KARACHI, April 9: The Securities and Exchange Commission of Pakistan (SECP) has approved the concept of issuance of Musharika-based Term Finance Certificates (TFCs) by the modarabas.

The issuance of TFCs would enhance the resource mobilization ability of the modarabas as well as deepen the corporate debt market, the Modaraba Association of Pakistan (MAP) announced here on Wednesday.

Development of new resource mobilization product was a long outstanding issue of the sector, hindering its growth.

The MAP has been working closely with the SECP on the development of TFC concept which will pave the way for further development of the Islamic financial market and products.

There was a general consensus among the MAP members and SECP officials on the proposed amendments, which will facilitate growth, provide safeguard to all stakeholders and further improve the legal framework.

The Specialized Companies Division within the SECP carries out regular in-house studies about the role and prospects of various sectors under its purview. The analysis of the Modaraba sector had brought to light certain impediments to its growth, including access to low cost financing and regulatory bottlenecks.

Approval of Musharika-based TFCs and proposed amendments in the Modaraba Ordinance and Rules will provide further strength to the sector and development of Islamic financial markets.—APP