ISLAMABAD, Aug 6: The Securities and Exchange Commission of Pakistan (SECP) has warned the federal government that its proposal to bring Non-Bank Financial Companies (NBFCs) under the regulatory control of State Bank of Pakistan would turn the central bank into a corporate and securities regulator and will result in overlap of jurisdictions for financial and non-financial entities.

Sources told Dawn on Wednesday that the SECP, which at present regulates the NBFCs, has termed as “piecemeal solution” a proposal raised on Tuesday at a meeting here to empower the SBP to regulate NBFCs as well as business groups owning both financial and commercial concerns.

The Tuesday’s meeting was held over a proposal to amend the Banking Companies Ordinance and was presided over by Finance Minister Naveed Qamar.

The SECP is also of the view that the proposal has not been discussed with the stakeholders and could hurt the market, it is learnt.

The commission, the sources said, had conveyed to the Finance Ministry that the supervision of the NBFCs was transferred just five years ago to the SECP and that the reasons for transfer needed to be studied before any reversal of the decision.

Leasing companies, in fact, have always been under the SECP. And, the commission now wants the federal government to carry out “regulatory impact assessment” before any decision and that all the market players should be consulted.

Meanwhile, the Investment Bank Association of Pakistan has convened a meeting on Thursday to discuss the pros and cons of the proposal. The association’s chairman, Rashid Mansur told Dawn that he would hold meetings with individuals and members in order to come with a joint view point.

However, in response to a question, he said: “the timing of the proposal is a bit strange and odd”. He said this was not an issue which could be resolved overnight and needed a lot of time. He said that the SBP had rationale while deciding to hand over the regulation of the NBFCs to the SECP in the past and there was a need to study that rationale now.

He said that keeping in view the timing of the proposal and the micro economic situation, the proposal could not be in the interest of the economy and the capital markets.

Meanwhile, the Leasing Association of Pakistan also held a meeting over the issue.

An amendment to Banking Companies Ordinance based on the proposal will enable SBP supervisors to oversee the banking group on a consolidated basis. The central bank will be able to monitor risks in their entirety and appropriately apply prudential norms to all aspects of the business conducted by the group worldwide.