ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has rolled out new Consumer Protection Principles for Non-Banking Microfinance Finance Companies (NBMFCs), mandating them to issue a Key Fact Statement (KFS) for borrowers.
In a recent Circular No. 5 of 2025, the SECP has directed all NBMFCs and the Pakistan Microfinance Network to comply with these principles. These guidelines build upon the existing regulations outlined in Circular 24 of 2018 and Circular 08 of 2024, while aligning with the Women Equality in Finance Policy for the sector.
The newly introduced principles aim to enhance consumer awareness, financial inclusion, and transparency, ensuring borrowers receive fair treatment and comprehensive information to make well-informed financial decisions. NBMFCs are required to integrate these principles into their operational framework as detailed in the attached Annexure-A.
Key directives include:
- Clear Communication: NBMFCs must provide well-defined terms, conditions, and pricing details for financial products.
- Key Fact Statement (KFS): A concise summary must be displayed to borrowers before loan disbursement, preferably in the local language, in a simple and accessible format.
- Loan Contract: Contracts must be available in the borrower’s language, with a signed copy provided to the client and retained by the NBMFC.
- Fixed Terms & Conditions: Loan terms cannot be altered before maturity.
Additionally, before loan disbursement, NBMFCs must disclose:
- Fee Disclosure: Transparent details on all fees and charges at different stages, including screening, approval, and disbursement.
- Total Cost of Credit: A clear breakdown of interest rates, fees, and any additional costs.
- Risk Information: Communication of risks associated with financial products, with information accessible via multiple channels, including in-person, online, and mobile platforms.
NBMFCs are also required to train staff for grievance redressal and submit gender-disaggregated data on complaints and financial metrics, as per Circular No. 3 of 2025.
These measures reinforce SECP’s commitment to a transparent and consumer-friendly microfinance ecosystem in Pakistan.
