Govt Plans to Cut Reliance on Bank Loans

The federal government has accelerated efforts to deepen Pakistan’s capital markets, with Finance Minister Muhammad Aurangzeb directing regulators to fast-track reforms aimed at expanding the corporate debt market and reducing businesses’ reliance on bank financing.

Chairing a meeting of the Capital Market Development Council (CMDC), the finance minister said Pakistan’s equity market has made encouraging progress, but the corporate debt market remains underdeveloped and unable to meet the long-term financing needs of businesses, particularly small and medium enterprises (SMEs).

The meeting reviewed ongoing reforms to diversify financing sources and build a more balanced financial ecosystem. Officials discussed a comprehensive external study currently underway to develop Pakistan’s local currency-linked bond market, covering sovereign financing, non-bank financial institutions, primary dealers, secondary market development, market infrastructure, hedging instruments and derivatives.

Aurangzeb said the study should deliver practical, evidence-based recommendations supported by international best practices to guide future reforms.

The council also reviewed findings from surveys conducted by the Securities and Exchange Commission of Pakistan (SECP) on the challenges faced by the country’s top listed companies in accessing the corporate debt market. The finance minister directed regulators to broaden consultations beyond large listed firms to include medium-sized businesses and other high-growth enterprises.

To accelerate implementation, Aurangzeb instructed the SECP and the Pakistan Stock Exchange (PSX) to establish dedicated Debt Desks at the senior management level with clearly defined responsibilities, measurable performance targets and regular progress reporting.

The meeting also focused on simplifying the corporate debt issuance process. The finance minister called for closer coordination between the SECP, PSX and the Central Depository Company (CDC) to introduce a one-window listing framework supported by standardized procedures, digital integration and simplified application processes to make it easier for companies to raise funds through capital markets.

Participants also discussed measures to strengthen Pakistan’s Islamic capital market by expanding the domestic Sukuk market, improving secondary market liquidity and encouraging the issuance of green and sustainable financial instruments.

Other proposals reviewed during the meeting included tax reforms, improving SME readiness, enhancing financial literacy, expanding digital investment platforms and strengthening institutional support to encourage greater participation in capital markets.

Emphasizing the need to move beyond policy discussions, Aurangzeb directed the council to organize future work through dedicated thematic working groups and ensure that reform proposals are translated into time-bound action plans with clear ownership, milestones and regular progress reviews.