Pakistan pushes banks to expand SME lending
ISLAMABAD (News Desk): The federal government has urged commercial banks and other financial institutions to expand lending to small and medium enterprises (SMEs), acknowledging that increasing the number of businesses accessing formal credit remains a key challenge despite progress in overall financing.
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb issued the directive while chairing a meeting on SME financing on Thursday, where officials reviewed lending volumes, borrower numbers and measures to improve access to credit for businesses across the country.
The Finance Minister emphasised that financing must reach a wider range of businesses, particularly micro and small enterprises and export-oriented companies, as the government seeks to strengthen economic activity, investment and export-led growth.
The meeting noted that although progress had been made in expanding SME financing, bringing more new businesses into the formal credit system remained a priority. Participants discussed how commercial banks, microfinance banks and non-banking finance companies could broaden their outreach and improve access to loans.
The government also reviewed the recently launched SME Connect portal, designed to allow small businesses to apply directly for bank financing and facilitate engagement with financial institutions.
Aurangzeb appreciated the initial response to the platform, saying thousands of applicants had shown keen interest since its launch earlier this week. He called for further improvements to the portal and streamlined procedures to make the financing process more accessible, transparent and efficient.
The meeting also focused on the need to address the different financing requirements of micro, small and medium-sized enterprises rather than adopting a uniform approach towards businesses of varying sizes.
The Finance Minister stressed better utilisation of dedicated financing limits, particularly for export-related activities, while calling for closer coordination between banks and relevant institutions to address existing gaps in credit access.
Particular emphasis was placed on strengthening coordination between the Small and Medium Enterprises Development Authority (SMEDA) and lenders to ensure that business capacity-building initiatives translate into actual financing opportunities. Participants highlighted the need to help businesses become financially prepared and eligible for formal credit.
The Finance Minister directed that access to finance remain the central focus of ongoing deliberations, with subsequent discussions expected to examine the SME Connect portal, lending procedures and regulatory hurdles requiring intervention by relevant ministries.
The meeting was attended by Federal Ministers Rana Tanveer Hussain, Jam Kamal Khan and Dr Musadik Masood Malik, Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan, Minister of State for Finance Bilal Azhar Kiyani, Governor State Bank of Pakistan, Chairman Securities and Exchange Commission of Pakistan, representatives of the Pakistan Banks Association and Chief Executive Officer SMEDA, among other senior officials.
The government’s renewed push highlights the importance of expanding formal credit access beyond established businesses, with the success of its SME financing agenda increasingly dependent on whether smaller enterprises can translate financing opportunities into actual bank loans.