KARACHI: The textile sector, faced with slowing exports, borrowed Rs82.6 billion from banks in the first six months (July-December) of this fiscal year, a rise of around 43 per cent compared to Rs57.7bn a year ago.

The sector’s exports, however, fell 5pc year-on-year to $6.544bn during the same period from $6.8875bn.

According to a latest report of the State Bank of Pakistan (SBP), working capital increased to Rs201.6bn during the half compared to Rs165.5bn a year earlier, while total credit off-take by the private sector rose to Rs353bn during the period reflecting an improvement in the economic activity.

Loans for fixed investment, which had been reduced to negligible levels in the past seven years, rose to Rs88bn from Rs42bn.

Export financing dropped mainly on account of falling exports from the country. However, the import financing remained half of the previous fiscal year.

Loans under the head of export financing amounted to Rs34bn during this period compared to Rs44bn in the same period of the previous fiscal year. The import financing fell to Rs20bn during July-December 2015-16 from Rs40bn in the same period of the preceding fiscal year.

Loans to chemicals and products industry showed an extraordinary situation as the sector expressed unbelievable appetite for loans. Loans for this sector, which were just Rs17.9bn during the entire FY15, swelled to Rs40.9bn during July-December FY16.

Banking loans pattern seems to have changed this year, particularly in the wake of rising working capital, despite government’s heavy borrowing from the scheduled banks. Banks have parked 85 per cent of their liquidity in the government papers, but a steep fall in the returns on these papers is compelling the banks to find new ways and approach the private sector.

Published in Dawn, February 14th, 2016