ISLAMABAD: The Board of Investment (BOI) has removed the regulatory bottlenecks, enabling the investors to get heavy loans from financial institutions even against moveable assets, WealthPK reported.
The BOI has introduced Regulatory Reforms and Guillotine Initiatives (RRGI), proposing 168 reforms aimed at ensuring ease of doing business in the country.
With the introduction of these reforms, Pakistan’s upcoming ranking in Getting Credit Indicator in Doing Business Report, 2022, is expected to improve.
Under the reforms, investors can get loans against their moveable assets as well as unincorporated entities. Besides, future assets can also be kept as collateral for availing credits.
The amendments further expand the outreach of the Financial Institutions Act, 2016, to provide more protection to both the lenders and borrowers, which may lead to an enhanced access to credit through financial institutions against moveable and immoveable, existing and future assets. It will be beneficial for businesses and individuals (creditors, debtors) of all sectors.
Talking to WealthPK, a BOI official said the regulatory reforms and guillotine initiatives aim to identify, simplify, modernise and eliminate the regulatory bottlenecks for facilitating businesses, particularly small and medium enterprises (SMEs).
He pointed out that globally, most countries have expanded access to credit by introducing legal frameworks containing broader scope and protection. “In this respect, Pakistan has also taken steps by amending its Secured Transaction Act, 2016, to ensure a secured access to credit.”
While sharing an overview of the progress on the regulatory guillotine mechanism, he added, “The entire exercise has been carried out in collaboration with business associations of various sectors to ensure accurate identification of cumbersome regulations that are hampering business growth.”
He also informed WealthPK that before these amendments, only incorporated companies were able to get loans against immovable assets, and only current and fixed assets were kept as collateral for availing loans. “This situation was slowing down business growth as it restricted the access to credit.”
The BOI official maintained that local banks have also been allowed to issue Cross-Border Corporate Guarantees (CBCG) to their foreign branches or to other foreign commercial banks. “Long-Term Financing Facility (LTFF)/Islamic Long-Term Financing Facility (ILTFF) was earlier limited to a few sectors and upper credit limit was set at Rs2.5 billion, which did not cater to the growing needs of businesses. Therefore, under the amended regulation, the State Bank of Pakistan has extended the scope of LTFF/ILTFF to all sectors and the maximum financing limit for a single project has been enhanced from Rs2.5 billion to Rs5 billion.
