25 September 2004	Saturday	09 Shaban 1425

KARACHI, Sept 24: The Securities & Exchange Commission of Pakistan (SECP) is examining the merits of offering a single licence of all activities of Non-bank Finance Company which fall within the similar risk class.

But if the SECP finally decides to go for this, those getting such comprehensive licence will have to meet the capital adequacy ratio and professional management criteria.

SECP Chairman Dr. Tariq Hasan said while speaking as the chief guest at the annual general meeting of Leasing Association of Pakistan (LAP) here the other day. He also indicated that the requirements of investing 70 per cent of assets in the core business activities of leasing companies would be revisited if the SECP moves towards a universal licence system.

Dr. Hasan also advised leasing companies to raise capital adequacy ratio gradually in line with the current trends in the financial sector, says a press release adding that he appreciated the performance of leasing companies in a tough competitive environment.

The SECP chief said that well-capitalized and diversified NBFCs need to be created through further amalgamations and mergers. He also cautioned the leasing sector against their cost and yield mismatch if the interest rates keep on increasing and advised them to further strengthen internal governance and monitoring of operations particularly when venturing into unorganized sectors and SMEs.

He assured that the SECP would facilitate leasing companies desiring to become multi-functional entities "but the initiative must come from those who have the requisite expertise and financial resources so that the growth and diversification is based on solid grounds."

The SECP chief appreciated the LAP's move to extend its membership to NBFCs engaged in other businesses like investment banking and termed it as an excellent move towards consolidating the non-bank sector's representation.

Reviewing the performance of the leasing sector during the last year, LAP Chairman Basheer Chowdry said that the collective assets of the leasing sector rose from Rs71 billion to Rs77 billion. He said that the profit of this sector consequently increased from Rs1.7 billion to Rs1.99 billion.