Pakistan PM Orders Action Against Banks Slow to Lend to Farmers, SMEs and Housing

Prime Minister Shehbaz Sharif has instructed the State Bank of Pakistan (SBP) and the Finance Ministry to take action against banks that are slow to extend credit to farmers, small and medium enterprises (SMEs) and applicants under the Prime Minister's Apna Ghar housing scheme. The directive came during a review meeting in Islamabad focused on improving access to finance in these priority sectors.

The prime minister said broadening financing for SMEs, housing and agriculture is a central plank of the government's economic strategy, describing these sectors as key to growth and to creating jobs for young people. He commended banks that have performed well under government-backed lending initiatives but stressed that financial institutions must show the same level of cooperation to priority sectors that they receive from the state and its institutions.

Shehbaz described SMEs as having substantial potential to drive economic growth, lift exports and generate employment, while calling agriculture the backbone of the national economy. He said the government is pursuing value addition in agricultural commodities to raise export earnings. The Apna Ghar scheme, he added, would support housing and construction and stimulate the many industries connected to the sector.

The meeting was briefed on progress so far. Under the Apna Ghar programme, loans worth Rs. 511 billion had been approved across 86,899 applications as of October 23, 2026, with Rs. 91 billion disbursed to 15,584 applicants. Overall housing finance reached Rs. 455 billion, benefiting 187,317 borrowers. Agricultural lending stood at Rs. 1,329 billion and served roughly 3.5 million people, while SME financing reached Rs. 1,148 billion across 342,458 businesses. Targets have been set to raise both agriculture and SME lending to Rs. 1,500 billion by the end of fiscal year 2027.

The SBP outlined three pillars for expanding priority-sector lending: refining regulations, sharing risks and costs between the government and banks, and broadening digital services. As part of these efforts, the central bank recently launched the SME Connect portal, which lets businesses apply for loans and track application progress. The prime minister also directed the finance minister to resolve financing issues raised by stakeholders in the SME, agriculture and housing sectors and to prepare a comprehensive action plan, while the SBP and the Federal Board of Revenue were told to jointly address tax issues affecting SMEs and exporters and to develop a risk-coverage strategy to support SME lending.

The push reflects growing official emphasis on channeling bank credit toward productive sectors rather than relying on traditional lending patterns. How quickly banks respond to the new pressure, and whether the fiscal 2027 targets are met, will be closely watched by businesses and borrowers who have long complained about difficult access to affordable finance.