SECP granted the license to Pakistan’s First Entity Transformed from “not-for-profit” to “for-profit” Non-Bank Microfinance Company

Karachi: 17 July 2022: SECP granted the license to Pakistan’s First Entity Transformed from “not-for-profit” to “for-profit” Non-Bank Microfinance Company”
SAFCO Microfinance Company (Private) Limited- SMCL is the first ever transformation of a not for profit into a for profit NBMFC in Pakistan
Hyderabad: Securities & Exchange Commission of Pakistan (SECP) yesterday issued license to newly established “Non-Banking Microfinance Company” namely SAFCO Microfinance Company (Private) Limited (SMC), a wholly owned subsidiary of SAFCO Support Foundation (SSF) one of the leading microfinance institution, later is engaged in microfinance business under section 42 of the Companies Act, 2017 that has been incorporated as For-Profit Private Company and received NBFC license.
License issued is first move of its kind by the management and board of SSF and is result of (“Securities & Exchange Commission of Pakistan-SECP’s”) concerted efforts to encourage the companies engaged in microfinance business under section 42 of the Companies Act, 2017, operating as “not for profit” structure to transform into “for profit” structure under linear regulatory structure facilitating the entities to take potential benefits of large capital base, expand financial services, improve efficiency through improved governance and economy of scales. This incorporation and receipt of license was not possible without extraordinary support and guidance by the regulator (SECP).
After license, SMCL will work as entity for benefits of its shareholders and among others, will able to pay dividends to its shareholders, opening multiple avenues for new local and foreign investments and leverage the competitive interest rates from lenders to expand its operating and financial outreach.
SAFCO has been operating since 2009 having footprint across the whole of Sindh Province with a network of 57 branches providing microfinance services to more than 700,000 unbanked and low-income entrepreneurs, out of them 59% are women entrepreneurs and 80% of them are rural small holder farmers. The subsidiary has been formed with the vision to seek multiple avenues of like-minded and well reputed mission driven equity investors from both local and international markets. This will allow SMCL to further strengthen its balance sheet and leverage it for massive growth, doubling the outreach in the next five years which reinforces SAFCO groups and its Founding Director Mr. Suleman G. Abro’s vision towards the National Financial Inclusion Strategy and Sustainable Development goals of improving the lives of unbanked and low-income businesses in Pakistan.
This historic episode is taken in place with the help of Pakistan Microfinance Network-PMN & with the support of the leading apex financing organization Pakistan Microfinance Investment Company-PMIC. SAFCO cannot forget the support we received from both our existing lenders and borrowers in getting NOCs for this transformation to conclude. The untiring efforts of the management team, guidance from the Board of Directors and facilitation of other stakeholders was a necessity for this to happen in the last 1 year.
At the end we renew our commitment towards the national objectives set out in NFIS and global SDGs along with a commitment that we have made with PMN in documenting this transformation so that we can support such transformations going forward. This initiative is expected to encourage other market players to consider transforming entities (by establish for-profit wholly owned subsidiaries) and take potential benefits of extending outreach through financial inclusion.

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