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

SABIC signs MoU with PRC province for petrochem complex

Textiles | On 26th Sep 2018

SABIC signs MoU with PRC province for petrochem complex

The Saudi Basic Industries Corporation (SABIC) recently announced the ...

New Pakistani federation to fight for workers' rights

Textiles | On 26th Sep 2018

New Pakistani federation to fight for workers' rights

The various unions in Pakistan’s textile and garment industry...

Courtesy: Pexels

Textiles | On 26th Sep 2018

Fitch raises growth forecast for India to 7.8% in 2018-19

Rating agency Fitch last week raised India’s growth forecast for...

Interviews View All

Abhishek Samdaria, Reflete

Abhishek Samdaria
Reflete

GST will certainly reduce a lot of paperwork in future

Neel Sawhney, One Friday

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Anshul Sood, Oceedee

Anshul Sood
Oceedee

‘Indian footwear market is nascent and largely a trend follower’

Ravi Raj Desai,

Ravi Raj Desai

Himalaya Cotton Yarn Ltd manufactures high quality denier. The spinning...

Karan Behal,

Karan Behal

Karan Behal, founder and chief executive of top-selling brand...

Carolin Russ,

Carolin Russ

Weko, Weitmann & Konrad GmbH & Co KG, based in south Germany, is...

Ashok Desai, Bombay Textile Research Association

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Karl Zelik, Vanderbilt University

Karl Zelik
Vanderbilt University

A team of engineers at the Vanderbilt University has designed a smart...

Robin Grankvist, OrganoClick AB

Robin Grankvist
OrganoClick AB

Robin Grankvist talks about PFCs, additives and various chemicals used in...

Yash P. Kotak, Bombay Hemp Company

Yash P. Kotak
Bombay Hemp Company

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

Madhu Jain, Madhu Jain

Madhu Jain
Madhu Jain

She grew up in the walled city of Old Delhi, completed her studies, and...

Nisha Chanda, Whistling Woods International School of Fashion

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

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

Leave your Comments


October 2018

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

news category


Related Categories:

Advanced Search