Banking Sector Cuts Mark-Up Rate By 3% on Export Refinance Facility

Pakistan’s banking sector has voluntarily cut the markup rate on export financing by 3 percent, bringing the end-user rate under the Export Refinance Facility down to 4.50 percent with immediate effect.

In a statement issued in Karachi, the Pakistan Banks Association (PBA) said the move is aimed at lowering the cost of doing business for exporters and supporting foreign exchange earnings at a time when the country is focused on economic stabilization.

The reduction applies to all new loans and rollovers under the Export Refinance Facility within the existing limit of Rs. 1,052 billion. The industry said this limit may be increased if the State Bank of Pakistan or the EXIM Bank expands the facility through June 2027.

According to the association, banks have continued to expand credit despite heavy government borrowing. In FY25, private sector credit rose by Rs. 1.1 trillion, compared to Rs. 470 billion in FY24, reflecting stronger demand for working capital and fixed investment.

The statement said the support has been broad-based. The SME borrower base surged by 57 percent, while financing to small and medium enterprises doubled over two years. In agriculture, the borrower base increased from 2.7 million to nearly 3 million, and total disbursements reached a record Rs. 2.58 trillion.

In the first half of FY26, private sector credit expanded further by Rs. 654 billion, or 6.75 percent. During the same period, banks also financed Rs. 1.95 trillion in government borrowing, highlighting what the association described as continued support to both the public and private sectors.

PBA Chairman Zafar Masud said the decision reflects the banking sector’s commitment to national economic stability. He added that providing export finance at 4.50 percent demonstrates support for exporters and the broader economy.

The association also cited the banking industry’s role in addressing circular debt and supporting the privatization of Pakistan International Airlines, saying the sector remains committed to economic reform and financial inclusion.