29

[(xliia) “securities broker” means a trading right entitlement certificate holder or

“TRE” certificate holder who, by way of business,

(a) makes or offers to make with any person or induces or attempts to

induce any person to enter into or to offer to enter into, any agreement
for or with a view to buying, selling, exchanging or subscribing for,
securities; or

(b) solicits or accepts any order for or otherwise trading in, or effects
transactions in, securities for clients or on its own account;”;]
30
[(xliib) “strategic investment” means an investment which an NBFC makes with the
intention to hold it for a period of minimum 5 years and is more than 10% of
its equity;]

(xliv) “trust” means a trust established by a deed under the provisions of the Trusts
Act, 1882 (II of 1882);
31
[(xlv) “trustee” means a company appointed as a trustee of a notified entity as per
the rules and regulations made under Part VIII A of the Ordinance;]

(2) Words and expressions used but not defined in these rules shall have the same
meaning as assigned to them in the Ordinance or the 32[Securities Act, 2015 (III of 2015) or
Rules and Regulations made thereunder].

3. Eligibility criteria for the establishment of a NBFC. A NBFC may be

established, if each of its promoters, proposed directors, chief executive and chairman of the
Board of Directors fulfills the terms and conditions mentioned in the fit and proper criteria as
may be specified by the Commission by notification in the official Gazette and complies with the
requirements of the Ordinance, these rules and the regulations made under the Ordinance.

4. Permission to form a NBFC. -(1) A person desirous of forming a NBFC 33[to

undertake any form of business] shall make an application to the Commission as set out in Form-
1 providing information, as given in Annexure thereto, along with all the relevant documents and
receipt evidencing the payment of non-refundable processing fee as may be specified by the
Commission by notification in the official Gazette.

29 Inserted vide SRO 1002(I)/2015 dated October 15, 2015

30 Inserted vide SRO 1002(I)/2015 dated October 15, 2015
31 Substituted for “(xlv) “trustee” includes a bank licensed under the Banking Companies Ordinance, 1962 (LVII of 1962) or a trust company
which is a subsidiary of such a bank or a central depository company approved by the Commission or a NBFC carrying out investment finance
services provided it has been approved by the Commission to act as trustee or such other company or trust as may be approved by the
Commission to act as trustee;” vide SRO 1002(I)/2015 dated October 15, 2015
32 Substituted for “Securities and Exchange Ordinance, 1969 (XVII of 1969)” vide SRO 1002(I)/2015 dated October 15, 2015
33 Inserted vide SRO 1002(I)/2015 dated October 15, 2015

10
 (2) The Commission, if it is satisfied that the person seeking permission to form the
34
NBFC [to undertake any form of business] has fulfilled the criteria in terms of rule 3 and the
regulations, may permit by an order in writing 35[ ] to establish a NBFC.
36
[(3) The permission granted under sub-rule (2) shall be valid for a period of six
months unless extended for a maximum period of further three months under special
circumstances, on the application of the promoters made before the expiry of initial six months.
During the validity of this permission, the promoters shall get the NBFC incorporated and submit
an application to the Commission for grant of licence, after fulfilling all the conditions specified
in these rules.]

5. Conditions for grant of licence.- 37[(1) An NBFC or any other company subject
to eligibility in terms of schedule I shall make separate applications to the Commission for grant
of licence for carrying out each form of business. The said application shall be submitted to the
Commission in Form-II along with a non-refundable processing fee as may be specified by the
Commission by notification in the official Gazette for each licence.

(2) A fund management NBFC shall not be eligible for seeking licence for any form
of business allowed to lending NBFC and a lending NBFC shall not be eligible for seeking
licence for any form of business allowed to fund management NBFC.

(3) An NBFC or any other company may apply to the Commission for grant of
licence subject to eligibility criteria given in Schedule I.

(4) The Commission may issue a licence for asset management services to manage
only closed end fund. Licence granted to an NBFC for investment finance services shall be valid

34 Inserted vide SRO 1002(I)/2015 dated October 15, 2015

35 Deleted the words ‘such person”
36 Substituted for “(3) The permission granted under sub-rule (2) shall be valid for a period of six months unless extended for a maximum period
of three months under special circumstances, on the application of the promoters made before the expiry of said six months. During the validity
of this permission, the promoters of the NBFC shall get the NBFC incorporated as a public limited company or any other form of company as
may be specified by the Commission by notification in the official Gazette.” Vide SRO 1002(I)/2015 dated October 15, 2015
37 Substituted for “(1) An NBFC shall make separate applications to the Commission for grant of licence for carrying out different forms of
business. The said application shall be submitted to the Commission in Form-II along with a non-refundable processing fee as may be specified
by the Commission by notification in the official Gazette for each licence.
(2) An NBFC seeking licence for undertaking investment advisory or asset management services or both shall not be eligible for seeking licence
for any other form of business.

Explanation.- (i) For the purpose of sub-rule (2), the Commission may issue a licence for asset management services to manage only closed-end
funds.

(ii) All existing NBFCs licensed to provide investment advisory services that are managing closed-end funds shall, within six months of the
coming into effect of this provision, apply for an asset management services licence to manage closed-end funds.

(3) An NBFC licenced to carry out asset management services shall be eligible, subject to the criteria as may be specified by notification in the
official Gazette, to undertake pension fund scheme business as specified by the Federal Government to be a form of business in terms of section
282A of the Ordinance.

(4) An NBFC seeking licence for undertaking investment finance services or leasing or housing finance services or discounting services or all of
the said forms of business shall not be eligible for seeking licence for any other form of business
Explanation.- For the purpose of sub-rule (3), licence granted for investment finance services shall be valid for undertaking discounting services,
and separate licence for undertaking discounting services shall not be required.
(5) All existing NBFCs shall comply with the requirements set out in sub-rule (2) and (3) within a period of one year from the date of coming
into effect of this provision or any other time as may be specified by the Commission by notification in the official Gazette.” Vide SRO
1002(I)/2015 dated October 15, 2015

11
for undertaking leasing, housing finance services and discounting services and such an NBFC
shall not be required to obtain separate licences for each form of business i-e., leasing, housing
finance services and discounting services specified in these rules.

(5) Every other person engaged in any form of business shall within a period of six
months of coming into force of these rules apply in writing to the Commission, for grant of a
licence along with a non-refundable processing fee as specified by the Commission by
notification in the official Gazette] 38[:

Provided that persons already engaged in business of micro financing shall for grant of
licence apply in writing to the Commission within six months from the date of publication of this
Notification or such other extended date as may be specified by the Commission through
Notification in the official Gazette:

Provided further that a person shall not be required to obtain licence, if engaged in
business of micro financing, but having less than five thousand active borrowers or having
outstanding loan portfolio of less than fifty million rupees:

Provided also that such person should be receiving funding or financing from a bona fide
source such as local or international donor agencies of repute or Federal or Provincial
Governments or their agencies or entities regulated by the Commission or State Bank of Pakistan
or such other sources as specified by the Commission and such providers of fund shall endeavor
to route the funding through proper banking channels and to oversee its operations so that these
are conducted legitimately, as specified by the Commission.]
39
[(6) The Commission shall, after making necessary inquiries and after obtaining such
further information, as it may consider necessary, and if it is satisfied that each of its promoters,

38 Substituted for the full stop (.) vide SRO 437 (I)/2019 dated April 8, 2019
39 Substituted for “(6) The Commission, after making necessary inquiries and after obtaining such further information, as it may consider
necessary, and if it is satisfied that the company has fulfilled the criteria in terms of rule 3 and the regulations, and that the promoters thereof are
persons of means and integrity having knowledge of matters which the company may have to deal with, in respect of the forms of businesses for
which the licence is being sought, shall grant licence to such company in Form-III for one or more of the forms of businesses subject to
compliance of the following conditions, namely:-
(a) the company is incorporated as a public limited company or such other form of company as may be specified by the Commission by
notification in the official Gazette;
(b) the company is not part of a group of companies already holding a licence, under these rules, for the same form of business;
(c) the company has minimum equity as may be specified by the Commission by notification in the official Gazette, in respect of each form of
business;
(d) the company has allotted at least twenty five percent of the paid-up share capital to the promoters;
(e) the company’s promoters or majority shareholders and directors have deposited their shares with Central Depository Company of Pakistan
Limited in an account marked as blocked and such shares shall not be sold or transferred without prior approval of the Commission and shall be
kept unencumbered.
(f) the company’s promoters or majority shareholders and directors have given an undertaking that they shall not enter into any agreement for sale
or transfer of their shares in any manner without prior approval of the Commission;
(g) the company appoints its chief executive who does not hold such office in any other company except for an investment company being
managed by the said company, provided that prior approval of the Commission has been obtained in this regard;
(h) the company has given an undertaking that no change in the Memorandum of Association, other than increase in the authorized share capital,
shall be made without prior approval of the Commission;
(i) the company has given an undertaking that the conditions as set out in these rules, the regulations or prudential regulations or any direction
given by the Commission shall be duly complied with; and
(j) the company has furnished an undertaking that within ninety days of the grant of certificate of registration it shall furnish evidence to the
satisfaction of the Commission that the personnel employed by it for executive positions, research or other related functions possess sufficient
educational qualifications and professional experience to undertake the proposed form of business of the NBFC.” Vide SRO 1002(I)/2015 dated
October 15, 2015

12
directors, chief executive and chairman of the Board of Directors fulfills the terms and
conditions mentioned in the fit and proper criteria, grant licence as per Form-III for one or more
forms of businesses subject to compliance of all or any of following conditions:-

(a) the company fulfills the eligibility criteria given in Schedule I;

(b) the company is not part of a group of companies already holding a licence, under
these rules, for the same form of business;

(c) the company meets minimum equity requirements or any other requirement in
lieu of minimum equity requirement as may be prescribed by the Commission for
specific form of business or class of companies by notification in the official
Gazette, in respect of each form of business;

(d) the company has allotted at least twenty five percent of the paid-up share capital
to the promoters;

(e) the company’s promoters or majority shareholders and directors have deposited
their shares with Central Depository Company of Pakistan Limited in an account
marked as blocked and such shares shall not be sold or transferred without prior
approval of the Commission and shall be kept unencumbered:

Provided that directors holding qualifying shares, maximum up to 2 per

cent of the total share capital shall be exempt from this requirement;

(f) the company’s promoters or majority shareholders and directors have given an
undertaking that they shall not enter into any agreement for sale or transfer of
their shares in any manner without prior approval of the Commission;

Provided that directors holding qualifying shares, up to maximum up to 2

per cent of the total share capital shall be exempt from this requirement;

(g) the company appoints its chief executive who does not hold such office in any
other company except for an investment company being managed by the said
company, provided that prior approval of the Commission has been obtained in
this regard;

(h) the company shall not make any change in the Memorandum of Association,
other than increase in the authorized share capital, without prior approval of the
Commission;

(i) the company shall comply with the conditions as set out in these rules, the
regulations or any direction given by the Commission;

(j) the company shall furnish evidence to the satisfaction of the Commission that the
personnel employed by it for executive positions, research or other related

13
 functions possess sufficient educational qualifications and professional experience
to undertake the proposed form of business:

Provided that a new company shall furnish the evidence within 90 days of
grant of licence;

(k) the company obtaining licences for multiple forms of business or any company
undertaking any form of business as an ancillary activity must have, other than
chief executive, at least one person responsible for heading each licenced form of
business;

(l) the company incorporated as NBFC in accordance with criteria mentioned in rule
4 shall not undertake any other activity except the licenced activity; and

(m) the company, its promoters and major shareholders, its chief executive and its
directors shall furnish separate undertakings to the Commission that they shall
comply in letter and spirit with the requirements of the Ordinance, these rules, the
regulations made under the Ordinance and the directions issued by the
Commission:

Provided that the Commission may, impose additional conditions or grant

time to the company for compliance with any of the above conditions as it deems
appropriate:

Provided further that the Commission may further extend the time granted
to the company for compliance.]

(7) Without prejudice to the conditions prescribed under sub-rule (6) above, the
Commission may, while granting licence, impose such additional conditions, as it may deem
necessary.
40
[(7a) If a company fails to commence business within the period as specified by the
Commission while issuing licence, the licence shall be deemed to be cancelled unless the
specified period is extended by the Commission on the application made by the company.]

(8) The licence granted 41[ ] shall be valid for 42[three years] from the date of its
issuance and shall be renewable upon expiry of the said period by making an application at least
one month prior to the expiry as set out in Form IV along with payment of a fee as specified by
the Commission by notification in the official Gazette.

(9) The Commission may, after making such inquiry and after obtaining such further
information, as it may consider necessary, renew the licence 43[ ], for 44[three years] in Form V
on such conditions, as it may deem necessary:

40 Inserted vide SRO 1002(I)/2015 dated October 15, 2015

41 Deleted the words “to the NBFC” vide SRO 1002(I)/2015 dated October 15, 2015
42 Substituted for “one year” vide S.R.O. 271 (I)/2010 dated April 21,2010
43 Deleted the words “of such NBFC” vide SRO 1002(I)/2015 dated October 15, 2015

14
 Provided that till such time that the licence is renewed, the existing licence shall be
deemed valid for the purposes of these rules and the regulations unless the company fails to
apply as specified in sub-rule (8) and fulfill all the requirements to the satisfaction of the
Commission for the 45[renewal] of a licence:

Provided further that if the company fails to apply within the stipulated time period and
fulfills all the requirements to the satisfaction of the Commission its licence shall stand cancelled
and the Commission may initiate further proceedings to give effect to the cancellation.
46
[(10) Without prejudice to the terms and conditions prescribed in rule 7, the
Commission may, subsequent to the grant or renewal of licence, impose any other condition as it
may deem necessary in the public interest.]
47
[ ]

7. Conditions applicable to a NBFC.(1) A NBFC shall,

(a) maintain such books of accounts and other records, as prescribed under the
Ordinance, as shall depict a true and fair view of its state of affairs, including,-

(i) journals, cash books and other records of original entry forming the basis
of entry in any ledger;

(ii) ledgers (or other comparable record) reflecting assets, liabilities, income
and expenses along with all supporting documents or records;

(iii) ledgers (or other comparable record) showing securities in the portfolio;

(iv) record of transactions with banks;

(v) record of the meetings of the board of directors and all relevant
committees including the audit committee, credit committee and
investment committee; and

44 Substituted for “one year” vide S.R.O. 271 (I)/2010 dated April 21,2010
45 Substituted for “grant” vide SRO 1002(I)/2015 dated October 15, 2015
46 Substituted for “(10) Every company in existence which is engaged in one or more forms of businesses shall apply in writing to the
Commission, as provided by sub-section (3) of section 282C of the Ordinance, for grant of a licence along with a non-refundable processing fee
as specified by the Commission:
Provided that till such time that a new licence is issued, the existing licences or registrations shall be deemed to be valid for the purposes of these
rules unless the company fails to apply for licence as specified in sub-rule (8) or the Commission declines to grant such licence for reasons to be
recorded in writing.”.” vide SRO 1002(I)/2015 dated October 15, 2015
47 Deleted the words “6. Commencement of operations by NBFC. (1) An NBFC shall commence or continue its business and operations only
after it has complied with the requirements of these rules and the regulations and has been issued a licence to carry out a form of business.
(2) Without prejudice to the terms and conditions prescribed in rule 7, the Commission may, subsequent to the grant of licence to the NBFC,
impose any other condition, as it may deem necessary in the public interest.
(3) If an NBFC fails to commence business within one year of the issuance of licence, the licence shall be deemed to be cancelled or otherwise as
specified by the Commission by notification in the official Gazette.”

15
 (vi) original record of all reports, analysis and memoranda containing
investment advice distributed;

(b) maintain such books of accounts and other records, as prescribed under the
Ordinance, to depict a true and fair view of its state of affairs for a period of not
less than ten years;

(ba) ensure that its statutory auditors are from the approved list of auditors circulated
by the Commission;

(c) appoint an individual, having minimum three years experience, as its financial or
chief accounting officer who is-

(i) a chartered accountant; or

(ii) a cost and management accountant; or

(iii) a member of a recognized foreign accountancy organization; or

(iv) a person having master’s degree in commerce or business administration

with specialization in finance,
48
[Provided that a non-deposit taking and unlisted lending NBFC
may designate another officer as its financial or chief accounting officer;]

(ca) appoint 49[as internal auditor];

50
[(i) a person having minimum three years relevant experience who is-]

(a) a chartered accountant; or

(b) a cost and management accountant; or
(c) a certificated internal auditor; or
(d) a certified information system auditor; or
(e) a member of recognized foreign accountancy organization; or
(f) an individual having master degree in commerce or business
administration with specialization in finance; or

(ii) a chartered accountancy firm having satisfactory Quality Control Review

(QCR) and not being the statutory auditors to whom this function is
outsourced 51[.

48 Substituted for “;” vide SRO 1002(I)/2015 dated October 15, 2015
49 Inserted vide SRO 1002(I)/2015 dated October 15, 2015
50 Substituted for “(i) a person having minimum three years experience as internal auditor who is-“ vide SRO 1002(I)/2015 dated October 15,
2015
51 Substituted for “;” vide SRO 1002(I)/2015 dated October 15, 2015

16
 Provided that the internal auditor shall report directly to the board
of directors or the audit committee of the board of the NBFC.]

(cb) appoint a person as compliance officer to ensure reporting to the Commission of

status of compliance with the existing regulatory framework by the NBFC 52[:

Provided that a non-deposit taking and unlisted Lending NBFC may

designate another officer as its compliance officer;]

(cc) appoint such executives who shall fulfill the terms and conditions mentioned in
the fit and proper criteria specified by the Commission by notification in the
official Gazette;
53
[(cd) appoint the directors in accordance with Schedule I, provided that the
Commission shall be the final authority to determine the status of a director as
independent or otherwise;]

(d) prepare its accounts in conformity with the International Accounting Standards
notified under sub-section (3) of section 234 of the Ordinance and technical
releases issued by Institute of Chartered Accountants of Pakistan from time to
time;
54
[(da) furnish to the Commission its quarterly and annual financial statements in
accordance with Schedule I;]
55
[ ]

(g) follow directions issued to protect NBFCs against their involvement in money
laundering activities 56[, terrorist financing] and other unlawful trades;

52 Substituted for “;” vide SRO 1002(I)/2015 dated October 15, 2015
53 Substituted for “(cd) appoint-
(i) at least one third of its directors who shall be independent directors; and
Provided that at least two of its directors, excluding the chief executive officer, shall have relevant experience of at least five years at a senior
management level in the financial sector;
Explanation.- For the purpose of this sub-clause, the expression "independent director" means a director who is not connected with the company
or its promoters or directors on the basis of family relationship and who does not have any other relationship, whether pecuniary or otherwise,
with the company, its associated companies, directors, executives or related parties. The test of independence principally emanates from the fact
whether such person can be reasonably perceived as being able to exercise independent business judgment without being subservient to any
apparent form of interference.
Provided further that the Commission shall be the final authority to determine the status of a director as independent or otherwise;” vide SRO
1002(I)/2015 dated October 15, 2015
54 Substituted for “(da) furnish to the Commission within one month of the close of first and third quarter and within two months of the close
of second quarter of the year of account of its financial year, a balance sheet along with an income statement, cash flow statement and the
statement of changes in equity for the respective quarters, whether audited or otherwise;”
55 Deleted the words “(db) furnish a copy of its annual report together with copies of the balance sheet, income statement, cash flow statement
and statement of changes in equity along with the auditors report to the Commission or any other person as required by the Commission within
three months of the close of the accounting period;
(e) separately disclose in relevant notes to its quarterly and annual accounts all those facilities and exposures whose carrying value exceeds
twenty percent of its equity;” vide SRO 1002(I)/2015 dated October 15, 2015
56 Inserted vide SRO 1002(I)/2015 dated October 15, 2015

17
 57
(h) [obtain rating in accordance with Schedule-I] as and when it becomes eligible
for rating as per the rating criteria of a rating agency registered with the
Commission, and such rating shall be updated at least once every financial year:

Provided that the NBFC shall within one year of the decrease in its rating
from the grade specified by the Commission by notification in the official
Gazette, obtain a fresh rating and during the period that its rating is below the
grade so specified, the NBFC may be allowed by the Commission to continue its
operations on such conditions as are deemed appropriate by the Commission;
58
[(i) publish the rating in its annual report and quarterly reports, annual and quarterly
reports of the collective investment schemes managed by it, if applicable, and any
advertisement and brochures in relation to promotion of its business;] and

(j) acquire and maintain membership of the relevant association and follow the code
of conduct specified by the said association approved by the Commission.”;
59
[(k) seek registration of notified entities as per the regulations notified by the
Commission in the Official Gazette before offering of unit, certificates or shares
of notified entities:]

(2) A NBFC shall not,

(a) appoint as directors 60[those] persons who hold such office in any other NBFC
licensed for the same form of business.

Provided that this clause shall not apply to the nominees of the Federal or
Provincial Governments on the board of any NBFC or, any exception specified by
the Commission;

(aa) appoint or change its chief executive or any of its directors subject to fulfillment
of the fit and proper criteria and prior approval of the Commission provided that
the Commission may refuse appointment of any person 61[ ];

Explanation.- This clause shall not apply to a director nominated by the

Federal Government or Provincial Governments;
62
[(b) enter into premises leasing or renting, and sale or purchase of any kind with their
directors, officers, employees or their close relatives or any person acting on their

57 Substituted for “obtain credit rating and, management quality rating, wherever applicable” vide SRO 1002(I)/2015 dated October 15, 2015
58 Substituted for “(i) publish the credit rating and management quality rating, as the case may be, in its annual report and quarterly reports,
annual and quarterly reports of the collective investment schemes managed by the NBFC, if applicable, and any advertisement and brochures in
relation to promotion of its business;” vide SRO 1002(I)/2015 dated October 15, 2015
59 Inserted vide SRO 1002(I)/2015 dated October 15, 2015
60 Inserted vide SRO 1002(I)/2015 dated October 15, 2015
61 Deleted the words “without assigning any reason” vide SRO 1002(I)/2015 dated October 15, 2015
62 Substituted for “(b) purchase anything from, or sell anything to any director, officer, employee of the NBFC or to a person who either
individually or in concert with close relatives beneficially owns ten percent or more either of the equity or other securities with voting rights, if
any, issued by such NBFC;

18
 behalf or such persons who either individually or in concert with family members
beneficially own 10% or more of the equity of the NBFC:

Provided that this restriction shall not apply to such NBFCs that
have a policy to this effect duly approved by their board of directors:

Provided further that in case of any sale and purchase to the

directors the prior approval in writing of the board, excluding the
participation of the beneficiary directors, is required;]
63
[(ba) hold or make investment in a subsidiary other than that which is a
financial services company:

Provided that an NBFC may make strategic investments in

financial services company with the approval of the Commission] 64[:

Provided further that non-banking microfinance companies may

set up non-financial subsidiaries with intimation to the Commission,
whose business is conducted so as to supplement or complement the
community service objective of the non-bank microfinance company:

Provided also that the conditionalities and modalities pertaining to

these investments shall be specified by the Commission and any
exceptions thereto shall be decided by the Commission on case to case
basis;]
65
[(c) form, sell or transfer ownership of shares in subsidiary or associated
company, merge with, acquire or takeover any other company unless it has
obtained prior approval of the Commission in writing to such formation or
sale or transfer;]
66
[(ca) sell strategic investment unless it has obtained prior approval of the
Commission in writing to such sale;

(cb) merge with, acquire or takeover any other company unless it has obtained
prior approval of the Commission in writing to such scheme of merger,
acquisition or takeover;]
67
[ ]

Provided that this restriction shall not apply to such NBFCs that have a policy to this effect duly approved by their board of directors:
Provided further that in case of any sale and purchase to the directors the prior approval in writing of the board, excluding the participation of the
beneficiary directors, is required;”vide SRO 1002(I)/2015 dated October 15, 2015
63 Inserted vide SRO 1002(I)/2015 dated October 15, 2015
64
Substituted for semi colon (;) vide SRO 437 (I)/2019 dated April 8, 2019
65 Substituted for “(c) sell or transfer ownership of shares in subsidiary or associated company, merge with, acquire or takeover any other
company unless it has obtained prior approval of the Commission in writing to such sale or transfer or scheme of merger, acquisition or
takeover;” vide SRO 1002(I)/2015 dated October 15, 2015
66 Substituted for “(ca) make investment in its subsidiary except out of its surplus equity (i.e. over and above the specified minimum equity
requirement for the licences held by such NBFC);” vide SRO 1002(I)/2015 dated October 15, 2015

19
 (f) remove any of its records or documents relating to its business from
Pakistan to a place outside Pakistan without the prior permission of the
Commission;
68
[(h) make aggregate investment in shares of unlisted company in excess of
twenty percent of its equity. Investment in unlisted company shall be
approved in a board meeting after carefully analyzing the merits and
financial impact of the investment and recording the decision in detail in
minutes of the meeting and such decisions shall be communicated to the
Commission within fourteen days of the board meeting along with copy of
the minutes:

Provided that the NBFC shall not own shares of any one unlisted
company in excess of ten per cent of its own equity or of the issued capital
of that company, whichever is less:

Provided further that investment by an NBFC out of its surplus

equity (i.e. over and above the required minimum equity requirements) in
unlisted shares of its subsidiaries or any other financial services company
in the group, shall not be taken into account for calculating the limit for
unquoted shares;]

(i) offer any of its own or other securities for any consideration other than
cash 69[or liquid assets] nor make any loan or advance against these
securities. Unless otherwise specified by the Commission by notification
in the official Gazette;

(j) hold, deal or trade in real estate except for the use of NBFC itself or where
specified by the Commission by notification in the official Gazette 70[:

Provided that properties acquired by lending NBFC in satisfaction

of its claims shall be disposed of within a maximum period of seven years
from the date of acquisition;]

67 Deleted the words “(e) enter into transactions with any broker which exceed ten percent of the total brokerage expense of the NBFC in any
one accounting year
Provided that the NBFC shall not have a common director or officer or employee with the broker;” vide SRO 1002(I)/2015 dated October 15,
2015
68 Substituted for “(h) make an investment in unquoted shares of any company in excess of twenty percent of its equity. Unquoted investment
shall be approved in a board meeting after carefully analyzing the merits and financial impact of the investment and recording the decision in
detail in minutes of the meeting and such decisions shall be communicated to the Commission within fourteen days of the board meeting along
with copy of the minutes;
Provided further that all existing NBFCs, who have investment in unquoted shares exceeding twenty percent of their equity , shall bring such
investments down to twenty percent within a period of six months from the date of this provision taking effect.
Provided also that an investment by an NBFC out of its surplus equity (i.e. over and above the minimum specified regulatory requirement for the
licences held by the NBFC) in its wholly owned subsidiaries, for undertaking a form of business, shall not be taken into account for calculating
the limit for unquoted shares;” vide SRO 1002(I)/2015 dated October 15, 2015
69Inserted vide vide SRO 1002(I)/2015 dated October 15, 2015
70 Substituted for “;” vide SRO 1002(I)/2015 dated October 15, 2015

20
 71
[(k) raise deposits in any form by whatever name called except as specified by
the Commission in the Non-Banking Finance Companies and Notified
Entities Regulations, 2008;]

(l) provide unsecured facilities or exposures except as specified by the

Commission by notification in the official Gazette;

(m) encumber or mortgage or pledge or transfer clients’ assets deposited as

security with the NBFC against any facility extended to the client, for
securing its own obligation;

(n) undertake the brokerage business in capital market except by forming a

separate company for this purpose72[.]
73
[ ]
74
[(3) An NBFC shall comply with such minimum equity requirement or any other
requirement in lieu of minimum equity requirement as may be prescribed by the Commission
from time to time for specific form of business or class of companies by notification in the
official Gazette.]
75
[7A. Payment of fee.- An NBFC shall pay such non-refundable fee as may be
specified by the Commission through notification in the official Gazette.]
76
[8. Opening or closure of bank account, account with a broker or branch.- An
NBFC shall inform its board of director regarding opening or closure of any bank accounts,
accounts with a brokers or branches of an NBFC and the same must be recorded in the minutes
of board meeting.]
77
[9. Insurance coverage.- An NBFC shall obtain sufficient insurance coverage from
an insurance company rated minimum A- by a credit rating agency registered with the
Commission against any losses that may be incurred as a result of employee’s fraud or gross
negligence. The NBFC shall make disclosure about the insurance coverage in its financial
statements.]

71 Substituted for “(k) raise funds in any form from individuals except as specified by the Commission by notification in the official Gazette;”
vide SRO 1002(I)/2015 dated October 15, 2015
72 Substituted for “Provided that the NBFCs already engaged in brokerage business shall comply with this requirement within a period of one
year of coming into effect of this provision” vide S.R.O. 1002(I)/2015 dated October 15, 2015
73 Deleted the words “: Provided that this sub-rule shall not apply to NBFC which have a valid license to undertake investment finance services
business and have been, to such terms and conditions as Commission may impose, granted permission by the Commission to undertake brokerage
business without forming a separate company: and” vide SRO 1002(I)/2015 dated October 15, 2015
74 Substituted for “(3) An NBFC shall comply with such minimum equity requirement in respect of each form of business specified by the
Commission from time to time by notification in the official Gazette.” Vide SRO 1002(I)/2015 dated October 15, 2015
75 Substituted for “7A. Monitoring fee.- An NBFC engaged in deposit taking shall, within three months of the close of its financial year, pay to
the Commission an annual fee as may be specified by the Commission by notification in the official Gazette.” Vide SRO 1002(I)/2015 dated
October 15, 2015
76 Substituted for “8. Opening or closure of bank account, account with a broker or branch.- Opening or closure of any bank accounts, account
with a broker or branches of an NBFC shall be approved in a board meeting by the board of directors of the NBFC after carefully analyzing its
merits and financial impact and the reasons must be recorded in the minutes of board meeting. Such decisions and minutes of the board meeting
shall be communicated to the Commission within fourteen days of the said meeting.” Vide SRO 1002(I)/2015 dated October 15, 2015
77 Substituted for “9. Insurance coverage. A NBFC shall obtain sufficient insurance coverage on its own or for its clients’ benefit against any
losses that may be incurred as a result of employee’s fraud or gross negligence” vide SRO 1002(I)/2015 dated October 15, 2015

21