KARACHI: The Securities and Exchange Commission of Pakistan took action this week to allow small investors greater access to the market. SECP overhauled their Mutual Fund Account System on May 14, 2026, increasing investment ceilings significantly and reducing red tape that has hindered retail investors for years.
The reforms introduced by SECP regarding the investments in the mutual fund apply to two types of accounts that have been specially made for small investors namely Sehl Account and Sahulat Account. The ceilings for both have become much higher and both have lost the yearly investment ceiling altogether.
It does matter for millions of Pakistanis who sit on the fence when it comes to investment. It makes mutual funds offered by regulated institutions easier to access and much simpler to join.
Limits for Investment in Sehl Accounts Increased by More Than Four Times
The figures mentioned in the new circular are quite impressive. The SECP increased the investment limit in the Sehl Account from Rs200,000 to Rs1 million. It is a significant increase since the investment limit was only Rs200,000 before. Investors now will be able to make some meaningful investment.
Investment limits for SECP-registered mutual funds in Sahulat accounts also witnessed an increase. The limit increased from Rs1 million to Rs3 million, which is three times more than before. These changes are not minor. These changes reflect a new mindset regarding the trust that regulators have placed in smaller investors.
Importantly, the SECP also abolished the annual cap on investments for all accounts. This means that investors have unrestricted access to their money at any point during the year without having to reach a specified annual limit.
ALSO READ: Service Long March Tyres IPO Approved SECP Clears Rs7.8bn SLM Listing
KYC Duplication Reduction – No More Forms for Existing Bank Clients
Apart from the increases in the limits, the SECP’s new structure for investing in mutual funds addresses a long-standing issue of duplicate KYC for investors.
With the previous approach, an individual who already had an approved account with a commercial bank, microfinance bank, or e-money issuer would have to undertake a new KYC exercise in order to open an account with an AMC in case he opted for either a Sehl or a Sahulat account.
This is no longer needed according to the new regulations. Those customers who have already been validated by financial institutions do not need to repeat the process again with their documents. This might be an important step for a novice mutual fund customer using online banking.
The regulatory body made changes regarding the due diligence process for online account opening. The SECP became confident enough about advancements in biometric authentication technology to streamline the manual process without having to compromise on the process of identity verification.
SECP Target: 2.5 Million Capital Market Investors
There is an institutional vision that ties into this reform initiative. The Chairman of the SECP, Dr. Kabir Ahmed Sidhu, is targeting the development of 2.5 million investors in Pakistan’s capital markets.
Increased numbers of people investing in regulated products would result in increased capital movement through the system, increased competition among AMCs for investors, and savings built up by Pakistanis through investments.
Moreover, the program is in line with Pakistan’s drive towards digitization in the financial sector. In the last few years, there have been many efforts to increase mobile banking and branchless banking facilities across the nation. This move by the SECP regarding the mutual funds bridges the gap between a banking and investment account.
Implications for Ordinary Investors
The implications are evident for an ordinary person working for a salary, for someone who owns a small business or for an individual making an initial investment in Pakistan. The new SECP mutual fund scheme gives him the opportunity to make a substantial investment of up to Rs1 million in Sehl account or Rs3 million in Sahulat account without any restriction on annual basis.
Beneficiaries of this innovation will be asset management companies. This simplification makes the onboarding process less costly to get retail customers, thus eliminating a major cause that made prospective investors quit the process halfway through their registration.
Investors have the opportunity to earn dividends, grow their capital, and hedge against inflation, which could be done theoretically before but not realistically because of low thresholds and inefficiencies in the system.
A Structural Change Rather Than a Band-Aid Solution
The revamping of the process for investing in mutual funds by SECP does not constitute a superficial change in the system. All four changes mentioned make sense as a package together.
These measures reflect best practices from around the world in retail investing. Stock markets such as those of India, Malaysia, and Indonesia managed to create a sizeable base of investors through their mutual funds by lowering minimum requirements for accounts. Pakistan is moving in the same direction now.
The accomplishment of such a target of reaching 2.5 million investors is dependent on performance – not only from AMCs but also from banks that will ensure smooth flow of verified customer information and from investors who will take the opportunity that lies before them. The road ahead is clear thanks to SECP.
