The collective asset base of the Non-Banking Finance Companies (NBFC) sector stood at Rs2.87 trillion as of June 20, 2023, posting a growth of 35.9% as compared to the previous year, annual report for the fiscal year 2023 by the Securities and Exchange Commission of Pakistan (SECP) stated on Wednesday.
The assets had stood at Rs2.11 trillion as of June 30, 2022.
SECP released its annual report for FY23, which details its accomplishments and financial accounts.
Within the NBFC sector, the fund management segment of the mutual fund industry emerges as a key player. As of June 30, 2023, the assets under management (AUM) of the mutual fund industry stood at Rs1,675 billion, showing substantial growth from Rs1,281 billion in June 2022, marking a 30.8% increase.
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Amid currency fluctuation during the year, money market funds dominated the AUMs of the mutual fund industry with the largest share of 55%, followed by income funds having share of 23%.
The assets under investment advisory portfolio management also showed positive trajectory by posting 34% growth on year on year basis and amounts to Rs476 billion as of June 30, 2023.
Lending NBFCs
The cumulative assets of companies licensed for lending business, including investment finance companies (investment banks), leasing companies, housing finance companies, discounting companies and non-bank microfinance companies, have surged to Rs319.50 billion as on June 30, 2023. This marks a substantial growth of 22.6% compared to Rs260.65 billion as on June 30, 2022.
Insurance
Meanwhile, the insurance sector experienced a 34% rise in revenue, primarily attributed to policy reforms aimed at enhancing policyholder protection, says SECP.
According to the sector-wise breakdown, the life insurance industry’s assets amount to Rs2,177 billion, while the non-life insurance sector holds assets worth Rs457 billion.
In revenue terms, the life insurance sector underwrote premiums of Rs374 billion, whereas the non-life insurance sector recorded premiums of Rs205 billion for the year 2022.
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This figure includes the premium from the sole reinsurance company in Pakistan, owned by the Government of Pakistan, amounting to Rs25 billion during the same period.
Chairman SECP Akif Saeed expressed satisfaction with the SECP’s focus on fostering capital formation, simplifying procedures, robust enforcement and facilitative measures aimed at ease of doing business in Pakistan.
In his message, the chairman emphasised SECP’s core objective of ensuring transparency and fair conduct within regulated sectors. The modification and amendments to the regulatory framework were instrumental in boosting stakeholder confidence and mitigating instances of financial misconduct.
In the current year, SECP placed specific emphasis on addressing complaints and regulatory gaps associated with digital lending apps. Successful collaborations of SECP with Google, PTA, and FIA resulted in the shutdown of illegal loan apps.
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Further, digital lending standards were also implemented to uphold fair business practices for the NBFC. Additionally, SECP revitalised its investor education programme ‘Jamapunji’ to raise awareness among the public about their rights as financial consumers.
The introduction of a new trading and surveillance system at PSX, with the goal of improving trade processing speed and managing high volumes, is a significant achievement poised to facilitate investment and introduction of new derivative products.
A regulatory framework for online-only securities brokers was also introduced, allowing brokers to focus more on customer onboarding and trading. Further, the regulatory framework for Centralised Gateway Portal (CGP) is approved to streamline the KYC requirements across various asset classes and improve the digital onboarding process. The development and implementation of CGP has been entrusted to the Central Depository Company of Pakistan Limited (CDC).
The SECP’s efforts in increasing incorporation, facilitation, automation and optimising processes, have resulted in favorable expansion in company registrations. In the year, a total of 27,746 new companies were registered, elevating the overall number of registered companies to 196,805 by June 30, 2023.