APTMA rejects proposed corporate rehab law

RECORDER REPORT

LAHORE: All Pakistan Textile Mills Association’s Chairman Mohsin Aziz has rejected unilateral move of finalising the proposed ‘corporate rehabilitation act’ by the Securities and Exchange Commission of Pakistan (SECP) to juggernaut the industry on the pretext of loan recoveries.

He called the proposed law as a draconian one in its very nature and said the SECP had initiated the move under the pressure of the banking industry, while ignoring the industry’s point of view altogether on the subject.

It may be noted that the SECP was in the process of finalising recommendations on the proposed law under the garb of rehabilitation and restructuring of distress corporate entities, followed by its approval from the Economic Coordination Committee to the Cabinet and finally from the Parliament to provide it legal cover.

APTMA Chairman said textile industry was the largest borrower of bank loans in private sector therefore no fair recommendation on the proposed law was justified without its active participation. As a matter of fact, he said, the SECP was not taking into account the industry’s troubles owing to unprecedented energy shortage, leading to bank defaults at large.

Accordingly, he said the loan portfolio of textile industry was in a bad shape and some 33 percent out of total industry loans were being bracketed into non performing loans (NPLs) at present. But there was no fault on the part of the entrepreneur in 99 percent cases so far as high ratio of NPLs was concerned, he added.

Mohsin feared that the proposed law under consideration of SECP would give way to the proposed action just by one term of non-payment and bring the law into action to enable the banks to appoint administrator on the respective mills to take over the unit and recover the disputed loans.

He said any such law would not less than be a black law in the face of circumstances beyond the industry control at large.