SECP’s new policy for NBMFCs targets women in leadership, clientele

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a new policy framework, titled Women Equality in Finance Policy (WEFP) for non-bank micro finance companies (NBMFCs).

The aim of the policy is to reduce the disparity that exists between men and women in the employment space, particularly in the leadership role. This is not the first time that SECP has taken measures to improve gender diversity. In 2017, the corporate regulator issued a directive for listed companies to have at least one woman director within three years’ time. The results from that policy were promising, which prompted the commission to focus their energies on other avenues of improving female participation – starting with the NBMFCs.

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Under the WEFP policy, during the next five years, the NBMFCs are mandated to ensure that at least 70 per cent of all their new clients are women.

Speaking to HUM News English, SECP Director Amina Aziz said that the policy has also given certain targets to the NBMFCs in operational terms, chief among which is the issuance of women-focused products. “We are going to partner with the companies in this sector to promote and provide products targeted at women [users]. We are building an infrastructure where women will take the center stage, whether its products or complaint resolution systems.”

She added that the NBMFCs will also be required to have at least two female directors on their boards, one of whom needs to be an independent director.

So far the women employees make up about 30 per cent of the employees in this segment, and the new policy is aiming to increase this ratio as well.

STATUS OF WOMEN PARTICIPATION SO FAR

The policy paper issued by the commission on WEFP says, the microcredit segment in particular represents a large opportunity, with the gender gap increasing from 16 per cent in 2013 to 31 per cent in 2024 and this has been forecast to deteriorate further to over 40 per cent by 2030. In terms of the management, women currently represent 23 per cent of employees and 21 per cent of senior management.

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A detailed review of the sector further showed that the average loan outstanding by NBMFCs in 2024 for women is much lower at Rs35,571 as compared to Rs64.537 for men. Between 2018 and 2024, the overall share of lending to women in the microfinance sector (MFBs and NBMFCs combined) has declined both in terms of numbers (from 54 per cent to 46 per cent) and loan volume (from 36 per cent to 34 per cent).

POLICY FORMULATION

SECP said that the process of policy formulation was initiated in January 2023 consisting of a series of surveys, market analysis, and assessment of prevailing regulatory guidelines and practices. A consultative session “Women in Finance Thought Leaders Workshop” was later jointly organised by SECP and the Asian Development Bank (ADB) in January 2024. The workshop brought together key representatives of the NBMFC sector, enabling environment entities, and regional experts to find solutions to bridge the gender finance gap. The workshop participants prioritised a roadmap of policy initiatives that eventually became part of the new Women Equality in Finance Policy.