SBP Chief Urges Banks to Boost Private-Sector Lending in Pakistan

State Bank of Pakistan Governor Jameel Ahmad has called on commercial banks to increase financing for businesses and strengthen their retail deposit base, warning that private-sector lending remains low compared with other emerging economies. Speaking at the 11th Pakistan Banking Awards 2026 on Friday, Ahmad said the country’s private-sector credit-to-GDP ratio has declined substantially over the past three decades despite the expansion and resilience of the banking system.

The central bank governor said government borrowing requirements alone could not fully explain the weakness in private-sector credit. He pointed to emerging economies where governments carry significant domestic debt but banks still provide a much larger share of financing to businesses. Ahmad urged Pakistani banks to reassess their business models and place greater emphasis on mobilising deposits from households while directing more credit toward productive private-sector activity.

Ahmad said Pakistan had made progress in restoring macroeconomic stability, but warned that stabilisation by itself would not deliver the higher and more sustainable growth the country needs. He described the banking industry as an important part of the next phase of economic development, particularly because companies require reliable access to financing for investment, expansion and job creation. Greater private-sector lending could therefore become a key channel through which improved economic conditions translate into broader business activity.

The governor also highlighted the financial strength of the banking industry. According to figures he presented, total banking-sector assets reached Rs69 trillion by the end of June 2026, while deposits stood at Rs43 trillion. He said profitability remained strong and capital adequacy continued to stay comfortably above domestic regulatory requirements as well as international benchmarks, indicating that banks have remained resilient despite economic and external pressures.

At the same time, Ahmad said both banking assets and deposits remain relatively small as a proportion of Pakistan’s economy when compared with several emerging-market peers. He also noted that the amount of currency circulating outside the banking system remains high relative to deposits. Reducing dependence on cash and attracting more funds into formal financial institutions could expand the resources available to banks for lending while supporting efforts to deepen Pakistan’s financial system.

The remarks come as policymakers focus on moving from economic stabilisation toward stronger growth after a difficult fiscal year marked by floods, geopolitical tensions and uncertainty in global trade. Ahmad said inflation had remained close to the medium-term target range, inflation expectations were broadly anchored and the current-account deficit stayed near the lower end of projections. He also said foreign-exchange reserves had moved above the end-June target of $18 billion, with much of the increase coming from State Bank purchases rather than debt-driven accumulation.

For Pakistan, the next test will be whether improving macroeconomic indicators translate into greater financing for companies, particularly businesses seeking capital for investment and expansion. The State Bank’s message places responsibility on commercial lenders to broaden their deposit base and increase their role in financing productive economic activity. Banks’ response, along with future monetary and regulatory conditions, will help determine how quickly private-sector credit can recover as a share of the economy.