The Securities and Exchange Commission of Pakistan (SECP) has decided in principle to lower equity ratio for investment banks, leasing companies, and house finance companies after receiving recommendations from the NBFI andModaraba Association of Pakistan. Earlier, the minimum ratio for the investment finance companies was Rs 1 billion, for leasing companies Rs 700 million and for the house finance companies Rs 700 million. However, a few institutions among the investment banks, leasing and house finance companies are fulfilling the requirements of the SCEP rules while the majority of others are working on ad hoc basis which is adversely affecting the businesses of the investment finance companies and banks. A competitive environment, which is necessary to promote business activities, is absent and the businessmen have to take loans on heavy ratio and have to lease assets. In the light of negotiations between the SCEP and businessmen, the new rules will be enforced in June this year while the ratio will also be curtailed. Meanwhile, the SCEP has decided to enforce a new regulatory regime for deposit raising non-banking finance companies, if the companies fail to comply with the exchange’s conditions.
The SCEP has to ensure that all the listed companies are complying with the government rules and regulations. It is unfortunate that every sector of the economy has been marred by corruption and mismanagement. Earlier in 1979, the general public faced one of the biggest catastrophe when finance companiesdecamped with billions of dollars public money. No government action had been taken against the culprits to recover the money. Then again in 80s the common man was fleeced in the name of good profit. A recently modarabascandal is an eye opener for the government and the general public alike in which some clerics were allegedly involved in depriving the people of billions of rupees.
The Double Shah case has emerged as the best exampleof fraud in the recent history where people have lost billions of rupees investment moneyto an evil wizard.It will be plausible if the government establishes a conducive environment for small scale investments and introduce public investment schemes in accordance with the Islamic Sharia. There are thousands of thousands retired people who want to invest their money in interest-free ventures, but they ultimately land in hands of fraudulent people who deprive them of all their lifelong earnings.
Though the SECP has taken several measures to safeguard the interest of the general public, but as long as greed is there, fraudulent people will not die of hunger.
