Karandaaz Pakistan, with financial support from the UK’s Department for International Development (DFID), is helping the Securities Exchange Commission of Pakistan (SECP) to support digital transactions registry key operations.
Karandaaz Pakistan, with financial support from the UK’s Department for International Development (DFID), is helping the Securities Exchange Commission of Pakistan (SECP) digitalize its key operations.
In the first phase of this process, a digital Secured Transactions Registry (STR), governed by The Financial Institutions (Secured Transactions) Act, 2016 has been launched. The STR is an electronic database in which financial institutions can record charges or security interests created by unincorporated entities or individuals on their movable assets.
Movable assets include receivables, intellectual property, inventory, agricultural produce, petroleum or minerals, motor vehicles, etc. A digitalized STR will open up new avenues for small and medium enterprises and agriculture sector borrowers to secure credit from financial institutions while offering greater transparency and visibility around recorded charges or security interests to financial institutions.
Aamir Khan, Chairman SECP said, “While the STR will improve access to finance for micro, small and medium businesses, this initiative would help in meeting “Getting Credit” indicator of World bank’s ‘Doing Business Index’ and make Pakistan able to meet 7 out of 12 indicators”. Khan said that SECP has already commenced work for the next year to strive for 100% coverage of this indicator and as a result, Pakistan would be at the forefront of “getting credit” reforms in South Asia. “This improvement, coupled with other changes SECP has been able to drive during the current year, in ‘starting a business’, ‘protection of minority interests’, and ‘resolving insolvency’ indicators shall lift Pakistan’s overall ranking,” he added.
Dr. Shamshad Akhtar, Chairperson Karandaaz said, “Pakistan ranks 108th on Ease of Doing Business Index making the country less attractive for foreign direct investment. The absence of a secured transaction registry (STR) was one of the factors that contributed to our lower score on this index. It also compromises the allocative efficiency of capital as a wide class of moveable assets could not be used as collateral.
I am pleased that Karandaaz Pakistan in partnership with SECP has implemented STR through the support of the UK’s Department for International Development. The STR promises to substantially redress the information asymmetries and legal uncertainties that have hampered the supply of credit to micro, small and medium businesses. Apart from improving Pakistan’s score on the index, it will enable the financial eco-system to leverage a useful database for AI-driven credit models helping in unleashing the potential of financial markets for economic development.”