Federal Minister for Finance and Revenue Mohammad Aurangzeb emphasized the significance of the banking sector’s recommendations for small and medium enterprises (SMEs), digital technology, and agriculture in promoting growth and sustainability. During a meeting with the Pakistan Banks’ Association (PBA), Aurangzeb underscored the necessity for the entire sector to contribute to these priority areas in line with their capacities and specialties.
Voluntary Targets Over Directed Lending
Aurangzeb clarified that while there will be no “directed lending,” banks and regulators will set voluntary targets to share the responsibility of supporting these critical sectors. He expressed confidence that the banks would continue collaborating with the government to revive and grow the economy.
Agriculture Sector Focus
In the agriculture sector, key proposals included restructuring crop loan insurance schemes to integrate crop yield factors, revitalizing agricultural cooperative banks, and updating provincial agricultural cooperative legislation to facilitate the establishment of agricultural cooperative lending institutions. The PBA also suggested leveraging technology-driven solutions for distributing targeted subsidies, particularly to subsistence-level farmers, akin to the Benazir Income Support Programme (BISP), to enhance financial inclusion.
Support for SMEs and Digital Technology
The discussion also concentrated on bolstering support for SMEs and the digital and technology sectors in Pakistan. PBA Chairman Zafar Masud, alongside the steering committee members, presented comprehensive recommendations developed in close consultation with the State Bank of Pakistan (SBP). These proposals aim to address the unique challenges and opportunities within each sector.
Banks will actively provide financial and management support to entities such as the Small and Medium Enterprises Development Authority (SMEDA) and the National Credit Guarantee Company Limited (NCGCL). The minister was informed about ongoing revisions to SME Prudential Regulations, enhancement of clean financing limits, and review of regulatory retail portfolio limits to facilitate SME financing. The establishment of an “SME and Agriculture Index” was also discussed to target customers outside the documented economy and enhance credit risk management.
Enhancing Digital and Technological Solutions
On the digital and technology front, the PBA recommended facilitating retail foreign investment through digital micro sukuks/infra bonds and integrating freelancers into payment gateways. Enhancing foreign remittance flows via specially developed online portals for overseas Pakistanis was also proposed. Additionally, banks were encouraged to offer technology-driven products and services to the market, extending beyond their internal operations to boost export flows.
The role of banks in documenting the economy through technology was also highlighted, outlining their potential contribution to government efforts in this area.
Commitment to Economic Prosperity
Aurangzeb commended the PBA’s steering committee and task forces for their detailed analysis and valuable recommendations. He highlighted the crucial role of the banking community in driving economic growth and urged banks to intensify their support for these priority sectors. The minister agreed to the governance structure for implementing the proposed recommendations, which will be spearheaded jointly by him and the SBP governor, in collaboration with the Ministry of Finance and Revenue.
“PBA and its members are fully committed to working closely with the Ministry of Finance and the SBP to implement these recommendations, ensuring the effective contribution of the banking sector to Pakistan’s economic prosperity,” pledged PBA Chairman Zafar Masud.
