Pakistan’s government has set a combined financing target of Rs3.7 trillion for housing, agriculture and small and medium enterprises (SMEs), directing commercial banks to expand lending to farmers, businesses and prospective homeowners. Prime Minister Shehbaz Sharif issued the directives while chairing a meeting to review the performance of existing financing schemes and identify measures to improve access to credit. Banks with unsatisfactory lending performance have been instructed to improve their records to qualify for government incentives. The prime minister also directed relevant ministries and the State Bank of Pakistan (SBP) to consult stakeholders and submit recommendations by the end of October to improve the existing financing programmes. The initiative aims to increase the availability of loans for productive economic activities and address financing constraints faced by households, agricultural borrowers and smaller businesses.
The meeting reviewed progress under the Prime Minister’s Apna Ghar housing scheme, through which loans worth Rs448 billion had been approved for 75,198 applicants. Of this amount, Rs76 billion had been disbursed to 14,000 beneficiaries, according to the briefing. Banks have been assigned a target of providing Rs700 billion in financing for 125,000 housing units during the current year. The programme is intended to improve access to housing finance for eligible applicants, although the difference between approved and disbursed amounts highlights the importance of completing the remaining processing and disbursement stages. Expanding access to housing loans could help eligible households finance home purchases or construction while supporting activity across the property and construction sectors.
To make housing finance more accessible, the government has reduced the processing period for loan applications to 15 working days and cut the number of required documents from 25 to five. These changes are intended to reduce administrative delays and simplify the application process for prospective borrowers. Shehbaz Sharif directed officials to simplify procedures further, particularly requirements relating to unencumbered property titles. Property documentation can be a significant consideration in housing finance because banks need to establish ownership and assess whether property can be accepted as security for a loan. Streamlining these requirements while maintaining appropriate checks could help reduce delays for eligible applicants and improve the efficiency of loan processing.
Agricultural financing is another major component of the government’s lending plan. According to the meeting briefing, agricultural lending currently stands at Rs1.352 trillion and has benefited 3.455 million borrowers. The government aims to increase the total amount of agricultural financing to Rs1.5 trillion and expand the number of beneficiaries to 4.5 million by June 2027. Access to credit can help farmers purchase seeds, fertilisers, machinery and other agricultural inputs, as well as manage seasonal expenses. However, the availability of financing also depends on repayment capacity, lending criteria and the ability of farmers to provide the information and documentation required by banks. Expanding the number of borrowers alongside the total lending volume would require financial institutions to reach a wider section of the agricultural sector.
The government has also set a target of increasing financing for small and medium enterprises to Rs1.5 trillion by June 2027. More than 352,000 SMEs have received loans totalling Rs1.137 trillion, according to the briefing. The revised target aims to increase financing and expand the number of borrowing businesses to 575,000. SMEs play an important role in employment, manufacturing, trade and services, but many face difficulties obtaining formal credit because of limited collateral, incomplete financial records or insufficient credit histories. Increasing access to bank lending could help businesses invest in equipment, working capital, inventory and expansion. To support this objective, the meeting reviewed revised SME regulations, risk-sharing arrangements, supply-chain financing and improved data-sharing mechanisms intended to strengthen the flow of credit to smaller businesses.
The meeting also examined ways to improve agricultural storage and financing arrangements. Shehbaz Sharif directed that inactive warehouses and silos operated by the Pakistan Agricultural Storage and Services Corporation be brought into operation through public-private partnerships. The proposed approach is intended to improve storage facilities and make better use of existing infrastructure. Better storage capacity can help reduce post-harvest losses and improve the handling of agricultural produce, while potentially giving farmers greater flexibility over when to sell their crops. The prime minister also called for the expansion of Allied Bank’s model of providing loans against stored agricultural produce and supported the bank’s proposed investment in an SME park. Financing against stored commodities can offer farmers an alternative to selling produce immediately to meet short-term cash requirements, subject to the applicable lending and storage arrangements.
The government’s lending targets place commercial banks at the centre of efforts to improve access to finance across several parts of the economy. Housing finance is expected to support eligible homebuyers, agricultural credit is intended to reach more farmers, and SME lending aims to help smaller businesses obtain funding for their operations and growth. The directives also emphasise the need to improve the performance of banks participating in government-supported schemes and simplify procedures that can delay financing. The State Bank of Pakistan and relevant ministries have been tasked with consulting stakeholders and presenting recommendations by the end of October. Achieving the targets will depend on banks’ ability to process applications efficiently, manage credit risks and reach eligible borrowers while maintaining appropriate lending standards. The government aims to expand the overall volume of financing and broaden participation in formal credit markets by June 2027.
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