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PESHAWAR: All Pakistan Textile Mills Association (Aptma) has expressed ‘disappointment’ over the increase in the ratio of non-performing loans as reported by the State Bank of Pakistan in its report.
In a press statements issued here on Thursday, Aptma chairman Mohsin Aziz said that it was alarming that the NPLs had recorded an ‘abnormal surge’ going up by 24 per cent from Rs494 billion to Rs629 billion in one year.
“The reasons for such an abnormal increase in NPLs include high interest rates and shortage of electricity and gas to the industry,” said the Aptma chief, adding that because of these reasons the industrial sector was not performing at its full capacity.
He said that increase in NPLs ratio carried negative impact for the textile industry. The sector, he added, was “struggling for survival in the most unfavourable atmosphere prevalent in the country”.
The textile sector, he added, was capital and labour intensive and high interest rates carried financial implications for the textile units.
“The recent reduction of policy/discount rate by two per cent is insufficient and that it is resulting in NPLs,” said Mr Aziz, adding that a reduced gas supply to Punjab, where most of the textile industries were concentrated, had a crippling effect for the sector.
He demanded that the rate of interest should be brought down to a single digit level. The move, he added, would help the government control the NPLs problem and grow the country’s exports, helping to improve the growth rate.
Growth in NPLs on such an alarming rate, he said, lent negative impact to the banking sector as, he added, banks tended to avoid lending.
He called upon the federal government and the State Bank of Pakistan “to look into the state of affairs very seriously as both, the reduction of interest rates and power shortages if not addressed properly, would have serious consequences.”
