Verifiable sales records and digital cash flows could help Pakistani small businesses overcome a major barrier to bank financing: their inability to demonstrate reliable financial performance, as digital banking platforms seek to bring undocumented businesses into the formal financial system.
A large number of Pakistan’s micro, small and medium-sized enterprises (MSMEs) operate without formal registration or digitised accounts, making it difficult for banks to assess their creditworthiness. Consequently, lenders often demand collateral, which many small businesses cannot provide. Speaking at the launch of NEO BIZ, a digital banking service for SMEs, Mashreq Bank Pakistan CEO Muhammad Hamayun Sajjad said businesses often maintained bookkeeping records that banks did not consider reliable enough for lending decisions.
Pakistan has approximately 7.14 million MSMEs, contributing nearly 40% to gross domestic product (GDP), 30% to exports and employing more than 80% of the non-agricultural workforce. However, outstanding SME financing stood at around Rs882 billion as of December 2025, according to figures cited at the event.
Digital-first banking models could help bridge this gap by creating verifiable records of business transactions, including sales, payments and collections. Banks could use these records to assess turnover, analyse cash-flow patterns and evaluate repayment capacity, potentially enabling creditworthy businesses without conventional financial statements to access loans.
