Bridging the SME Financing Gap in Pakistan through Islamic Finance: A Policy Review

Abstract

This study investigates the latest developments in promoting SMEs in Pakistan by the Government and other stakeholders. It also maps SME issues with Islamic finance solutions. The study is based on a literature review, categorizing policies and regulations from SMEDA and SBP, along with other research and reports. Despite advancements in SME policies, SMEs lack awareness and proper business education. Islamic banks are hesitant to fund SMEs due to documentation issues. Solutions include consultancy services, training programs, and awareness sessions in Islamic finance. This research assists SME operators and stakeholders understand government assistance and legislation for SMEs. It also advises Islamic banking and financial institutions on tailored solutions for SMEs.