Circular No. 22 of 2026: Criteria for Qualified Capital for Non-Banking Finance Companies Engaged Exclusively in the Business of Issuance of Guarantees

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Specialized Companies Division Lending & Private Funds Department

No. SC/NBFC-1-196/Circular/2026/432 October 02, 2026

Circular No. 22 of 2026

Subject: Criteria for Qualified Capital and its Terms and Conditions for Non-Banking Finance Companies Engaged Exclusively in the Business of Issuance of Guarantees

In exercise of powers conferred under sub-section (3) of section 282B of the Companies Ordinance, 1984 (XLVII of 1984) read with Regulation 67A of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the “NBFC Regulations”), the Securities and Exchange Commission of Pakistan (the “Commission”) is pleased to make the following amendments in Circular No. 17 of 2019 dated December 6, 2019, namely: -

(1) in the aforesaid Circular, -

(a) in the subject heading and opening paragraph, the words “to enhance the quality of debt instruments issued to finance infrastructure projects in Pakistan” shall be omitted;

(b) for the expression “Qualified Capital” means the aggregate of Callable Capital and Contingent Capital (including any drawdown thereunder);”, the expression “Qualified Capital” means the aggregate of Callable Capital, Contingent Capital and Ring-Fenced Capital (including any drawdown thereunder);” shall be substituted; and

(c) in the Explanation, after clause (ii), the following new clause shall be inserted, namely:-

“(iia) “Ring-Fenced Capital” means a non-returnable grant, funding, or committed sum provided to the NBFC by the Federal Government, a Provincial Government, or a body or a multilateral institution owned or controlled by the Federal Government or Provincial Government, as the case may be, to enable the NBFC to extend guarantees for the expansion of its portfolio outreach or to extend guarantees in respect of any agreed priority sector(s), subject to the following conditions: -

(a) the grant, funding, or commitment shall be received on an irrevocable and non-returnable basis;

(b) the utilization of Ring-Fenced Capital shall be restricted solely to the issuance and settlement of guarantees, and the absorption of guarantee-related losses, for the purposes specified above;

(c) the amount of Ring-Fenced Capital recognized as such shall stand deducted to the extent of any claims paid, impairment recorded, or other utilization thereof;

(d) where any claim paid against Ring-Fenced Capital is subsequently recovered, in whole or in part, from the underlying obligor or otherwise, the amount so recovered, net of the reasonable cost of recovery, shall be credited back to and restored as part of the recognized Ring-Fenced Capital; and

(e) pending utilization, funds constituting Ring-Fenced Capital shall be invested in accordance with board approved investment policy subject to concurrence of the capital provider.”.

(2) This Circular shall come into force with immediate effect.

(Imtiaz Haider)
Commissioner (SCD)

Distribution:

1. Chief Executive Officers of Non-Bank Finance Companies engaged exclusively in the business of issuance of guarantees
2. Chief Executive Officers – All Lending Non-Bank Finance Companies
3. Chief Executive Officer – Pakistan Microfinance Network
4. Chief Executive Officer – NBFI & Modaraba Association of Pakistan