PM orders action against banks slow to lend to farmers and SMEs

Prime Minister Shehbaz Sharif on Monday directed the State Bank of Pakistan and the Ministry of Finance to take action against banks that delay loans to farmers, small and medium-sized enterprises and applicants under the Prime Minister's Apna Ghar housing scheme.

Chairing a review meeting on credit for priority sectors in Islamabad, he said banks that fail to provide financing under government initiatives should not be given any concessions by the central bank or the finance ministry, according to the PM Office.

He praised banks performing well in agriculture, housing and SME financing and said he expected them to extend to priority sectors the same cooperation the government and its institutions gave to the banking industry.

The meeting was told that Rs511 billion in loans had been approved under Apna Ghar as of October 23, covering 86,899 applications. Of those applicants, 15,584 had received Rs91 billion.

Total housing finance stood at Rs455 billion across 187,317 borrowers. Outstanding agricultural loans were Rs1,329 billion and reached about 3.5 million people, while SME lending was Rs1,148 billion to 342,458 businesses.

The government wants lending to agriculture and to SMEs to reach Rs1,500 billion each by the end of fiscal year 2027.

Officials briefed the meeting that the SBP is working on three areas to raise lending to priority sectors: improving regulations, sharing risk and cost between the government and banks, and expanding digital financial services. The central bank recently launched an SME Connect portal where businesses can apply for loans and follow their applications, the meeting was told.

The prime minister asked the SBP and the Federal Board of Revenue to settle jointly the tax issues faced by SMEs and exporters, and called for a comprehensive risk-coverage strategy so that small businesses find it easier to borrow. He directed the finance minister to address financing problems raised by stakeholders in the three sectors and to draw up a comprehensive strategy.

He described agriculture as the backbone of the national economy and said exports should rise through value addition. Apna Ghar, he added, would support industries linked to housing and construction.

Risk-sharing and credit-guarantee measures have been introduced for housing, agriculture and SMEs, and work is under way to simplify loan procedures, cut documentation and widen access through digital systems.

Federal ministers Ahsan Iqbal, Rana Tanveer Hussain, Dr Musadik Malik, Mian Riaz Hussain Pirzada, Muhammad Aurangzeb, Attaullah Tarar and Shaza Fatima Khawaja attended, along with adviser Haroon Akhtar, Minister of State Bilal Azhar Kiani and SBP Governor Jameel Ahmad. The Express Tribune reported that MNAs Hafizuddin and Chaudhry Iftikhar Nazir were also present, as were heads and representatives of major commercial banks.