# SBP lets banks lend to small businesses and farmers through microfinance agents: up to Rs 5 million a borrower

Source: Searchable (https://searchable.pk/news/business/sbp-lets-banks-lend-to-small-businesses-and-farmers-through-microfinance-agents)
Type: News article
Author: Searchable Editorial
Published: 29 Oct 2026
Updated: 29 Oct 2026
Retrieved: 29 Oct 2026

> A new State Bank framework lets banks reach small firms and small farmers through microfinance banks and NBFCs, with the loans covered by the government's Risk Coverage Schemes. Here are the limits and who qualifies.

The State Bank of Pakistan (SBP) has introduced a framework that lets banks lend to **small enterprises and small farmers** through microfinance banks, non-bank microfinance companies and non-bank finance companies (NBFCs), acting either as wholesale borrowers or as the bank's agents, [ProPakistani reported](https://propakistani.pk/2026/10/29/sbp-makes-it-easier-for-small-businesses-farmers-to-get-bank-loans/) on Thursday. The aim is to get more **SME loans in Pakistan** to borrowers that bank branches rarely reach, with the loans covered under the federal government's Risk Coverage Schemes for SMEs and small farmers.

## The new loan limits per borrower

| Lender that originates the loan | Small enterprise | Small farmer |
|---|---|---|
| Non-bank microfinance company | Rs 1 million | Rs 500,000 |
| Microfinance bank or NBFC | Rs 5 million | Rs 2 million |

The limits apply per individual borrower and depend on each institution's own financing capacity and its ability to underwrite and monitor loans.

## How it works

A bank chooses an "authorised financial institution" and either lends to it wholesale or appoints it as an agent. The agent does the groundwork: finding the borrower, appraising and approving the loan, monitoring it, recovering it and reporting. The loan can sit on the bank's books or be handled under the agency arrangement, but either way it must be identifiable and traceable, and reported to the bank through an API link. These loans count towards the bank's small-enterprise and small-farmer portfolios, which is what brings them under the government's risk cover.

The risk cover matters because it is the reason banks are willing to take on small, collateral-light borrowers at all: the government shares part of the first losses. The SBP's [Risk Coverage Scheme page](https://www.sbp.org.pk/Incen-others/RCSSFUA.asp) sets out the existing scheme for small farmers.

## Which lenders qualify as agents

To be picked, a microfinance bank, microfinance company or NBFC must have:

- 100% operational self-sufficiency
- a non-performing loan ratio of no more than 5% in its SME and farm lending
- clean (unqualified) audit opinions for the last two years
- at least three years of SME or agricultural lending experience
- capital adequacy in line with its regulator's rules, where the loans are on its own books
- a working board, independent internal audit and compliance, and anti-money laundering controls under SBP or SECP rules

## What it means for a shopkeeper or a farmer

If you run a small shop, workshop or farm and your bank branch has turned you away, the lender most likely to reach you now is the microfinance bank or finance company already working in your area. Ask it whether it lends under a bank's risk-covered SME or small-farmer scheme. Before signing, work out the instalment with our [personal loan calculator](/tools/finance/personal-loan-calculator), and check the benchmark the rate is pegged to on our [KIBOR page](/data/kibor-1y). The SBP policy rate is currently [12%](/data/sbp-policy-rate).

The State Bank's circular itself could not be read from its website when this story was written; the figures above are as reported by ProPakistani.

## Frequently asked questions

**How much can a small business borrow under SBP's new framework?**

Up to Rs 5 million per borrower through a microfinance bank or NBFC, or Rs 1 million through a non-bank microfinance company.

**What is the loan limit for small farmers?**

Rs 2 million per farmer through a microfinance bank or NBFC, and Rs 500,000 through a non-bank microfinance company.

## Sources

- SBP Makes It Easier for Small Businesses, Farmers to Get Bank Loans (ProPakistani): https://propakistani.pk/2026/10/29/sbp-makes-it-easier-for-small-businesses-farmers-to-get-bank-loans/
- Risk Coverage Scheme for Small Farmers and Underserved Areas (State Bank of Pakistan): https://www.sbp.org.pk/Incen-others/RCSSFUA.asp

How to cite: "SBP lets banks lend to small businesses and farmers through microfinance agents: up to Rs 5 million a borrower", Searchable, 29 Oct 2026, https://searchable.pk/news/business/sbp-lets-banks-lend-to-small-businesses-and-farmers-through-microfinance-agents