RIBA FREE FOR EVERYONEINITIATIVE FOR MODARABA INDUSTRY

SHARI’A AND REGULATORYCOMPLIANCE FOR MODARABAS

With the launch of Shari’a Compliance Mechanism by Registrar Modaraba SECP, Modaraba operators are required to established Shari’a and regulatory compliance structure and have to ensure compliance at every stage on a continuous basis. In this regard NBFI & Modaraba Association of Pakistan has developed Shari’a Compliance Guide to assist, facilitate and promote better and efficient culture of regulatory compliance in the Modaraba sector.

Islamic finance industry in Pakistan is growing at a rapid rate of over 15% every year however despite the 97% Muslim population, the total industry size is still very small as compared to conventional peers.

The industry has gone through its natural evolution process and has developed an infrastructure in the country, a foundation which is still vulnerable, inefficient and restricted.

A unified strategy, ability to reach mass population and providing them with Riba free financial solutions remains key industry road blocks. Emaan Financial Services, Pakistan's leading Shari'a compliant advisory firm has undertaken an industry-wide initiative "Riba free for everyone", enabling Islamic financial institutions to reach every household and institutional customers with Riba free financial solutions.

WHITE PAPER CONTENT

1 Shari’a and Regulatory Compliance

2 Technology for Effective Compliance

3 Compliance Technology for Modarabas

4 Islamic Wealth Management

5 OnePlatform Solution for Modarabas

6 Benefits for Modaraba Industry

7 About Emaan Financial Services

Why SECP is promoting Shari’a compliance?• Strengthen the Shari’a compliance mechanism both in letter and spirit• Assurance of achieving Shari’a objective of Islamic laws in financial transactions • Assurance of Shari’a compliance in systems, procedures, products and agreements• Assurance of use of the standard agreements as approved by the Religious Board• Introduction and establishment of internal Shari’a audit system• Mitigation of reputational and operational risks• Enhancement of operational framework of Modaraba institutions• Introduction of Shari’a investments and purification standards

What is required under the SECP’s Shari’a Compliance Mechanism?• Appointment of Shari’a advisor• Establishment of internal Shari’a audit function• Development of process flow and standard operating procedures• Use of SECP approved model agreements • Development and implementation of Shari’a Compliance Reporting Mechanism• Development and implementation of Shari’a and Regulatory Audit Framework

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TECHNOLOGY FOREFFECTIVE COMPLIANCE

New Technological tools can make financial services’ firms compliance programs both more effective and more efficient. Technology helps utilize existing resources and can extend the breadth and depth of coverage. More importantly, technology plays a key role in fulfilling requirements to test the adequacy of compliance policies and procedures. It allows compliance personnel to focus on analyzing results and identifying potential violations rather than performing labor-intensive, manual reviews.

Regulators and investors expect to see technology integrated into compliance programs, demonstrating a robust culture of compliance. As firms continue to adopt technology in their compliance programs, regulators’ focus on whether and how firms are using technology will likely increase. And in the face of growing regulatory demands for information, technology can assist with timely production of key indicia of the operation of the compliance program.

As financial services firms prepare for increased regulation, scrutiny, and oversight, they are evaluating their compliance and control systems. With new regulatory requirements in the wake of the financial crisis and the Registrar Modaraba SECP Reforms, a fully functioning, comprehensive compliance program is more important than ever.

Compliance officers can spend more time analyzing data rather than gathering information Increased efficiency leads to cost reduction It enables conflict management, a key area of any comprehensive compliance program Data accuracy is enhanced, which reduces risk by limiting human error It demonstrates a prudent and responsible compliance culture It provides confidence to regulators and stakeholders New infrastructure can scale quickly as the business grows, and it is resistant to staff turnover It allows compliance staff to track issues uniformly, eliminating ad hoc records It reduces the burden of inspections by automatically generating predesigned reports that can be downloaded at a regulator’s request

Why integrate technology into compliance?

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eCompliance is Pakistan’s first custom built Shari’a compliance management solution. It is a state of the art technology package specifically designed for managing Shari’a compliance and Shari’a audit functions within an Islamic financial Institution. The system connects the major organization functions and aligns them on standard operating procedures ensuring strict Shari’a compliance as per SECP directives. The system allows for automated and real-time based Shari’a approvals and non-compliance triggers resulting in faster transaction and disbursal executions.eCompliance module is available as an independent software application as well as part of our Islamic Core Financial System.

eCompliance simplifies the process of Shari’a compliance and Shari’a audit functions. The system allows Shari’a advisors, Shari’a auditors and regulators to monitor Modaraba transactions on a real time basis without the need of paper-based manual process. eCompliance is meant to ensure simultaneous compliance of both Shari’a and regulatory requirements and is an integral part of the overall approval and monitoring procedures of the Modaraba operations.

Transaction checklist covers major modes of financings and investments, and has been developed according to the needs of the modern Islamic finance and International best practices in financial services.

Statutory Shari’a complianceTransaction E-ChecklistReal time Shari’a case reviews and approvals Automated Shari’a non-compliance trigger pointsAudit trail checklist and timestampsDisbursal alerts and notifications Exceptions and deviations management

Secure and real time connectivityTime and resource efficientRegulatory compliantInteractive solution for business unitsIntuitive Shari’a Advisor and Auditor dashboardsInternational best practicesEliminates paper checklist and manual compliance process

Murabaha, Ijarah, Musharakah, Diminishing Musharakah, Istisna, Salam, Investment in Securities ,Charity Management,Default and Rescheduling

Transactions Covered

Supporting documents e-vaultsStandardized product SOPsInteractive communication gatewayData archiving for Shari’a, regulatory and statutory auditsInterconnectivity of Business/ Shari’a/ Finance/ Audit departments

eCompliance Functions

eCompliance Features

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ISLAMICWEALTH MANAGEMENT

Modaraba sector being the pioneer promoters of Islamic financial services in the country have today become stagnant in the overall business growth. The sector derives performance and profitability primarily from its financing operations. With stiff competition from Islamic banks, tightening of funding resources and non-availability of new credit lines, impact on bottom line is inevitable.

The competitive edge for Modarabas as premier Islamic financial institutions is being lost due to non-availability of competitive Islamic financial products and services. It is the need of the hour for Modarabas to develop alternative income streams and transform itself into a more robust operating structure.

Using EFS state of the art distribution technology and solutions, Modarabas can now introduce multi-product Islamic wealth management solutions to their retail and SME customers without any capital expenditure.With EFS Solutions, the financial institutions can offer third party investment and financial products to its customer in a seamless automated environment and generate substantial fee based income. This new business segment will not only provide new revenue streams but will also fortify their existence within the Islamic financial industry.

Opportunity of Wealth Management Distribution• Generate new revenue streams• Implementation of End-2-End distribution business unit with no capital costs• To become a part of the new global phenomenon• Implement international best practices for Islamic financial services• Retaining long-term relationships with clients by providing them one stop financial solutions• Ability to provide both in-house and third party Shari’a compliant financial products

What is Islamic Wealth Planning? • Shari’a compliant alternative to conventional wealth management• Goal-based financial planning and strategy formulation• Accumulation, protection and transfer of wealth in line with Shari’a principles• Diversified and focused tax-efficient Shari’a compliant investments• Shari’a compliant family assurance and retirement planning tools• Zakat and inheritance planning• Development of future family leaders

• Takaful Assurance Plans• Mutual Funds• Equity and Commodity Brokerage• Voluntary Pension Schemes• Retirement and Investment Plans• Certificate of Investments• Personal Finance• Wealth Planning Toolkits• Strategic Wealth Planning

Wealth Management Products

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In a nutshell, single platform enables selection of financial products from many different product providers into one consolidated portfolio. Under the initiative “Riba free for everyone”, EFS has developed OnePlatform distribution infrastructure “emis 2.0” allowing cost effective wider retail reach for Modarabas without the need of physical branches. emis 2.0 infrastructure provides customers and distributors access to the best of the Islamic financial products in a highly cost effective environment. The OnePlatform concept facilitates in achieving the required investment objectives by providing real time market data, electronic transaction processing, powerful analytical tools and account consolidations.

emis 2.0 simplifies the process of investing, distribution and customer management. It allows product advisors to develop and offer tailored financial solutions to achieve the most competitive returns on wealth portfolios. The open architecture and modular design structure provides flexibility and scalability to distribution operations of Islamic financial product providers.

The state of the art technology along with web enabled “anytime anywhere” access, powerful consolidation tools and back office integration, allows product providers and distributors to spend far less time on administration and more time servicing the needs of their existing clients and attracting potential ones.

Highly secured, real time connectivityElimination of physical transaction processesMulti product single sign-on platformMulti channel distribution supportFlexible and transaction based pricingInternational best practices

Electronic transaction processingInteractive communication gateway Intuitive and business intelligent dashboardsPowerful data managementAccount statements - Customer & DistributorsSales and customer relationship management

OnePlatform Distribution

Outlets Outlets Outlets

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Financial ProductDistributionSolutions

Financial ProductDistributionSolutions

BENEFITS FORMODARABA INDUSTRYTechnology Innovation

Multi Product Platform

Anytime, AnywhereReal time connectivityElectronic application processingSecured transaction managementCommission management & reconciliation

InvestmentsTakafulBrokerageWealth planningPersonal finance

Shari’a and Regulatory complianceWealth management servicesWhite label and co-branded productsInnovative product development

Value Innovation

Intiutive dashboardsMarket data and reportsUnbiased product comparisonsCustomer and lead management

Business Intelligence

Portfolio management and analysisE-Account statementsCustomer account portalCustomer experience

Customer ManagmentEFS Channels enable Modaraba Institutions with an integrated distribution solution through which they can offer their customers industry's leading Shari'a compliant financial solutions without the need of physical branches. As an institution, you can offer both your own custom products or distribute 3rd party products to your customers through a single consolidated platform. The OnePlatform emis2.0 provides Modaraba with leading client administration and back-office services allowing them to focus on their core business - Customer's financial well-being.

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ABOUTOUR COMPANY IT & Core

Banking Solutions

Transaction &Project Advisory

Research &Training

Financial ProductDistributionSolutions

Emaan Financial Services (EFS) is Pakistan's premier Shari’a compliant advisory company. It serves a critical gap by providing expert distribution and advisory services to financial institutions adhering to Shari’a law.

EFS is a trusted and customer-centric, one-stop financialservices provider catering to the diverse needs of retail, high net, corporate and institutional customers.

The essence of brand EFS is encapsulated in our brand proposition – 'BELIEF is what we never change'.

Our brand proposition reflects our strong resolve to deliver financial solutions that are according to Islamicbeliefs and benefit our customers and the society at large.

Our widespread reputation for excellence is earned through the hard work of our highly experiencedteams who are focused exclusively for serving your financial and business needs.

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Financial ProductDistributionSolutions

Financial ProductDistributionSolutions

Financial ProductDistributionSolutions

Financial ProductDistributionSolutions

OURSTRENGTHS

OUR EXPERIENCE

OUR SOLUTIONS

OUR SUCCESS

Our group has been delivering the best solutions to the Islamic Finance industry for over 15 years with clients across Middle East and Asia region.

We advise Islamic financial institutions on new product developments, management of IT infrastructure & distribution solutions for their financial products.

Our team members have extensive experience on managing advisory projects across MEA region. As a result, we have built efficient work processes giving us the grip on managing critical success factors.

The experience and technical expertise we have provides the assurance that we exceed expectations and deliver strong partnership values.

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OURGROUP CLIENTS

9

12C, Second Floor, Lane 2Main Kh-e-Shahbaz, DHA Phase VI

Karachi, Pakistan.

0092-21-353418280092-21-36206079

0092-21-35341829

info@efspakistan.com

For more information you can CONTACT EFS

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