Customers advised to conduct their own due diligence

recorder report

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has advised the prospective customers to conduct their own due diligence prior to investing in Certificate of Deposits of a Non Banking Finance Company, as such certificates are subject to various risks including credit/liquidity risks.

The SECP has amended Non-Banking Finance Companies and Notified Entities Regulations, 2008 through a notification issued here on Monday.

According to the SECP, an Asset Management Company shall disclose in the Offering Document the maximum rate of management fee chargeable to Collective Investment Scheme within allowed expense ratio limit. An Asset Management Company shall be entitled to an accrued remuneration that has been verified by the trustee and is paid in arrears on monthly basis: Provided that Asset Management Company may charge variable fee or fixed fee or the combination of both which shall not exceed the limit disclosed in the Offering Document. AMC shall disclose actual rate of management fee charged as percentage of net asset of CIS in the monthly fund manager report.

The NBFC shall seven days prior to the launch of any new deposit taking product and any subsequent amendment, provide information to the Commission along with product disclosure statement, deposit taking instrument and approval of its Board of directors: Provided that the NBFC shall place all the deposit taking products along with specimen instruments on its website for information of the general public and it shall be the responsibility of the NBFC to regularly update its website in this regard.

All advertisements for any invitation to attract deposits either through advertisement by print, electronic or social media outlets or any other form or channel to the public or through private placement shall at the minimum contain the following information: (a) credit rating of the NBFC, the name of the rating agency, the date on which the credit rating was issued; (b) minimum and maximum tenor of the Deposit; (c) expected profit rate to be paid on the deposits; and (d) all advertisements for inviting a person to invest in a Deposit taking scheme of an NBFC must contain the disclaimer. The Asset Management Company shall, before it applies for the registration of an Open End Scheme or Closed End Scheme, appoint the trustee which is registered with the Commission.

In case the amendments are proposed in the fundamental attributes of CIS and/or amendments with respect to offering of units to public and maturity of fund/plan shall be subject to the prior approval of the Commission. In case amendments are made in the Constitutive Documents due to change in regulatory requirements, the same shall be incorporated without prior approval of the Commission. The supplement Constitutive Document for amendments shall be submitted to the Commission for information within one week from the date of amendments, SECP added. In case of micro financing, the exposure limits of Rs.1,500,000 would be applicable for poor person for housing loan; Rs.500,000 for general loans other than housing loan and exposure limits of Rs.1,500,000 would be applicable for microenterprise.