Pakistan’s financial regulatory agency has approved the launch of the nation’s first peer-to-peer lending platform.
The Securities and Exchange Commission of Pakistan (SECP) has granted approval for the launch of an unnamed P2P platform under the first cohort of regulatory sandbox to support and encourage fintech revolution in the country.
The SECP regulatory sandbox allows fintech firms to test their services and facilitate the adoption of new technology in a live environment within a limited, well-defined scope.
If the platform’s testing stage is successful, it will help the SECP devise its regulatory framework for small- and medium-sized enterprise (SME) financing.
During this first phase, the platform will operate within pre-defined parameters and is subject to certain terms and conditions.
This includes the platform being subject to specific eligibility criteria on the selection of each lender and borrower.
The SEC said this was to address the inherent risks involved in operating P2P platforms in the absence of a regulatory framework.
However, the regulator added that these terms and conditions shall be reconsidered when the results are known from the experimentation stage.
“This current approval for testing and experimentation of a P2P Lending Platform by SECP is also attributed towards development of an ecosystem for SME financing to achieve higher growth prospects and to create new employment and business opportunities,” the SECP said.