Islamic lender signs with UNIDO’s Bahrain office and ICEI to set up a focus group offering mentoring, investment readiness and export support, aiming at the advice gap that keeps many small businesses out of formal finance
KARACHI/LAHORE: Meezan Bank, Pakistan’s largest Islamic bank, will set up an in-house unit to coach startups and small businesses using a United Nations enterprise development method, betting that advice and investor connections can do what loans alone have not in widening access to finance.
The bank has signed two exchanges of letters, one with the United Nations Industrial Development Organization’s Investment and Technology Promotion Office in Bahrain (UNIDO ITPO Bahrain) and one with the International Center for Entrepreneurship and Innovation (ICEI). The agreements lay the ground for a dedicated Focus Group within Meezan that will offer non-financial services to startups, women- and youth-led businesses, and micro, small and medium enterprises (MSMEs).
The unit will be built on UNIDO’s Enterprise Development and Investment Promotion (EDIP) methodology, a programme designed to help small firms become investment-ready.
Advice before credit
“MSMEs, startups, and women and youth entrepreneurs are central to Pakistan’s economic future. Yet, access to finance alone is not enough,” said Dr Syed Amir Ali, Meezan Bank’s president and chief executive. “Many promising businesses also need guidance, skills and the right connections to grow.”
Lenders frequently cite missing financial records, business plans or documentation as reasons small firms fail to qualify for loans, even when banks have money to lend. The Focus Group is meant to fill that gap, then refer prepared clients to the bank’s own Shariah-compliant financing products.
Planned services include business advisory, training and capacity building, investment-readiness support and investor matchmaking, mentoring and coaching, links to technology and innovation, market access and export promotion, business incubation and acceleration, and referrals to Meezan products.
What each partner brings
Under its agreement, UNIDO ITPO Bahrain will advise on setting up and running the unit, transfer EDIP tools and practices, train bank staff and advisers, support enterprise development and incubation, and connect the Focus Group with national and international partners. It will also promote entrepreneurship in emerging sectors, which the agreement names as clean energy, the marine economy, creative industries and services for senior citizens.
“Meezan Bank’s initiative is an innovative approach to strengthening entrepreneurship, bringing financial and non-financial services together under one roof,” said Dr Hashim Hussein, head of UNIDO ITPO Bahrain, adding that the office hoped the unit would become “a regional model for entrepreneurship support in the banking sector.”
The ICEI agreement was signed by Sheikh Ebrahim bin Khalifa Al Khalifa, who chairs both the centre and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Bahrain-based body that sets global standards for Islamic finance. He was also Meezan Bank’s founding chairman.
“Our ambition was to demonstrate that Islamic banking could succeed at scale in Pakistan,” he said. “Today, we have an opportunity to take that vision further, from building a successful Islamic bank to helping build successful enterprises.”
The SME credit gap
The initiative lands as Islamabad pushes banks to lend more to small businesses. Prime Minister Shehbaz Sharif this month ordered that SME lending be doubled to Rs2.2 trillion, about $7.9 billion, by 2028 from about Rs1.1 trillion. Small and medium firms make up more than 90% of Pakistan’s businesses, contribute an estimated 40% of GDP and employ about 78% of the non-farm workforce, yet receive only around 6% to 7% of private-sector credit.
Outstanding SME financing rose 33% year on year to Rs943 billion in the second quarter of 2026, with the share of bad loans falling to 11.7% from 23%, according to figures reported this week. That improvement gives banks more room to grow the segment, provided borrowers can meet lending standards.
Islamic banks are taking a growing share of that market. Islamic banking held 23.7% of the industry’s assets and 29.2% of deposits at the end of June 2026, according to State Bank data, with assets growing 13% in the first half of the year.
The Lahore and Punjab angle
Although the agreement was signed in Karachi, its likely impact will be felt heavily in Punjab, home to most of the country’s manufacturing SMEs, from Lahore’s garment, food and light-engineering workshops to the export clusters of Sialkot, Gujranwala, Wazirabad and Faisalabad. The provincial government has its own subsidised small-business loan schemes and has been pushing an industrial policy built around cluster upgrades and export certification.
For Lahore’s women and young entrepreneurs, many of whom run home-based or online businesses outside the formal system, structured mentoring linked to a bank could offer a path into formal finance. Informal lending carries real risks; Lahore police arrested 49 people in a crackdown on loan sharks in August. Policymakers in the province have also argued that new technologies must reach small firms, not just large institutions.
Execution will be the test
The agreements are exchanges of letters rather than funded programmes, and the bank did not say when the Focus Group would open, how many businesses it aims to serve, how it will be staffed, or whether its services will be free.
Meezan’s recent experience with government-backed lending also shows how approvals can outrun delivery. Under the Prime Minister’s housing scheme, the bank had approved Rs49 billion in home loans but funded only about 1,000 families by the end of September, largely because of property-title hurdles. Small-business support faces its own frictions, from informal bookkeeping to collateral requirements.
If the unit can move firms from advice to investment, it could, as its backers hope, become a model for Islamic banks in Pakistan and the wider region. The first figures on businesses enrolled and financed will show whether it does.
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