Banks to Support Financing for EVs, Energy-Efficient Homes, and SMEs with Improved Data Access

Islamabad: Pakistan’s banking sector has pledged to support the financing of energy-efficient households, electric vehicles, and small and medium enterprises (SMEs) to enhance financial inclusion. This support is contingent on improved data availability for consumer credit assessments.

The commitment was made at a high-level meeting that was presided over by Finance Minister Muhammad Aurangzeb. Utility providers, including gas, electricity, and telecommunications companies, were requested to collaborate with the banking sector. These entities, which are legally required to share data with credit bureaus to facilitate lending decisions, have encountered initial reservations from certain regulatory bodies.

A delegation from the Pakistan Banking Association (PBA) led by its Chairman, Zafar Masud, and State Bank of Pakistan (SBP) Governor Jameel Ahmed were among the notable attendees.

Mr. Masud delineated PBA’s vision for a financial ecosystem that is both sustainable and inclusive. He emphasized the need for the establishment of a financial data exchange, the revival of agricultural cooperatives, the establishment of a venture capital fund for fintechs, corporate farming financing, and electronic warehouse receipt finance and a SME index.

For immediate impact, Mr. Masud proposed initiatives including financing for energy-efficient fans, electric vehicles, solar-powered tube wells, and a markup subsidy with first loss coverage for SME financing.

Governor Ahmed reported progress on various PBA-proposed initiatives. He stated that the central bank had implemented numerous additional regulatory measures to facilitate the implementation of such initiatives. He emphasized the necessity of enhancing collaboration between the banking industry and utilities to establish a robust database that can be used to develop a favorable credit scorecard for small and medium-sized enterprises (SMEs) and agriculture.

The finance minister  commended PBA and SBP for their efforts, while simultaneously urging them to concentrate on short-term projects. He proposed that the objectives of these should be to ensure that the implementation is completed by the end of December, allowing for an early deployment in the following year.

Minister Aurangzeb also committed to collaborating with the relevant ministries and regulators to resolve the issue of data sharing. He ensured that the anticipated meetings between banking institutions and other key actors in the sector received the requisite support. Furthermore, he committed to organizing a meeting with all relevant parties in order to collect input and encourage agreement on the proposed measures.