IFC, HABIBMETRO Launch $40m Facility to Boost SME Lending in Pakistan

The International Finance Corporation (IFC) has unveiled a new risk-sharing facility with Habib Metropolitan Bank Limited (HABIBMETRO) aimed at unlocking up to $80 million in financing for small and medium enterprises (SMEs) across Pakistan, including agricultural businesses.

The move targets Pakistan's chronic SME financing gap, where fewer than 200,000 of the country's 3.2 million SMEs currently have access to formal credit — despite the sector accounting for 90 percent of businesses and contributing around 40 percent of GDP.

Tackling Pakistan's SME Credit Shortfall

Under the agreement, IFC will provide an unfunded risk share of up to $40 million (Pakistani rupee equivalent), covering up to 50 percent of principal losses on a portfolio of SME loans originated by HABIBMETRO. The total supported loan portfolio is expected to reach up to $80 million.

The facility is designed to catalyze lending to underserved enterprises, including agricultural SMEs, which are often excluded from formal financial systems due to perceived higher risk profiles.

"Unlocking private capital at scale is essential to close Pakistan's SME financing gap," said Momina Aijazuddin, IFC's Regional Industry Director for Financial Institutions Group in the Middle East and Central Asia.

"Together with Habib Metropolitan Bank Limited, IFC is deploying targeted risk-sharing to expand credit for SMEs and agri-centric businesses, promoting growth that is inclusive, sustainable, and commercially viable."

Supporting Job Creation and Market Competitiveness

SMEs are widely regarded as the backbone of Pakistan's economy, driving employment and regional development. However, limited access to credit has constrained their ability to scale operations, invest in technology, and compete in both domestic and export markets.

By mitigating lending risk for HABIBMETRO, the facility is expected to:

• Increase financing to productive sectors

• Expand credit access in underserved regions

• Support job creation

• Demonstrate commercially viable SME lending models

The partnership aligns with HABIBMETRO's medium-term strategy to scale and diversify its SME loan portfolio.

"We are consciously working to improve access to finance for SMEs," said Khurram Shahzad Khan, President and CEO of HABIBMETRO.

"Our partnership with IFC will enable us to broaden and diversify our SME portfolio across various regions and industrial sectors, including agriculture."

Structured Under IFC's Small Loan Guarantee Program

The facility will be processed under IFC's Small Loan Guarantee Program (SLGP) and will have a tenor of up to six years.

It is further supported by a pooled first-loss guarantee from the International Development Association's (IDA) Private Sector Window (PSW) Blended Finance Facility. Through this mechanism, IDA PSW provides a first-loss backstop across a portfolio of IFC risk-sharing facilities in eligible countries, enabling larger scale and improved pricing for SME lending.

The blended finance structure reduces capital constraints for lenders while encouraging private-sector participation in higher-risk markets.

Strengthening Pakistan's Financial Ecosystem

The initiative is part of broader efforts to strengthen Pakistan's financial inclusion landscape and mobilize private capital for productive sectors of the economy.

By demonstrating sustainable risk-sharing frameworks, IFC and HABIBMETRO aim to shift more financing toward SMEs and agricultural enterprises — sectors considered critical to economic resilience and long-term growth.