In a statement, Aziz said that the reasons for such an abnormal increase in NPLs were: higher interest rates being the basic cause and the shortage of gas to the industry being the second reason.
The recent reduction of policy/ discount rate of just two per cent were totally insufficient for investment and viability of the projects and thus are resulting in NPL’s, he stated. He said reduced gas supply to textile mills, in Punjab in particular where textile units are concentrated, had crippled this premier industry.
He lamented the fact that more than 120 days in the current year the textile mills in Punjab were either closed or running at very low capacity. Such sorry state of affairs, he emphasized, should not be allowed to continue as it would lead to a loss in the major export earnings from textiles and also would cause massive unemployment.
He said the impact of such an increase in NPLs further damages the industries’ image in the banking sector, as it restricts banks from extending further loans to the industry, in which Balancing Modernisation and Replacement is essential to keep the product in line with the technologically advancing world requirement.
Published in The Express Tribune, November 18th, 2011.
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