The Securities and Exchange Commission of Pakistan (SECP) has introduced a comprehensive framework aimed at fostering innovation in the digital lending sector. The new guidelines, encapsulated in Circular 12 of 2024, enable the launch of cutting-edge products such as embedded lending via APIs, buy-now-pay-later (BNPL) services, and employer-integrated earned wage access.
In collaboration with industry stakeholders, the SECP conducted an extensive review of the existing framework to promote innovation while ensuring robust consumer protection. The new circular consolidates and amends the requirements of Circulars 15 of 2022, 10 of 2023, and 15 of 2023, streamlining the regulatory landscape for digital lenders.
The revised framework introduces a range of new product verticals designed to address the evolving needs of borrowers and bolster cybersecurity standards. Key innovations include the implementation of embedded lending through APIs, BNPL services, and employer-integrated earned wage access. These initiatives are poised to revolutionise the digital lending market by providing more accessible and secure financial solutions.
One of the primary objectives of the revised guidelines is to enhance access to finance for Small and Medium Enterprises (SMEs) through Business-to-Business (B2B) financing channels. Additionally, the integration of multiple Non-Banking Financial Companies (NBFCs) with whitelisted digital lending platforms via APIs is expected to expand lending opportunities to a wider range of borrowers.
The SECP’s enhanced digital lending ecosystem aims to cater to both consumers and businesses, promoting transparency, data protection, and innovative financial solutions. By aligning regulatory frameworks with the latest technological advancements, the SECP is positioning Pakistan’s digital lending sector for significant growth and development.
