ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has extended the effective date for applicability of the International Financial Reporting Standard (IFRS-9) for non-banking finance companies (NBFCs), including non-bank microfinance companies (NBMFCs) and modarabas, until June 30, 2024.

Currently, only 17 out of 42 members of NBFI and Modaraba Association of Pakistan and only two NBMFCs have adopted the standard.

The SECP has said the extension has been granted in the wake of economic hardships and capacity issues being faced by the respective sectors in the post-Covid times as well as for providing a level playing field to the NBFCs/modarabas in line with the extension granted by the State Bank of Pakistan for banks and development finance institutions until Jan 1, 2024.

Moreover, the NBFCs and modarabas have also been directed to submit periodic status updates to the commission on Dec 31 and March 31 and June 30 next year.

The International Accounting Standard Board (IASB) replaced International Accounting Standard 39 with IFRS 9 effective from Jan 1, 2018.

The new standard can have a substantial market impact and requires, in particular, the application of a new impairment requirement expected credit loss, which requires all NBFCs to establish provisions for expected future credit losses.

Published in Dawn, October 12th, 2022