Annual sales turnover enhanced: SBP revises regulations for SMEs financing

KARACHI: The State Bank of Pakistan (SBP) on Thursday announced the amendment in prudential regulations for Small and Medium Enterprises (SMEs) financing and definition.

As per amendment, SBP has revised the definitions of Micro, Small and Medium Enterprises for regulatory purposes by updating the annual sales turnover thresholds and introducing a separate classification for start-ups.

“In order to align the SMEs’ definition with the current economic realities, the SMEs’ definition given in Part-I of the Prudential Regulations for SME Financing has been revised,” according to a circular issued by the SBP.

Under the revised criteria, businesses with annual sales turnover of up to Rs30 million will be categorised as Micro Enterprises, while Small Enterprises will include firms with turnover exceeding Rs30 million and up to Rs400 million. Previously, having a turnover of above Rs30 million to Rs 150 million were consider as Small Enterprises.

As per revised criteria, Medium Enterprises (ME) will comprise businesses with annual sales turnover above Rs400 million and up to Rs2 billion compared to previous limits of above Rs150 million to Rs800 million.

The SBP has also classified Start-ups as Micro, Small or Medium Enterprises that are up to five (5) years old.

The revised definitions are aimed at strengthening the regulatory framework for MSMEs and facilitating better access to financial services and policy support for businesses at different stages of growth. According to SBP, these amendments will come into force with immediate effect.

The SBP has already asked the banks for priority financing to SME sector and has set a target of increasing outstanding SME financing to Rs1.5 trillion by June 2028, while expanding the number of SME borrowers to 750,000.

With the efforts of the SBP, outstanding SME financing more than doubling between June 2021 and December 2025, while the number of SME borrowers increased by approximately 75 percent.

SBP has already advised the banks and DFIs to develop SME finance as one of their key business lines and will have a vision, plan and strategy duly approved by their respective Board of Directors (BODs) to develop and expand their SME finance portfolio on sustained basis.

Copyright Business Recorder, 2026