Pakistan's banking industry welcomes Federal Budget 2025–26
The banking sector, under the
leadership of the Pakistan Banks Association (PBA), has voiced strong support
for the Federal Budget 2025–26, reaffirming its commitment to Pakistan’s
economic growth, structural reform, and national development agenda.
In close coordination with the
Ministry of Finance (MoF), the State Bank of Pakistan (SBP), and key ecosystem
partners, the sector has played a vital role in shaping and advancing several
budget initiatives led by the Honorable Finance Minister and Governor SBP.
One of the most notable achievements
is the successful closure of the PKR 1.275 trillion Circular Debt Resolution
transaction—one of the largest and most complex financial restructurings in the
country’s history. Spearheaded by the PBA in partnership with MoF, SBP, and the
Central Power Purchasing Agency (CPPA), the agreement includes regulatory
concessions and a consumer-backed cashflow structure. It is expected to
stabilize the power sector and reduce electricity costs.
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The budget also introduces the National
Subsistence Farmers Support Initiative (NSFSI), a forward-looking program
designed to uplift smallholder farmers. It offers digital loans of up to PKR 1
million, directly disbursed to digital wallets and redeemable at POS-enabled
merchants for agricultural inputs. Coupled with tech-based advisory services
and e-warehouse receipt solutions, the initiative aims to promote inclusive
rural financing.
In the SME sector, the SBP-led SME
Risk Coverage Scheme has already disbursed over PKR 311 billion to more than
95,000 businesses. SME lending has increased 36% to PKR 641 billion, with a 51%
rise in beneficiaries—bringing the ambitious Rs. 1.1 trillion credit target by
2028 within reach.
Affordable housing also features
prominently, with a government-backed scheme enabling 20-year subsidized
mortgages for low- and middle-income buyers. With banking sector support, the
program aims to raise Pakistan’s mortgage-to-GDP ratio from 0.3% to 5% by 2030.
To advance green mobility, a
targeted financing scheme for electric 2- and 3-wheelers has been launched.
Developed in collaboration with the PBA, it offers subsidized, collateral-light
loans to gig workers, women, and small business owners—helping reduce
emissions, air pollution, and fuel expenses.
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Youth empowerment remains central to
the development agenda. The PM’s Youth Business and Agriculture Loan Scheme has
set a PKR 200 billion target, with concessional loans prioritized for MSMEs and
the agri-sector. It also supports green financing of up to PKR 2.5 million to
solarize diesel-powered tube wells—paving the way for climate-resilient
farming.
In a landmark step, Pakistan’s
first-ever Skills Impact Bond (PSIB) is being launched in partnership with the
British Asian Trust (BAT). This outcome-based funding model ties financial
support to real employment results, moving away from conventional input-based
funding in the technical and vocational education sector.
“These bold reforms underscore the
banking industry’s evolution from financial intermediary to strategic partner
in national transformation,” said Zafar Masud, Chairman, PBA. “The PBA remains
at the forefront of driving collaboration, shaping policy, and enabling
innovation for real economic impact.”
As Pakistan moves toward economic
stability and inclusive prosperity, the banking sector stands firmly aligned
with the country’s development goals.
Source: Pro Pakistani