IslamabadThe Governor of the State Bank in Pakistan, Jameel Ahmad, called on commercial banks to reconsider their current business models and give the priorities of lending to small and medium enterprises to contribute an activity in the economic growth of the nation.
Speaking at the end of the Pakistani banking summit 2025 ′ on Tuesday, Ahmed stressed the need to convert banks to focus them away from government and large financing. Instead, urging them to focus more on lending to the sectors of small and medium companies and microfinance.
“This issue in the internal meetings with the Pakistani Bank Association (PBA) has sparked, and today I call on banks to evaluate their current business models seriously,” Ahmed noted.
The ruler indicated that the banks in Pakistan have largely transformed their lending to the government, thus marginalizing the private sector. He said that economic progress is impossible without sufficient financing for the private sector.
The latest data from SBP shows that, by December 5, 2024, commercial banks occupied 30.3 trillion rupees in deposits, including nearly 29 trillion rupees that were lended to the government suffering from financial distress. This is equivalent to approximately 96 % of the total deposits directed to the government.
In late 2024, commercial banks also increased short -term financing for large companies, may avoid additional tax obligations due to low private sector lending. As a result, private sector credit rose to 15.1 trillion rupees in December, up from 11.8 trillion rupees in August 2024.
Ahmed also highlighted that, compared to other countries in the region, both bank deposits and private sector financing in Pakistan are still relatively low. “A nation that depends on the ability of its banks to finance the private sector,”
The banks also encouraged the acceleration of the digitization of payment systems for both the public and private sectors, and urged them to teach customers how to manage banking transactions over the Internet.
In addition, Ahmed stressed the importance of financing the climate reference to ensure the long -term economic growth in Pakistan. He warned that ignoring climate challenges could lead to great relapse in the future.
SBP Governor also called on banks to invest in technology, artificial intelligence (AI), infrastructure and human resources to develop products that focus on customers and implement the best banking practices.
Ahmed pointed out that investing in technology will help banks improve financial integration and benefit from artificial intelligence to determine future gaps in the sector.
As of now, about 64 % of adult population in Pakistan holds bank accounts, with a significant increase of 47 % in 2018. The gender gap in banking services has also narrowed from 47 % to 34 % in the same period. The central bank has set new targets to increase account penetration to 75 % of the adult population and reduce the gender gap to 25 % by 2028.
