SBP Simplifies Loan Access for Small Firms and Farmers

The State Bank of Pakistan rolled out a new framework letting banks lend to small businesses and farmers via microfinance partners, with set limits and strict eligibility rules.

NationPulse Desk

Oct 29, 2026 · 9:40 AM 2 min read

Key takeaways

SBP introduced a framework allowing banks to lend to small businesses and farmers via microfinance partners

Maximum loan limits are Rs. 1 million for small enterprises through non-bank micro-finance firms and Rs. 5 million through other authorised institutions

Agricultural borrowers can receive up to Rs. 500,000 from non-bank micro-finance firms and Rs. 2 million from other authorised institutions

Participating institutions must be 100% operationally self-sufficient and have NPL ratios below 5% in SME and farm lending

Institutions need unqualified audits for two years, three years lending experience and must meet capital, governance and AML/CTF standards

The State Bank of Pakistan (SBP) has launched a financing framework that permits banks to grant credit to small enterprises and small farmers through wholesale and agency arrangements, aiming to expand loan access under the government's Risk Coverage Facility.

Under this scheme, banks may partner with eligible microfinance banks, non-bank micro-finance companies and non-bank financial companies to reach borrowers, provided they meet defined eligibility criteria, lending caps and risk-management standards.

Financing delivered via these channels will be recorded in banks' portfolios for small enterprises and small farmers and will be covered by the Federal Government's Risk Coverage Schemes for SMEs and small farmers.

Financing limits set for businesses and farmers

The framework authorises participating financial institutions to use other authorized institutions as agents, tapping into their lending capacity and outreach.

These agents handle loan origination, appraisal, approval, monitoring, recovery and reporting. Loans can be booked directly on the participating bank's books or managed through the agency model.

In either case, loans must be identifiable and traceable, with reporting to banks via API-based integration.

Maximum financing limits for small enterprises are Rs. 1 million per borrower for non-bank micro-finance companies and Rs. 5 million for non-bank financial companies and microfinance banks.

For agricultural borrowers, the caps are Rs. 500,000 for non-bank micro-finance companies and Rs. 2 million for non-bank financial companies and microfinance banks.

These limits apply to individual borrowers and remain subject to the financing capacity and underwriting and monitoring abilities of the authorised institutions.

Eligibility criteria for participating institutions

Banks will choose authorised financial institutions based on criteria that include 100 percent operational self-sufficiency and a non-performing loan ratio not exceeding 5 percent in SME and agricultural financing.

Eligible institutions must have received unqualified audit opinions for the past two years, possess at least three years of experience in enterprise lending or agricultural financing, and satisfy relevant regulatory capital adequacy requirements when loans are recorded on their books.

They must also maintain sound governance and risk-management systems, featuring a functional board, independent internal audit and compliance functions, and effective credit origination, monitoring and reporting mechanisms.

Compliance with anti-money-laundering and counter-terrorism financing rules under SBP or Securities and Exchange Commission of Pakistan regulations is also required.