SME financing doublesto Rs1.1tr

Collateral-free limit raised from Rs10m to Rs50m as SME Connect Portal opens on November 1

LAHORE:

Outstanding financing to small and medium enterprises (SMEs) rose to approximately Rs1,110 billion in June 2026 from Rs491 billion in June 2024, with borrowers climbing to 325,000 from 177,000, State Bank of Pakistan (SBP) Governor Jameel Ahmad said, announcing that the collateral-free limit for SME loans had been raised from Rs10 million to Rs50 million.

He was addressing the Lahore Chamber of Commerce and Industry (LCCI), according to a statement issued on Friday.

The definition of SMEs has also been revised, with the annual turnover limit for small enterprises raised from Rs150 million to Rs400 million and for medium enterprises from Rs800 million to Rs2 billion, so that businesses with turnover of up to Rs2 billion can now access SME financing.

Financing stood at Rs691 billion in June 2025 with 275,000 borrowers, he said.

Ahmad said the SBP, with the Small and Medium Enterprises Development Authority (SMEDA) and commercial banks, had cut the SME loan application form to a single page, and that the SME Connect Portal would become operational on November 1, 2026, allowing entrepreneurs to apply online from their homes and track progress.

He said the limit under the Export Refinance Scheme had been raised from Rs1 trillion to Rs1.5 trillion, of which Rs300 billion is allocated for SME exporters, and that the cabinet had approved a 10-year long-term export financing scheme to support export-oriented investment.

Under the government's revised housing finance scheme, banks approved Rs521 billion for about 80,000 applicants in six to seven months, against outstanding housing finance of Rs251 billion before the March 2026 revision. Loans under the Prime Minister's Youth Business and Agriculture Scheme carry mark-up rates of zero to 7%.

LCCI President Ali Hussam Asghar proposed a joint financing mechanism involving industry, government, EXIM Bank and commercial banks, selecting 1,000 SMEs on available data, identifying their obstacles and developing a replicable facilitation model. He urged the SBP to link its complaint centre with the LCCI's to help importers and exporters facing delays in opening letters of credit, and said a clear timeline should be set for resolving complaints.

Senior Vice President Sardar Usman Ghani said Islamic banking accounted for 39.1% of total financing but only 15.9% of SME financing, proposing a minimum 5.9% target that could add Rs204 billion, in line with the sector average. He said the bad-debt ratio in Islamic banks' SME portfolio was 2.2% against 5.5% for the overall banking sector.