In Islamic finance, Modaraba is an instrument. In Pakistan Modaraba companies were established in mid-eighties. These entities are like closed-end mutual fund, where investors buy certificates (equivalent to shares), which are traded at the local stock exchanges.
At present 25 Modaraba companies are operating in the country, having total equity of slightly more than Rs15,894 million and total assets of nearly Rs30,029 million. All the companies have released their financial accounts for the period ended 30th June 2015.
Allied Rental Modaraba enjoys the distinction of posting the highest profit of Rs403.53 million, followed by First Habib Modaraba (Rs306.50 million), Standard Chartered Modaraba (Rs195.47 million) and First UDL Modaraba (Rs149.74 million). These Mobarabas contributed the largest share to an aggregate profit of slightly more than Rs1,353 million by all the companies.
Two Modarabas need specific mention: 1) First UDL Modaraba posting Rs149.74 million profit for FY15 as compared to Rs68.45 million profit a year ago and 2) First National Bank Modaraba posting Rs122.18 million loss as compared to a loss of Rs34.21 a year ago.
After a long time another Modaraba will floated by Pak Brunei Investment Company, an Investment Finance Company established as a joint venture between Government of Pakistan and Brunei Investment Agency (BIA) that commenced operations in August 2007.