First Paramount Modaraba

The Islamic finance initiative started in the 80s in Pakistan with the promulgation of the Modaraba Companies and Modaraba Ordinance in 1980 that provided a statutory framework for Shariah compliant business opportunities for investors according to the injunctions of Islam. During the financial crisis of 2008, Modarabas showed exemplary resilience. It was the least affected sector of the economy with not even a single default registered during the period. Modaraba arrangement provides maximum benefit to both the parties, i.e. the Rab-ul-Mal and the Modarib. It is one of the most practical modes applied by the Islamic Banks in their relationship with the depositors who tender their moneys to the bank as capital owners to be invested by the bank as Modarib on the basis of profit sharing according to specific ratios agreed upon. Modaraba arrangement provides maximum benefit to both the parties, i.e. the Rab-ul-Mal and the Modarib. It is one of the most practical modes applied by the Islamic Banks in their relationship with the depositors who tender their moneys to the bank as capital owners to be invested by the bank as Modarib on the basis of profit sharing according to specific ratios agreed upon.