NBFIs, modarabas' role in economic growth lauded

The non-banking financial sector and Modarabas play a very significant role in the economic growth of the country, particularly for credit delivery to SMEs and mobilising investments through regulated channels. These views were expressed by the Chairman of the Securities and Exchange Commission of Pakistan (SECP), Muhammad Ali, while addressing the annual award ceremony held by NBFI and Modaraba Association of Pakistan here on Monday.
The SECP Chairman said that a task force had been constituted of NBFI segment's representatives and SECP executives to formulate recommendations for promoting a sustainable NBFI sector to complement the overall financial system with particular focus on attracting savings to the capital and debt markets and an increased outreach to meet the needs of SMEs.
He said that SECP was keen to remove the factors inhibiting the growth of NBA sector, promote admissible activities and reform the regulatory regime on the lines of best international practices.
Basheer Chowdry, Chairman of NBFI and Modaraba Association of Pakistan in his presentation, while highlighting potential, performance and operating issues of the sector, said that the enormous efforts made by the leasing companies and investment banks to deal with the impact of 2008-09 financial crisis had produced commendable results. From an overall loss position of Rs 4,298 million suffered in 2008, the sector had emerged to show a net profit of Rs 1,189 million in 2011. The resilience and determination shown by the sector, he said, was now looking for a quantum move into the future to explore new dimensions of growth, to be spearheaded by SECP.
Basheer also highlighted consistent stability, profitability and dividend distribution shown by the Modarabas during the last three years. He pointed out that 18 out of 26 Modarabas had declared total dividend of Rs 1,208 million, the highest being 73.5 percent, thereby maintaining their distinctive record of distributions in the financial industry.
He presented some of the pertinent issues which needed to be worked out before the market conditions could overcome the possibility of revival of the sector. The most important issue, he pointed out, was that of resource mobilisation, which needed to be focused upon for generation of funds from the financial sector, corporate sector, individual depositors, special pool of funds and schemes of SBP, subsidised funds for SMEs financing, government and semi-government funds, floatation of bonds and sukuks with the help of the regulator and enhancing the product line of NBFIs to facilitate non-funding business and rebuilding overall image of the sector. He also stressed upon the need for innovative and out of the box solutions for product development and business strategies.
Later, the chief guest distributed Awards to the members adjudged as the Best Performers for the year 2011 on their dividend payouts and other corporate excellence factors. The top award was given to Allied Rental Modaraba, followed by First Habib Modaraba being the second, and First lmrooz Modaraba coming third in line. Orix Leasing Pakistan was given a special prize.
From this year, the Association has started recognising the sector pioneers who have completed 25 years of their business operations. In this category, special trophies were given to B.R.R. Guardian Modaraba, First Habib Modaraba and Orix Leasing Pakistan.
The SECP Chairman congratulated the recipients of the Best Performance Awards and those who received trophies on completion of 25 years. Muhammad Ali appreciated the efforts made by the Association and its members in improving their performance and undertaking strategic planning to mould the future through innovative measures, and assured them of SECP's continuous interaction and support in achieving the common purpose of building a strong non-banking financial and Modaraba regime. The vice chairman of the Association, Murtaza Ahmed, also spoke on this occasion. SECP Executives and CEOs of leasing companies, investment banks and Modarabas attended this event.