Housing, agriculture, SMEs drive Pakistan’s access to finance push

August 26, 2026 (MLN): Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a fortnightly meeting of the Access to Finance Steering Committee, reviewing progress on initiatives aimed at expanding affordable and inclusive financing across key sectors, including housing, agriculture, small and medium-sized enterprises (SMEs), exports, information technology and renewable energy.

The meeting noted significant progress in several financing initiatives since the end of FY26, alongside legal, regulatory and institutional reforms aimed at strengthening the country's overall financing ecosystem.

The Finance Minister said the Government's focus is to direct a larger share of the financial sector's capacity toward productive investment, business creation, home ownership, agricultural development and export growth, supporting stronger private-sector-led and inclusive economic expansion.

Total housing finance increased from around Rs294 billion at the end of June to Rs307bn by mid-August, the Committee noted.

Under the Wazir-e-Azam Apna Ghar Program Ghar Ho To Apna, applications rose by 52% since June to nearly 139,000, while approvals surged 84% to more than 46,000.

Approved financing almost doubled from Rs144bn to Rs279bn, while the number of loans disbursed increased by 59% to more than 7,600, with total disbursements exceeding Rs38bn.

The expansion in housing finance is being supported by regulatory reforms, including the State Bank of Pakistan's revised Prudential Regulations for Housing Finance.

The reforms include a 90:10 loan-to-value ratio, a 65% debt-burden ratio, models for assessing informal income, simplified property valuation and documentation procedures, greater digitalisation and longer financing tenors.

The Committee also highlighted the Financial Institutions (Recovery of Finances) (Amendment) Act, 2026, describing it as an important structural reform for strengthening the recovery and enforcement framework for mortgage-based lending.

A more predictable recovery mechanism is expected to improve lenders' confidence, expand the availability of housing finance and support the development of Pakistan's mortgage market.

The Committee further stressed the need for the housing and construction sector to increase the supply of quality and affordable housing units as demand for mortgage financing continues to grow.

Higher activity in the housing sector could also generate spillover benefits for construction, cement, building materials, allied industries, SMEs, employment and broader economic activity.

The number of agriculture borrowers increased from around 3.26m at the end of June to 3.37m by mid-August, adding approximately 115,000 borrowers, while total agriculture financing remained close to Rs1.26tr.

Under the Zarkhez-e-Asaan Zarai Qarza scheme, more than 58,000 farmers have registered for uncollateralised financing designed primarily to support smallholder and tenant farmers in purchasing agricultural inputs.

Since June, bank approvals under the programme increased by around 12% to nearly 16,700, while approved financing limits exceeded Rs7.2bn.

Loans disbursed under the scheme also increased by around 13% to nearly 5,000.

The Committee emphasized the need to accelerate the conversion of applications and approvals into actual financing to support agricultural productivity, rural incomes and financial inclusion.

Formal financing to SMEs stood at approximately Rs1.05tr, benefiting around 330,000 businesses.

The Committee also reviewed a credit-scoring pilot being conducted across 13 banks, which aims to improve credit assessments through proxy and alternative methods for evaluating cash flows and expand access to financing beyond conventional collateral-based lending.

The Government's medium-term target is to increase both agriculture and SME financing to Rs1.5tr by June 2027 and Rs2tr by June 2028, accompanied by substantial growth in the number of borrowers.

The Committee also reviewed measures to align access-to-finance initiatives with the Government's export-led growth strategy, including enhanced financing and refinancing facilities for exporters and SMEs.

These measures are aimed at improving access to working capital and long-term investment financing.

The meeting welcomed the Performance Based Rebate on Incremental Exports (PRIE), which became effective on July 1, 2026.

Under the scheme, exporters achieving growth of up to 10% are eligible for a 1% rebate on incremental exports, while exporters recording growth above 10% can receive a 2% rebate.

The Committee also emphasized improving access for export-oriented SMEs to bank financing under facilities administered by the Export-Import Bank of Pakistan (EXIM Bank).

Muhammad Aurangzeb said SME financing, export refinancing, long-term investment funding and performance-based incentives should work together to help businesses expand capacity, improve competitiveness and generate higher export and foreign-exchange earnings.

The Committee also reviewed progress under the Pakistan Accelerated Vehicle Electrification (PAVE) Programme.

By mid-August, the programme had received more than 83,000 applications, with around 15,800 approved and nearly 4,000 loans disbursed.

Since June, approvals increased by approximately 24%, while loan disbursements rose by 34%.

Meanwhile, the number of electric vehicles delivered more than tripled from 471 to over 1,500.

The meeting also reviewed progress on the Prime Minister's online digital housing portal and stressed the importance of stronger coordination among relevant institutions to simplify access to financing.

Concluding the meeting, Muhammad Aurangzeb said the Access to Finance initiative should function as an integrated economic-enablement framework, combining legal and regulatory reforms, digitalisation, improved credit assessment, targeted financing, risk-sharing mechanisms, refinancing facilities and performance-based incentives.

He directed regular bank-wise monitoring of financing, borrower growth, approvals and disbursements, while implementation bottlenecks will be brought before the Steering Committee for timely resolution.

The Finance Minister also called for greater public awareness to ensure that farmers, SMEs, exporters, prospective homeowners and entrepreneurs are fully informed about available financing opportunities.

He said the broader objective is to expand access to economic opportunities by enabling households and businesses to acquire homes, expand farms and enterprises, invest in productive capacity, increase output and compete in international markets.

The expanding financing ecosystem, he added, should ultimately support higher investment, stronger construction and agricultural activity, more competitive SMEs, increased exports, employment generation and sustainable and inclusive economic growth.

Copyright Mettis Link News