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  • Mr. Basheer A. Chowdry has been elected Chairman for the Year 2017-18 while Mr. Muhammad Naimuddin Farooqui as Senior Vice Chairman and Dr. Fakhara Rizwan as Vice Chairperson of NBFI & Modaraba association of Pakistan.
  • The 7th Annual General Meeting of the Association held on 26th September 2017 at the Conference Hall of the Association.
  • Mr. Ayaz Dawood has been elected Chairman for the Year 2016-17 while Mr. Murtaza Ahmed Ali as Senior Vice Chairman and Mr. Rashid Kamal Siddiqui as Vice Chairman of NBFI & Modaraba association of Pakistan.
  • 6th Annual General Meeting of the Association held on 21st September 2016 at the Conference Hall of the Association.
  • SECP issued Draft Amendments in Modaraba Companies and Modaraba (Floatation & Control) Ordinance, 1980
  • The NBFI & Modaraba Association of Pakistan announced its Election Schedule for the election of Executive Committee and Office Bearers for the year 2017-2018

Honorable Guests, Ladies & Gentlemen

On behalf of NBFI & Modaraba Association of Pakistan, I welcome you all to this gathering of eminent professionals, in their respective fields, to this annually conducted occasion to launch the Association’s Year Book for 2015.

I am particularly thankful to Mr. Zafar Abdullah, Commissioner, SECP, who has kindly accepted to honor us with his presence as our Chief Guest for the occasion.

It would be unkind, on my part, not to acknowledge with gratitude the presence of other senior officials of the SECP, including Mr. Imran Inayat Butt, Mr. Aamir Khan, Mr. Shahid Nasim, Executive Directors of SECP and Mr. Shahid Mahmood, Registrar of Modarabas. Having taken the initiative of taking time out of their heavy schedule duties at Islamabad to be here with us shows SECP’s genuine interest in the welfare and growth of NBFIs and Modarabas Sectors in Pakistan.

Allow me also to thank Mr. Syed Khalid Tawab, Senior Vice Chairman, FPCCI, Mr. Shahid Ghaffar, Chairman, NIT and the Chief Executives of our Member Institutions representing Modarabas, Leasing Companies, Investment Banks and Islamic Takafuls, in addition to Shariah Advisors and respected guests from other financial institutions, who have also graced the event by their presence.

This 6th Year Book of the Association, which I have the honor and privilege to present to you now, includes both the individual, as well as the collective performance of Member Institutions of the Association for the Financial Year ended 30th June, 2015.

Over the years, our Year Book has attained an internationally acknowledged status of being the most reliable, detailed and useful source of information relating to the NBFIs and Modaraba Sectors in Pakistan, which comprise an important element of the Shadow Banking System of the country.

In developing this Book, the Association has painstakingly ensured that the data and analyses presented benefit all categories of Stakeholders associated with the NBFIs and Modaraba Sectors in Pakistan. While the Member Institutions are likely to use the Book for evaluating comparative performance between their respective peer groups, for developing a healthy competition among themselves, the Investment and Research Analysts would get all the information that they need for professionally examining the merits of each constituent of these Sectors and for a comparative analysis of the advantages of recommending investment in one sector/company, or the other.

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 NBFI & Modaraba Sectors. This is in line with the core objectives of the Association, which include a) coordinating the activities of its Member Institutions; b) addressing their problems through interaction with the Regulators; c) adopting a unified approach in resolving issues faced by the Members; c) developing a healthy corporate culture based on good corporate governance; and d) ensuring Shariah compliance for Modarabas and other Members offering Islamic financial products.

Non-Banking Financial Institutions, including Modarabas, going by the internationally recognized norms, are expected to play a vital role in broadening the access to financial products and services by extending supplementary support to the overall Banking System. NBFIs help in providing alternatives for encouraging and enhancing efficiencies in the areas of investments and savings, besides broadening the base of the Financial Market, by extending financial support to fringe market borrowers.

Notwithstanding the tough challenges offered by the prevailing market conditions and other economic constraints, particularly those adversely affecting the NBFIs and Modaraba, the Sector, as a whole, performed rather satisfactorily during the Financial Year ended 30th June, 2015.

Leasing Companies exhibited an increasing trend in their assets, with the Total Assets base increasing to Rs.40,595 million against a complementary rise in the overall Equity Base at Rs.6,927 million. The Sector booked an Annual Profit of Rs.655 million, out of which Rs.369 million was distributed among the Shareholders by way of Dividends. Return on Equity stood at a reasonable rate of 9.74% as against a Return on Assets of 1.70%. The Market Capitalization of the Sector, as on 30th June, 2015, amounted to Rs.6,927 million.

Among the hard core Leasing Companies in Pakistan, which excludes leasing services being rendered by the Commercial Banks and Development Financial Institutions (DFI’s), ORIX Leasing merits a special mention. Thanks to a focused, creative and progressive policy adopted, ORIX now emerges as the market leader with almost a 70% share of the Leasing Companies’ overall portfolio of leased assets. While still on the subject, I take this opportunity to specifically mention the name of Mr. Teizoon Kisat, one of our senior colleagues, who has recently retired as the Chief Executive of ORIX Leasing Pakistan Limited, after a long and meritorious career in the Leasing Sector in Pakistan, which included his guidance and support to the Association while he served as a former Chairman, for more than one tenure.

Modarabas performed well during the year under review. Out of the 25 operating Modarabas, 20 were profitable enough to be able to declare Cash Dividends among their respective Certificate Holders ranging from 1% to 90%. Judging by the amount of profit distributed, 77,472 Certificate Holders of Modarabas received over Rs.1.0 billion, pro-rata to their investments, by way of the aforesaid dividends declared by Modarabas. Total Assets of all Modarabas stood at Rs.30,736 million and Total Equity at Rs.15,894 million, as at 30th June, 2015, while these Modarabas booked a Profit of Rs.1,353 million for the year. Return on Equity was 8.73%, while the Return on Assets was at a decent rate of 4.39%. Modarabas are playing a significant role for promoting Shariah-compliant financing and investment products in the country and have, over the years, emerged as a significant part of Pakistan’s Financial System. Moreover, Shariah governance, within the Modaraba Sector, has tremendously improved with the passage of time.

Investment Banks in Pakistan have unfortunately not been able to attain the status, either in terms of size or operations, which was expected of them when SRO 585(1)/87 dated 13 July 1987, was issued by the Ministry of Finance for licensing these institutions. More specifically, after the financial markets turmoil of 2008-09, which badly affected the entire NBFI Sector, the Investment Banks are still passing through difficult times. Only a few entities among these have shown resilience and performed better in 2015, than the preceding Financial Year. SECP does need to come out with some solutions to protect and promote Investment Banks’ future in Pakistan.

We sincerely appreciate SECP’s keen desire for development of a strong NBFIs & Modarabas Sector. We are aware that presently the Commission is in the process of reviewing/revamping its existing regulatory framework for the entire Sector, keeping in view the recommendations finalized by the NBF Sector Reform Committee. In this context, I confirm that the Association has recently received draft amendments in Modaraba Companies & Modaraba Rules, 1981 for comments/input of the Member Modarabas. The matter is receiving our most professional and expeditious attention which would soon be forwarded to the Commission.

It has been in vogue, for a long number of years, for representative associations of various specialized institutions to encourage and recognize outstanding performance during a year by their concerned Member Institutions by awarding trophies and shields. Our Association has also resolved to adopt this practice and starting from this Year, we shall be giving awards to the Top-5 Performers, on a combined NBFI and Modaraba Sector basis. To arrive at the qualifying institutions’ names, comprehensive assessment criteria, taking into account the various key factors determining performance of each Member, including among others, Profit, Corporate Governance, Credit Ratings have been utilized. Our Secretary General, Mr. Muhammad Samiullah, will give a brief summary on with respect to the Association’s Awards Criteria, while announcing the Awards for the Year 2015, in a short while.

It might be of some interest for the Members to know, that we have recently added to our list two new reputable members namely, Awwal Modaraba sponsored by Pak Brunei Investment Limited with a Paid up Capital of Rs.One billion and LSE Financial Services Limited (formerly Lahore Stock Exchange Limited). The size and professional backdrop of these new members is likely to add value to the existing credentials and competence of the Association and their inclusion to our fold is greatly appreciated. We understand that a few more Modarabas are also in process of regulatory approval and expected to go for public floatation fairly soon.

Allow me, once again, to extend on behalf of the Members of the Association our collective appreciation for the professional support and guidance so cordially extended to us by all at SECP.

I would also like to express my sincere thanks to all members of NBFI & Modaraba Association for their valuable assistance to the Executive Committee and to each member of the regular staff of the Association, particularly that of Mr. Muhammad Samiullah, the Secretary General, for their consistent hard work in ensuring timely collation and publication of various outputs, including the publication of the current Year Book, in addition to the various Training Programs regularly offered by the Association for the benefit of the executive and staff of Member Institutions.

My special thanks are due to all those Institutions, members or not, who have kindly contributed to the publication expenses of our Year Book, by insertion of their advertisements. Without the support of their respective Managements, it would not have been possible to produce this precious document.

Thank you.