The State Bank of Pakistan (SBP) has taken a significant step to support the growth of Small and Medium-sized Enterprises (SMEs) by increasing the clean lending limit for these businesses to Rs 10 million. This decision aims to improve SMEs’ access to finance and boost their contribution to the economy.
In a circular issued by SBP’s SME, Housing, and Sustainable Finance Department, banks and DFIs have been instructed to strictly comply with the revised regulations regarding SME financing. The new limit on clean facilities will allow SMEs to obtain unsecured loans up to Rs 10 million, based solely on their cash flows and personal guarantees.
SBP has also clarified that the clean exposure limit does not include consumer financing limits, such as credit cards and personal loans, granted to the sponsors of SMEs.
To further support SMEs, the central bank has revised the definition of these businesses. Under the new criteria, enterprises with an annual sales turnover of up to Rs 150 million are classified as “small enterprises,” while those with a turnover between Rs 150 million and Rs800 million are categorized as “medium enterprises.”
SBP has emphasized the importance of strict adherence to the revised regulations and has warned that non-compliance may result in punitive action under the Banking Companies Ordinance, 1962.