KARACHI: Sugar industry, electronics, textile and auto sectors are the biggest defaulters of banks in Pakistan.
According to the data issued by the State Bank of Pakistan, Contrary to the government claim of rebound in industrial output, a number of industries in sectors including leading automobile and sugar have defaulted on paying off debt owed to banks in the quarter ended September 30, 2021.
However, overall non-performing loans (NPLs) decreased to 8.8 percent during July-September 2021 compared to 9.9 percent in the same quarter of last year, the central bank reported. The default cases remained high in the quarter despite the offer of a scheme to banks’ clients to get their loans deferred and rescheduled for one year or for a longer time period to cope with the Covid-19 pandemic.
The non-performing loans of the sugar sector decreased from 29.1 percent to 29.1 percent on a year-on-year basis in the aforementioned quarter. The NPFs of the electronics sector decreased from 23.5 percent to 17.8 percent while those of the textile sector came down from 14.3 percent to 10.1 percent. Similarly, the financial institutions’ non-performing loans came down from 4.9 percent to 4.4 percent.
According to the Ministry of Finance, the trends in high frequency indicators also indicates economic recovery as car production and sale increased by 87.7 percent and 80.5 percent respectively, during July-September FY2022, while tractor production and sale increased by 11.3 and 12.1 percent respectively.
The ministry said that domestic cement dispatches increased by 3.92 percent to 11.279 million tonnes during July-September FY2022 (10.853 MT last year). Total Oil sales increased by 21.0 percent to 5.8 million tonnes during the first quarter of FY 2022 (4.8 million tonnes last year).
According to experts, the non-performing loans decreased due to a surge in economic activities during the Covid-19 pandemic. The new companies which defaulted on payment to banks would have avoided getting their loans deferred and rescheduled under the central bank scheme to cope during the pandemic, they said.
Businesses and households got loans worth Rs910.6 billion deferred and rescheduled since introduction of the scheme in March 2020 to April 16, 2021, according to the State Bank of Pakistan.
During the quarter under review (July-September 2021), the infection ratio of the agribusiness sector decreased to 8.6% compared to 13.5% in the corresponding period of the last year.
