KARACHI: A high-powered body of two apex financial and banking regulators — the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan — on Wednesday decided to seek cooperation of law enforcement agencies in curbing unregulated lending operations, particularly at the country’s stock exchange where certain brokers are said to use investors’ money in illegal badla financing.
Analysts, however, considered it an uphill task for the two regulators to take to task those brokers, or other individuals, involved in the illegal business of providing a fixed return to their clients on their investment and using their money for notorious badla financing.
The unregulated lending operations recently came under the spotlight after the owner of a Lahore-based brokerage firm — M.R. Securities — disappeared with investors’ cash and shares worth millions of rupees. The Pakistan Stock Exchange recently informed the SECP that it received a total of 485 claims, amounting to Rs1.2 billion, against the brokerage house.
A spokesman for the SECP confirmed to Dawn that the decisions pertaining to the unregulated lending operations at the meeting of the coordination committee of the SECP and SBP were taken against the backdrop of the Lahore brokerage firm episode.
