Housing Finance Services Licence

Housing finance licensing: scope and regulatory route

A business extending mortgage-backed housing credit in Pakistan requires an appropriate non-banking finance company (NBFC) authorisation from the Securities and Exchange Commission of Pakistan (SECP). A company registration certificate, real-estate development approval, or ordinary commercial trading registration does not confer the right to originate regulated housing loans. The legal starting point is the definition of “housing finance services” in the NBFC (Establishment and Regulation) Rules, 2003: conventional or Islamic consumer or commercial finance for purchasing or constructing a house or apartment, or purchasing land and constructing on it, including improvements to housing.

There are two materially different licensing paths. A new applicant may seek permission to establish an NBFC for housing finance, incorporate the approved vehicle, and obtain the operating licence. Alternatively, an existing NBFC licensed for investment finance services may, under rule 5(4) and regulation 4 of the NBFC Regulations, undertake housing finance, leasing and discounting without separate licences for those activities, subject to its existing licence, applicable conditions and minimum equity requirement for investment finance. A standalone housing-finance licence is therefore not the only lawful route, but an unlicensed company cannot simply rely on that exception.

SECP's older public housing-finance licensing overview ↗ describes incorporation as a public limited company and refers to the Companies Ordinance, 1984. Its checklist and the amended Rules must be read together with current company-incorporation law; do not treat historical website wording as an exemption from the current Companies Act, 2017 or an absolute rule on corporate form. The actual permission, incorporation and licence are separate regulatory decisions.

Eligibility, capital and prohibited assumptions

Promoters and management. Rule 3 requires promoters, proposed directors, chief executive and board chairman to meet the fit-and-proper criteria. Rule 5 requires the SECP to assess the applicant's ownership, governance, financial capacity, business model and compliance arrangements. Applicants should prepare a complete ownership and beneficial-control map, explain related financial businesses, and identify experienced directors and the executive responsible for credit underwriting, risk and collections. The regulator may request additional material or impose conditions.

Minimum equity is activity-specific. Schedule I of the NBFC Regulations, consolidated to 15 January 2026, prescribes PKR 50 million for a non-deposit-taking NBFC seeking a standalone housing-finance licence. A non-deposit-taking investment-finance-services licensee instead falls under the PKR 100 million IFS requirement, with distinct provisions for qualifying digital lending. A new deposit-taking NBFC seeking an HFS or IFS licence is in a materially different category: Schedule I lists PKR 1,000 million. These are equity requirements, not filing fees, and equity must be maintained as prescribed. Deposit-taking is not authorised merely because an NBFC has a housing-finance licence.

Corporate structure. Rule 5 distinguishes lending NBFCs from fund-management NBFCs and prevents combining incompatible business classes. A property developer, estate agent, contractor or bank subsidiary must assess whether its proposed transactions are regulated housing finance; an ordinary property business cannot use its existing registration as a substitute for SECP licensing. An existing IFS licensee should first verify the licence scope and any SECP restrictions before launching housing products.

Foreign sponsors and public-sector applicants. SECP's housing checklist asks for authenticated sponsor identification, net-worth and background records. Foreign applicants may need apostilled or consular-authenticated documents and security-clearance information. Government employees and public-sector undertakings face additional NOC or competent-authority approval requirements where applicable. These are conditional requirements, not a universal document list for every applicant.

Credit-product eligibility. Regulation 25(e) prohibits finance solely for purchasing a vacant plot. Where finance covers purchase of land and construction, disbursement is staged, with up to 50% of the sanctioned loan limit available for plot purchase and the balance for construction. Finance against a plot already owned by the borrower is permissible for construction if the funds are used for that purpose. Mortgage products must comply with affordability, loan-to-value, security, valuation and underwriting standards; the detailed conditions are addressed below.

Documentary requirements for formation and licensing

Prepare separate indexed files for Form I formation permission and Form II operating licence. The original SECP housing-finance checklist (May 2025) ↗ includes the prescribed forms and annexures. It contains conspicuous asset-management template text in its housing-finance sections, including a PKR 200 million AMC equity figure and references to “Asset Management Services”. Those lines should not be copied as housing-finance requirements; Schedule I of the enacted NBFC Regulations controls the capital category. The September 2025 attachment on the same SECP page is a Chinese-language summary labelled for discounting, not a substitute for the HFS-specific statutory instruments.

• Identity and ownership: proposed name and availability evidence; sponsor and major-shareholder particulars; CNIC/passport records; ownership and controlling-person disclosures; net-worth certificates and supporting wealth statements, where applicable; sources of subscribed funds and related-party disclosures.
• Corporate and governance: draft memorandum and articles for Form I; certified constitutional documents after incorporation for Form II; proposed board composition, independent-director status, chief executive qualifications, employment history and fit-and-proper declarations under Schedule IX; any required independent-director registration or training evidence.
• Financial readiness: three-year cash-flow and operating projections; staffing, capital and overhead budgets; auditor's certificate confirming the correct equity category; subscription-money bank evidence or proceeds-realisation documentation; realistic funding and liquidity arrangements.
• Housing finance operations: product terms for acquisition, construction and improvement loans; credit policy, borrower affordability methodology, loan-to-value policy, collateral valuation, title-verification and mortgage-perfection processes; construction disbursement controls; insurance/takaful; collections, complaints, credit classification and risk reporting.
• Conditional records: foreign-sponsor authentication and security clearance; government-employee NOCs or public-sector approvals; share-blocking evidence and undertakings where rule 5 applies; additional disclosures requested by the Licensing Department.

Form II should reconcile paid-up capital, actual equity, sponsor subscriptions, board appointments and the licence activity with the formation NOC. Do not represent the checklist as exhaustive: the SECP may request further information, and the checklist's obvious template errors require reconciliation with the Rules and Regulations before submission.

How to obtain a Housing Finance Services licence in Pakistan

1. 01
   Classify the proposed finance business

   Write a transaction-level description of each product: residential purchase, construction, land-plus-construction, improvement, developer-linked finance or commercial housing credit. Distinguish lending from property sales and brokerage. Check whether an existing investment-finance-services licence already covers the activity under rule 5(4), subject to SECP conditions; do not file for a second licence automatically.

2. 02
   Set the applicant and equity route

   Identify standalone HFS versus IFS, deposit-taking versus non-deposit-taking, and conventional versus Islamic finance. Apply the correct Schedule I equity category and prepare evidence of actual funding. Do not mistake a non-deposit-taking PKR 50 million HFS requirement for the PKR 100 million ordinary IFS or PKR 1,000 million new deposit-taking category.

3. 03
   Reserve the name and seek SECP formation permission

   Use SECP's current name-reservation process, then submit Form I under rule 4 with the business plan, sponsor disclosures, fit-and-proper documents, draft constitutional documents and fee receipt. Schedule II-A of the January 2026 NBFC Regulations prescribes a PKR 250,000 ordinary Form I application fee. The filing route should be confirmed with SECP's Licensing Department; name reservation is not permission to conduct housing finance.

4. 04
   Observe the NOC validity period

   Rule 4(3) makes formation permission valid for six months, extendable by up to three further months in special circumstances on an application made before the initial expiry. During the permission period, incorporate the permitted NBFC and apply for the operating licence. Calendar the actual NOC date and its conditions; do not assume an extension is automatic.

5. 05
   Incorporate the approved company

   File incorporation documents under the applicable Companies Act and Companies Regulations using the current SECP incorporation procedure. The older HFS overview speaks of public limited companies, while the May 2025 checklist contemplates more than one corporate form. Resolve the permissible form against rule 5, Schedule I and the particular NOC before incorporating. Incorporation fees are separate from NBFC licensing fees and depend on the applicable company filing.

6. 06
   Apply for the operating licence on Form II

   Submit the incorporated company's constitutional documents, auditor-certified equity, banking evidence, governance records, undertakings and business-readiness material. Schedule II-A prescribes an ordinary PKR 500,000 Form II licence-application fee. The regulator may seek clarification, interview management or require presentation of the business plan. Neither payment nor incorporation guarantees approval.

7. 07
   Implement housing-specific controls before lending

   Adopt the board-approved underwriting policy, title and valuation procedures, mortgage security, insurance/takaful, customer disclosures, risk controls, AML/CFT and grievance procedures. Test borrower affordability and construction drawdown controls against regulation 25(e) and Schedule XIIIA. Commence only the licensed activities, subject to the issued authorisation and any commencement deadline imposed by SECP.

8. 08
   Maintain licence and regulatory compliance

   Rule 5(8) provides a three-year licence and a renewal application on Form IV at least one month before expiry. Schedule II-A lists the Form IV application fee as nil; this does not eliminate other statutory costs. Keep evidence of filing, maintain minimum equity and comply with reporting, fit-and-proper, borrower-protection and licence conditions.

Official procedure: NBFC Rules, 2003 (rules 3–5) ↗ · NBFC Regulations, 2008 (Schedules I and II) ↗ · SECP HFS formation and licence checklist ↗

Housing finance prudential requirements and continuing compliance

Housing-specific underwriting. Regulation 25(e) requires a lender to determine credit limits under its internal credit policy and the borrower's repayment capacity. For an individual borrower, total monthly amortisation of all finance, including the proposed housing facility, must not exceed 50% of net disposable income; a co-borrower's income may be included with written consent. The maximum ordinary loan-to-value ratio is 85%. A separate 90% maximum applies to qualifying low-cost housing, for which the regulation specifies a housing-unit value not exceeding PKR 3 million, covered area up to 850 square feet and loan size up to PKR 2.7 million. Do not confuse these statutory underwriting limits with a particular lender's more conservative policy.

Loan purpose and maturity. A plot-only loan is not housing finance under regulation 25(e). Where plot purchase and construction are combined, no more than half the sanctioned facility is disbursed for the plot, with the balance linked to construction. The maximum financing tenor under the regulation is 25 years, subject to the NBFC's approved credit policy and asset-liability maturity profile. Earlier text in deleted regulation 35 referred to a 20-year tenor and different affordability figures; those deleted provisions are not the operative standard.

Property security and valuation. A mortgage, equitable or registered as legally appropriate, must be created over financed property. For properties valued above PKR 3 million, regulation 25(e) requires a professional valuer from the Pakistan Banks Association's approved list; lower-value properties still require defensible valuation and title controls. Obtain a documented legal review of title and encumbrances. Registration, mutation, stamp duties, transfer permissions and enforceability differ across provincial land records, development authorities, cantonments and housing schemes; these are transaction-specific matters rather than one uniform SECP form.

Insurance and portfolio concentration. Regulation 25(e) requires insurance or takaful of the mortgaged property up to the full value of finance for an apartment and up to construction cost for a house. Regulation 25(a) requires a lending NBFC primarily to invest at least 70% of its relevant assets in its licensed activity, measured on a quarterly-average basis with specified exclusions; newly licensed lenders have a regulatory adjustment period subject to the conditions in that provision. The underwriting standards in Schedule XIIIA require documented credit decisions, collateral verification, portfolio oversight and borrower-risk controls.

Governance and reporting. Maintain SECP-required periodic returns, statutory accounting and audit records, fit-and-proper governance, AML/CFT/CPF controls, consumer disclosures, complaints handling, credit classification and provisioning. Lending NBFCs must maintain a website displaying the specified financial statements, directors, complaints process, branch contacts and SECP complaint links. Material changes in control, business scope, shareholding or key management should be reviewed for prior-approval and notification obligations. An HFS licence is not a general permission to solicit public deposits.

Renewal and changes in law. File Form IV in time and keep proof of submission. The NBFC Regulations consolidated to 15 January 2026 incorporate enacted amendments including S.R.O. 2120(I)/2025. SECP's 29 September 2026 S.R.O. 1638(I)/2026 was published as a draft NBFC amendment for consultation. It must not be treated as binding unless a subsequent final notification is identified and checked. Confirm current instruments immediately before filing.

Governing legislation and official references

The principal regime is the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, read with the Non-Banking Finance Companies and Notified Entities Regulations, 2008, the Companies Act, 2017 and applicable SECP company regulations. Particular attention is required to rules 3–5, regulation 4, regulation 25(e), Schedule I (equity), Schedule II (fees), Schedule IX (fit-and-proper) and Schedule XIIIA (housing underwriting). SECP's category checklist is administrative guidance and must be reconciled with enacted law where its wording is inconsistent.

For mortgage security and enforceability, examine the relevant provincial or territorial land-registration and stamp laws, development-authority conditions, cantonment rules and property documents. The regulatory licence is federal; perfection of an individual mortgage and associated taxes or charges can depend on the property's location.

How Chambers can assist

Chambers can review the legal route, identify regulatory constraints, prepare or review the supporting corporate and legal documents, manage the prescribed submission and correspond with the competent authority where instructed. The scope of the engagement will be determined by the applicant’s particular circumstances.

For an initial enquiry, identify the proposed activity, applicant entity and current stage, and provide the available documents indicated above. Please avoid sending confidential or identity-sensitive records through an unencrypted first contact.