The Pakistan Banks’ Association (PBA) has announced to develop an small and medium-sized enterprises (SME) index over the next one year, aiming to provide a barometer to the financial sector and help accelerate financing to SMEs in the country.
“The banking association has decided to gather data from the market to develop SME index in one year. The index would enable banks to take decisions on ramping up lending to the enterprises,” PBA advisor Mir Nejib ur Rehman said while responding to a question at a press conference on Wednesday.
The index would be refreshed after every six months to give a better understanding on the SME sector to lenders, he added.
There are around 5 million SMEs operating in Pakistan that employ around 80% of the total non-agriculture labour force, which contribute towards 40% of the country’s GDP [gross domestic product] and 25% of the total exports of Pakistan, according to State Bank of Pakistan’s (SBP) National Financial Inclusion Strategy (NFIS) 2024-28 report published in January 2025.
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“However, out of these total SMEs, only 155,000 SMEs (3%) are availing financing from the banking sector. The share of SME financing in total domestic private sector credit stands at 6%.”
SBP aims to support SMEs in their journey towards financial success through measures to ensure their full participation in the mainstream financial ecosystem.
SBP Governor Jameel Ahmad said the other day the central bank was aimed at doubling the SME outstanding financing to Rs1.1 trillion by 2029.
In this regard, the central bank is encouraging financial institutions to use technology to enhance SME financing.
The PBA organised the presser to announce holding its first ever conference titled ‘Pakistan Bank Summit 2025’ (PBS’25) on February 24-25, 2025 in Karachi to give a direction to banks to ramp up financing to the private sector in the country and share international knowledge to domestic players in the sector.
Zafar Masud, Chairman of PBA, said banks were aimed at setting their focus on four major areas of the economy to scale up financing including SMEs, agriculture, housing, and digital sectors.
Banks may target the sectors to expedite financing to the private sector and support economic activities in the country, said Masud, who is also president/CEO of the Bank of Punjab (BoP).
Atif Bajwa, Chairman of the PBS’25 Steering Committee and President/CEO of Bank Alfalah, said the banking sector was misunderstood by and large without knowing mechanism.
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The sector is playing a critical and central role in promoting the domestic economy, according to Bajwa.
“We must strengthen our banking sector. It meets financial requirements in the domestic economy and supports trade and investment,” he said.
Bajwa dismissed an impression that the banking sector was minting money and making windfall gains, adding over half of its net earnings goes in taxes to the government.
“After paying 54% of the earning in taxes, banks net profits remain near and around the levels the other sectors book (in Pakistan),” he said.
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