Pakistan: Revival of textile sector

ISLAMABAD: The National Assembly (NA) Standing Committee on Textile Industry has unanimously recommended to the Governor State Bank of Pakistan (SBP) that a committee comprising representatives from banks and value chain of the textile sector—under the auspices of Deputy Governor SBP and Executive Director SBP—may be constituted to look into the matters related to the hike in mark-up rate, restructuring of loans obtained by the textile industry from various commercial banks.

According to the minutes of the committee meeting presided over by the chairman Haji Muhammad Akram Ansari at committee room of the SBP Karachi, Governor State Bank of Pakistan informed the committee that the banks are serving all sectors of the textile industry in all geographic areas including the ones that are facing multiple problems due to war on terror. All the banks have been positively responsive to the needs in the adverse financial impact spun off by global recession, decline in demand, power and energy shortages and input costs escalation.

SBP has formulated and followed fair policy for rescheduling, restructuring of the loans and the banks are supporting the textile sector by the way of granting loans and rescheduling at their facilitation.

The President National Bank of Pakistan informed the committee that the shares of loans granted for textile sector is 14% approximately. Whereas the share of amount rescheduled during the last ten years is 35% and the share if waived off amount is 60%. The President NBP further informed the committee that the spinning sector is the largest beneficiary being 52% of our all exposure against textile sector. NBP has factually served the credit needs of the entire chain of the textile sector, from cotton growing stage to finished goods production level through upright financing to grower, ginning, spinning, weaving units and processing units and garments and other value added sectors.

The representative of the United Bank of Pakistan (UBL) informed the committee that the share of loans granted for textile sector is 29% approximately. Whereas share of cases rescheduled for the textile sector is 39% approximately and the share of cases in which loans are waived off is 34% approximately. He further informed the meeting that in order to remove the textile sector’s crises, the un-interrupted supply of gas and electricity to the textile industry must be ensured so that their problems could be solved amicability.

The representative of the Muslim Commercial Bank (MCB) while endorsing the foretasted view informed the committee that the share of textile loans granted for textile sector is 11.85% approximately. Whereas the share of cases rescheduled for the textile sector is 22.22% approximately and the share of cases in which the loans were waived off is 21% approximately.

The President Allied Bank of Pakistan (ABL) suggested that those units not in working condition be closed to save industry from further losses. He also informed the committee that the share of granted loans to textile sector is 21%, whereas, the share of cases rescheduled for the sector is 59% and share of cases in which loans were waived off is 64% approximately.

After hearing the viewpoint of the representatives of the banks, chairman of the committee allowed members and stakeholders to present their viewpoint. All the stakeholders of the textile sector unanimously demanded that interest rate be slashed—and loans already granted be rescheduled. They also briefed the committee that textile industry is facing multiple problems—and may collapse due to many reasons—mainly law and order situation, non-availability of power and gas and other issues. They also demanded banks and standing committee to back up textile sector for its survival.

After hearing the banks and textile sector representatives, chairman committee pleaded governor SBP may intervene in matters and take all necessary measures for betterment of the textile industry, which is largest sector earning huge foreign exchange for the country.