Suspension of Trading Continues for First National Bank Modaraba

Karachi, Trading in the shares of First National Bank Modaraba (FNBM) remains suspended due to ongoing non-compliance issues as detailed in a recent communication from the Pakistan Stock Exchange (PSX). The suspension, initially enforced in April 2018, continues as the company addresses significant financial challenges, primarily related to its non-performing loans (NPLs) in the textile sector. FNBM, a subsidiary managed by the National Bank of Pakistan (NBP), has faced escalating losses, with accumulated deficits surpassing 50% of its paid-up capital.

According to information available from the Pakistan Stock Exchange (PSX), FNBM’s management has made strides in addressing these financial discrepancies through enhanced recovery efforts and financial restructuring. The company has reportedly recovered a considerable amount of cash through settlement and restructuring arrangements with defaulters, leading to reversals in provisioning and the recording of net profits since March 31, 2021. These recoveries have significantly reduced the accumulated losses, and further improvements are anticipated.

FNBM has engaged in legal proceedings to facilitate these recoveries, obtaining favorable decree orders from Banking Courts, which have bolstered its financial position. The company anticipates continuing this positive trend, potentially complying with regulatory thresholds within the next two to three years if economic conditions remain favorable.

Furthermore, FNBM has petitioned the Honorable Modaraba Tribunal in Lahore, seeking a reconsideration of the winding-up application initially filed by the Registrar Modaraba SECP under Section 23(I)(ii)(b) of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980. This legal move aims to secure a more favorable resolution that aligns with the interests of stakeholders, particularly the Modaraba Certificate Holders. The tribunal’s decision on this matter is still pending.