SBP sets PKR1.5 trillion SME financing target by 2028

The State Bank of Pakistan (SBP) has set a target to increase financing to small and medium-sized enterprises (SMEs) to PKR1.5 trillion and expand the number of SME borrowers to 750,000 by June 2028 as part of its broader strategy to strengthen private sector-led economic growth.

SBP Governor Jameel Ahmad announced the target while delivering the keynote address at the Pakistan Banking Summit 2026 on Wednesday, saying expanding credit to priority sectors, including SMEs, agriculture and affordable housing, remains one of the banking industry's biggest challenges and opportunities.

"Sustainable economic growth requires a banking system that supports productive investment," Ahmad said, adding that agriculture, SMEs and affordable housing are critical for employment generation, exports and economic resilience but continue to face significant financing gaps.

The governor said outstanding SME financing more than doubled between June 2021 and December 2025, while the number of SME borrowers increased by about 75%. Although the progress was encouraging, he said it remained insufficient and urged banks to accelerate lending through innovation and technology-driven solutions.

The SBP's Vision 2028 strategy seeks to expand financing through regulatory reforms, digital innovation, risk-sharing mechanisms and capacity building rather than relying primarily on directed lending. Key initiatives include the SME Asaan Finance Scheme, the Risk Coverage Scheme for SMEs and the Prime Minister's Youth Business and Agriculture Loan Scheme.

The central bank has also introduced regulatory changes to increase financing limits, expand clean financing within the retail portfolio, simplify loan procedures and revise prudential regulations for SMEs. Ahmad said the reforms are intended to give banks greater flexibility to leverage technology, collaborate with fintech companies and introduce products such as digital supply chain financing and cash flow-based lending using alternative data.

He urged banks to develop sector-specific financial products tailored to the cash flow cycles of SMEs and agricultural businesses while gradually reducing reliance on government-backed financing schemes.

Speaking at the summit, Pakistan Banks' Association Chairman Zafar Masud said inadequate documentation remains a major obstacle to expanding SME lending by the private sector.

He said businesses need to formalize their operations, register with authorities and pay taxes to improve access to bank financing.

Highlighting the country's digital transformation, Ahmad said more than 92% of retail financial transactions are now processed digitally, supported by 268 million financial accounts and more than 49 million Raast IDs. He added that the SBP has mandated the digitization of all government disbursements through secure digital wallets.

The governor said the macroeconomic environment has become more supportive of financial sector transformation, noting that average inflation stood at 7.05% in FY2026, real GDP growth reached 4% during July-March FY2026 and was provisionally estimated at 3.7% for the full fiscal year. He added that the current account remained in surplus and the country's foreign exchange reserves had risen above USD18.4 billion.

Ahmad said economic growth is expected to strengthen further in FY2027 and stressed that cyber resilience, data governance and public trust will be critical as digital financial services continue to expand.