ISLAMABAD: On Friday, the Chairman of the Securities and Exchange Commission of Pakistan (SECP), Aamir Khan, said that non-banking finance companies (NBFCs) have reached out to more than 365,000 borrowers and as a result surpassed the disbursement of around Rs6bn.
In the virtual event, “NBFCs in Pakistan – Regulatory Landscape and Bottlenecks”, at the launch of the Karandaaz report, the Chairman addressed the liquidity challenges faced by NBFCs. He advised that for long-term liquidity, NBFCs should not only limit to bank credit lines but also tap into capital markets.
“In the Kamyab Pakistan Program, the State Bank of Pakistan and the Ministry of Finance have granted support for including NBMFCS and HFCs as Executive Agents. NRSP and Akhuwat Islamic Microfinance are two such NBMFCs that have distributed up to Rs5bn to over 28,000 borrowers.”
He further highlighted that the high-cost structure due to a limited capacity of resource mobilization and the large-scale dependency on bank credit lines have affected the NBFCs’ commercial viability.
The NBFCs should start leveraging the highly digitalized financial ecosystem and the exclusion from concessionary funding backed by the central bank and the government to meet the National Financial Inclusion Strategy targets, he said.
Data science with its revolutionary analytical tools and models should be incorporated by NFBCs to be more responsive to external risks, customer requirements, and market insights. He further emphasized that data science could help NFBCs to venture into areas not covered by banks such as small and medium businesses through calculated risks.
He emphasized the need for sound liquidity management. He also highlighted the importance of collaboration between NFBCs and established operators in banking, real estate, and cellular companies to capitalize on value-added solutions.
He also shed light upon certain customer-focused products that NBFCs should develop such as machinery leasing to agricultural and livestock sectors, their rental packages, crop insurance, supply of fertilizers and seeds, and regular crop and weather information.
Improved governance structures, deeper insights into target markets, calculated risk-taking, and scientific risk mitigation strategies can improve the overall performance, the SECP Chairman added.
