KARACHI: The State Bank of Pakistan (SBP) has introduced a financing framework for Small Enterprises (SEs) and Small Farmers (SFs) under wholesale and agency arrangements to further improve their access to credit under the government’s Risk Coverage Facility.
The banks may provide financing to SEs and SFs through wholesale and agency arrangements. The framework aims to facilitate financing through participating financial institutions and authorized financial institutions, subject to prescribed eligibility criteria, lending limits and risk management requirements.
The financing provided to SEs and SFs under the wholesale or agency arrangement will be reported as part of the bank’s portfolio against SEs and SFs and the financing provided by the banks under this framework will be covered under the Federal Government Risk Coverage Schemes for SMEs and Small Farmers.
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The Financing Framework enables banks (Participating Financial Institutions or PFIs) to provide financing through wholesale and agency arrangements by leveraging the outreach and financing related capabilities of eligible institutions, i.e. Microfinance Banks, Non-Banking Microfinance Companies (NBMFCs) and Non-Bank Finance Companies (NBFCs), referred to as Agent Financial Institutions (AFIs).
The Framework aims to ensure that PFIs and AFIs have robust systems and processes, with explicitly defined roles and responsibilities. Under the Framework, the AFIs will be responsible for loan origination, appraisal, approval, monitoring, recovery and reporting, while loans can either be booked directly in the PFIs books.
In both cases, the loans extended under the Wholesale or Agency Arrangement will be identifiable and traceable and will be reported to the PFIs through API based integration. The parameters of the framework are as below:
Under the framework, the maximum financing limit for SEs will be set at Rs1 million per borrower for NBMFCs and Rs5 million for non-bank financial companies (NBFCs) and microfinance banks (MFBs). For agricultural borrowers, the maximum financing limits will be Rs500,000 for NBMFCs and Rs2 million for NBFCs and MFBs. The prescribed ceilings will apply to individual borrower exposure under the arrangement, subject to the respective authorized financial institutions’ financing capacity and their underwriting and monitoring capabilities.
Under the framework, PFIs will select AFIs based on specific eligibility criteria, including 100 percent operational self-sufficiency and a non-performing loan ratio of no more than 5 percent in SME and agricultural financing.
Eligible institutions must have received unqualified audit opinions for the last two years, possess at least three years of experience in enterprise lending or agricultural financing, and comply with minimum capital adequacy and capital requirements prescribed by the relevant regulator where financing is recorded on their books.
They must also maintain sound governance and risk management systems, including a functional board, independent internal audit and compliance functions, and robust credit origination, monitoring and reporting mechanisms. Compliance with anti-money laundering and counter-terrorism financing (AML/CFT) requirements under SBP or Securities and Exchange Commission of Pakistan (SECP) regulations will also be mandatory.
Copyright Business Recorder, 2026