SECP approves Pakistan’s first peer-to-peer lending platform

ISLAMABAD: The Securities and Exchange of Commission of Pakistan (SECP) has approved the launch of the country’s first peer-to-peer lending platform that will improve access of small businesses to finance, the commission’s chairman said on Wednesday.

Finja, a venture capital backed financial technology (fintech) secured the approval under the first cohort of SECP’s regulatory sandbox.

Aamir Khan, chairman of the SECP said the commission placed significant focus on serving the micro small and medium enterprises (MSMEs) as they play a vital role in the economic development of any country. To improve access to finance for the MSMEs, agriculture borrowers and rural enterprises, SECP has already operationalised the secured transaction registry, which went live on 30 April. So far, more than 125,000 security interests have been recorded in the registry. This has allowed small businesses to obtain credit against their movable assets.

Khan said trading volume on Pakistan Stock Exchange doubled to 426 million shares from 233 million shares in a year.

“The outgoing year was a difficult year. However, we kept the capital market stabilized despite all odds,” SECP chairman told media following the fintech launch ceremony.

“In early days of COVID-19, we were under immense pressure to keep the stock market closed. But, we decided to keep it open, and decision was proved a sane step,” he said.

SECP introduced index halt and circuit breakers system in the market, which was beneficial for the market and investors. To facilitate the brokers, SECP has removed the additional margin, liquidity margin and haircut.

After taking these steps, the Pakistan Stock Exchange despite difficulties has performed very well compared to other equity markets of the region, according to the SECP chairman.

SECP is focusing on simplifying the private equity and venture capital regime so that the high growth and knowledge-based start-ups can have access to long term capital, required to grow and expand.

Under the regulatory sandbox, six concepts were approved in the first cohort. This initiative will encourage entrepreneurs and businesses to try and develop new ideas and, in the process, serve the end-users, and expand financial inclusion.

Finja has introduced lending services with a focus to provide digital credit to micro small and medium enterprises and the people that they employ. So far, Finja has digitally processed loans with a throughput of $10 million to MSMEs and their employees, using their proprietary machine learning and artificial intelligence led algorithms and analytics. These loans are disbursed and collected digitally, eliminating cash-heavy, time and cost intensive processes.

Qasif Shahid, CEO and co-founder of Finja said: “We’re fully committed to digitising the complete supply-chain ecosystem in the country. Our association with SECP will serve as a precursor to grow the country’s most important segment.”

Finja was co-founded in 2016 by Qasif Shahid, Monis Rahman and Umer Munawar. It is backed by leading global venture capital funds.