The State Bank of Pakistan on Thursday launched SMEConnect, a centralised digital platform that will handle all small and medium enterprise financing applications from banks and development finance institutions across Pakistan starting November 1.

According to the SBP, the new system will simplify the application process, boost accessibility, and increase efficiency and transparency in SME financing. Users will be able to monitor their application status in real time and, if rejected, see the specific reasons.

Anyone who visits a bank or DFI branch or website to apply for funding will be redirected to SMEConnect. The central bank has instructed all banks and DFIs to place the platform's link prominently on their sites and to ensure their SME teams and field staff are trained to guide applicants. A tutorial video is also available on the portal.

The platform features a live dashboard that gives the SBP full visibility into financing requests, showing real-time data on applications received, processed, approved, disbursed and rejected, both by individual institutions and industry-wide.

Bank officials noted that any bank can turn down an SME financing request, as banks act as the primary protectors of depositors' money. They added that neither the government nor the central bank can force a private bank to lend unless it is satisfied with the risk.

Previous attempts to spur the sector fell short because banks and DFIs preferred to park liquidity in risk-free government papers for higher returns. A day before the launch, financial institutions offered Rs4.9 trillion for treasury bill investment, and the government raised Rs1.9 trillion, surpassing its auction target.

SMEs also carry a higher default rate than other sectors, making lending to them riskier than investing in the equity market. Nonetheless, the government continues to promote SME financing as a driver of business and industrial activity while growth stays at 3.7 percent.

The SBP said the platform reflects its commitment to financial inclusion, entrepreneurship support and strengthening the SME financing ecosystem to achieve inclusive economic growth, alongside the subsidised Prime Minister's Housing Scheme that currently attracts more investment than SMEs.