Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman on Monday said that the Modaraba sector in Pakistan could be made more efficient by introducing new products.
Speaking at the 14th Annual General Meeting of Modaraba Association of Pakistan (MAP) here, he said that a meeting between MAP Executive Committee and SECP has been slated for December 11, Tuesday to discuss issues including Islamic Financial Accounting Standards and new agreement to introduce more products.
The first three agreements for modaraba products including Musharakah, Murabaha and Ijarah were signed in early 90s and so far no new agreement has been inked and hence, no new product. Nonetheless the MAP has now planned to introduce seven new products after the approval of new agreement by the Religious Board, Razi said.
He said the modaraba sector was introduced in Pakistan some 20 years back and now over two dozen modaraba companies were existing in the country.
He said many countries including Malaysia and the UK have adopted this Islamic financial system and running it successfully. "The modaraba sector could be made more active by introducing new products with clear understanding," he said and added that modaraba products can be made more efficient by following the principles.
"We should have liberty to change the product, if it needed to make the Islamic products more efficient." He assured the MAP members that SECP was ready to help them for resolution of all issues. Speaking on the occasion, MAP Chairman Basheer A Chowdry said that Pakistan earned the distinction of having incorporated the first organised and regulated Islamic financial sector in the form of modarabas in the 80s. He said 24 operative modarabas having a total asset base of Rs 26.103 billion and equity of Rs 10.917 billion. The financial year ending June 30, 2007 witnessed a growth of 10 percent in the assets of the modarabas and earned a net profit of Rs 813 million.
He said most of the modarabas have been paying cash dividends regularly and paying more than the other companies of the financial sector. During the last year, 19 modarabas declared dividends up to 65 percent. The total cash and stock distributions come to Rs 575 million which constitute an average of 9 percent of the paid-up capital of the modarabas, he added.
MAP Vice Chairman Javed Perwaz and General Secretary Muhammad Samiullah also spoke on the occasion. The SECP chairman also gave away awards on the occasion to top three best performing modarabas including First Imroz Modaraba, First Habib Modaraba and Standard Chartered Modaraba.