ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified the draft of Modaraba Regulations, 2015 to provide a level- playing field to modarabas with all other participants of non-bank financial sector.
The draft was notified through S.R.0. 334(1)/2015,to obtain feedback of the general public and stakeholders, according to a press release here Friday.
Comprehensive provisions have also been introduced to prevent the criminal use of modaraba institutions for money laundering or any other unlawful activities.
The new regulations envisage various risk management measures, which mainly include minimum conditions for grant of finance, various restrictions on certain types of transactions as well as proper criteria for appointment of chief executive and directors of modaraba companies.
The Sharia compliance and Sharia audit mechanism has been made part of the draft regulations to ensure that the day-to-day business transactions of modarabas are in conformity with the injunctions of Islam.
Permission for fund raising has been linked with the minimum equity requirement of Rs250 million, satisfactory financial performance, acceptable grade credit rating and satisfactory fiduciary conduct of the chief executive and directors of modarabas.
The classification criteria for non-performing assets has been reviewed and brought in line with the other player of NBF sector.
The draft regulations have been circulated among all relevant quarters, and have also been placed on SECP’s website www.secp.gov.pk for the information of the general public. The general public and other stakeholders may give their comments to the SECP by May 8, 2015.
