Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular No. 05 of 2022
March 29, 2022

The Presidents/CEOs
All Banks/DFIs.

Dear Sir/Madam,

Amendment in Prudential Regulations for SME Financing

Please refer to IH&SMEFD Circular No. 06 dated April 05, 2021 on the above subject.

  1. In order to align the definitions of small enterprise and medium enterprise with the SME definition prescribed in SME Policy 2021, notified by Government of Pakistan, following definition related regulations have been updated:

    Regulation SE R-1: Definition of Small Enterprise

    Enterprise Category

    Criteria Annual Sales Turnover

    Small Enterprise (SE)

    Up to PKR 150 Million

    Start-up (SE)

    A small enterprise up to 5 years old will be considered as start-up SE

    Regulation ME R-1: Definition of Medium Enterprise

    Enterprise Category

    Criteria Annual Sales Turnover

    Medium Enterprise (ME)

    Above PKR 150 Million to PKR 800 Million

    Start-up (ME)

    A medium enterprise up to 5 years old will be considered as start-up ME

  2. These amendments are applicable with immediate effect on new financing. However, since the banks/DFIs need to segregate their existing portfolio according to the revised definition of Small Enterprise and Medium Enterprise, they are allowed an implementation period upto June 30, 2022. Moreover, updated copy of Prudential Regualtions for SME financing also incorproating above changes is attached as Annexure-1.

  3. Banks and DFIs are advised to ensure circulation of these regulations among all their offices/ branches for meticulous compliance in letter and spirit. Non-compliance of Prudential Regulations will lead to punitive action under the relevant provisions of BCO, 1962.
Encl: Annexure-1: Updated Prudential Regulations for SME Financing


Yours sincerely,


(Dr. Mian Farooq Haq)


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