Key Takeaways
- SECP proposes raising the maximum loan limit for microfinance companies to Rs5 million.
- Income threshold for individual borrowers is increased to Rs1.5 million.
- SECP aims to better serve SMEs by revising the annual turnover ranges.
The Securities and Exchange Commission of Pakistan (SECP) has proposed significant changes to the loan limits and income thresholds for non-banking microfinance companies, aiming to support the growth of small and medium enterprises (SMEs) in the country. These proposals, part of draft amendments to the Non-Banking Finance Companies and Notified Entities Regulations 2008, are currently open for public consultation.
Under the proposed amendments, the maximum loan limit for microenterprise and housing finance from non-banking microfinance companies would be increased to Rs5 million. Additionally, the income threshold for individual borrowers in this sector would be raised from Rs1.2 million to Rs1.5 million. These changes are intended to enable non-banking finance companies to better meet the growing financing needs of small and medium-sized businesses.
To further support the financing needs of businesses, households, and individuals, SECP is also proposing to revise the annual turnover ranges used to classify SMEs. The proposed range for small enterprises is set at Rs30 million to Rs400 million, compared to the current limit of up to Rs150 million. For medium enterprises, the proposed range is Rs400 million to Rs2 billion, compared to the current range of Rs150 million to Rs800 million.
According to the SECP, these changes are expected to help non-banking finance companies serve a larger number of borrowers and better respond to the diverse financing needs of SMEs, households, and individuals. The SECP believes that by increasing the loan limits and income thresholds, non-banking finance companies will be better positioned to support the economic growth and development of Pakistan.
The draft amendments are currently open for public consultation, providing stakeholders with an opportunity to provide feedback and suggestions. The SECP is committed to ensuring that these changes are well-received and will benefit the broader economy.
The proposed changes are part of a broader effort by the SECP to modernize and enhance the regulatory framework for non-banking finance companies in Pakistan. By revising the loan limits and income thresholds, the SECP aims to create a more inclusive and responsive financial ecosystem that can support the growth of SMEs and contribute to the overall economic development of the country.
