Pakistan’s small-business financing more than doubles to Rs1.2 trillion in two years

Pakistan’s banks have more than doubled financing for small and medium enterprises (SMEs) in two years, raising it from about Rs490 billion to Rs1.2 trillion, Pakistan Banks Association (PBA) Chairman Zafar Masud said on Tuesday. The number of SME borrowers increased from 200,000 to 350,000.

Visiting the Karachi Press Club with PBA Chief Executive Muneer Kamal, Masud said banks had expanded lending to smaller businesses, households and farmers to support financial inclusion and economic growth.

Agricultural borrowers had rebounded from 2.7 million to 3.4 million after falling from 4 million in 2019, he said. The State Bank of Pakistan aims to bring that number to 5.8 million by 2028, with agricultural financing expected to increase from Rs1.3 trillion to Rs3.3 trillion over that period.

Housing borrowers have grown from 65,000 two years ago to roughly 300,000, while approved financing stands at Rs455 billion, Masud said. He credited government-supported housing finance programmes with helping drive the increase.

Banks also restructured Rs1.3 trillion of energy-sector loans without government guarantees, helping tackle circular debt, he said. A Rs3.23-per-unit charge on electricity bills is expected to be removed gradually over the next two years. Banks helped facilitate Pakistan International Airlines’ (PIA) privatisation by restructuring approximately Rs300 billion in debt.

Exporters continue to receive bank financing at 4% despite higher policy rates, Masud said. Maintaining those concessional loans costs the banking industry an estimated Rs100 billion.

Masud said banks were also assuming the cost of facilitating overseas Pakistanis’ remittances following the discontinuation of government incentive payments from July 1, 2026. The industry would spend about Rs100 billion each year to keep transfers to Pakistan free of transfer charges.