There are different types of institutions involved in financial services. These include commercial banks, development financial institutions (DFIs) and non-banking finance companies (NBFCs). Unlike DFIs e.g. ADBP and PICIC, that have a specified objective at priority besides efficient business conduct, NBFCs are formed purely with the commercial objectives. NBFCs provide range of financial services to their clients. Types of services that fall under the domain of non-banking finance services include the following;
Investment Finance Services
Investment Advisory Services
Asset Management Services
Venture Capital Services
Housing Finance Services
Any other form of business activities which the Federal Government may, by notification in the official gazette, specify from time to time
Incorporation of NBFC
To conduct any one or more type of non-banking business, prior permission of the SECP (the Commission) is required.
If the Commission grants permission to form an NBFC, the promoters of NBFC shall get the NBFC incorporated under the Companies Ordinance 1984 as a public company.
After incorporation under the Companies Ordinance 1984, the directors shall make separate application to the Commission for the grant of license for carrying on each type of business along with a nonrefundable fee of Rs. 100,000 for each such license.
The license granted by the Commission to NBFC would be valid for one year and each license shall be renewable annually on the payment of a fee of Rs.25,000.
The company must have separate tiers of minimum equity in respect of each type of service it want to indulge in:
Investment finance services – 300 million
Investment advisory services – 30 million
Asset management services – 30 million