Lahore: First National Bank Modaraba (FNBM), under the management of the National Bank Modaraba Management Company Limited, has released its quarterly progress report for the quarter ending June 2026, highlighting ongoing efforts to address regulatory non-compliance issues. The report, dated July 2, 2026, outlines the measures being taken to resume business operations and rectify the causes leading to the suspension of trading in its certificates.
FNBM has faced significant challenges due to accumulated losses that have surpassed 50% of its paid-up capital, primarily driven by provisioning on Non-Performing Loans (NPLs) in accordance with the Securities & Exchange Commission of Pakistan’s (SECP) Modaraba Regulations. This financial strain led to the SECP triggering a winding up petition under Section 23(1)(ii)(b) of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980, filed in the Modaraba Tribunal in Lahore.
The accumulated losses of FNBM are largely tied to provisioning against NPLs, which is characterized as a reserve-building measure rather than a permanent loss. The company has seen progress in its efforts to rectify this non-compliance, with all legal recovery suits filed against defaulting customers being decreed in its favor, facilitating active recovery processes in the Banking Courts.
According to information available from the Pakistan Stock Exchange (PSX), FNBM's certificates were suspended in April 2018. Since then, the company has achieved cash recoveries from NPLs through court-awarded decrees and out-of-court settlements, leading to the progressive reversal of provisions. Despite posting net operating profits from fiscal year 2021 to 2024, the accrued finance costs on facilities from the National Bank of Pakistan (NBP) have hindered the full offsetting of accumulated losses.
The FNBM Board and management are finalizing a revival plan that addresses the regulatory, operational, and financial challenges the company faces. This strategic review is critical as the company seeks to comply with regulatory requirements within the next two years, supported by continued cash recoveries from NPLs, the restructuring of finance facilities, and the backing of NBP.
FNBM has appealed to the Modaraba Tribunal in Lahore to remand the winding up petition back to SECP, aiming for an amicable resolution in the interest of stakeholders, particularly the Certificate Holders. The matter remains pending adjudication.