In a keynote address at the ninth Annual Microfinance Conference in Karachi, State Bank of Pakistan Governor Jameel Ahmad argued that durable macroeconomic stability is needed to deliver inclusive growth, pointing to sharply lower inflation and stronger external buffers. He also outlined SBP actions aimed at expanding and strengthening the microfinance sector. The Governor said inflation is projected to remain within the government’s 5–7 percent target range over the medium term, despite temporary flood-related price pressures, and noted that foreign exchange reserves are almost five times higher than in February 2023 due to interbank foreign exchange purchases. On microfinance policy, he described comprehensive revisions to the Prudential Regulations for Microfinance Banks to move from a rules-based to a principle-based approach, including removing restrictions on microenterprise lending, creating a dedicated Agriculture and Livestock loan category, and raising loan limits to PKR 5 million for agriculture, microenterprise and housing loans and PKR 500,000 for general loans. He also referenced the launch of a World Bank-funded Climate Risk Fund under the Resilient and Accessible Microfinance Project to support two million borrowers through liquidity facilities, and a Risk Coverage Scheme for Small Farmers and Underserved Areas offering 10 percent first-loss coverage and operational incentives to expand lending in regions including Balochistan, Khyber-Pakhtunkhwa, Azad Jammu and Kashmir, and Gilgit Baltistan.
State Bank of Pakistan 2025-10-09
State Bank of Pakistan Governor sets out principle-based revision of microfinance bank rules and new climate and risk coverage facilities
State Bank of Pakistan Governor Jameel Ahmad stressed the need for durable macroeconomic stability for inclusive growth, noting reduced inflation and stronger external buffers. He announced revisions to Prudential Regulations for Microfinance Banks, adopting a principle-based approach, and introduced a World Bank-funded Climate Risk Fund and Risk Coverage Scheme to support microfinance expansion. Inflation is expected to stay within the 5–7 percent target range, with foreign exchange reserves significantly increased since February 2023.