State Bank of Pakistan (SBP) Governor Ashraf Wathra said on Wednesday the non-bank financial (NBF) sector should consider introducing a deposit protection scheme for the depositors of NBF institutions.
Speaking at a conference on non-bank financial sector and capital markets organised by the Securities and Exchange Commission of Pakistan (SECP) in collaboration with United States Agency for International Development (USAID), Wathra assured the professionals of the NBF sector that the SBP will provide full support in the resolution of outstanding issues.
Addressing the participants during the session on the leasing sector, Orix Leasing Pakistan CEO Teizoon Kisat said the regulatory framework needs to be improved in order to grow the size of the leasing sector in the economy. Kisat said leasing should be popularised by creating awareness about it among the public.
As opposed to traditional modes of bank financing, leasing offers an asset-based financing model in which one rents property to another without any collateral.
Small and medium-size enterprises (SMEs) can particularly benefit from this sector, as financing is based on a pay-as-you-earn model of cash flows, he added.
There are nine leasing companies in Pakistan, with total assets amounting to Rs40 billion. Their share in the non-banking finance sector was 5% at the end of the last fiscal year. The asset size of leasing companies went up 11% or Rs4 billion over 2014-15.
Speaking during the inaugural session, SECP Chairman Zafar Hijazi said the conference was part of the regulator’s continuous efforts to improve the overall business environment through a consultative process for the benefit of all stakeholders.
Hijazi said the SECP is striving to promote investment in the country. Emphasising that regulatory measures can be conducive to such an environment, he noted the real thrust must come from market participants. They should look at regional and international best practices to offer suitable and cost-effective products to give investors a fair deal, he added.
Speaking on the occasion, USAID Mission Director John Groarke said USAID will continue to work with the Pakistani government to strengthen the financial sector and increase private-sector access to finance.
“The more efficiently and effectively capital is allocated, the more progress Pakistan will make in meeting international financial milestones and emerging as a formidable economic force in global markets,” he said.
According to Groarke, USAID is working with Pakistan on debt security issuances, strengthening the debt market and helping the four signatory financial institutions increase access to loans for micro, small and medium enterprises (SMEs). “Key to that is developing private-equity finance to improve access to all forms of financing for SMEs, such as equity, leasing, venture capital and credit financing,” he said.