ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has directed the leasing companies to include vehicle financing as part of leasing during calculation of its investment in leasing business.

The SECP has also released the Minimum Housing Finance Underwriting Standards.

The SECP has notified SRO582(I)/2021 here on Tuesday to issue draft amendments to the Non-Banking Finance Companies and Notified Entities Regulations, 2008.

According to the proposed amendments, a leasing company, while calculating its investment in leasing, may include vehicle financing as part of leasing.

Under the other terms and conditions applicable to lending Non-Banking Finance Companies (NBFCs), an NBFC shall operate in accordance with the laid down conditions.

The lending NBFC shall primarily invest in its licensed form of business.

Leasing Company, Housing Finance Company and Discount House shall primarily invest at least 70 percent of their total assets in leasing, housing finance and discounting services respectively on quarterly average basis: Provided that cash, deposits with financial institutions, and investment in government securities shall be excluded to calculate the above limit.

Under the Minimum Housing Finance Underwriting Standards, the SECP has specified that role of the NBFC’s Board.

The board of directors shall establish and oversee a housing finance underwriting policy aligned with the NBFC’s risk governance framework, its risk tolerances and limits, and its overall risk appetite and strategy.

The policy shall articulate the NBFC’s business strategy and approach to housing finance underwriting, and shall be reviewed by the board annually.

The board shall seek periodical reporting from the NBFC’s oversight functions to properly monitor and evaluate effectiveness of lending policies and procedures, risks, and to ensure that individual housing finance transactions comply with the underwriting policy and the risk tolerances.

At a minimum, the board should expect semi-annual reports on the NBFC’s housing finance loan portfolio including reporting on concentrations and aggregate exceptions to policy, the SECP added.

Copyright Business Recorder, 2021