The Modaraba sector has completed arrangements to setup an Islamic Financing Facility Center at Rawalpindi to facilitate availability to buyers of Motorcycles. The initiative is intended to increase outreach of Modaraba sector and to provide affordable financing to the public for conveyance needs.
Initially four Modarabas are participating in the arrangement namely Allied Rental Modaraba, First Habib Modaraba, Orix Modaraba and Trust Modaraba and more members are likely to join to expand the scope. The facility will be provided through sales network of one the major motorcycles retailers M/S Qazi Trading Company to ensure immediate outreach to the potential buyers. In due course other outlets will also be included.
Motorcycle is now the most commonly used mode of transport due to its affordability and convenience for the public. With constantly increasing sales of vehicles, hire-purchase and financing activities have also been increasing mostly in the informal sector through retailers and financiers for which the users have to pay exorbitant rates. So far, very limited financing is available to individual borrowers from the financial sector and therefore, those buyers who need to supplement their own cash resources through short term borrowing have no choice but to accept such cumbersome terms.
This initiative has been taken on the encouragement of the Securities and Exchange Commission of Pakistan (SECP) to bring Islamic Financing Facilities to the easy reach of the common man on cheaper terms than those offered by informal sector. The Center is the first of its kind and will be followed by similar facilities to be established at other locations. The participants of the arrangement have included all modalities and the Center is expected to commence its operations next week. The move is considered to be a significant development for improving Modaraba sector's contribution towards promotion of Islamic finance and reaching out to hitherto unexplored areas.
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