ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced new Consumer Protection Principles for Non-Banking Microfinance Finance Companies (NBMFCs), focusing on transparency and fairness for borrowers. The SECP has directed these companies to issue Key Fact Statements (KFS) for borrowers to ensure they are well-informed before taking out loans.
In Circular No. 5 of 2025, issued to the CEOs of all NBMFCs and the Pakistan Microfinance Network, the SECP outlined the requirements for consumer protection, which build on previous guidelines provided in Circular No. 24 of 2018 and Circular No. 08 of 2024. The new principles aim to enhance consumer awareness, promote financial inclusion, and strengthen relationships between borrowers and microfinance companies, in line with the women equality in finance policy.
The SECP emphasized that NBMFCs must comply with these new principles, integrating them into their operations as detailed in the attached document (Annexure-A). Key requirements include clear communication about terms, conditions, and pricing for financial products, as well as ensuring that loan contracts are presented in local languages for better accessibility.
Before disbursing loans, NBMFCs are required to present a Key Fact Statement (KFS) summarizing important loan details. This statement must be written in a simple and clear format, preferably in the borrower’s local language. Loan contracts should also be available in local languages, and a signed copy must be provided to the borrower and kept on record by the company.
Other important disclosures include a breakdown of all associated fees, the total cost of credit (including interest rates and charges), and a clear communication of the risks tied to the financial products offered.
NBMFCs must ensure the information is accessible through various channels such as in-person, online, and mobile platforms, to serve a diverse client base. They are also required to train staff to handle grievance redressal efficiently and submit gender-disaggregated data on complaints, in line with Circular No. 03 of 2025.
These new principles are expected to improve consumer protection and trust in the non-banking microfinance sector, helping borrowers make informed financial decisions.
