The clothing industry is suing the banks

LAHORE:

Garment manufacturers have appreciated the State Bank of Pakistan (SBP) for its guidelines on ‘Use of funds held in Exporters’ Special Foreign Exchange Accounts’ (ESFCAs) issued on February 23, 2024, but expressed concern over the lack of implementation from commercial banks, although it has been a few weeks.

In a statement on Monday, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) central president Mubashar Naseer Butt said that the SBP, through its circular, has drawn the attention of commercial banks to paragraph 40 of Chapter 12 (Exports) of the Foreign Exchange . Manual, which set out the purposes for the use of retained funds in the ESFCA.

He observed that the central bank has further liberalized the use of retained funds to facilitate exporters and promote ease of doing business, stating that all exporters will be able to freely use funds held in ESFCAs. These will be used to make all types of foreign current account payments, for their own business purposes, without prior SBP approval.

In addition, at the request of exporters, authorized dealers can issue debit cards against balances held at ESFCA. Booth termed it very worrying that a step taken to facilitate exporters was completely ignored by the banks, which showed no practical will to comply with the directive.

“It also reflects the central bank’s weak administrative control over the banking industry.”

The head of the association said that the garment sector had the status of the leading national industry of Pakistan, which provided jobs to millions of workers directly and indirectly and earned billions of dollars in foreign exchange for the national exchequer.

“The clothing industry has shown great export potential and is one of the main contributors to the growth of LSM.”

Published in The Express Tribune, March 19^u2024.

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