The massive NPLs not only curtailed the profits of banks but it also changed the banking approach towards the private sector. Under pressure banks do not want more NPLs so they kept investing in government papers as first priority and kept the private sector on second priority.Mohammad Imran, a research analyst, said the banks’ changed approach is a serious dent to economic growth as many new sectors could emerge while many needs money to expand their operations. Analysts said the slow pace of NPLs growth gave hope that banks might consider to change their priority for lending in future but it is possible only when the government slashes interest rates on its papers.

“The car prices may be raised by up to Rs50,000 a unit to offset the impact of a rising yen and protect our margins,” a director of one of the country’s three Japanese car assemblers told Dawn on Monday. The yen has gained almost 10 per cent against the rupee to rise to Rs1.0037 in three months and 46 per cent in two years making imports from Japan dearer. “The imported CKD kits are almost 35 per cent of the total cost of a car. So you can imagine the impact of the 10 per cent increase in the import costs on our prices and margins,” the executive said. “We are in a fix because the government wants us to reduce our car prices at a time when imports are becoming costlier, prices of raw materials are going up and our capacity utilisation is down to 55 per cent,” the assembler lamented. It may be noted that Suzuki operated on less that 50 per cent of its installed capacity of 150,000 units during the last financial year, while Honda with a capacity of 40,000 units could roll out only 13,500 units. Dewan worked at only 12.18 per cent of its 10,000 cars’ capacity. Only Indus Motor could utilise above 77 per cent of its installed capacity of 65,000 units.

As many as 1,015 people had lost their lives and around 1,000 people got severely injuries in the recent floods in Khyber Pakhtunkhwa. Some 3.8 million people are affected and 1.5 million rendered homeless. Over 220,000 houses, 6,000 shops, 1,300 water supply schemes, 700 educational facilities, 100 health facilities, 149 government sector buildings and 2,000km roads have been reported damaged. More than 650 transformers, 500 electric poles and five grid stations in different parts of the province have also been destroyed.

For the last couple of years the foreign investment has been falling amid fear of further degradation of law and order and poor performance of economy. The outflow also fell during the last couple of years. The State Bank reported that the repatriation of foreign exchange in 2007-08 was $921.4 million, which shrank to $764 million in 2008-09 and $775.6 million in 2009-10. The foreign investment has been largely limited to few sectors, including oil and gas exploration, telecommunications and financial business. Except the oil and gas exploration, the other two sectors witnessed sharp decline in the FID during the fiscal 2010 ended in June 30. A couple of years before, the rising repatriation of foreign exchange was concerning but now the falling figure is a cause for worry, which means the country has no place for the FDI,” said Abid.

The 6-month t-bills attracted Rs4.797 billion, while the 12-month paper attracted Rs12.465 in the auction. Bankers said there was a possibility that auction targets to sell t-bills could be revised upward since the government was in dire need of borrowing. Since the government is bound to remain within a limit while borrowing directly from the State Bank under the IMF agreement signed in 2008.

However, the sources said that the most serious issue was the failure of the government to eliminate subsidy on electricity from July 1, 2010 as was committed with the international donors. Sources said that the IMF would be given assurances that the reformed GST on services would be implemented in the VAT mode from October 1, 2010.

Minister for Textile Industry, Rana Farooq Saeed Khan is pursuing the readymade garments exporters for the Prime Minister Relief Fund despite the fact that garment exporters are already facing numerous problems because State Bank of Pakistan (SBP) has already withheld three percent Research and Development (R &D) fund. According to the sources, the future of readymade garments sector is in doldrums due to apathy of the Ministry of Textile Industry and the ill-fated garments manufacturers/exporters are not sure about their survival anymore. They said gravity of the situation could be judged from the fact that the number of readymade garments units has dropped drastically to 67 in 2010 comparing with about 150 in 2008 in Lahore... According to these circles, the gruesome situation in the value added industry has put viability of bigwigs at stake after eliminating a large number of small and medium level garments units.

They said that more than 1.6 million acres of agricultural lands had been badly affected by the super floods in the province [OLD FIGURE], out of which the cotton crop was on 437,885 acres, sugarcane on 117,611 acres and rice on 845,503 acres.

"This loss is the most serious setback for the farming community because most of the small farmers have lost considerable number of livestock too as they had limited facility for their animals", he added. Among the major cash crops the ministry's report highlighted that the largest loss of Rs 71.4 billion has been occurred by the cotton crop. He said that cotton was sown over 3.1 hectares in the current Kharif season out of which the floods have destroyed crops at 0.51 million hectares, as a result the production is expected to decline by almost 15 percent to 11.7 million bales as against the targeted cotton production of 14 million bales in 2010.

Pakistan Railways is likely to send thousands of its employees of 102 passenger trains to surplus pool after their closure. PR has announced to close 102 passenger trains because of financial losses and is also planning to send its employees to surplus pool or ask them to get early retirement, sources said.

Industrialists and economists on Wednesday expressed deep concerns over increase in electricity tariff of 26 paisa per unit, and termed it "an irrational decision", especially for industrial sector that is already facing enormous problems. They were of the opinion that higher cost of power would increase the overall cost of production for industries, thus becoming locally produced goods out of reach of general public.