ISLAMABAD: Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, has called on commercial banks to reconsider their current business models and prioritize lending to small and medium enterprises (SMEs) to actively contribute to the nation’s economic growth.
Speaking at the conclusion of the ‘Pakistan Banking Summit 2025′ on Tuesday, Ahmad emphasized the need for banks to shift their focus away from government and large corporate financing. Instead, he urged them to place greater emphasis on lending to SMEs and microfinance sectors.
“I have raised this issue in internal meetings with the Pakistan Banks Association (PBA), and today I am publicly calling on banks to seriously evaluate their current business models,” Ahmad remarked.
The governor pointed out that banks in Pakistan have largely channeled their lending to the government, thereby sidelining the private sector. He argued that economic progress is impossible without sufficient financing to the private sector.
Latest data from the SBP shows that by December 5, 2024, commercial banks held Rs30.3 trillion in deposits, of which approximately Rs29 trillion were lent to the cash-strapped government. This equates to nearly 96% of total deposits being directed to the government.
In late 2024, commercial banks also increased short-term financing to large corporations, likely to avoid extra tax liabilities due to low private sector lending. As a result, private sector credit rose to Rs15.1 trillion in December, up from Rs11.8 trillion in August 2024.
Ahmad also highlighted that compared to other countries in the region, both bank deposits and private sector financing in Pakistan remain relatively low. “A nation’s progress hinges on its banks’ ability to finance the private sector,” he stressed.
He further encouraged banks to accelerate the digitalization of payment systems for both public and private sectors, urging them to teach customers how to manage online banking transactions.
Additionally, Ahmad emphasized the importance of climate-resilient financing to ensure long-term sustainable economic growth in Pakistan. He warned that ignoring climate challenges could lead to significant setbacks in the future.
The SBP governor also called on banks to invest in technology, artificial intelligence (AI), infrastructure, and human resources to develop customer-centric products and implement best banking practices.
Investing in technology, Ahmad noted, would help banks improve financial inclusion and leverage AI to identify future gaps in the sector.
As of now, around 64% of Pakistan’s adult population holds bank accounts, a significant increase from 47% in 2018. The gender gap in banking has also narrowed from 47% to 34% in the same period. The central bank has set new targets to increase account penetration to 75% of the adult population and reduce the gender gap to 25% by 2028.
