Background and Introduction

Non-Bank Finance Companies (NBFCs) are entities that are engaged in specialized financial services in Pakistan. They
play a very important role in mobilizing finance to complement the outreach of the banking industry in underserved
segments such the SME sector, housing and infrastructure development.
Securities and Exchange Commission of Pakistan (SECP) is the regulator and licensing body for NBFCs. The NBFC Rules
(2003), later revised in 2015, are the main set of guidelines around governance, operations and structure of NBFCs.
The 2015 amendments split NBFCs into lending NBFCs1 and Fund Management NBFCs2. These amendments were
also intended to encourage the establishment of more NBFCs and further increase mobilization of finance through
reduced minimum equity requirements.
Following are the different types of NBFCs operating in Pakistan. They differ in terms of the services they offer, their
clientele, minimum equity and licensing requirements.
1 Lending NBFCs are Leasing Companies, Housing Finance Companies, Investment Finance Companies, Microfinance Companies and Discount Houses. The
NBFC rules grant permission to offer the services provided by the aforementioned company under one license with the exception of Microfinance.
2 Fund Management NBFCs provide Asset Management Services, REIT Management, Pension Fund Management and Private Equity/Venture Capital
Management Services

Table 1: Types of NBFCs in Pakistan

Raising Investment/Deposits
NBFC Category Description Services Offered
Externally
Modaraba Lending Islamic Finance Model Trading in halal Issuance of Certificate of
with a clear distinction commodities, Investment Modaraba that is listed on the
between management in Stock Markets, Project stock exchange for trading
and investors. Finance, Sharia purposes
Compliant Financial
Products
Leasing Company Lending Lending for purchase Operating and Financial Issuance of Certificate of
of tangible assets on a Leasing Deposits provided that the
rental or purchase company is listed on the stock
model exchange (among fulfilment of
other criteria)
Housing Finance Lending Specialized home Loans for purchase, -
Companies financing entity construction or
renovation of home,
small builder loan
Investment Lending/ Non-bank entity Brokerage and Advisory, Issuance of Certificate of
Finance Advisory providing corporate Project Financing, Deposits provided that the
Company finance services Underwriting, Portfolio company is listed on the stock
Management, Capital exchange (among fulfilment of
Market Financing other criteria)
Non-Bank Lending Loans to small Loans of up to PKR Cannot mobilize deposits from
Microfinance entrepreneurs and 200,000 for an individual, clients
Companies micro enterprises PKR 500,000 for a housing
loan and PKR 500,000 for
microenterprises.

Discount House Lending An entity providing Discounting corporate -

liquidity in the receivables, short term
capital markets money market
instruments and financing
against guarantees
 NBFC Category Description Services Offered Raising Investment/Deposits
Externally
Asset Management Fund Collective Stand-alone or a “Unit Holders” General Public
Company Management Investment Scheme combination of and/or Institutional Investors
in the form of a investments in money
Mutual Fund and/or market, debt and
Pension Fund equity
(subject to fulfilment
of certain criteria)
Private Equity/ Venture Fund Collective Portfolio of Institutional and/or High Net
Capital Firm Management Investment Scheme diversified Worth Individuals
investments in non-
listed private
companies with the
objective of exiting
after a certain time
period
Real Estate Investment Fund Collective Investment Portfolio of Initial Public Offering (IPO)
Trust (REIT) Management Scheme in Real Estate Investments in real
Management Company estate properties
(bought or improved
upon) that are sold or
rented

Note: 1) An NBFC license for Investment Finance Services is valid for undertaking Discounting, Leasing and House
Financing
Services; 2) Lending Companies can only issue Certificates of Investment (COI) with the permission of SECP and
subject to the fulfilment of certain criteria