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Banks extend 41% credit to textile sector
03
Apr '10
Banks have extended credit amounting to Rs 138.4 billion to the private sector during July 1st, 2009 to March 20th, 2010 compared with Rs 106.9 billion provided in the same period last year.

This was disclosed by the Deputy Governor, State Bank of Pakistan, Mr. Muhammad Kamran Shehzad while presiding over a meeting of the Private Sector Credit Advisory Council (PSCAC) at SBP, Karachi. He said that about 63% of total credit has been availed for working capital while 37% for fixed investment purposes and added the main sectors that availed credit included manufacturing (including textiles), electricity, gas, water and agriculture.

Mr. Kamran said that SBP's efforts to facilitate exports have resulted in rise in banks' credit disbursement for export finance by Rs 26.2 billion during the second quarter (October - December) of FY10 in contrast with a decline of Rs 2.6 billion in the first quarter of FY10. He also pointed out that sector-wise analysis of credit to private businesses has shown healthy growth of 6.2% during Jul-Feb FY10. All major sectors availed credit; however the highest share was availed by manufacturing sector (69%) followed by electricity, gas & water (29%), agriculture (5%) etc. Out of the total credit to manufacturing sector (Rs 92.4 billion) 46% was extended to food products & beverages, 41% to textile and 10.7 % to chemicals & chemical products while spinning, weaving, finishing of textiles received Rs 38.0 billion, the Deputy Governor added.

Mr. Kamran opined that favourable performance by the agriculture sector has had a healthy impact on the Large Scale Manufacturing (LSM) which grew by 2.3% in July –January, FY10 as against a contraction of 5.4% in the same period last year. Credit flow has expanded mainly to spinning, weaving and finishing of the textile, he added.

SBP Deputy Governor said that weighted average lending rate declined to 13.71% in December 2009 from 14.32% in June 2009 while real interest rate has also declined to 2.9% from 3.5 % during the period. “However, its effect has not trickled down to private sector, as most of the resources were preempted by government for commodity financing, fertilizer import, partial settlement of power sector circular debt and financing of budget deficit,” he added.

SBP Deputy Governor said the agricultural credit disbursement during July - February, FY10 has increased to Rs 144.7 billion or 11% from Rs 130.3 billion during same period last year. He said the Credit disbursement to infrastructure related projects during September -December, 2009 has increased to Rs 27.4 billion from Rs18.9 billion in preceding period. However, he said the SME credit has declined to Rs 348.2 billion at end December 2009 from Rs 383 billion last year. Similarly, credit to housing sector has declined to Rs 74.4 billion from Rs 83.8 billion last year.

Mr. Kamran said the branch network of Islamic Banking Institutions (IBIs) has crossed 650 branches in December, 2009.

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Courtesy: Kornit Digital

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