Modaraba sector: various Shariah compliant Islamic financing agreements approved

The Religious Board for Modarabas on Thursday approved different Shariah compliant model Islamic financing agreements for Modaraba sector, facilitating resource mobilisation of new products for the Islamic financial market.
According to an announcement of Securities and Exchange Commission of Pakistan (SECP), the Religious Board for Modarabas approved the following Shariah compliant model Islamic financing agreements for Modaraba sector: (i) Diminishing Musharika, (ii) Ijara, (iii) Istisna, (iv) Modaraba, (v) Musawamah, (vi) Musharika, (vii) Murabaha, (viii) Salam, (ix) Syndicate Modaraba (x) Syndicated Musharika, (xi) Islamic CFS Murabaha, and (xii) Sukuk (Islamic bonds).
The SECP said that the model Islamic financing agreements will be issued under the Modaraba Ordinance, 1980. The agreements have been designed to bring the Modaraba sector at a level-playing field with the financial institutions and to provide new products for the Islamic financial market.
The agreements are flexible and can be modified or amended to the extent that they do not affect the substance of the agreement and are in no way, in conflict with the Shariah.
The Religious Board for Modarabas also approved as Shariah compliant the issuance of "Modaraba Sukuks," short-term certificates of investment, to facilitate resource mobilisation for the Modarabas.
The agreements and the "Modaraba Sukuks" were approved as Shariah compliant in the 34th meeting of the Religious Board for Modarabas, chaired by Justice Mian Mehboob Ahmed, and attended by Dr Sher Mohammad Zaman, member, Religious Board; as well as Bilal Rasul, Registrar (Modarabas), and Shahid Mehmood, Deputy Registrar (Modarabas), representing the SECP, and Mohammad Shoaib, Chairman of the Modaraba Association of Pakistan (MAP) along with other representatives of MAP.
Justice Mian Mehboob Ahmed emphasised the role of the Modarabas in the development of the Islamic financial sector, and encouraged them to expand their business through innovation and diversification.
He also highlighted the need to expand the outreach to the rural and low-developed areas to serve the hitherto neglected sectors, while fulfilling the socio-economic principles of Islam.
The MAP representatives expressed their gratitude for the guidance and support provided by the SECP and the Religious Board, which would enable the sector to evolve and expand its businesses and size within the expanding Islamic financial sector of the country, the SECP added.