KARACHI, Sept 24: The Modaraba Association of Pakistan (MAP) has prepared a proposal to set up a SME Modaraba with an initial paid-up capital of Rs200 million to finance the requirement of small and medium enterprises.

This was stated by the chairman MAP Basheer A Chowdhry while speaking at the annual general meeting of the association.

He said that about 20 modaraba companies will participate in SME Modaraba which will undertake SME business in the smaller towns and distant areas.

SME Modaraba will resolve the problem of the individual modarabas which do not have an extensive branch network to reach out the perspective clientele, Chowdhry said.

Talking of other measures taken by the outgoing executive committee of the association, to generate funds for modaraba sector, he said the most important was the approval in principle of a concept paper for issuance of Musharaka based TFCs that will seek approval of SECP under Section 120 of the Companies Ordinance 1984.

“This would address a long-term outstanding issue of the Modaraba sector for resource mobilization and help the Modarabas with strong balance sheets to raise long-term funding at competitive rates”, MAP chief said.

Referring to the performance of modarabas sector, he said this sector has achieved some very important milestone of success, consolidation and corporate evolution during the previous year.

The meeting was of the view that the issuance of the Musharaka based TFCs, setting up joint venture SME Modaraba and focusing on the overseas Pakistanis and investors from other Islamic countries would have significant impact on the size and health of the Modaraba sector of Pakistan.—APP