In a show of unified commitment to national progress, Pakistan’s banking sector has extended strong support for the Federal Budget 2025–26. Spearheaded by the Pakistan Banks Association (PBA) and in close partnership with the Ministry of Finance and the State Bank of Pakistan (SBP), the sector has emerged as a core enabler of economic stability and inclusive growth through a range of forward-looking initiatives.
A standout highlight from this year’s economic roadmap is the resolution of the PKR 1.275 trillion circular debt challenge—one of the country’s most complex financial hurdles. The PBA played a central role in finalizing this financing transaction in collaboration with the Ministry of Finance, SBP, and the Central Power Purchasing Agency (CPPA). The solution, structured to be cashflow-backed without burdening consumers, is expected to bring stability to the power sector and lower electricity costs.
Another major initiative welcomed by the banking community is the National Subsistence Farmers Support Initiative (NSFSI), which extends digital loans of up to PKR 1 million to smallholder farmers. These loans, disbursed directly to digital wallets, can be redeemed through POS-enabled merchants for essential agricultural inputs. Coupled with real-time agri-advisory services and the Electronic Warehouse Receipt (eWhR) framework, the initiative aims to digitally integrate rural financing and promote financial inclusion in underbanked communities.
The banking sector is also backing the SBP-led SME Risk Coverage Scheme, which has already disbursed PKR 311 billion to over 95,000 businesses. This has led to a 36% surge in SME credit to PKR 641 billion and a 51% rise in beneficiaries. These results signal a clear path toward achieving the national credit target of PKR 1.1 trillion for SMEs by 2028.
To address Pakistan’s chronic housing gap, a new government-subsidized mortgage scheme will soon be rolled out, offering long-term home loans with repayment periods of up to 20 years. The goal is to elevate the country’s mortgage-to-GDP ratio from the current 0.3% to 5% by 2030, thereby making homeownership accessible to low- and middle-income earners.
In line with environmental and economic priorities, the budget has introduced a targeted financing scheme for electric two- and three-wheelers. This program, designed in coordination with PBA and its members, will provide collateral-light, subsidized loans to gig workers, women, and small business owners. The initiative supports cleaner urban mobility, reduced emissions, and long-term cost savings amid rising fuel prices.
Youth empowerment remains central to the government’s economic development framework. Under the Prime Minister’s Youth Business and Agriculture Loan Scheme, PKR 200 billion has been earmarked for concessional financing to MSMEs, with a focus on sustainable agriculture. The inclusion of green loans to solarize diesel-powered tube wells is set to promote climate-smart farming practices.
In a landmark step, the banking industry, in partnership with the British Asian Trust, is launching Pakistan’s first-ever Skills Impact Bond. This performance-based financing model will move away from traditional funding approaches and instead reward outcomes—namely employment—marking a paradigm shift in technical and vocational education.
Commenting on the sector’s role, Zafar Masud, Chairman of PBA, stated, “These bold reforms reflect the banking industry’s evolution from a traditional financial intermediary into a key architect of national transformation. We are not just facilitating transactions—we’re building futures.”
As Pakistan steers toward macroeconomic stability, resilience, and equitable progress, the banking sector’s proactive alignment with the Federal Budget signals a renewed commitment to inclusive development, financial innovation, and long-term prosperity.