Islamic term finance certificates to be introduced in Pakistan

Three of the leading Pakistani modarabas are aiming to come up with Islamic term finance certificates by the end of 2002. Managers of modarabas say there is a desperate need for TFC's to raise money as borrowing funds from banks is becoming more and more unfeasible. Islamic TFC's would be a profit and loss sharing debt instrument. The sharing of profit and loss would be based on an agreed upon ratio decided at the beginning of the TFC transaction. The profit garnered will be paid on a six-monthly basis and shall be a provisional or on-account payment, irrespectve of profit or loss. Prior to launching Islamic TFC's, the modarabas would have to seek clearance from the Securities & Exchange Commission of Pakistan and fulfill all necessary formalities.