NBFC Registration in Pakistan: Licensing, Restrictions, and Winding-Up Risk

A Non-Banking Finance Company (NBFC) is one of the more tightly regulated corporate structures in Pakistan, and for good reason: it is licensed to do things ordinary companies cannot, take deposits, extend leases, manage investor funds, or run a modaraba. That licence comes with a correspondingly narrow list of what the company is actually permitted to do, and Pakistani courts have shown they will order a company wound up if it strays outside that list.

At Global Law Company, we advise sponsors and investors on structuring, licensing, and regulatory compliance for NBFCs. For related corporate structures, see our guides to company registration in Pakistan and private limited company registration.

1. What Qualifies as an NBFC

Under the Non-Banking Finance Companies (Establishment and Regulation) Rules 2003, an NBFC is a company licensed by SECP to carry on one or more forms of "non-banking finance business", including leasing, investment finance services, housing finance, discounting, venture capital, and asset management. Modarabas and certain other notified entities fall under a related but distinct regime, the Non-Banking Finance Companies and Notified Entities Regulations 2008.

2. Licensing Requirements

Setting up an NBFC starts with incorporating a public or private limited company under the Companies Act 2017, followed by an application to SECP for a specific NBFC licence, which sets minimum equity requirements, fit-and-proper criteria for sponsors and directors, and the exact category of non-banking finance business the company is authorised to conduct. That licence is not a general finance licence, it is scoped to specific activities, and this scoping matters far more than most new entrants expect.

3. Staying Inside Your Licensed Business

This is where things go wrong most often, and where the consequences are severe. In Additional Registrar of Companies v. Ayat Enterprises (SMC-Private) Limited (2025 CLD 1349), the Lahore High Court dealt with a petition by the Registrar of Companies to wind up an NBFC that had performed business prohibited by its own memorandum and articles of association. The court confirmed that under section 301(g)(ii) of the Companies Act 2017, a company can be wound up where it carries on business prohibited or restricted by law, rules, or regulations, and under section 301(g)(v), where it is managed by persons who refuse to act in accordance with the memorandum or articles. For an NBFC, this means the licence you were granted is also a ceiling: exceeding it is not a minor compliance lapse, it is a ground for the company's dissolution.

4. Recovery Powers, an NBFC's Sharpest Tool

NBFCs, particularly leasing companies, benefit from a specialised recovery regime under the Financial Institutions (Recovery of Finances) Ordinance 2001, which gives them faster, more direct routes to recover defaulted finance than an ordinary commercial lender has. This power was tested in Muhammad Anis v. Pak Gulf Leasing Company Ltd. (2025 CLD 1504 and the related 2025 CLC 1552), where a property owner who had furnished his residential property as surety in an unrelated criminal case later found the same property caught up in an NBFC's recovery notice under sections 7(4) and 9 of the 2001 Ordinance. The courts examined the limits of the subordinate courts' powers to grant relief in such disputes, and the litigant's fundamental rights under Articles 4, 8, 10-A, 23, 24 and 25 of the Constitution. The lesson for both NBFCs and borrowers/guarantors: the recovery ordinance is powerful, but it is not unlimited, and procedural fairness still has to be observed.

5. Ongoing Regulatory Compliance

Once licensed, an NBFC remains subject to continuing obligations under the Notified Entities Regulations 2008, including capital adequacy, periodic SECP reporting, restrictions on related-party transactions, and prudential limits specific to its licensed category (leasing, investment finance, asset management, and so on). These are not one-time conditions checked at incorporation; SECP monitors them on an ongoing basis, and breaches can trigger the same winding-up exposure discussed above.

Talk to Us Before You License, or Before You Expand

Whether you're setting up a new leasing, investment finance, or asset management NBFC, or need to defend one against a winding-up petition, our corporate team can guide the licensing process and represent you before SECP and the courts. Contact Global Law Company at 0333 4125951 or visit our chambers at 3rd Floor, Ahmad and Shafi Plaza, 13 Fane Rd, Lahore, 54000.