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October 9, 2020

Shariah-compliant Naya Pakistan certificates approved

Business

October 9, 2020

ISLAMABAD: Government has approved shariah-compliant Naya Pakistan certificates to attract investment from overseas and locals who own assets abroad, it was learnt on Thursday.

The finance division notified the structure of shariah-compliant Naya Pakistan certificates.

The certificates will be available to resident and non-resident Pakistanis having foreign currency value account or non-resident Pakistanis rupee value account known as the Roshan digital accounts in the agent banks, according to an official document available with The News.

The investors need to open the digital accounts and after that they can remit funds from outside Pakistan through normal banking channels. They can invest in shariah-compliant or conventional instruments.

The investor needs to visit the bank’s site, choose conventional or shariah mode and provide investment details including tenor, currency and amount to be invested. The banks have online details of profit sharing ratio, weightage for each category of investment and expected rate of return.

The banks will debit the investors’ account and credit the special purpose vehicle account.

“In order to provide initial investment required for the establishment of each Mudaraba pool, the agent banks shall be invited to invest in USD and PKR Mudaraba pool,” said the document. “The agent banks shall be eligible to share the profits of the pools as per the profit sharing ratio to be agreed with them. The agent banks’ investment in the pools shall be transitory in nature and shall be retired or withdrawn on receipt of the individual investments in INPCs (Islamic Naya Pakistan certificates).”

The funds will be used to finance the government through sale and lease back of identified assets in the US dollar for foreign currency pool and rupee for the rupee pool. The rental rate will be mutually agreed, ensuring sufficient profits to remunerate the certificate holders at the rate equivalent / close to the expected sales.

“Once the initial investment of $20 million by agent banks is fully liquidated, they shall again contribute $20 million in the dollar pool for exceeding the second tranche of sale and lease back transactions on similar terms and conditions,” said the document. “This investment of the agent banks shall be gradually liquidated on receipt of investments in the INPCs. The process shall continue during the currency of the INPCs. The same mechanism shall be used for the PKR dominated INPCs.”

At each month, income generated by all the assets in each pool shall be calculated to arrive at the gross income of the pool and after deduction of the allowed expenses, the monthly profit of each pool will be calculated.