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WB urged to give due recognition to Modaraba cos

RECORDER REPORT

KARACHI: The Modaraba companies have called upon the World Bank to give them due recognition while drawing recommendations for the financial sector of Pakistan.

The Modaraba Association of Pakistan (MAP) made this request to a Financial Assessment Mission of the World Bank, which visited the MAP office last week.

The MAP told the mission to recognise the size and the specific requirements of the Modaraba sector in their appraisal and recommendations about the financial sector of Pakistan so that they could avail of a level playingfield while competing with banks and other financial institutions.

The Modaraba companies, numbering 42, have a paid-up capital base of over Rs 8 billion with total assets of around Rs 15 billion.

While briefing the mission about the macro-prospective of the Modaraba sector, the association said the Modaraba sector was earning about Rs 4 billion. This reflects that the performance of the sector in terms of the pay-outs and business activities is was not less than that of any other financial sector and indeed better than some of them, the association observed.

The association also spelled out the problems they were faced with. The key problem being faced by the Modarabas, was availing of credit facilities from the banks only with the prior approval of the State Bank of Pakistan. Moreover, problems in issuing bonus shares to their members were also highlighted.

The MAP also briefed the mission about the improvements brought about by restructuring the financial sector, securities and exchange commission and legal framework. Resource mobilisation was also mentioned as main constraint for the growth of the sector.

The mission advised that innovative methods should be adopted by the MAP to supplement their resources, besides banking on the traditional sources.

The mission comprised Joseph Pernia; Nagavalli Annamallai; Ghiath Shabsigh; Juan Costain; Mudassir Khan; Delsile Worrel and Tahiali Tayebi. The MAP was represented by S. M. Aminullah, chairman; Basher A. Chowdry, vice-chairman; Zubair Razzak Palwala; and Samiuddin Khan.