The PBA cites an increase in private sector lending, SME lending and record agricultural financing
Many foreign investors are believed to borrow from their domestic banks at lower interest rates (6-7%) and invest in Pakistan’s treasury bills, which offer high returns (20%). Photo: file
KARACHI:
The local banking sector has announced a voluntary 3% reduction in export sector returns, bringing the markup rate under the export refinancing facility down to 4.5%. The move is expected to lower business costs for exporters and help boost foreign exchange earnings.
Commercial banks have implemented the relief for exporters on all new loans as well as rollover loans, with the facility valid till June 2026.
According to the Pakistan Banks’ Association (PBA), private sector credit registered a significant increase of Rs 1.1 trillion. in 2025, while credit disbursements to the agriculture sector reached a record Rs 2.58 trillion. The PBA said the number of agricultural borrowers increased from 2.7 million to 3.0 million. PBA Chairman Zafar Masud said that during the first half of fiscal year 2026, private sector credit grew by an additional Rs654 billion, while banks also financed government loans by a significant Rs1.95 trillion.
The number of small and medium-sized enterprises (SMEs) accessing finance from the banking sector increased by 57%, resulting in a doubling of lending to SMEs over the past two years.
The PBA said the measure currently falls within the existing export refinancing scheme’s limit of Rs1.052 billion. However, it added that there is flexibility to increase the limit if the State Bank or the Exim Bank approves an increase before June 2027. The association termed the move as an important step in the public interest, aimed at reducing financing costs for exporters, accelerating economic growth and strengthening foreign exchange reserves. The interest waiver, it said, is part of a series of strategic initiatives by the banking industry to stabilize the national economy, including efforts to reduce circular debt and play a key role in the privatization of PIA.
Masud said the move was not just about numbers but reflected the banking sector’s commitment to respond to the call of the nation. He said that exports were vital to Pakistan’s economic stability, adding that by providing financing at a highly competitive rate of 4.5%, the banking sector showed that it stood firmly with the state and its exporters. He added that the numbers spoke for themselves.
