The State Bank of Pakistan (SBP) has opened a public consultation window for its newly revised draft of Prudential Regulations (PRs) for SME Financing, marking a significant move towards reforming the country’s financial regulatory landscape for small and medium enterprises. This strategic step aims to foster sustainable, inclusive, and responsible financing for the SME sector, which forms a vital part of Pakistan’s economic engine.
After conducting a comprehensive review of the existing regulations, the SBP has introduced a blend of new provisions and key revisions. These updates are focused on shifting the regulatory structure to a more principle-based framework. The goal is to eliminate longstanding structural obstacles that have hindered SMEs’ access to finance while encouraging financial institutions to adopt technology-driven approaches. The draft regulations also promote collaboration between banks, fintechs, and non-financial service providers to strengthen service delivery and widen access for underserved business segments.
The draft PRs have been published on the official website of the State Bank of Pakistan and are accessible for public review and feedback at: https://www.sbp.org.pk/PR-SME-Financing/PR.asp. Stakeholders are encouraged to submit their responses using the dedicated Feedback Form available on the same portal. The consultation period is open from June 5 to June 20, 2025, giving stakeholders two weeks to provide comments, recommendations, and observations. Feedback can be sent via email to SME.PRs@sbp.org.pk.
In this consultation, the SBP has extended an open invitation not only to the banking and financial sectors but also to trade bodies, business analysts, policymakers, and the general public. The central bank recognizes the value of an inclusive dialogue in shaping regulations that are not only practical but also aligned with real-time market dynamics and the evolving financial needs of SMEs.
SMEs in Pakistan often face barriers such as limited access to credit, lack of collateral, and low financial literacy, all of which restrict their ability to scale and formalize operations. The proposed regulatory changes seek to reduce these frictions by encouraging innovation through fintech adoption and digital lending frameworks. Encouraging banks to move beyond conventional credit assessment models and partner with technology providers is expected to enhance the efficiency, speed, and reach of SME financing in the country.
The new draft also aims to instill better risk management practices, operational transparency, and governance standards within lending institutions. By embedding flexibility in regulatory compliance, the SBP hopes to cater to diverse SME segments operating across industries and geographies.
This move underscores the SBP’s broader commitment to financial inclusion and economic modernization. The proposed updates to the prudential regulations are expected to serve as a catalyst for digitized, streamlined, and resilient SME finance ecosystems in Pakistan.
With public engagement now underway, the coming weeks will be crucial in finalizing a regulatory framework that supports long-term growth, financial democratization, and technological progress across Pakistan’s SME landscape.