The Pakistan Banks Association (PBA) has extended its full support to the federal budget for FY2025–26, terming it a step toward inclusive growth, sectoral reform, and long-term economic stability.
In a statement issued Wednesday, the PBA acknowledged the federal government’s efforts to align fiscal policy with structural transformation. It emphasised the banking sector’s growing role in supporting national priorities, in collaboration with the Ministry of Finance, State Bank of Pakistan (SBP), and other stakeholders.
A major achievement highlighted by the PBA is the completion of the Rs1.275 trillion circular debt resolution plan, touted as one of the most complex financing transactions in the country’s history. The transaction was coordinated between the PBA, SBP, and the Central Power Purchasing Agency (CPPA), and involved resolving multi-layered regulatory and financial issues.
“This cashflow-backed solution imposes minimal additional burden on consumers and is expected to stabilise the power sector while helping reduce electricity tariffs,” the PBA said.
The association also welcomed the launch of the National Subsistence Farmers Support Initiative (NSFSI), announced in the federal budget, which offers cashflow-based digital loans of up to Rs1 million to smallholder farmers. Disbursed via digital wallets, the loans are restricted to essential agricultural inputs at point-of-sale-enabled merchants. The initiative will be supported by agri-advisory services and an Electronic Warehouse Receipt (eWhR) system to improve rural financing.
The SME sector was another focus, with the PBA citing the SBP-led SME Risk Coverage Scheme as a catalyst for expanded credit outreach. As of now, over Rs311 billion has been disbursed to more than 95,000 businesses. SME lending has grown by 36% to Rs641 billion, while the number of beneficiaries has risen by 51%. The government has set a cumulative SME credit target of Rs1.1 trillion by 2028.
In the housing sector, a government-subsidised mortgage programme was also acknowledged. The initiative will offer 20-year home loans for low- and middle-income households at subsidised rates, with a stated goal of raising the country’s mortgage-to-GDP ratio from 0.3% to 5% by 2030.
To promote green mobility, the government and the banking sector are jointly launching a financing scheme for electric two- and three-wheelers. Designed for gig workers, women, and small businesses, the scheme aims to reduce both urban emissions and transport costs through low-collateral, subsidised loans.
In a further development, the PBA announced the upcoming launch of Pakistan’s first-ever Skills Impact Bond (PSIB), in partnership with the British Asian Trust. The bond introduces outcome-based financing to the country’s technical and vocational education sector, tying fund disbursement to actual employment outcomes rather than traditional input metrics.
“Designed to crowd in global outcome funders and CSR contributors, the PSIB marks a shift toward evidence-driven, results-based public finance,” the association said.
Zafar Masud, Chairman of the PBA, commented on the developments: “These bold reforms and targeted interventions underscore the evolving role of the banking industry—not merely as a financial intermediary but as a strategic driver of national transformation.”
He added that the PBA will continue to champion collaboration between the public and private sectors, shape policy dialogue, and promote innovation that delivers measurable impact.
