The State Bank of Pakistan (SBP) is actively working to shift the country’s traditionally collateral-based banking system towards a more progressive cash-flow and business-model-based lending approach, a top official announced on Friday.
The move, aimed at removing significant obstacles in financing for small and medium enterprises (SMEs), was highlighted during an expo organised to bridge the gap between businesses and financial institutions.
Syed Basit Aly, Executive Director of the SBP, stated that the SME sector is a primary concern for both the government and the central bank. He explained that the SBP is working closely with commercial lenders to remove impediments and has introduced new, principle-based prudential regulations to facilitate banks in this area.
Aly acknowledged that Pakistan’s banking system has historically demonstrated limited risk-taking. He confirmed that the central bank is working to gradually pivot the financing paradigm and is also developing viable new products in collaboration with international financial institutions to support this strategic shift.
The remarks were made at the SME Finance and Banking Expo, an event arranged by the Lahore Chamber of Commerce and Industry (LCCI). The day-long exhibition was designed to provide small and medium-sized businesses with direct access to banking facilities, financing schemes, and a range of financial products.
The gathering saw participation from almost all of the country’s major commercial and Islamic banks, alongside other financial institutions. These lenders set up stalls where a large number of LCCI members visited to obtain detailed information on SME-focused credit facilities, refinance schemes, Islamic finance models, and digital banking solutions.
The event was inaugurated by LCCI President Faheem Ur Rehman Saigol, SBP Executive Director Syed Basit Aly, SBP Chief Manager Tariq Riaz, and other LCCI office bearers.