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Stakeholders oppose power transfer to SBP

ISLAMABAD - Pakistan's investments banks, leasing companies and mutual funds have asked the government to drop the proposal which enables State Bank of Pakistan (SBP) to regulate some of the Non-Bank Finance Companies (NBFCs).

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In a separate letters sent to the finance ministry, the Leasing Association of Pakistan, Investment Banks Association of Pakistan and the Mutual Funds Association of Pakistan have expressed their concerns over the proposal and warned of overlap of jurisdiction for the financial and non-financial sector.

According to the proposal, 12 leasing companies, eight investment banks and three housing finance companies (23 in total) shall be regulated by the SBP, while the remaining 98 NBFCs, mostly Modarbas and leasing companies, will remain to be regulated by the Securities and Exchange Commission of Pakistan (SECP).

The powers proposed to be given to the SBP also include the powers to conduct inspections; take enforcement actions; and make regulations for the entire group of companies, which would primarily include non-financial companies.

The SECP has already opposed the proposal and said that the move would not only detract SBP from its primary role of supervision of the monetary policy of the country and the banking sector, but would also result in overlapping of jurisdictions.