Home / Knowledge / News / Textiles / Pak central bank flags country's ailing textile sector
Pak central bank flags country's ailing textile sector
30
Jun '16
The State Bank of Pakistan (SBP) has warned that if the country's textile sector worsens further, it would have dire consequences for the stability of banks due to their huge exposure in the industry.

The Pakistani central bank's Financial Stability Review said that the textile sector's infection ratio is also at an elevated level.

The review pointed out that exposure of nine banks in the textile industry is more than 100 per cent of their equity, while that of 13 banks is more than 50 per cent of their equity.

“Considering entity-wise high concentration, a few defaults can quickly erode the equity of exposed banks and threaten the stability of the banking sector,” the SBP report said.

The gross non-performing loans of the textile sector stood at a high 29 per cent on September 2015, with most of the bad debts were placed in the loss category.

The link between the textile and banking sectors entails some risks to the financial stability, said the report. Moreover, banks' exposure in textiles is concentrated to a few large entities.

“The outstanding loan disbursement against top-20 companies stands at Rs126 billion. In terms of banks, the exposure to textiles is quite dispersed as 29 of 35 banks are directly serving the industry,” it said.

In addition to sluggish global demand, the prime bottleneck hindering the textile sector's growth appears to be inadequate and expensive energy supply. The use of alternative methods (furnace oil, self-generation of power, etc) may be feasible for a few blue-chips companies in the short term, but may not be appropriate for majority of the firms.

Prices of textile products on the international markets have plummeted in the recent past. The international cotton price index fell by 24 per cent from 90.09 US cents per pound in September 2013 to 68.74 cents per pound in September 2015. The decline was even higher (62 per cent) when compared to the January 2011 level.

“Sluggish global demand due to consistent recessionary phase in the euro zone and slowdown in China is one of the major reasons for the decline in international prices,” the report said.

According to the report, the performance of the textile sector will also depend upon other important factors, including stability of the exchange rate, international and local regulations, political stability and law and order condition in the country.

It also pointed out that the preferential access to the European markets under the Generalised Scheme of Preferences Plus (GSP+) status is subject to fulfilment of various conditions. In case the status is withdrawn due to failing of one or a few conditions, it may negatively impact the textile sector exports, the SBP warned. (SH)

Fibre2Fashion News Desk – India

Must ReadView All

President Donald Trump; Courtesy: White House

Textiles | On 23rd Jan 2017

US textile industry eager to work with President Trump

The US textile industry is eager to work with President Donald Trump...

Textiles | On 23rd Jan 2017

China’s cotton imports down 39% in 2016

China’s total cotton imports declined by 39.1 per cent to ...tons in...

Courtesy: ZDHC

Textiles | On 23rd Jan 2017

Oeko-Tex joins ZDHC programme for sustainability

Oeko-Tex, an independent textile testing institute working for the...

Interviews View All

Nuno Venda
ROQ

‘There has been an increase in demand for water based inks, rather than...

Angelina Francesca Cheang
MY ANJE

'Consumers in the age-group 21 to 38 are driving the activewear trend'

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search