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  • The Association Launched Country Report 2020 on Non-Banking and Modaraba sector on 25th January 2021 at IBA Auditorium, Karachi. Dr. Ishrat Husain, Advisor to the Prime Minister was the Chief Guest. Dr. Akber Zaidi, Executive Director IBA & Mr. Farrukh H. Sabzwari, Commissioner, SECP also addressed the participants. Mr. Basheer A. Chowdry, Chairman, presented the Report to Dr. Akber Zaidi.

Honorable Guests, Ladies & Gentlemen,

On behalf of NBFI & Modaraba Association of Pakistan, I welcome you all to our annual occasion to launch the Year Book for 2017 and distribute Best Performance Awards to the outstanding members of the Leasing & Modaraba Sector.

Mr. Zafar Abdullah, Chairman, SECP had accepted to honor us with his presence as our Chief Guest for the occasion but he could not make it due the unexpected demands needing his presence in Islamabad. I am grateful to Mr. Imran Inayat Butt, Executive Director for being with us and representing the Chairman. Thank you Sir for your kind presence today.

I also acknowledge with gratitude the participation of senior SECP officials, Mr. Shahid Nasim Mr. Shahid Mahmood and other members of SECP Karachi Office in today's event. Their presence amongst us is a source of encouragement and shows their interest in the growth of NBFI & Modaraba Sectors in Pakistan.

Please allow me also to thank Mr. Ghulam Muhammad Abbasi, Director, Islamic Banking Department, State Bank of Pakistan for his kind presence in this ceremony. Our gratitude is due to our two senior colleagues and previous chairpersons of the Association, Mr. Etrat Hussain Rizvi and Mr. Javed Callea for their presence today. They are amongst the founders and promoters of the sector. I also welcome the Chief Executives of our member institutions representing Modarabas and Leasing Companies in addition to the worthy Shariah Advisors. We are also privileged to have eminent guests from banking and insurance sectors, Pakistan Mercantile Exchange and IBA who have graced the occasion and I sincerely thank them for their kind participation.

The 8th Year Book of the Association, which I shall have the privilege to present to you after my submissions, includes both the individual, as well as the collective performance of member of the Association for the financial year ended 30th June, 2017. It also contains a number of articles on different topics including write ups on significant changes and new concepts introduced in Modaraba Bill and Shariah Advisors Regulations, 2017. A special feature this year is a write up on the topic on Pakistan's Islamic finance by Mr. Muhammad Shoaib Ibrahim and Mr. Muhammad Samiullah, both published in the respected Islamic Finance News (IFN), of Malaysia.

Over the time, our Year Book has attained a locally and internationally acknowledged status of being the most reliable, detailed and useful source of information relating to non-banking and Modaraba Sectors in Pakistan. This publication continues to play an important role in creating awareness among the stakeholders by providing them with critical information on developments taking place in the Sectors.  This is in line with the core objectives, vision and mission of the Association.

The second segment of today’s event is distribution of Best Performance Awards to the top achievers of Leasing & Modaraba Sectors. It has been a regular practice for the Association to encourage and recognize outstanding performance of the members during the year. The Executive committee has also decided to give from this year a Special Award to the entity which contributes towards innovation, sector image and public awareness at national and international levels.

To arrive at the qualifying institutions’ names, a comprehensive assessment criteria is used taking into account various key factors. Our Secretary General, Mr. Muhammad Samiullah will give a brief summary on the criteria while announcing the Awards for 2017 in a short while.

Mr. Chairman, with your permission I shall give a quick brief about the performance of Leasing and Modaraba Sectors during the year ended 30th June, 2017.

Leasing Companies maintained their assets base at Rs.45,246 million while exhibiting an increasing trend in their Equity at Rs.9,326 million as compared to Rs.8,990 million last year. The sector booked a profit of Rs.971 million as compared to Rs.920 million, out of which Rs.501 million were distributed to their 7,103 shareholders by way of cash dividend. The market capitalization of the Leasing Sector stood at Rs.4,483 million during the year ended 30th June, 2017.

 During the year under review, one new leasing company Primus Leasing Limited was established by Pak Brunei Investment Limited with a paid up capital of Rs. one billion. We welcome this valuable addition to the sector. The group floated a Modaraba in the name of Awwal Modaraba in the year 2015 which is performing very well.

Modarabas showed a good performance during the year under review. Out of 25 modarabas 20 declared cash dividend to their 78,265 certificate holders, the highest being 100%. Total Assets of all Modarabas stood at Rs.44,016 million and Total Equity stood at Rs.21,835 million as at 30th June, 2017. The Modarabas booked a profit of Rs.1,577 million for the year. Return on Equity was 7.46% as compared to 6.52% in 2016 while Return on Assets was 3.90% as compared to 3.51%. Market Capitalization was Rs.22,827 million as compared to Rs.19,242 million depicting an increase of Rs.3,595 million i.e. 18.36% which shows growing faith in the Modarabas.

It is very encouraging that during the year two new modarabas were floated, (i) Habib Metro Modaraba with a paid up capital of Rs.300 million sponsored by Habib Metropolitan Group and (ii) Orient Rental Modaraba with a paid up capital of Rs.750 million sponsored by Orient Group. Another modaraba namely Mughal Manufacturing Modaraba with a paid up capital of Rs.750 million sponsored by Mughal Steel Group will shortly commence its operation. We warmly welcome all new comers and wish them every success.

On the regulatory side there are two significant events of the year. The Companies Act, 2017 has replaced the Companies Ordinance, 1984 and introduced significant changes and facilitation in the corporate formation and operational aspects. Modaraba Ordinance, 1980 is being replaced by Modaraba Bill which is currently going through the enactment process. Both laws will provide betterment and growth of the corporate and financial sector in the country and enhance effectiveness of the regulatory framework to meet the changing business environment. SECP also issued Shariah Advisors Regulations, 2017 and took various measures with prior consultative sessions with all the stakeholders.

We sincerely appreciate the guidance and initiatives of the Securities & Exchange Commission of Pakistan towards reviewing and revamping the existing regulatory framework in consultation with the NBFI & Modaraba Association of Pakistan and other stake holders.

Mr. Chairman, please allow me to submit that the non-banking financial sector has a crucial role to play in the national economy but still remains a rather small component of the overall financial industry. For co-existing with and supplementing the banking sector, it needs encouragement to enhance its overall size and business volumes. Sir, we desperately need regulatory assistance to enlarge our funding pool by having access to the public deposits and debt instruments market. Also the special refinancing facilities and schemes offered by State Bank to commercial banks can help a large number of our members who could fulfill all regulatory conditions of prudence and capability. Although leasing companies have been included the Credit Guarantee Scheme, yet the practical implementation of this facility needs to be achieved. State Bank is offering various incentives to the banks for on-lending to SME sector which have not been fully utilized.  We earnestly seek an enabling and encouraging approach of both regulators, State Bank and SECP for our inclusion of members in these schemes, as the SME sector has traditionally remained the domain of NBFIs. The increasing coordination between both regulators is very encouraging for the financial sector and we are keen to see some practical benefits reaching out to our members as well. The revolutionary developments like CPEC are opening multi-dimensional opportunities which our members can explore with their skills and experience but will remain restricted due to limitations on their funding resources. This handicap will need to be resolved with courage and cooperation of both regulators and the stake holders.

Sir, in the context of the declared policies of both regulators to promote Islamic financial system in the country, there is a great scope of mutual coordination amongst Islamic banks, modarabas, mutual funds, and Takaful entities. The abundant liquidity available with Islamic banks can well be utilized in Shariah compliance products and services being offered by Modaraba which need to supplement their resources. It is encouraging that the first Commodity Morahabah Contract has been signed between First Al-Noor Modaraba, Meezan Bank and Pakistan Commodity Exchange. I would like to see other Modarabas to avail the facility. I also acknowledge and urge the need for our members to adopt innovative and progressive strategies to explore operational linkages and syndications, increase their outreach, enhance products menu, improve managerial governance and ensure meticulous compliance of regulatory and prudential disciplines. Their initiatives and support of the regulators shall undoubtedly achieve evolutionary growth of the sector which is the common objective of all of us.

While concluding, I would like to express my sincere thanks to the Year Book Committee, Secretary General Mr. Muhammad Samiullah and the Association staff for their consistent hard work in ensuring timely collation and publication of the Year Book. My special thanks are due to all those entities and colleagues who have kindly contributed to the publication-expenses of our Year Book, by insertion or procurement of advertisements. Special thanks are due to Mr. Raheel Q. Ahmad, Dr. Fakhara Rizwan, Mr. Aftab Afroz Mahmoodi, Mr. Shiraz Butt and Mr. Aamir Malik. Without their support, it would not have been possible to publish this document.

I am personally grateful to all Association members for their continued confidence and valuable support for me and the Executive Committee. Undoubtedly, our members' active participation in sector related matters is our real strength. Also, various training programs regularly offered by the Association for benefit of their executives and staff are constantly enhancing the skill and competence level of the sector which is very comforting.

Once again I thank you Mr. Chairman, worthy guests from SECP and State Bank, all sector colleagues and valued guests for their participation in this event.