A Non-Banking Finance Company (NBFC), also called a Non-Banking Financial Institution (NBFI), provides financial services similar to a bank. However, it does not hold a banking license. Because of this, it does not operate like a traditional bank and does not fall under the same banking regulations that apply to licensed banks at the federal and provincial levels.

An NBFC mainly focuses on financial activities. In simple words, if more than 85% of a company’s total income or assets come from financial services, it is considered an NBFC. These companies work in areas such as investment and finance but do not offer full banking services.

Common examples of NBFCs include:

• Investment banks
• Mortgage lenders
• Money market funds
• Insurance companies
• Hedge funds
• Private equity funds
• Peer-to-peer (P2P) lenders

   

NBFCs provide many financial solutions, but they usually cannot accept demand deposits. This means they cannot take public deposits like savings or current account balances that people can withdraw at any time. Because they do not handle such deposits, they remain outside the traditional banking supervision system.

How SARDAR KHAN & CO Supports Clients

SARDAR KHAN & CO helps clients establish Non-Banking Finance Companies in Pakistan. The firm guides clients through the legal, regulatory, and procedural steps required for registration and licensing.

NBFCs may receive licenses to provide different types of financial services, such as:

• Asset Management Services
• Discounting Services
• Housing Finance Services
• Investment Advisory Services
• Investment Finance Services
• Leasing Services
• Pension Fund Scheme Services
• Private Equity & Venture Capital Fund Management Services
• REIT Management Services
• Venture Capital Investment Services
  
  

Each business activity requires proper approval and licensing from the concerned authority.

Banks vs NBFCs: Key Differences Explained

Both banks and NBFCs operate in the financial sector, but they serve different roles and follow different rules. Below is a simple comparison to help you understand the difference.

1. Legal Status

Banks hold a government-issued banking license. They can offer full banking services to the public.
NBFCs provide financial services but do not hold a banking license.

2. Deposits

Banks accept deposits from the public and use those funds to provide loans.
NBFCs generally cannot accept demand deposits like savings or current accounts.

3. Payment and Settlement

Banks manage payment systems. They handle transfers, settlements, and daily transactions.
NBFCs do not operate payment or settlement systems.

4. Demand Draft Facility

Banks can issue demand drafts in their own name.
NBFCs cannot issue demand drafts.

5. Cheque Services

Banks allow customers to issue and clear cheques.
NBFCs do not provide cheque facilities.

6. Credit Creation

Banks create credit through lending and deposit systems.
NBFCs do not have the same authority to create credit.

7. Transaction Services

Banks offer savings accounts, current accounts, and online transfers.
NBFCs focus mainly on loans, investments, and financial advisory services instead of transaction handling.

Legal Framework Governing NBFCs in Pakistan

NBFCs in Pakistan operate under specific laws and regulations. These include:

• The Companies Ordinance, 1984 (Sections 282A – 282K)
• The Companies Act, 2017 (Section 509)
• The Non-Banking Finance Companies and Notified Entities Regulations, 2008
• The Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003

These laws define how NBFCs must register, operate, and comply with regulatory standards.

How to Establish an NBFC in Pakistan

Step 1: Apply for Permission (NOC)

Any person who wants to establish an NBFC must apply to the Commission using Form I, as required under Rule 4. The applicant must submit all required documents along with a non-refundable fee.

The Commission usually grants written permission valid for six months. In special cases, this period may extend to nine months. During this time, the applicant must complete company incorporation and apply for a license.

Step 2: Apply for a License

After incorporation, the company must apply separately for each business activity it wants to conduct. The applicant must submit Form II along with the required documents and a non-refundable processing fee.

Process Fees

• NOC / Permission Fee: Rs. 250,000

   

• Licensing Fee: Rs. 500,000

   

These fees are payable as per the regulatory requirements.

Asset Management Company (AMC) – A Special Type of NBFC

An Asset Management Company (AMC) is a type of NBFC licensed by the Securities and Exchange Commission of Pakistan (SECP). It provides asset management services under Part VIII-A of the Companies Ordinance, 1984 and the NBFC & NE Regulations, 2008.

An AMC must first incorporate under the Companies Ordinance and follow the NBFC Rules, 2003. After incorporation, it must obtain the required license from SECP.

Chronological Process for Incorporating an NBFC and Licensing as AMC

1. NOC for Formation

Submit an application to the Specialised Companies Division at SECP Headquarters, Islamabad. The application must include Form I, supporting documents, and the required fee.

2. Incorporation

Incorporate the NBFC as a Public Limited Company at the relevant Company Registration Office by following standard company registration procedures.

3. Licensing as AMC

Submit Form II along with supporting documents and the required fee to obtain a license for Asset Management Services.

Once the Commission approves the license, the AMC becomes fully established and can begin operations.

NBFC Registration and Financial Services in Pakistan

Non-Banking Finance Companies play an important role in Pakistan’s financial sector. They offer specialised financial services without functioning as traditional banks. Although they do not accept public deposits like banks, they provide valuable solutions in investment, leasing, housing finance, and asset management.

Open strong opportunities in the financial market. With proper guidance and compliance, setting up an NBFC can be a profitable and smooth process. SARDAR KHAN & CO assists clients at every step, from initial permission to final licensing, ensuring a smooth and legally compliant setup process.