INTERVIEW WITH MANSHA CHURRA, VICE PRESIDENT FPCCI
Nov 8 - 14, 2010
Mohammed Mansha Churra is the Vice President of FPCCI (Federation of Pakistan Chambers of Commerce and Industry). Churra has also an honor of being Life Member & holding Presidential Gold Medal for extraordinary service for Pakistan Export Chairman Fair & Exhibition FPCCI. In addition to his FPCCI activities, Churra is also the chairman of Churra group of companies including Churra Silk Factory, Churra & Co, ADMA Industries, ADMA Trading House, Shabbir Industries and Imran Industries. Churra is also a Life Member of Saarc Chamber of Commerce and Industry, Member Dispute Resolution Committee Central Board of Revenue, Ex. Vice Chiarman & Trustee Karachi Port Trust, Ex. Senior President of Karachi Chamber of Commerce and Industry where he had an honor of being the only elected representative of the biggest chamber by taking the highest number of votes in the history. Besides his business activities he was the Ex. President and Gold Medallist for Humanity Service Lions Club Karachi.
AWARDS AND RECOGNITIONS
Gold Medal from President of Pakistan General Pervez Musharraf on August 27, 2002 in recognition of the meritorious services rendered to the business community specially in the area of national and international fair and exhibitions.
Awarded shield from Custom Agents Group Karachi on recognition of services rendered to the Business Community.
Awarded shield and Gold medal from Jodia Bazar Business Association on recognition of services rendered to the Business Community.
Awarded shield from Karachi Chamber of Commerce and Industry in recognition of services rendered to the business community.
Awarded shield and gold medal from All Pakistan Silk and Rayon Mills Association (Twice) on recognition of services rendered to the business community.
Awarded shield from Karachi Port Trust in recognition of services rendered to the business community.
PAGE: WHAT DO YOU THINK COULD BE THE REASONS FOR HIGH LEVEL OF NON-PERFORMING LOANS?
MOHAMMED MANSHA CHURRA: Non performing loans of banks are increasing at an alarming rate that is not only fettering the banking industry's performance but also hurting their customers trust in them. There could be a variety of reasons behind rising levels of non performing loans, largely because of continuous accrual of mark-up on the principal amounts that had been in default but mainly the poor law and order situation, high interest rates and economic slow down in the country are the main factors. The net NPL ratio has however, declined in the second quarter of 2010. Unfortunately, intense government borrowings have also caused non performing loan provisions to increase. The high level of non performing loans is badly affecting the financial health of the pakistani banking industry.
PAGE: WHAT IS YOUR OPINION ABOUT FINANCING RATES IN PAKISTAN?
MOHAMMED MANSHA CHURRA: Financing rates in Pakistan have been increasing at a constant rate. Recently, an increase in export finance rate has left the business community in distress. The cheaper the export finance rate is the higher the export growth would be. Moreover, high financing rates would not only widen the trade deficit but also increase government's borrowings which are now higher than the limits set by IMF. Above all, after the devastating floods throughout the country the price of raw materials has risen to an unmanageable position given the higher interest rates. Therefore, the business community is looking forward to the government support and subsidies to keep the industries' wheels moving.
PAGE: HOW CAN BANKS AVOID BAD LOANS AND HOW MUCH RATE SHOULD THEY BE CHARGING?
MOHAMMED MANSHA CHURRA: Banks can minimise the extent of bad loans by balancing between risk and benefit. Since, a bank advances money in multiple ways, like wise it should also give multiple ways to its customers to make the payments. The fees of some options may be expensive for the bank but not as expensive as waiting for 60 to 120 days. Also, it needs to spend some time while preparing the "Terms and Conditions" document and make sure that your customers are crystal clear about when, how much and how to pay you. Lastly, keep on sending summarised statements to your customers letting them know that they are on top of the situation in relation to outstanding debts. As far as the rates are concerned, it is the cost of money from central bank that determines how much a bank will charge its customers keeping in view the economic situation of the country as well as the world economies to boost up the economic growth and internal demand for credit.
Page: What would you say about financing by banks to business community?
Mohammed Mansha Churra: Banks act as financial intermediaries that accept deposits and advance money. A bank is a custodian of the assets of general masses. Pakistani banking industry is deemed as a highly regulated and prudent industry. Business community's access to real capital often determines whether a hatchling enterprise succeeds or dies in infancy. Therefore, out of the several business financing options available, commercial bank loans are quite attractive as they do not require entrepreneurs to turn over equity or company control. Today, various banks offer a wide range of loans, leases and lines of credit to meet the varied financing needs of the business community.
PAGE: WHAT ARE YOUR VIEWS ABOUT TEXTILE AND BANKING SECTORS PERFORMANCES IN PAKISTAN?
MOHAMMED MANSHA CHURRA: Pakistan's textile industry is the major contributor to our total exports. There is a huge demand of the Pakistani yarn in the global market but unfortunately during the past three years thin investments in the textile industry has made it almost meager. At this point we have to realise the fact that we have entered into a modern era with the struggling and liberalising world creating options of variety of excellent goods. Therefore, in order to carry on in a more spirited world we need to go for modern skills and for the manufacture of high value added goods. A lot is needed to be invested in the infrastructure as well as human resources by the textile sector management to mitigate the inefficiencies of the textile industry of Pakistan.
On the other hand, banking industry contributes more than half of our GDP. The top five banks in Pakistan have around 50 per cent of the market share. There is a healthy competition between state-owned banking sector and private financial institutions and our banking industry's performance has always been highlighted among South Asian countries by the World Bank. Banking industry, these days, is currently under a wave of mergers and acquisitions because of over employment, non-performing loans and ultimately high bad debts. But I am positive that these mergers shall benefit the shareholders of these banks as well as the economy of Pakistan.
PAGE: WHAT DO YOU THINK IS THE STRENGTH OF PAKISTANI BANKING SYSTEM IN THE PRESENT GLOBAL UNCERTAIN ENVIRONMENT?
MOHAMMED MANSHA CHURRA: The sturdiness of banking sector in Pakistan can be observed through its maintained resilience and improvement in key solvency indicators despite global financial crisis in the previous year. The key strengths, in my opinion, are that our banking industry and its regulatory bodies are very prudent in determining the areas where improvements are needed, how banking services can be improved, by understanding the full range of its customer financial needs across different markets and how to market its products and services to the targeted population.