KARACHI: A collateral-free financing scheme introduced by Pakistan’s central bank is expected to solve the liquidity problems of around 10 million Small and Medium Enterprises (SMEs) in the country, traders and a financial expert said on Friday.
The State Bank of Pakistan (SBP) this week rolled out an innovative initiative to improve access to finance for SMEs that cannot offer collateral or security to banks.
Under the scheme, titled ‘SME Asaan Finance or SAF,’ the government will provide risk coverage of 40-60 percent to selected banks against losses, depending on the size of loans.
A majority of SMEs in the informal sector are currently borrowing in cash at a minimum 25 percent interest rate due to several reasons, including higher loan losses, high-cost bank finance models, less use of appropriate technology for SME finance and a lack of acceptable security, according to the SBP.
Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver appreciated the SBP’s new initiative, calling it the fulfilment of a long-standing demand by SMEs.
“This is indeed a very big step to facilitate the sector,” Thaver said. “This move will help some 10 million SMEs, including farmers, in playing a vital role in the national economy.”
SMEs were previously entitled to get only a Rs100,000 loan on the provision of security or collateral, which was later increased to Rs1 million.
“The collateral-free loans will enable thousands of small traders to get financing which is their right,” Thaver said.
The UNISAME president said SMEs were the backbone of the country’s economy and a major contributor to the export sector. “With the financing made available, the exports are expected to boost,” he told Arab News.
“This risk cover will be 60 percent for small loans up to Rs4 million, 50 percent for midsize loans from above Rs4 million to Rs7 million, and 40 percent for relatively larger loans of Rs7 million to Rs10 million,” the central bank said about the new scheme.
Pakistani SMEs play a key role in the national economy and are estimated to contribute 40 percent to the gross domestic product (GDP) and 25 percent to export earnings. Despite this, small businesses find it difficult to access bank finance as SME financing stood at Rs444 billion on March 31, or only 6.6 percent of the total private sector credit, according to the Small and Medium Enterprises Development Authority (SMEDA) and SBP.
Under the new scheme, the central bank will provide refinancing for three years to selected banks. Banks will get refinancing from SBP at 1 percent per annum and extend financing to SMEs at the end-user rate of up to 9 percent per annum, which is very attractive compared to informal finance costs, according to SBP, which has also added Shariah compliant features to the SAF scheme to accommodate financing needs of faith-sensitive borrowers.
Some traders say the 9 percent interest rate being offered is still high.
“The interest rate is high and if the process is done through banks it would be difficult for small businesses to get financing,” Iftikhar Ghani Vohra, the convener of the Federation of Pakistan Chambers of Commerce and Industry’s central committee on SMEs, told Arab News.
Vohra said the FPCCI committee was studying the scheme and would present a detailed review at a later date.
Samiullah Tariq, a research director at Pakistan-Kuwait Investment Company, said the relatively cheap financing rates would provide working capital to small businesses, which may ultimately enhance productivity.
“This will help small businesses with liquidity for their working capital, expansion, vehicles and generators,” he said, “and will improve supply chain and productivity.”
Pakistan’s new collateral-free financing scheme to benefit 10 million small businesses — traders
https://arab.news/w7zwn
Pakistan’s new collateral-free financing scheme to benefit 10 million small businesses — traders
- Majority of small businesses that do not have collaterals currently borrow at a minimum 25 percent rate
- Central bank says the government will cover risk for small loans up to 60 percent under ‘SME Asaan Finance’ initiative
Pakistan army chief says future warfare will rely on technology over battlefield maneuvers
- Asim Munir cites drones, electronic warfare and surveillance as central to future war operations
- Remarks follow Pakistan’s 2025 military conflict with India that highlighted role of technology
ISLAMABAD: Pakistan’s army chief said on Thursday future conflicts would be shaped more by technology than traditional battlefield maneuvers, as the military accelerates its shift toward drone warfare, electronic systems and networked command structures, according to a statement issued by the Pakistan military.
Field Marshal Syed Asim Munir, who also serves as Chief of Defense Forces, made the remarks while visiting the Bahawalpur Garrison in southern Punjab, where he observed a high-intensity field exercise focused on integrating new technologies into conventional military operations, the Inter-Services Public Relations (ISPR) said.
The exercise, titled Steadfast Resolve, involved unmanned aerial systems, advanced surveillance assets, electronic warfare capabilities and modern command-and-control mechanisms, reflecting what the military described as a move toward “technology-enabled multi-domain operations.”
“Character of war has evolved massively, with technological advancements driving the evolution, dictating huge mental transformation at all tiers,” Munir said while addressing troops, according to the ISPR statement.
“In future, technological maneuvers will replace physical maneuvers and will fundamentally alter the way offensive and defensive operations are undertaken,” he added.
Militaries worldwide are reassessing combat doctrine as drones, electronic warfare and real-time data increasingly shape outcomes on modern battlefields. In South Asia, those shifts gained renewed attention following military exchanges between Pakistan and India in May 2025, when both sides employed surveillance, electronic countermeasures and precision capabilities alongside conventional forces, underscoring the growing role of non-kinetic domains.
Munir said the Pakistan army was “embracing and absorbing technology at a rapid pace,” adding that “innovation, indigenization and adaptation shall remain fundamental” as the military prepares for future battlefield and security challenges.
The army chief also reiterated that Pakistan’s armed forces remained prepared to defend the country’s sovereignty and territorial integrity, while emphasizing the need to maintain readiness as warfare increasingly expands across physical, cyber and electronic domains.
