Securities And Exchange Commission of Pakistan Briefs NBFCs on Improved Regulatory Requirements

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) briefed the non-banking finance companies (NBFCs) on improved regulatory requirements, recently imposed through Circular No 15 to address the complaints of mis-selling, inflated charges and undue access to customers’ data.

Senior management of all the licensed NBFCs, engaged in digital lending, participated in the online session.

Giving an overview of the circular’s key requirements, SECP Executive Director KhalidaHabib informed the participants that the SECP has imposed restrictions on deducting upfront charges from the lent amount.

Moreover, the lending companies are stopped from operating more than one digital App at Google Play store or any other platform. However, they can launch different products and schemes under one Master App.

The said Circular aims to tackle concerns involving mis-selling, breach of data privacy, unfair business conduct and unethical and coercive recovery practices of licensed digital lending NBFCs, she maintained.

Companies that are already running more than one App have been asked to identify one Master App and shutdown the other apps within 90 days. The companies are also required to maintain confidentiality of user data and provide audit reports of their apps from a PTA approved IT security audit firm. Digital lenders are also required to disclose their full corporate name on their mobile applications, KhalidaHabib added.

SECP’s Additional Joint Director Ahmad Abdul MoizKhawaja briefed the participants on regulations regarding clear disclosures of loan terms & conditions, requirements of managing credit risk, advertisements, grievance redressal systems and loan collection methods. He conveyed the NBFC companies cannot change the terms of the loan agreement without prior consent of the borrower.

The SECP officials also informed that the confidentiality and privacy of data is at the forefront of Commission’s digital lending framework and it has been made obligatory that data shall not be stored on any cloud infrastructure outside the jurisdiction of Pakistan.

Moreover, data currently stored on cloud infrastructure/ hosting/ data centres outside the jurisdiction of Pakistan shall be shifted/ transferred inside the jurisdiction of Pakistan within the specified period. Similarly, digital lender will not be allowed access to the borrower’s phone book or contacts list or photo gallery even if the borrower has given consent in this regard.

The lender shall also not be allowed to contact the persons in the borrower’s contact list, other than those who have been specifically authorized by the borrower as guarantors and who have also provided their consent to the digital lender at the time of loan approval.

The SECP has issued digital lending license to M/s Sarmaya Microfinance (Pvt) Limited, M/s Cashew Financial Services Limited, M/s Credit Fix Financial Services Limited, M/s Qisstpay BNPL Private Limited, M/s Seedcred Financial Services Limited, M/s Finja Lending Services Limited, M/s Tez Financial Services Limited, M/s Abhi Private LTD, M/s Mirco Cred Financial Services Ltd, and M/s Humraah Financial Services Limited