Karachi: First National Bank Modaraba (FNBM), managed by a wholly owned subsidiary of National Bank of Pakistan, faces ongoing challenges due to a trading suspension of its shares. This suspension, in place due to non-compliance with specific clauses of the Pakistan Stock Exchange (PSX) Regulations, primarily concerns financial handling related to Non-Performing Loans (NPLs) in the textile sector. The company has reported a series of proactive measures aimed at rectifying these issues, according to a company statement released on September 13, 2024.

According to information available from the Pakistan Stock Exchange (PSX), FNBM initially encountered difficulties after its accumulated losses exceeded 50% of its paid-up capital, a direct result of losses booked on provisioning for NPLs. In response, FNBM has engaged in aggressive recovery efforts, including the filing of recovery suits in the Banking Court of Lahore. These efforts have yielded decree orders in all cases, with execution proceedings currently underway.

These legal pursuits, combined with out-of-court settlement and restructuring arrangements, have facilitated significant cash recoveries and a reversal of previous provisioning. As a result, FNBM has reported net profits for three consecutive years from the fiscal year 2021, which has effectively reduced its accumulated losses.

Further support for FNBM's recovery strategy comes from an anticipated injection of equity of Rs. 300 million by the National Bank of Pakistan, although this is pending approval from the State Bank of Pakistan. Continued success in NPL recoveries and potential support from NBP could enable FNBM to meet compliance thresholds within the next two to three years.

Additionally, FNBM has sought intervention from the Honorable Modaraba Tribunal in Lahore, requesting the remand of its application back to the Securities and Exchange Commission of Pakistan (SECP) to negotiate an amicable arrangement that better serves the interests of stakeholders, particularly the Modaraba Certificate Holders.

The company remains under the scrutiny of regulatory bodies, and the timeline for lifting the trading suspension hinges on the successful continuation of its current financial strategies and support from its parent bank. FNBM continues to be proactive in its compliance efforts, indicating a possible return to full trading status in the near future.