Karachi: The Pakistan Mortgage Refinance Company (PMRC) recently issued a PKR 3.1 billion sukuk, for a period of three years and at the rate of 8.25 per cent. This is seen by many as an innovation in Islamic Banking as the shariah compliant instrument will attract many investors, particularly towards the housing sector.
Sukuk is a shariah compliant instrument, similar to a bond but adhering to the principles of Islamic finance. The financial product is based on Shirkah-tul-Aqd, a type of Musharakh (Partnership Agreement) which represents a portion of ownership in the assets, in contrast to the traditional bonds which are debt obligations towards the holders.
The sukuk was led by the Pakistan Kuwait Investment Company (PKIC) and the Bank of Punjab (BoP) jointly, with Meezan Bank Limited structuring the sukuk with the PMRC officials. The investors included Habib Bank Limited, Askari Commerical Bank, Bank Islami, PKIC, BoP and Karandaaz Pakistan.
To follow the example led by Malaysia, the PMRC was built to promote the growth of the housing sector in Pakistan. The institution receives finances from the World Bank (WB) and extends the same to banks at lower rate, exclusively for the housing sector.
Meezan Bank President and CEO Irfan Siddiqi expressed optimism that the sukkur will greatly contribute towards increasing accessibility and growth in the housing finance. He further stated that he was pleased to partner with the PMRC in structuring the sukuk for raising Islamic funds.
PMRC Managing Director Mudassir H Khan termed the sukuk an innovation in Islamic finance and expressed delight at the fact that the PMRC was rapidly becoming an important player in the development of affordable housing finance.
