoring a dynamic period of growth and development in this sector
Lending NBFCs play a vital role in providing specialized financial services that complement the outreach of the banking industry. They effectively channel financial resources, particularly in underserved segments of the economy, expanding the overall access to finance.
As of June 30, 2022, the cumulative assets of companies licensed for lending business, including investment finance companies (investment banks), leasing companies, housing finance companies, discounting companies, and non-bank microfinance companies, have surged to Rs. 319.50 billion. This marks a substantial growth of 22.6 percent. compared to Rs. 260.65 billion as of June 30, 2022.
