Under the first cohort of its technology-driven ‘Regulatory Sandbox’ program, the Securities and Exchange Commission of Pakistan (SECP) has granted approval for the launch of a peer-to-peer lending network.
The change aims to help and promote a transition in the country’s financial technology, a press release said on Wednesday.
The SECP’s current approval for testing and experimenting with such a framework is also due to the creation of a SME financing ecosystem with a view to achieving higher growth prospects and generating new jobs and business opportunities.
The ‘Regulatory Sandbox’ SECP is a structure to accommodate the supply of financial services that exploit emerging technologies. It enables FinTech companies to test their services and encourage the implementation of new technologies within a small, well-defined framework in a live environment.
The statement released described the network as, “Peer-to-peer lending is an innovative, alternative digital platform that connects borrowers with individual lenders, who come together to meet the former’s loan requirements. Peer-to-peer lending helps borrowers give out short-terms loans that enable small and medium enterprises (SMEs) to scale up their businesses, eventually allowing them to qualify for bigger bank loans.” The statement added that this will help the SECP establish a much-needed enabling regulatory structure.
The press release further added, “These terms and conditions have been imposed to address the inherent risks involved in operating such platforms in the absence of a regulatory framework. However, these terms and conditions shall be reconsidered parallel to the results of the experimentation stage.”
This platform will work within pre-defined parameters during the testing process and is subject to certain terms and conditions. Specific eligibility requirements may apply to each lender/collection.
Reference links: www.dawn.com
