ISLAMABAD: Pakistan on Wednesday launched a new industry-backed capital market development fund aimed at expanding retail investing, improving financial literacy and bringing millions of new investors into the country’s underdeveloped financial markets.
The Capital Market Development Fund (CMDF), established under the Securities and Exchange Commission of Pakistan (SECP), brings together the country’s major market institutions in a coordinated effort to deepen capital markets and reduce reliance on traditional bank financing in an economy where stock market participation remains among the lowest in the region.
Pakistan’s financial system has historically been dominated by commercial banks, while participation in equities, bonds and other investment products has remained limited. Officials say broader access to capital markets is critical for mobilizing domestic savings, financing infrastructure and private-sector growth, and reducing dependence on external borrowing.
“Investor participation in Pakistan’s capital market remained below one percent of the population despite recent growth,” SECP Chairman Dr. Kabir Ahmed Sidhu said at the launch ceremony in Islamabad, according to a statement.
He said regulators were targeting an investor base of 2.5 million people in the coming years through reforms aimed at simplifying onboarding and improving investor access.
The CMDF will initially be seeded with Rs120 million ($430,000), while participating institutions will contribute one percent of their annual revenues to sustain the fund, according to officials.
The agreement to establish the fund was signed by the Pakistan Stock Exchange, Central Depository Company, National Clearing Company of Pakistan Limited, Pakistan Mercantile Exchange and the Institute of Financial Markets of Pakistan.
Finance Minister Muhammad Aurangzeb, who attended the event, linked stronger capital markets to Pakistan’s broader economic resilience and self-sufficiency goals following recent regional tensions and global economic uncertainty.
“We must rely on our own resources and strengthen self-sufficiency. Capital markets can play a vital role in providing the financing needed for economic independence,” Aurangzeb said.
The finance minister said the government remained focused on maintaining macroeconomic stability, strengthening the current account balance and reducing the fiscal deficit despite regional and economic pressures.
He also said Pakistan’s stock market had remained resilient during recent volatility, reflecting improving investor confidence in the country’s economic direction.
Dr. Mobashar Sadik, chief executive of the Institute of Financial Markets of Pakistan, said the fund would focus on four main areas: financial literacy, retail investor participation, financial inclusion and institutional capacity building.
Officials said around 24,000 new investors entered Pakistan’s stock market in April alone, reflecting growing participation by retail investors, particularly younger Pakistanis using digital investment platforms.
The SECP said Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures were also being streamlined to make it easier for first-time investors to enter the market without weakening regulatory safeguards.
Pakistan has sought in recent years to broaden its investor base and deepen local capital markets as part of wider financial sector reforms tied to economic stabilization efforts under a $7 billion IMF program approved in 2024.
Officials say stronger domestic capital markets could help Pakistan finance long-term infrastructure, renewable energy and private-sector investment projects locally rather than relying heavily on external lenders and commercial bank borrowing.
