Chairman All Pakistan Textile Mills Association (Aptma), Mohsin Aziz has expressed disappointment over the abnormal surge of more than 24 percent in NPLs, from Rs 494 billion to Rs 629 billion in a period of one year. He was commenting on the State Bank report about non-performing loans (NPLs) Thursday.
Chairman Aptma said higher interest rates and shortage of utilities supply, particularly gas, to the industry are two major reasons behind the phenomenon. The industry was not performing because of these reasons, resulting into abnormal rise in the NPLs, he added. He expressed deep concerns over the rising NPLs on the textile industry, already struggling for survival in a highly unfavourable economic situation in the country.
Aziz said the textile industry is both capital and labour intensive but it is facing financial troubles due to high interest rates. Recent discount rate of just two percent by the SBP was insufficient for investment and viability of the industry, resulting in high rate of NPL, he added.
He warned that not only the NPL's would grow at the same speed but would also result in stagnant or lower exports. If the twin problems of high interest rate is not addressed, and is not brought down to a single digit figure clubbed with control on power shortages to textile industry. Also, he feared that a very low growth rate of two to 2.5 percent against 8.5 a few years back. Furthermore, said chairman Aptma, a cut in gas supply to the textile mills in Punjab, particularly in where textile units are concentrated, had crippled this premier industry.
Textile mills in Punjab were either closed or running at very low capacity for more than 120 days in the current year. Such sorry state of affairs, he emphasised, should not be allowed to continue as it would lead to a loss in the major export earnings from textiles and also would cause massive unemployment.
According to Chairman Aptma, abnormal increase in NPLs has impacted negatively on the image of textile industry in banking sector, as it restricts banks from extending further loans to the industry. The industry, on the other, always requires BMR to keep the product in line with the technologically advancing world requirement, he added. Chairman Aptma stressed upon the government, especially the SBP and the ministries concerned to look into this state of affairs, as both high interest rate and power shortages would have drastic and irreversible consequences for industry growth if not addressed timely.
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