Karachi, June 2025 — As a key partner in Pakistan’s economic development, the banking sector—under the aegis of the Pakistan Banks Association
(PBA)—continues to play a vital role in supporting national priorities and advancing structural reforms. In close coordination with the Ministry of Finance (MoF), the State Bank of Pakistan (SBP) and other partners across the ecosystem, under the leadership of Honorable Finance Minister and the Governor SBP, the sector is proud to contribute to a series of transformative initiatives introduced in the Federal Budget 2025–26.
PBA played a catalytic role in closing the PKR 1.275 trillion Circular Debt Resolution transaction—one of Pakistan’s largest and most complex financing efforts. Working closely with MoF, SBP, and the Central Power Purchasing Agency (CPPA), the Association reached a consensus on many intricate issues and secured vital regulatory concessions to make the deal viable for all stakeholders. This cashflow- backed solution with additional burden on the consumer is expected to stabilise the power sector and reduce electricity costs for consumers.
Among the most forward-looking initiatives in this year’s budget is the National Subsistence Farmers Support Initiative (NSFSI), launched to support smallholder farmers. The program offers digital, cashflow-based loans of up to PKR 1 million, disbursed directly to farmers’ wallets and redeemable at POS-enabled merchants for key agri-inputs. It will also provide tech-enabled agri-advisory services, promoting more inclusive rural financing dovetailed with Electronic Warehouse Receipt (eWhR) solution.
Similarly, the SME sector has gained renewed momentum. The SBP-led SME Risk Coverage Scheme, introduced last year, has disbursed over PKR 311 billion to 95,000+ businesses. As a result, SME financing has grown 36% to PKR 641 billion,
with beneficiaries up 51%, bringing the Rs. 1.1 trillion credit target by 2028 within reach.
A government-backed subsidy scheme is being launched to support affordable housing for Pakistan's low- to middle-income buyers. With the support from the banking sector, the scheme will offer 20-year mortgages at subsidised rates, helping to raise the mortgage-to-GDP ratio from 0.3% to 5% by 2030. To accelerate Pakistan’s transition towards a greener and more inclusive mobility ecosystem, the government is launching a targeted financing scheme for electric 2- wheelers and 3-wheelers. Under this program—developed in close collaboration with the PBA and the banking industry—subsidised, collateral-light loans will be offered to eligible individuals, particularly gig workers, women, and small business owners.
This initiative not only reduces carbon emissions, urban noise and air pollution but also meaningfully improves cost savings for the average citizen, especially amid rising fuel prices.
Youth, as a key driver of economic growth and innovation, remain central to the government’s development agenda. Under the Prime Minister’s Youth Business and Agriculture Loan Scheme, a PKR 200 billion disbursement target has been set to provide concessional financing to MSMEs, with a focus on the agriculture sector.
The scheme also includes green loans of up to PKR 2.5 million to solarise diesel- powered tube wells—advancing a more sustainable and climate-resilient agri- economy.
In a landmark move, Pakistan’s banking sector, in collaboration with the British Asian Trust (BAT), is launching the country’s first-ever Pakistan Skills Impact Bond (PSIB)—a breakthrough instrument that shifts from traditional, target-based funding to outcome-based financing, where success is measured by real employment outcomes. Pakistan’s technical and vocational education sector has long struggled with input-based funding models, limited accountability, and a growing gap between skills supply and labour market needs. The idea is to attract global outcome funders and CSR contributors to scale the model. This represents a transformative step toward results-driven public finance and inclusive economic growth.
Zafar Masud, Chairman PBA, said, “These bold reforms and targeted interventions underscore the evolving role of the banking industry—not merely as a financial intermediary but as a strategic driver of national transformation. As a key enabler, the PBA continues to lead from the front—fostering collaboration between the public and private sectors, shaping progressive policy dialogue, and championing innovation that delivers real impact.” As Pakistan charts its course towards economic stability, inclusive growth, and long- term resilience, the banking sector remains deeply committed to aligning with the nation’s development agenda.
