SBP Governor Calls for Banks to Support SMEs & Drive Economic Growth

Jameel Ahmad, the Governor of the State Bank of Pakistan (SBP), has urged commercial banks to rethink their current business strategies and focus more on extending credit to small and medium-sized enterprises (SMEs) to play an active role in the country’s economic development.

Speaking at the ‘Pakistan Banking Summit 2025’ on Tuesday, Ahmad stressed the importance of shifting the banks’ attention away from financing the government and large corporations, urging them to prioritize lending to the SME and microfinance sectors.

“I’ve raised this concern in internal discussions with the Pakistan Banks Association (PBA), and today, I’m making a public appeal for banks to critically reassess their business models,” Ahmad remarked.

He highlighted that banks in Pakistan have primarily directed their lending to the government, leaving the private sector underfunded. He pointed out that economic growth cannot be achieved without adequate support for the private sector.

Recent figures from the SBP show that as of December 5, 2024, commercial banks had accumulated Rs30.3 trillion in deposits, with approximately Rs29 trillion—about 96% of the total deposits—lent to the financially strained government.

In late 2024, commercial banks also increased short-term loans to large corporations, likely as a strategy to avoid additional tax liabilities due to the limited lending to the private sector. This led to a rise in private sector credit to Rs15.1 trillion by December, up from Rs11.8 trillion in August 2024.

Ahmad also pointed out that both bank deposits and private sector financing in Pakistan remain relatively low when compared to other nations in the region. “A country’s progress depends on its banks’ capacity to fund the private sector,” he emphasized.