Leasing is an Islamic mode of financing and is being widely practiced throughout the world. This sector has experienced enormous growth during the 90s. Presently there are - 29 leasing companies in Pakistan with a paid up capital of Rs. 4,966 M. The assets are close to Rs. 45,222 M and an investment of Rs. 36,680 M. Companies have been mostly extending short and medium term credit facilities to industries and consumers, but still there is room for improvement, since many sectors of the economy remain unexplored and neglected.

Lease finance by all means is the most suitable financing arrangement for developing countries and especially Pakistan. Despite the fact that most banks of the country are facing surplus liquidity crises and have unutilised funds, they are still not catering to the needs of micro enterprises in an effective and efficient manner.

Askari Leasing Limited (ALL), a subsidiary of Army Welfare Trust (AWT), was incorporated in August, 1993 with an authorized share capital of Rs. 500 million and is listed on all three Stock Exchanges of the country. The company has generated enough resources to adequately fiance its leasing operations, mainly by securing funds through Certificates of Investment, which is reflective of the confidence of COI holders reposed in the company's management and its business potential. The company's operations are based on sound appraisal criteria and standards and are focused on quality lease business. Major areas of financing include consumer auto leasing and big ticket leasing to large local and multinational companies. Askar, our auto lease package has firmly placed the company in auto finance market.

The security and collateral requirements at ALL are much softer than other leasing companies and banks. An application for loan might take days or even months in case of a bank, whereas at ALL an application for lease can be processed within twenty-four hours, with minimum documentation requirements. The lease rentals are also tax deductible, since the asset remains the property of leasing company until its maturity.

At ALL, we disbursed Rs.2.6 billion during the year in lease transactions with a major investment in Askar, our auto financing product. Net investment in lease as at June 30, 2002 is Rs.6.7 billion compared to Rs.6.3 billion last year. The leases have primarily been financed through certificates of investment, which stood at Rs.5.9 billion as at June 30, 2002. Total revenue during the year was Rs.1.2 billion which was slightly higher than the previous year. Lease revenue contributed Rs.929 million and Rs. 180 million was contributed by short-term/treasury investments. Finance charge was Rs.951 million compared to Rs.938 million for the previous year. Allowance for potential lease losses is Rs.68 million while Rs.25 million has been provided for the impairment of receivables, resulted from restructuring of lease transactions. The current provisions enhanced the total allowance for losses to Rs.291 million while Rs.105 million has been set aside in reserves for contingencies.

Assets wise lease analysis shows investment in well diversified portfolio. We have a good geographic distribution of assets in the all major cities of Pakistan. Sector wise significant exposure besides consumer, includes textiles, oil and gas and services.

The Pakistan Credit Rating Agency (PACRA) has maintained Askari Leasing's entity rating of "A Plus" for long term and "Al" for short term obligations based on the results of June 30, 2001.

The funds have been deployed in a well diversified lease portfolio. Askari Leasing has been leasing out large scale equipment and machinery. We have been adequately catering to the needs of large scale industry, and we are in the midst of fulfilling the needs of Small and Medium Enterprises. In addition to that we are also on the verge of introducing consumer financing.

Due to untiring effort of the work force and timely decision making by the management, ALL has made tremendous progress over the years and has already become the largest leasing company of Pakistan.