KARACHI, Jan 24 Yet another committee is being formed by the government to bring depressed and demoralised textile tycoons and concerned and worried bankers on one forum to discuss repayment schedule of outstanding loans, interest rate and other related issues.

“We are waiting for a letter from Pakistan Banks` Association (PBA) anytime on resumption of consultation,” a top leader of All Pakistan Textile Mills Association (Aptma) informed Dawn on Saturday.

The Aptma leader said the recent decision of one year moratorium was by the State Bank of Pakistan, while restructuring of outstanding loans and interest rates were to be settled with commercial banks for which the committee was being formed.

But the recent decision to offer one-year moratorium to export-oriented industries on loan payment has apparently failed to cheer up the textile tycoons who want a more comprehensive financial package to solve their problems.

One reason for disappointment is that the moratorium is for only downstream textile sector and the most capital-intensive segment of textiles — spinning -- has been kept out of benefit net. Secondly, it does not answer all issues of textile sector which to quote a top exporter is groaning under unbearable cost of doing business.

“One year moratorium on payment of my principal amount will not solve my problems,” the textile exporter remarked. He has just returned disappointed from Frankfurt`s Heimtextil fair and his bitterness is understandable.

He wants banks to bring down interest rates, gas tariff be linked with fuel oil price, and that there should be a cap on gas and electricity tariff for at least next three years.

More than 200 textile mills are said to be struggling hard to survive the impact of almost 19 to 20 per cent interest rates on bank loans, tariff hike of gas and electricity with frequent long period interruptions in supply, high freight cost and demand of a drastic price cut on textile products from their buyers in the US and EU.

But bankers are also equally worried and concerned and are said to be making “polite and friendly enquiries” formally as well as informally from their “sources in textile companies” on cash flow, business status and profitability prospects.

“Textile sector did not perform up to expectations in 2006 and 2007 after getting more than Rs30 billion subsidy and concession in swapping of expensive loans with concession rated loans,” recalled a banker.

Bankers say the non-performing loans portfolio of textiles sector in the year 2007 was Rs51 billion after having shown a high growth of 25 per cent over 2006. No firm figures of textiles related NPLS for the year 2008 are available but rough estimates put it anywhere from Rs80 billion to Rs100 billion. Total exposure of textiles to banking sector is being estimated at around Rs300 to Rs350 billion and bankers fear further increase in infection to loans given to textile companies.

Textile industry leaders now do not mince words in demanding relief in loans repayment from banks and an implied threat is “no relief no adjustment” suggesting that NPLs in coming days may swell to such a huge amount that it may give a crippling blow to the banking industry itself.

Designed to cater almost 80 per cent of its products to export market mostly to the USA and EU, textiles is hard pressed after recent economic meltdown in the major trading partners, where erosion in personal incomes is said to have drastically brought down consumption level, resulting in closure and shrinkage of giant retail store chains.

Textile leaders complain that India, China, Bangladesh, Indonesia, Thailand and even tiny Vietnam have taken steps by way of offering some incentive package to their local textile industry maintain their stay in world textile export market.

But Pakistan`s decision makers have remained oblivious of problems of textile industry. In less than one year, since March 2008, there have been three commerce ministers, two finance ministers and now an adviser on finance and two textile ministers in federal cabinet.

Commerce Minister Makhdoom Amin Fahim seems to be far cut off from the world of business and trade. By his own confession, the Textiles Minister has no information on textiles.