SH&SFD Circular No. 07 of 2026, dated 28 October 2026 · Reviewed 28 October 2026. The original instrument and any later changes govern.
The circular permits banks to use wholesale and agency arrangements, subject to the detailed framework and underlying risk coverage scheme terms.
What changes for banks
SBP Circular No. 07 of 2026 permits banks to provide financing to small enterprises and small farmers through wholesale and agency arrangements. SBP states that qualifying financing is to be reported as part of the bank's portfolio for those borrower categories. The circular is dated 28 October 2026 and does not specify a later commencement date.
The short circular references an attached financing framework. Banks should read that attachment before adopting a particular intermediary model; the circular alone does not establish detailed requirements for every origination, servicing and reporting function.
Government risk coverage
The circular says financing under the new framework will be covered under the Federal Government Risk Coverage Schemes for SMEs and small farmers notified through SH&SFD Circular 02 of 2024 and ACFID Circular 02 of 2025 respectively.
Risk coverage should not be described as unconditional. Eligibility, documentation and claim requirements under the relevant scheme and the attached framework must be assessed for each arrangement.
Implementation considerations
Banks and partners should allocate responsibility for credit decisions, borrower records, collections, data protection, complaints and regulatory reporting in clear contractual terms. These are practical due diligence issues; the brief does not attribute additional unstated duties to the circular.
The institution should test the proposed operating model against the detailed framework and relevant scheme conditions before launch, and avoid suggesting that an intermediary has independent banking authorisation without separate legal support.
Why this development matters
The circular opens an additional financing delivery model, but does not replace the need to verify scheme eligibility and implementation conditions.
Specific steps for affected organisations
- Review the attached framework and both referenced risk coverage schemes.
- Confirm borrower eligibility, reporting and the parties' contractual responsibilities.
- Assess partner due diligence, data management and servicing arrangements.
- Avoid unconditional claims about government coverage.
Timing and legal status
Issued 28 October 2026; no later effective date stated in the circular.
The framework attachment and earlier risk coverage scheme terms govern operational details; the brief does not purport to reproduce unavailable attachment text.
SBP SH&SFD Circular 07/2026 (official text)