Due to lack of support from local banks, businessmen in Faisalabad are looking to establish their own bank.
The business community in Faisalabad is unhappy with the way local banks are treating them, especially with their lack of interest in helping out Small Medium Enterprises (SMEs) established by entrepreneurs in the city.
According to the President of Faisalabad Chamber of Commerce and Industry (FCCI) Shabbir Hussain Chawla, local banks are refusing to lend money to businesses.
Shabbir says that banks feel secure loaning money to the government as they consider it a sound investment, with their profits intact in those cases. They however, won’t support local businessmen in this respect.
He further said that due to this lack of cooperation from the banking sector, Faisalabad’s industrial development has been hampered in recent years. Despite the huge amount of $89 billion that the government has borrowed, the industrial sector of the country has failed to grow, Mr. Chawla said.
Another reason behind the local industry’s lack of growth is due to the increasing trade deficit. Mr Chawla demanded that the government should put a ban on import of luxury items right away.
Faisalabad currently contributes 55% of the total textile exports of Pakistan.
Chawla said that industries have failed to upgrade their units with the latest technology because banks aren’t providing funds at all. He remarked that even though Exim Bank is providing some capital to industrialists in the city, however that amount isn’t enough to cater to the needs of the whole industry.
According to him, banks that are providing money to businesses in rare cases are overcharging. These banks are charging extra markup along with the Karachi Inter-Bank Offered Rate (KIBOR), which has significantly increased production costs at factories and units in Faisalabad.
Mr Chawla said that if the banks continue to adopt such an anti-business attitude, the business community in Faisalabad has no option but to establish its own bank to fulfill the needs of the community. He further added that loans will be provided to businesses who enjoy a good reputation in the market, are honest, and in need of financial support.