Feedback on draft modaraba regulations sought

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has sought feedback of the general public and stakeholders on the draft of Modaraba Regulations, 2015 by 8th of next month, which the commission has notified through SRO 334(1)/2015.
The regulations aimed at providing a level-playing field to modarabas with all other participants of non-bank financial sector and prevent criminal use of modaraba institutions.
Interestingly, comprehensive provisions have also been introduced to prevent the criminal use of modaraba institutions for money laundering or any other unlawful activities.
The new regulations envisage various risk management measures, which mainly include minimum conditions for grant of finance, various restrictions on certain types of transactions as well as proper criteria for appointment of chief executive and directors of modaraba companies.
The Shariah compliance and Shariah audit mechanism has been made part of the draft regulations to ensure that the day-to-day business transactions of modarabas are in conformity with the injunctions of Islam.
Permission for fundraising has been linked with the minimum equity requirement of Rs250 million, satisfactory financial performance, acceptable grade credit rating and satisfactory fiduciary conduct of the chief executive and directors of modarabas.
The classification and provisioning criteria for non-performing assets has been reviewed and brought in line with the other player of NBF sector.
The draft regulations have been circulated among all relevant quarters, and have also been placed on SECP’s website www.secp.gov.pk for the information of the general public.