SBP targets PKR 1.5tn SME credit

The State Bank of Pakistan (SBP) has set a target of increasing financing for small and medium-sized enterprises (SMEs) to Rs1.5 trillion by June 2028, while expanding the number of SME borrowers to 750,000, Governor Jameel Ahmad said on Wednesday.

 

Speaking at the Pakistan Banking Summit 2026, Ahmad described expanding credit to SMEs, agriculture and affordable housing as a key priority for the banking sector, stressing that sustainable economic growth requires greater financing for productive sectors.

 

"Agriculture, SMEs and affordable housing are critical drivers of employment, exports and economic resilience. Yet they continue to face significant financing gaps," the governor said.

 

According to Ahmad, outstanding SME financing has more than doubled between June 2021 and December 2025, while the number of SME borrowers has increased by around 75%. He said the progress was encouraging but called on banks to further scale up lending through innovation.

 

The SBP's strategy focuses on creating an enabling ecosystem through regulatory reforms, digital innovation, risk-sharing mechanisms and capacity building, rather than relying heavily on directed lending.

 

Key initiatives include the SME Asaan Finance Scheme, the Risk Coverage Scheme for SMEs, and the Prime Minister's Youth Business and Agriculture Loan Scheme. The central bank has also introduced regulatory changes to increase financing limits, simplify loan procedures and encourage digital lending solutions.

 

Governor Ahmad urged banks to develop sector-specific financing products tailored to the cash flow needs of SMEs and agricultural businesses while reducing dependence on government-backed schemes.

 

"The policy framework is now firmly in place. The next step is to translate these opportunities into scale through innovation, partnerships and sustained commitment from the banking industry," he said.

 

Speaking on the sidelines of the summit, Bank of Punjab President and CEO Zafar Masud, who also serves as Chairman of the Pakistan Banks' Association (PBA), said the undocumented nature of many small businesses remains a major hurdle to expanding SME lending.

 

"The main challenge for private sector SME credit is that businesses are not documented, so banks cannot assess them properly. They will have to get registered and pay taxes to access bank financing," he said.

 

The SME financing initiative forms a key pillar of the SBP's Vision 2028, alongside digital transformation. Ahmad noted that more than 92% of retail financial transactions are now processed digitally, supported by 268 million financial accounts and over 49 million Raast IDs.

 

The governor also presented an optimistic macroeconomic outlook, noting that inflation averaged 7.05% in FY26, real GDP growth reached 4% during July-March FY26, and is provisionally estimated at 3.7% for the full fiscal year. He added that Pakistan's current account remained in surplus, while foreign exchange reserves have risen to more than $18.4 billion.

 

"The macroeconomic environment remains conducive for our financial sector to undergo the necessary transformation," Ahmad said, adding that economic growth is expected to strengthen further in FY27.