SECP Notifies Amendments to NBFC Regulations

naazimaltaaf@gmail.com April 23, 2025

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The Securities and Exchange Commission of Pakistan (SECP) has announced the final changes to the Non-Banking Finance Companies and Notified Entities Regulations of 2008.

These reforms mainly aim to update the Total Expense Regime (TER) for mutual and pension funds, while also implementing important measures to strengthen the Shariah compliance framework in the mutual fund sector.

Under the amendments, the current Total Expense Ratio (TER) capping system will be replaced with limits on management fees, starting July 1, 2025. This transition period allows Asset Management Companies (AMCs) and Pension Fund Managers (PFMs) sufficient time to adapt their business strategies.

To enhance transparency and support investor decision-making, Asset Management Companies (AMCs) and Pension Fund Managers (PFMs) are required to offer detailed disclosures of the Total Expense Ratio (TER) for mutual and pension funds.

To bolster Shariah compliance within the industry, the amendments allow for a relaxation in obtaining a Shariah Compliance Certificate for Collective Investment Schemes (CIS) that have a similar structure and strategy to an already established Shariah-compliant scheme.

Moreover, all Collective Investment Schemes (CIS) that do not have a Shariah Compliance Certificate must secure one by September 30, 2025. Additionally, an Annual Shariah Advisor’s Report will be included in the financial statements provided to unit holders and participants in the Voluntary Pension System (VPS).

The amendments were finalized after extensive consultations with stakeholders, including Asset Management Companies (AMCs), Pension Fund Managers (PFMs), and the Mutual Funds Association of Pakistan (MUFAP).

Through this collaborative process, a consensus was achieved on amendments designed to enhance transparency, improve cost efficiency, and align with international best practices in the mutual fund and pension fund sectors.