SMEs: govt urged to provide financing at 6pc below KIBOR

Business Recorder reported that Mian Zahid Hussain, who heads the Pakistan Businessmen and Intellectuals Forum, has asked the government to extend SME loans at six percent below KIBOR. He wants this backed by risk-sharing cover of at least 50 percent so small firms benefit. He also welcomed the Prime Minister's call to lift SME financing to Rs2.2 trillion by 2028, from Rs1.1 trillion.

The directive came at an October 12 meeting with SMEDA in Islamabad. Hussain said the initiative could lift production, investment and jobs, but reaching the goal would require cheaper credit, banking reforms and easier collateral. According to finance ministry figures he cited, SME financing stood at Rs1.114 trillion in June 2026 and Rs1.137 trillion in September, serving about 350,862 borrowers. Hitting the 2028 goal would need roughly Rs118 billion added each quarter, over five times the Rs23 billion gained in three months.

Hussain urged the government to set clear targets for commercial banks and require digital processing of applications with online monitoring. He noted KIBOR is at 11.5 percent, and banks add a margin of 5 to 6 percentage points, taking yearly SME borrowing costs to about 17 to 18 percent. He also flagged loan delays, paperwork, costly energy, taxes and late payments by large buyers. He said concessional schemes at 5, 7 and 9 percent should be judged by borrowers reached and funds disbursed.