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Private banks refused rescheduling loans to textile unit

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Loans to Textile Unit
Loans to Textile Unit

Refusing the request of a request from the textile exporters, the private banks rejected the loan applications to reschedule loans for the revival of a sustainability of sick textile unit. The revival of textile units running under the capacity was aimed at increasing the export in the textile sector.

Talking to the media, Senate Standing Committee on Textile Chairman Senator Mohsin Aziz said that the banks refused to consider the direction of the standing committee and request of members of All Pakistan Textile Mills Association (APTMA) for restructuring loan for around 35 textile units.

“We had asked the banks through State Bank of Pakistan (SBP) to revive the sick units which, in the case of revival, could earn over $1 billion in foreign exchange and create five million jobs. However, according to SBP, the private banks are not willing to accept the proposal of textile sector,” Said Mr Aziz.

At the time when the exports have declined from 25 million dollars to 20 million dollars, the revival existing units in the textile industry were much in need of the favor. Mr Aziz said that  “We may further contact SBP in near future for providing at least required working capital to the textile units,” he further added that the functioning of the existing machinery would also help in taking maximum benefit from GSP Plus facility from the European Union.

The textile ministry secretary, Hassan Iqbal, on the other hand, said to the media that the government had supported some textile units for revival. “A large number of machinery were installed when there was high demand in past without keeping in view the long term feasibility of such units. A revival of few units is not the solutions since the old machinery are not cost effective” he further added that the exporters instead of running the de-rated machinery should opt for the latest machinery.

According to sources, the revival of only local textile units in Faisalabad could help getting $1 billion foreign exchange. Owners of these units have spent billions of rupees on its infrastructure and machinery and are in a position to start operation as soon as the running finance is made available. However, a major bottleneck was the prudential regulations of the SBP as the banks are not giving loans to these units because of Non-Performing Loans (NPL) Clause.

The officials of the State bank of Punjab, said earlier to the media that a meeting of the Senate Standing Committee on Textile was held on January 03, 2017 at the SBP to discuss the rescheduling, restructuring of defaulted loans of sick textile units. 

During the meeting, it was decided that SBP will be playing a facilitating role and will oversee whether the restructuring decisions are taken on merit. A senior SBP official will serve as a focal person to facilitate the restructuring of defaulted loans of the textile units. In this regard, preliminary meetings with representatives of textile mills and banks have already been held, advising the banks to only consider restructuring of those units which can be revived on a sustainable basis.”

Source: Pakistan Today