Investment Finance Services Licence

Investment finance services: the regulated business

An Investment Finance Services (IFS) licence permits a qualifying non-banking finance company (NBFC) to undertake financing activities within the limits of the licence, the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and the NBFC and Notified Entities Regulations, 2008. It is not an ordinary company-registration service. Sponsors first seek SECP permission to establish the NBFC, then incorporate the company, and then obtain the operating licence before conducting regulated finance business.

The legal classification turns on the proposed products and funding model. Corporate or consumer finance, digital lending, microfinance, discounting, leasing, housing finance and credit-guarantee activity do not necessarily share the same equity, prudential or customer-protection rules. Investment advice and management of pooled investment funds are different regulated activities; an IFS licence is not an asset-management or securities-advisory licence.

Rule 5(4) and regulation 4, as amended by S.R.O. 2120(I)/2025, expressly recognise that an IFS licence may cover leasing, housing finance and discounting without a separate licence for each of those activities. That does not waive product-specific conduct rules, SECP conditions, prudential limits or any separate permission required for deposit raising or digital distribution. Applicants should map every intended product before choosing the licence route.

Eligibility, business category and minimum equity

The promoters, proposed directors, chairman and chief executive must meet the fit-and-proper requirements of rule 3 and Schedule IX of the NBFC Regulations. SECP examines financial standing, qualifications, experience, integrity, credit history, conflicts, connected interests and the ability to manage a supervised lending institution. A corporate sponsor requires its own constitutional authority and ownership evidence. Foreign sponsors and public-sector promoters face additional evidence and clearance requirements.

Select the appropriate capital and operating category

• Ordinary non-deposit-taking IFS NBFC: Schedule I of the January 2026 consolidated Regulations specifies minimum equity of PKR 100 million. The same row specifies PKR 40 million for Digital Lending, subject to the digital-lending classification and all other applicable requirements.
• Non-bank microfinance company undertaking IFS: the separate Schedule I category specifies PKR 50 million, or PKR 20 million for Digital Lending. Where the institution has no share capital, the Schedule requires equivalent qualifying funds and reserves.
• Deposit-taking: the Schedule specifies PKR 1,000 million for a new deposit-taking NBFC seeking IFS, leasing, discounting or housing finance licensing; a separate category covers existing deposit-taking IFS licence holders at PKR 750 million. An ordinary IFS licence does not authorise accepting deposits without the requisite permission.
• Leasing, discounting or housing finance without IFS: separate non-deposit-taking categories may carry different thresholds. Do not apply the IFS figure indiscriminately to a standalone licence.
• Fund management: a lending NBFC cannot simply combine IFS with asset-management or investment-advisory activities. Rule 5(2) separates lending and fund-management NBFC business families.

Minimum equity is an ongoing regulatory measure, not the application fee, and may require adjustments under the regulatory definition of equity. Sponsor subscription funds, audited evidence, reserves, deductions and additional prudential capital must be tested before filing. Board composition and management experience must satisfy the current NBFC Rules, the amended Schedule II where relevant, and the fit-and-proper requirements; the checklist alone is not a substitute for those instruments.

Prescribed forms and documentary evidence

Prepare separate formation-permission and operating-licence bundles. The SECP's 15 May 2025 IFS/discounting checklist supplies an administrative starting point, but its text contains apparent asset-management template references. Those references must not be copied into an IFS application as if they amend the Rules or the IFS minimum-equity schedule.

• Formation application: Form I under rule 4, the annexed particulars, name-reservation evidence from SECP eZfile, draft memorandum and articles, sponsor and proposed-director particulars, identity documents, declarations and the correct fee receipt.
• Business and financial case: product-by-product financing policy, proposed customer segments, sources and uses of capital, projected cash flows and budgets, expected loan-book composition, concentration limits, risk appetite, liquidity plan and governance arrangements. SECP's checklist asks for at least three years of cash-flow projections.
• Sponsor capacity: documented ownership and source of funds, relevant tax/wealth evidence and net-worth certificates where required, corporate approvals for institutional sponsors, beneficial ownership and associated-company information, and disclosures of other regulated positions.
• People and governance: CVs, academic and professional qualifications, relevant senior-management experience, fit-and-proper questionnaires, independent-director particulars, proposed CEO and key officers, and arrangements for compliance, internal audit, finance, credit approval and complaints.
• Conditional foreign or public-sector evidence: passports, attestation or apostille as applicable, overseas wealth or banking evidence where prescribed, Ministry of Interior clearance if required, government-servant NOC and competent public-sector or cabinet approval where applicable.
• Post-incorporation licence: Form II under rule 5, incorporation records, certified constitutional documents where currently required, auditor confirmation of the applicable equity threshold, proof of funds credited to the company, management and control systems, relevant undertakings, and payment of the licence application fee.

Keep a document matrix identifying which annexures apply to the actual applicant. The current checklist may request affidavits or additional supporting material, whereas the 2023 amended Rules simplified certain declarations and filing requirements. Where the administrative checklist and the enacted Rules appear inconsistent, obtain written clarification from the SECP Licensing Department rather than silently substituting one for the other.

Step-by-step SECP formation and licensing process

1. 01
   Classify the proposed regulated products

   Prepare a short legal product memorandum distinguishing ordinary IFS, digital lending, microfinance, leasing, housing finance, discounting and deposit-taking. Identify any credit-guarantee, P2P, Islamic-finance or securities activity requiring additional regulatory analysis. Confirm that the proposed NBFC will not mix lending and fund-management business contrary to rule 5(2).

2. 02
   Determine capital, ownership and board eligibility

   Use Schedule I of the January 2026 consolidated NBFC Regulations, not an unrelated AMC row in an older checklist. Obtain evidence of the selected category's minimum equity, assess sponsor wealth and funds, verify the proposed directors and CEO against Schedule IX, and identify conflicts or overseas security-clearance issues before committing incorporation expenses.

3. 03
   Reserve the proposed company name

   Use the current SECP company-formation/eZfile route to reserve an acceptable name and draft constitutional objects reflecting the exact regulated activity. A name reservation is not a formation NOC and does not authorise lending. Ensure consistency of the name across the application, fee receipt and corporate documents.

4. 04
   Apply for permission to form the NBFC

   Submit Form I with the rule 4 annexure, supporting sponsor, board, business-plan and financial evidence to SECP's competent licensing department. The January 2026 consolidated Schedule II specifies a PKR 250,000 formation application fee for the ordinary NBFC category, with a separate PKR 125,000 rate for non-bank microfinance companies. Verify the payment channel and any subsequent notification before remittance.

5. 05
   Observe the formation-permission period

   Rule 4(3) provides a six-month permission period. On an application made before expiry, SECP may extend it for a maximum further three months in special circumstances. During the permission's validity the promoters must incorporate the NBFC and submit the operating-licence application. The period is not a guaranteed time for SECP to decide the initial application.

6. 06
   Incorporate the approved company

   Complete the Companies Act, 2017 incorporation process using the approved name, permissible company form and regulator-consistent objects. The SECP checklist discusses private and public limited forms, but the operative Rules and any permission conditions determine eligibility. Do not assume that every applicant may choose any corporate form without confirmation. Incorporation fees are separate from the NBFC application fees.

7. 07
   Submit the operating-licence application

   File Form II under rule 5 with the auditor's equity confirmation, evidence of subscribed funds, detailed business plan, management documentation, risk and compliance controls and other applicable annexures. The January 2026 consolidated Schedule II specifies PKR 500,000 for an ordinary NBFC operating-licence application and PKR 250,000 for the non-bank microfinance category. The fee is not the minimum equity requirement.

8. 08
   Resolve regulatory questions and obtain licence

   SECP may request missing documents, sponsor or management clarification, an operational presentation and further evidence. A formation NOC, certificate of incorporation or fee receipt is not an operating licence. Commence only after the appropriate licence is issued and the commencement conditions, including systems and staffing readiness, are satisfied.

9. 09
   Set up the renewal and regulatory calendar

   Under rule 5(8), the licence ordinarily lasts three years; the prescribed Form IV renewal application must be submitted at least one month before expiry. The January 2026 Schedule II shows a nil renewal application fee for the listed ordinary and NBMFC categories, but other fees, returns and conditions may apply. Never rely on an assumed automatic renewal.

Primary filing materials: SECP IFS and discounting checklist ↗; NBFC Rules and prescribed forms ↗; consolidated NBFC Regulations and fee schedules ↗. No uniform guaranteed processing period is represented.

After licensing: capital, prudential and conduct obligations

Licensing is the beginning of supervised operations. Regulation 4 requires the minimum equity to be maintained continuously. The lending provisions in Part III govern exposure, provisioning, funding, asset quality and related credit risks; the applicable limits depend on the institution's category and whether it is deposit-taking, non-deposit-taking, a microfinance lender or a credit-guarantee institution. A lender should not reuse an exposure threshold intended for a different category.

Maintain board-approved credit, collateral valuation, underwriting, recovery, write-off and complaints policies; proper segregation of duties; borrower identity verification; anti-money-laundering, counter-terrorist-financing and proliferation-financing controls; privacy and technology security where lending is digital; and records sufficient to support SECP inspection and audited financial statements. The Commission may require periodic reports under regulation 7 and issue category-specific directions. Audit and regulatory filing deadlines should be maintained in a separate compliance calendar.

Changes in directors, CEO, control, significant shareholdings or licensed activities can trigger approval or notification obligations. Regulation 10 sets detailed procedures and deadlines for director elections, casual vacancies and CEO changes; it should be consulted for each event rather than assuming ordinary company filings alone are sufficient. Deposit raising is a separate regulated permission under regulation 14 and must not be implied by an IFS licence.

The regulated company should preserve executed loan agreements, pricing disclosures, customer consents, collection and complaint records, board minutes, internal audit reports, financial statements, regulatory correspondence and capital computations. A proposed change to products or funding should be assessed before launch, particularly for digital lending, microfinance, P2P and Shariah-compliant products.

Governing instruments and legal-review status

The governing framework is the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, the Non-Banking Finance Companies and Notified Entities Regulations, 2008, applicable provisions of the Companies Act, 2017, and the SECP's applicable AML/CFT/CPF and prudential instruments. For an application, read the exact consolidated Rules, Schedules I and II of the Regulations, Form I, Form II, Form IV and the category-specific checklist together.

LEGAL-EDITOR SIGNOFF PENDING. The factual and procedural material has been reviewed against the cited primary sources; independent practising-lawyer certification and applicant-specific verification remain separate. Check later enacted amendments and live regulator instructions before filing.

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.