SBP sets Rs1.5 trillion target for SMEs financing by June 2028 

The State Bank of Pakistan (SBP) has set a target to increase small and medium-sized enterprise financing to Rs1.5 trillion by June 2028 and expand the number of SME borrowers to 750,000.

SBP Governor Jameel Ahmad announced the target on Wednesday while addressing the Pakistan Banking Summit 2026 as keynote speaker. He said expanding credit to priority sectors, including SMEs, agriculture and affordable housing, was both a major challenge and opportunity for the banking industry.

Ahmad said sustainable growth required a banking system that supported productive investment. He said agriculture, SMEs and affordable housing were important for employment, exports and economic resilience but continued to face financing gaps.

According to the governor, outstanding SME financing more than doubled between June 2021 and December 2025, while the number of SME borrowers rose by around 75%. He said the progress was encouraging but insufficient, and urged banks to scale up lending through innovation.

The SBP’s strategy focuses on regulatory reforms, digital innovation, risk-sharing mechanisms and capacity building instead of relying mainly on directed lending. Its initiatives include the SME Asaan Finance Scheme, the Risk Coverage Scheme for SMEs and the Prime Minister’s Youth Business and Agriculture Loan Scheme.

Recent regulatory changes have increased financing limits, expanded clean financing within the regulatory retail portfolio, simplified loan procedures and revised prudential regulations for SMEs.

The central bank said these steps are aimed at giving banks more flexibility to use technology, work with fintechs and design products such as digital supply chain financing and cash flow-based lending based on alternative data.

Ahmad urged banks to develop sector-specific products aligned with the cash-flow cycles of SMEs and agriculture, while reducing dependence on government schemes.

Zafar Masud, President and CEO of the Bank of Punjab and Chairman of the Pakistan Banks’ Association, said a major challenge in private sector SME credit was the lack of documentation among businesses. He said businesses would need to register and pay taxes to access bank financing.

The SME financing push is part of SBP’s Vision 2028, which also focuses on digital transformation. Ahmad said more than 92% of retail financial transactions are now processed digitally, supported by 268 million financial accounts and over 49 million Raast IDs. The SBP has also mandated digitisation of all government disbursements through secure digital wallets.

Atif Bajwa, CEO of Bank Alfalah and Chairman of the Pakistan Banking Summit, said banks needed closer alignment with national priorities, including agriculture, SMEs, housing, climate and the environment. He also called for greater focus on women’s participation in the workforce and business.

Bajwa urged banks to invest more in technology and human capital, saying the industry was still not investing enough in technology despite rapid changes in banking. He also stressed ethics, customer-centric practices and regulatory reforms across the broader economy.

Ahmad said the macroeconomic environment was conducive for financial sector transformation. He said average inflation in FY26 stood at 7.05%, real GDP growth reached 4% during July-March FY26 and was provisionally estimated at 3.7% for the full year. The current account remained in surplus, while foreign exchange reserves rose above $18.4 billion.

He added that growth momentum was expected to improve in FY27 and stressed the need for cyber resilience, data governance and trust as digital adoption increases.