Topics to be Covered

• Modaraba Defined

• Modaraba as practiced in Pakistan

• Structure of Modaraba

• Some key Modaraba Companies in Pakistan. 

 Modaraba Defined
• Modaraba is a business in which one person
participates with his money (Sahib-ul-maal)
and the other (manager) with his efforts or
skills to share the profits in a pre-agreed ratio

• The word ‘Modaraba’ is derived from ‘Al-darb’

meaning journeying the land for the purpose
of earning sustenance (RIZQ). Another name
for Modaraba is Qiradh
 Modaraba as practiced in Pakistan
• Introduced in 1980’s

• It was introduced as an alternate to Riba

• Modaraba would not do any business which

would be opposed to the Injunctions of Islam.
 Essentials for Modaraba
• Modaraba certificate means acknowledging
receipt to the subscriber

• Application to the registrar should be made

• Application for floatation should be along

prospectus

• Religious board should be formed and should

have 3 members
 Essentials for Modaraba
• Company should issue certificates within 30 days
of allotment

• Company should maintain separate accounts for

assets and liabilities

• Modarabas can be sued on its own name

• Certificate should be granted in prescribed form

 Floatation of Modaraba
Three parties are involved in it:

1.Modaraba company

2.Registrar

3.Religious Board
 Types of Modaraba
• Multi-purpose Modaraba is that which has
more than one objective or specific purpose
or is permitted to carry out a diversified
business

• Specific purpose Modaraba is established for a

specific purpose or is permitted to carry out a
specific business, a Modaraba may be either
for a fixed period or for an indefinite period.
 Start of Modarabas in Pakistan
• Start of Modarabas in Pakistan was very slow

• Two Modarabas were formed in 1985, further

two came up in 1987

• Main reason for extra ordinary growth was

attributed to their tax free status
 Start of Modarabas in Pakistan
• Modaraba became the second largest sector on
stock exchange after textile

• (MAP) was incorporated in April 1994

• Removal of tax free status took it to disaster

• In last two decades they have managed a distinct

place for them selves
 Start of Modarabas in Pakistan

• As on June 2008 there were 40 Modaraba

companies in Pakistan with total equity of Rs
11.378 Billion and total assets of Rs 29.642
Billion
 Some key Players
First International Bank Modaraba

• It is multipurpose and perpetual Modaraba

• Totally  owned by NBP

• Invests in Shariah modes of Islam

 Some key Players
First International Bank Modaraba

• On June 30 2009 the company had net income

of 10.8 Million Rupees

• Gradually the income of the company is going

down
 Some key Players
AL Zamin Modaraba

• Commenced its operations in August in 1992

• Paid up capital of RS 100 Million

• Listed in Karachi, Lahore and Islamabad stock

exchange

• Managed to become one of the most successful

Modaraba company
 Some key Players
First Equity Modaraba

• It was floated in 1991

• Initial paid up capital fund of rupees 200 Million

and is presently RS 524 Million

• Distributed RS 62 Million in stock dividends and RS

482 Million in cash dividend

• Book Value stood at RS 588,405,858

 Some key Players
BRR Guardian Modaraba
• Formerly known as BRR International Modaraba.

• This company is involved in activities like leasing

of assets, musharaka finance.

• It also invests in stock market equities and

provides custodial and management services.
 Some key Players
First Habib Modaraba
• It commenced its business on March 1985
• Initial paid up capital of RS 25.
• Multi purpose Modaraba engaged in Islamic
activities
• Got the best performing Modaraba sector
company award in 2009 by MAP
 Some key Players
First Habib Modaraba

• Total assets RS 3,281.20 Million and EPS was 1.12 in

2009

• Equity base RS 2.497 Billion

• Paying dividends for 21 consecutive years

 Some key Players
Standard Chartered Modaraba

• Established in 1987

• Wholly owned by Standard Chartered Group

• Involved in financial activities like Ijarah. Musharaka and

Morabaha financing.

• PACRA rated it AA+ and A+ for long term and short term
respectively
 Some key Players
First Punjab Modaraba

• It is a Pakistan based company. It is a multi

purpose, multi dimensional and perpetual
Modaraba engaged in the business of leasing
musharaka, Morabaha financing and equity
financing, the company is managed by Punjab
Modaraba services pvt. Ltd.
 Some key Players
First Fidelity leasing Modaraba

• It was formed in Dec 2005

• It is a perpetual, multi purpose and multi dimensional

Modaraba

• 30th June 2008 paid up capital and reserves of RS

351.545 Million

• Revenues earned by the company was 118.95 Million

rupees
 Some key Players
First Fidelity leasing Modaraba

• It was incorporated on Nov 12, 199

• It is a perpetual, multipurpose, multidimensional

Modaraba

• Earned profit of RS 18.576 Million in 2006

• Suffered a net loss of RS 64.925 Million in 2007

 Some key Players
First Imrooz Modaraba

• It was formed on 25th September 1993. It is a perpetual

Modaraba.

• Initially it was floated for specific purpose of trading in

approved commodities and other products.

• In 1998 it was converted into Multipurpose Modaraba.

• It is mainly engaged in domestic and international

trading activities.