Loans for SMEs: SBP decision to review regulations greeted

KARACHI: Malik Khuda Bakhsh, Chairman of the Energy Standing Committee of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and President of the Pakistan Business Forum (Karachi Region), has welcomed the State Bank of Pakistan's decision to review the regulations for easy funding for small and medium-sized enterprises (SMEs).

He stated that this decision will promote sustainable, responsible, and inclusive access to finance for the SME sector. He said that it is too easy to attribute SMEs' resistance to joining the documented economy simply to their reluctance to be part of the tax net. In reality, what is needed is a program that improves and simplifies the regulatory process while focusing on reducing bureaucratic barriers.

According to the State Bank of Pakistan, the amendments in the regulations aim at to define a procedure that will help these institutions avoid difficulties in obtaining loans from banks while also providing facilities for loan repayment.

Malik Khuda Bakhsh further stated that, despite their immense role in national development, small and medium-sized enterprises (SMEs) have long been neglected. Nearly 80% of jobs in the non-agricultural sector are provided by SMEs, which contribute to 40% of Pakistan's GDP. However, only 6% of loans from private banks are given to this sector, reflecting that despite the vital role these enterprises play, they are not being given the importance they deserve.

He went on to say that it is estimated that around 5 million SMEs are operating in Pakistan. This sector plays a key role in the country’s development and is not only creating new jobs but also contributing to the growth of national exports.

Malik Khuda Bakhsh highlighted that SMEs also play a significant role in Pakistan’s external sector, contributing around 25% of total exports. The government has set a target of increasing exports to $60 billion over the next five years, and much of this depends on the potential and growth of SMEs.

Copyright Business Recorder, 2025