SECP issues draft Modaraba Regulations 2019

SECP vide SRO 1417(1)/2019 (dated November 19, 2019) issued draft Modaraba Regulations 2019 for information of all the stakeholders and to strictly regulate and monitor the Modaraba sector in Pakistan. The regulation includes the following:

  • Prudential regulations such as:
    • Maximum exposure of a modaraba to a person or group;
    • Exposure limits in capital market;
    • Minimum conditions for providing finance;
    • Linkage between equity of the customer and total exposure from financial institutions;
    • Financial indicators of the borrowers;
    • Requirements on certain types of transactions;
    • Investment in the shares of un-listed company;
    • Regulations for housing finance for individual;
    • Limit on aggregate liabilities of a modaraba;
    • Creation and building up of reserve;
    • Classification and Provisioning for non-performing assets;
    • Reversal of Provisioning; and
    • Overdue, default and recovery.
  • Resource mobilization; and
  • Other miscellaneous regulations.
    Posted in SECP