November 1, 2001	Thursday	Shaba’an 14, 1422

KARACHI, Oct 31: Modarabas are ready to offer housing finance under the recently-announced scheme of the State Bank and the SBP authorities seem willing to allow them to do this.

“We sought permission of the State Bank to participate in the rediscounting house financing scheme and the State Bank Governor, Dr Ishrat Husain, told us he had no objection,” said the chairman of Modarabas Association of Pakistan (MAP), Basheer A. Chowdry. He said the issue came under discussion on Wednesday when a delegation of the Association called on the governor.

“Initially half a dozen modarabas with enough liquidity can do this,” he said while talking to Dawn over telephone.

Under the recently-announced housing finance scheme banks and financial institutions would offer housing loans that would be reimbursed by the SBP at a lower interest rate.

Bashir said the delegation also informed the governor that some modarabas would soon issue Certificates of Islamic investment or Islamic TFCs for resource mobilization.

He told Dawn that the modarabas were redrafting the rules for Islamic TFCs under the guidelines set by the Religious Board that oversees their operations. He said the delegation also told Dr Husain that the current Musharika Investment Certificates for the small savers are also being restructured to suit small investors.

Meanwhile, a press release issued by the Association said the SBP governor was of the view that “instead of duplicating what other non-bank financial institutions were doing the modarabas should concentrate on developing new products.”

The governor said the modarabas should match the needs of the savers and borrowers through the instruments based on principles of Sharia.

The release said the governor was of the view that modarabas provided a good transit point for the Islamization of the financial system having an appropriate infrastructure in place with more than 20-year practical experience. “He emphasized the need for quality of management and corporate governance with a view to providing maximum disclosures and transparency about the modarabas operations.” The release quoted the governor as saying that modarabas need to consolidate their capital base and create specific market niche for themselves. What makes this need more pronounced is that tax rates on banks are being cut and large nationalized banks are going to be privatized and restructuring of the overall financial sector is being considered. This would make it tougher for the modarabas to compete with other financial institutions.

The delegation of the modarabas led by Basheer A Chowdry gave an overview of the performance of modaraba sector. The meeting noted that so far seven modarabas have published their accounts and all of them have declared cash dividends ranging between 10-46 per cent.

The delegation comprised vice-chairman Adil A Ghaffar and executive members Ateed Riaz, Ayaz Dawood, Mohammad Shoaib, Wasim-ul-Haq Osmani.