The Securities and Exchange Commission of Pakistan has directed Non-Banking Finance Companies not to lend to borrowers with unsettled defaults or write-offs from any credit institution in the past three years.
The revised NBFC regulations require a borrower’s Credit Information Bureau report to show no defaults during the last three years. Credit institutions are defined under the Credit Bureaus Act, 2015. NBFCs engaged in digital lending must collect borrower information digitally.
The SECP has introduced “Nano Loans,” unsecured short-term cash financing, and redefined “Micro-enterprises” to include small trading, manufacturing, services, or agricultural projects employing up to 25 people excluding seasonal labor.
“Qualified Financial Institutions” are now defined as local or international AAA-rated multilateral institutions. The regulations also introduce “Contingent Capital,” a long-term finance commitment from these institutions, serving as a second-loss facility with irrevocable, revolving commitments callable on demand or upon a capital event, and replacement if the financing entity ceases to qualify.
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