SME Financing Doubles to Rs1.2 Trillion in Pakistan
SME financing in Pakistan has more than doubled to Rs1.2 trillion over the past two years, from around Rs490 billion. The number of borrowers rose from 200,000 to 350,000 in the same period.
Pakistan Banks Association Chairman Zafar Masud shared the figures on Tuesday during a visit to the Karachi Press Club, alongside the association’s chief executive, Muneer Kamal, The Express Tribune reported. He said banks had made significant progress in expanding credit to smaller businesses, farmers and households as part of efforts to promote financial inclusion and economic growth.
Banks were told to ease SME loans for small businesses earlier this month, and the new figures show how far that lending has already grown. The trade finance gap facing small exporters remains a concern, but domestic SME credit has expanded fast.
SME financing: farm and housing loans grow too
Agricultural lending has also recovered. The number of farm borrowers rose to 3.4 million from 2.7 million, after falling from 4 million in 2019. The State Bank has set a target of 5.8 million agricultural borrowers by 2028, and farm financing is expected to rise from Rs1.3 trillion to Rs3.3 trillion in that period.
Housing finance has grown even faster. Borrowers increased from 65,000 two years ago to around 300,000, while approved financing reached Rs455 billion. Masud credited government-backed housing finance programmes for part of the expansion.
Young borrowers are also getting more room. The youth loan limit was raised to Rs25 million earlier this month, with 30% of loans reserved for women and the minimum age lowered to 18.
Banks carry energy and export costs
Banks have also restructured Rs1.3 trillion in loans to the energy sector without government guarantees, a step that helps address circular debt. The government, PSO and the IMF are already working on a circular debt plan for the power sector.
Masud said a charge of Rs3.23 per unit on electricity bills was expected to be phased out over the next two years. Banks also helped the privatisation of Pakistan International Airlines by restructuring around Rs300 billion of its debt.
On exports, banks continued to provide financing at 4% despite higher policy rates. The industry is bearing an estimated Rs100 billion in costs to keep that concessional financing in place.
Banks take over remittance costs
Banks are also taking over the cost of facilitating remittances from overseas Pakistanis. The government discontinued its incentive payments from July 1, 2026, and banks will now spend about Rs100 billion a year to make sure remittances can be sent to Pakistan without transfer charges.
The step protects inflows worth billions of dollars. October remittances reached $3.89 billion, the highest monthly figure so far this financial year.
The expansion of credit to small businesses, farmers and home buyers points to a banking sector pushing deeper into parts of the economy that once relied on informal lending. The test now is whether the growth in borrowers turns into lasting gains in output and jobs.
Frequently asked questions
How much has SME financing grown in Pakistan?
SME financing has more than doubled to Rs1.2 trillion in two years, from around Rs490 billion. Borrowers rose from 200,000 to 350,000.
How many farm borrowers do banks serve now?
Agricultural borrowers have recovered to 3.4 million from 2.7 million. The State Bank aims to raise the number to 5.8 million by 2028.
How fast has housing finance grown?
Housing finance borrowers rose from 65,000 to around 300,000 in two years, with approved financing of Rs455 billion.
What are banks doing about energy sector debt?
Banks restructured Rs1.3 trillion in energy sector loans without government guarantees. A charge of Rs3.23 per unit on power bills is expected to end within two years.
Why are banks paying for remittance transfers?
The government ended its incentive payments for remittances from July 1, 2026. Banks will spend about Rs100 billion a year so overseas Pakistanis can send money home free of charges.
