Banks urged to prioritise SME lending

State Bank of Pakistan (SBP) Governor Jameel Ahmad has urged commercial banks to rethink their business models and prioritise loans to small and medium enterprises (SMEs) to support the country's economic growth instead of lending heavily to the government. Speaking at the closing session of the two-day Pakistan Banking Summit 2025 on Tuesday, Ahmad stressed the need for banks to shift their focus from financing the government and large corporations to increasing SME lending and microfinancing. While he had previously raised the issue in internal meetings with the Pakistan Banks Association (PBA), he now publicly stressed its urgency. Pakistani banks have primarily lent their deposits to the government to help bridge the budget deficit, limiting credit availability for the private sector. As of December 5, 2024, commercial banks held total deposits of Rs30.3 trillion, of which Rs29 trillion—around 96%—had been loaned to the cash-strapped government, according to SBP data.