July 9, 2026 – The State Bank of Pakistan (SBP) has announced an ambitious target to expand credit to small and medium enterprises (SMEs) to Rs1.5 trillion by June 2028, as part of its comprehensive strategy to enhance financial inclusion and address the persistent financing gap in the sector. The initiative, unveiled during a high-level policy briefing, aims to increase the current share of SMEs in total private sector credit from approximately 7% to over 11% over the next two years. This significant push underscores the central bank’s recognition of SMEs as a critical engine for employment generation, industrial diversification, and sustainable economic development.
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To achieve this target, the SBP has introduced a multi-pronged approach that includes enhanced refinance facilities, targeted regulatory incentives, and a renewed focus on digitizing the lending process. A key component of the strategy involves encouraging commercial banks to develop specialized SME financing products and adopt alternative credit assessment models that move beyond traditional collateral requirements. Additionally, the central bank plans to partner with fintech companies and credit bureaus to improve risk assessment capabilities, thereby enabling smaller businesses with limited formal documentation to access much-needed financing.
The SBP’s renewed commitment comes against the backdrop of a structural economic transformation in Pakistan, where SMEs constitute over 90% of all enterprises but face significant hurdles in securing formal credit due to high collateral demands, complex procedures, and information asymmetries. By addressing these bottlenecks, the central bank aims to unlock the latent potential of the sector, which currently contributes approximately 40% to the nation’s GDP and employs over 80% of the non-agricultural workforce. The initiative is expected to foster innovation, enhance productivity, and integrate SMEs more effectively into domestic and global value chains.
