Mr. Bilal Rasul
Registrar (Modarabas),
Securities and Exchange
Commission of Pakistan

 

 

I would like to congratulate the Modaraba Association of Pakistan (MAP) on publishing the Year Book 2008. The efforts of MAP to document the performance of the Modaraba sector should be lauded as it provides an excellent glance of the steady improvements and progress made over the last few years.

2008 saw a lot of upheaval in the financial world. The events that transpired are indicative of the veracity and resilience of the Islamic financial system. As the financial crisis reaches out to even more areas around the globe, the financial sector in Pakistan was not an exception. I am glad that the Modaraba sector has not been affected from the financial tsunami to the extent that has crippled many of their conventional counterparts. I am pleased to state that during the crisis, not a single complain regarding any type of default by Modarabas has been received by the SEC from any quarter.

Today, the Islamic financial system is being viewed with a measure of envy and respect. There is growing appreciation of its essence in boosting and sustaining real economic growth. During the last two decades, the Modaraba sector has contributed immensely to the financial sector in Pakistan, particularly by providing an Islamic mode of financing. The sector has played a lead role in dynamically encouraging growth in the Islamic financial services. The sector has achieved a phenomenal growth in terms of profitability as out of 27 listed Modarabas, 18 paid dividends for the year ended June 30, 2008. However, the Modaraba Sector should not be complacent; rather, it must continue to critically evaluate itself and prove to other segments of the financial system that it is truly a robust and viable alternative to the conventional financial sector.

In advancing any industry, innovation and product development are key. To facilitate this, Securities and Exchange Commission of Pakistan (SEC) has been engrossed in formulating policies to facilitate the growth of the sector. In order to overcome the dilemma and bring the Modarabas at a level-playing-field with the banking companies, for resource mobilization as well as for introducing new products and modes of financing, in consultation with MAP, twelve new model Islamic financing agreements were developed. These agreements were approved and certified by the Religious Board for Modarabas earlier in the year (2008). These agreements have replaced the outdated agreements used by the Modaraba sector
for resource mobilization and are expected to provide impetus for growth of the sector.

There are other areas like capital enhancement, diversification of business modes, outreach in the market place, innovation in product and enhancement of professional skills which are to be addressed by the Modaraba sector with courage and speed. SEC has been working closely with MAP for developing a comprehensive and progressive plan for growth of the sector in the immediate to medium timeframe.

I appreciate the role played by MAP in organizing the Modaraba sector, and keeping an effective liaison with SEC to address regulatory, structural and standardization issues for improving the image and market perception of the sector.

I wish MAP and its members all the best in their concerted efforts.