The Securities and Exchange Commission of Pakistan (SECP) has proposed a significant revision to its financing regulations that could expand access to credit for individuals, households, and businesses.
Under the proposed amendments, the maximum limit for microfinance and housing loans would increase to Rs5 million. The move is part of a broader effort to update financing rules and make credit facilities available to a wider segment of borrowers.
Higher Income Limit for Microfinance Borrowers
The proposed changes would also increase the income threshold for people eligible to obtain microfinance loans.
Currently, borrowers with an annual income of up to Rs1.2 million fall within the relevant limit. SECP has proposed raising this threshold to Rs1.5 million per year.
The adjustment could allow more individuals to qualify for microfinance facilities, particularly as household incomes and financing requirements change over time.
Major Expansion in SME Turnover Limits
One of the most notable aspects of the proposed amendments is the revision of turnover limits used to classify small and medium-sized enterprises (SMEs).
Under the proposed framework, businesses with annual turnover of up to Rs400 million would be classified within the small-enterprise threshold. This represents a substantial increase from the existing ceiling of Rs30 million.
The turnover limit for medium-sized enterprises would also be raised. The proposed ceiling would increase from Rs800 million to Rs2 billion.
These changes would bring a much larger number of businesses within the SME classification framework.
Alignment With State Bank Revisions
According to the SECP, the proposed turnover thresholds have been aligned with recent changes introduced by the State Bank of Pakistan (SBP).
The alignment is intended to create greater consistency in the regulatory treatment of businesses and financing activities across the financial sector.
With the revised thresholds, businesses that previously exceeded the SME turnover limits could potentially fall within the updated categories and gain access to financing arrangements available under the applicable regulatory framework.
Changes Are Still Under Consultation
It is important to note that the proposed amendments have not yet become final regulations.
The SECP has invited stakeholders and other interested parties to submit their comments and recommendations on the proposed changes. The final framework could therefore be modified after the consultation process.
If approved in their proposed form, the amendments would represent a considerable expansion of the existing financing and SME classification framework.
What the Proposed Changes Could Mean
The proposed increase in loan limits could provide borrowers with access to larger amounts of financing, while the higher income threshold could broaden eligibility for microfinance products.
For businesses, the significantly higher turnover ceilings could bring many more enterprises within the SME framework. This may be particularly relevant for companies that have grown beyond the existing turnover limits but remain relatively small compared with larger corporations.
Overall, the proposals reflect an effort by the SECP to update its financing regulations in line with changing economic conditions and recent regulatory developments. However, stakeholders will need to wait for the completion of the consultation process and the SECP’s final decision before the proposed limits take effect.