Latest news with #KeyFactStatement
Business Recorder
19-07-2025
- Business
- Business Recorder
SECP directs all PFMs to incorporate KFS in Offering Document
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has directed all Pension Fund Managers (PFMs) to incorporate a Key Fact Statement (KFS) in Offering Document (OD), in order to achieve clarity and ease of understanding for the investors enabling them to make a well-informed investment decision. According to a circular issued by the SECP on Friday, the KFS shall be subject to following minimum requirements: PFMs shall provide approved version of KFS for each Pension Fund before soliciting new investments. PFMs shall ensure that KFS for each Pension Fund is readily accessible to investors on its website/ online portal. PFMs shall ensure that at the point of sale, including through PFM's website or a third-party digital portal/website, investors acknowledge receipt of the KFS and confirm their review ad understanding of its contents. This acknowledgment shall be obtained by requiring investors to sign off on the Investment Form for physical transactions and, in the case of online investments, through a pop-up screenshot incorporating a checkbox mechanism that allows participants to either accept or decline after review and validation. The investment pop-up shall clearly state the following with a check box; 'I acknowledge that I have received and read the Key Fact Statement at the time of statement have read and understood the terms and conditions to the best of my knowledge and retained copy of the same.' PFMs shall ensure the validity/correctness of the KFS including the incorporation of a subsequent amendment due to change in the fundamental attributes. PFMs shall continue to make available updated copy of OD's on its official website and other digital means. These requirements shall be applicable from August 15, 2025. The PFMs shall submit supplemental constitutive documents to the Commission for information within one week from the date of amendments in terms of Regulation 673 (4) of the Nan-Banking Finance Companies and Notified Entities Regulations, 2008, the SECP added. Copyright Business Recorder, 2025
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Business Standard
09-06-2025
- Business
- Business Standard
Microfinance in vicious cycle of debt, high rates, warns RBI deputy guv
India's microfinance sector is facing a "vicious cycle" of borrower over-indebtedness, high interest rates, and coercive recovery practices, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has warned. Speaking at an event in Mumbai on 5 June, Rao underscored the urgent need for structural reforms in lending practices to ensure responsible and sustainable credit models. 'The [microfinance] sector continues to suffer from a vicious cycle of over-indebtedness, high interest rates and harsh recovery practices,' said Rao, according to the full speech published on the RBI's website on Monday. He noted that even lenders with access to low-cost funds are charging 'significantly higher margins than the industry norm,' which in many cases 'appear excessive.' Although interest rates on microfinance loans have moderated slightly in recent quarters, 'pockets of high interest rates and elevated margins continue to persist,' Rao said, adding that these practices have intensified stress in the sector, particularly in the current financial year. Concerns over mounting stress Commercial banks have already flagged concerns about growing distress in the microfinance ecosystem, driven by borrower indebtedness, falling rural incomes, and election-related disruptions. Rao called for a shift in mindset among lenders, urging them to stop treating microfinance as a 'high-yielding business' and instead prioritise credit discipline and borrower welfare. 'There is a critical need to curb over-leverage and strictly avoid coercive recovery practices,' he said. He added that while many institutions have sound business models, flaws in organisational structures and incentive mechanisms can lead to 'perverse outcomes' for borrowers. 'This calls for an introspection around the models,' he said. Financial inclusion and historical milestones Rao's remarks were part of a broader speech on financial inclusion, where he highlighted the vital role of access to financial services in reducing poverty, fostering social equity, and promoting economic development. Reflecting on India's progress in this area, he cited key milestones including bank nationalisation in 1969, the introduction of Priority Sector Lending, and the launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY). As of 21 May 2025, over 550 million Jan Dhan accounts have been opened, with 56 per cent belonging to women, and cumulative deposits crossing ₹2.5 trillion. Responsible lending and borrower awareness Rao emphasised that increasing access to credit must go hand in hand with responsible lending and financial education. Without adequate awareness, financial inclusion could instead result in poor decision-making, mis-selling, and further debt accumulation. 'To facilitate informed decision-making by the customers and enhance transparency by the lenders, the RBI has mandated that all REs provide a standardised disclosure of key terms and conditions in the form of Key Fact Statement (KFS) to all retail and MSME borrowers,' he noted. Rao's candid comments reflect the central bank's deepening concern over unhealthy practices in India's microfinance space. As the country advances its financial inclusion agenda, the RBI is pushing for a parallel focus on ethical, transparent, and sustainable lending — especially for economically vulnerable populations.
