President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan, Chairman FPCCI Policy Advisory Board and Former Provincial Minister Mian Zahid Hussain has said that the State Bank of Pakistan’s revised definition for micro, small and medium enterprises is a timely, positive and business-friendly decision. He said the revised classifications reflect the economic realities created by rising business costs, inflation and changes in the value of the rupee. The decision could enable a larger number of businesses to qualify for SME financing and related banking facilities.
Mian Zahid Hussain said that under the revised definition, effective July 16, 2026, a business with annual sales of up to Rs30 million will be classified as a microenterprise. A business with annual sales of more than Rs30 million and up to Rs400 million will be classified as a small enterprise, while an entity with annual sales exceeding Rs400 million but not more than Rs2 billion will fall within the medium-enterprise category. A micro, small or medium enterprise operating for up to five years will be treated as a start-up. He said the decision would particularly benefit businesses whose turnover had increased because of inflation and higher input costs, even though their financial and operational capacity remained substantially below that of large corporate entities. However, he clarified that classification as an SME would not guarantee automatic approval of financing. Banks would continue to assess loan applications on the basis of cash flows, credit history, repayment capacity, financial position and risk profile.
Mian Zahid Hussain said that, according to the latest State Bank data, SME financing stood at approximately Rs854 billion at the end of March 2026. This represented only 7.63 percent of total domestic private-sector financing, while the number of SME borrowers was approximately 312,355. He said these figures demonstrated that considerable scope remained for expanding SME lending in Pakistan. The revised prudential regulations also provide for processing a complete financing application within 15 working days and encourage digital applications, credit scoring, technology-based assessment, and cash flow-based lending.
Mian Zahid Hussain observed that the State Bank, SMEDA, the Federal Board of Revenue and the Securities and Exchange Commission of Pakistan currently use different definitions, eligibility limits and classification criteria for SMEs. These inconsistencies create confusion for businesses and complicate access to financing, taxation benefits, regulatory concessions and government support programmes. He said all national institutions should adopt a common basic definition of an SME and align their respective policies with that framework. At present, the State Bank’s definition is primarily based on annual sales. In contrast, the FBR’s SME tax regime mainly covers manufacturing businesses with annual turnover not exceeding Rs250 million. Businesses with turnover of up to Rs100 million fall under Category One, while those with turnover above Rs100 million and up to Rs250 million are placed in Category Two. He added that the SECP’s classification, which is mainly used for financial-reporting purposes, considers paid-up capital, annual turnover and the number of employees. Under this framework, the turnover ceiling for a small private company is Rs100 million, while a medium-sized private company may have turnover below Rs1 billion.
Mian Zahid Hussain said that the State Bank’s revised turnover thresholds should be adopted as the basic national classification for SME because they are simple, updated and neutral across business sectors. He urged that the Ministry of Industries and Production, State Bank, FBR, SECP and SMEDA should jointly develop a uniform core definition, establish a central SME registry and review the applicable thresholds every three years. He concluded that a uniform identification framework would reduce compliance difficulties, improve the reliability of official statistics and make access to financing, tax incentives, public procurement and development programmes more transparent and efficient.
