Credit demand from textile sector up in H1 F11

18 Apr '11

2 min read

There has been a steep rise in the credit demand of the textile industry which rose by 110 percent to Rs. 177 billion during the initial six months of the current fiscal year which started on July 2010, as over same period in the earlier fiscal year.

In its recently released report, the State Bank of Pakistan (SBP) stated that, the textile sector availed over 50 percent of the private sector credit, which is suggestive of high prices of raw materials, and raw cotton in particular.

Demand for credit from the private sector accelerated with a rise of 51 percent in the stock of outstanding loans to Rs. 208.8 billion during the period under consideration, as over corresponding period last year. A rise in the seasonal demand for working capital and trade related loans has lead to a substantial rise in credit to private sector.

The impact of soaring prices of raw materials on credit demand was visible even in sectors other than textiles.

The upturn in the ratio for the textile sector is because of a rise in advances to the sector during second quarter of the current fiscal year. Besides, improvement in textile exporters' margin due to rise in export prices also boosted their capacity to payback some of the loans.

Conversely, the Gross Non-Performing Loans (NPLs) registered a rise of Rs. 58 billion to touch Rs. 517.9 billion by close of December 2010, as over a rise of Rs. 34.1 billion registered during corresponding period in the previous year.

Textile and energy sectors accounted for more than one-third of this increase in NPLs.

Fibre2fashion News Desk – India

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