The SME Bank was formed and incorporated as a public limited company under the Companies Ordinance 1984. The Government of Pakistan is the major Shareholder of the bank. As part of financial sector restructuring program of Government of Pakistan, Regional Development Finance Corporation (RDFC) and small Business Finance Corporation (SBFC) were amalgamated into SME Bank Ltd effective January 1, 2002.

SME bank Ltd was established to exclusively cater to the needs of the SME sector. it was created to address the needs of this niche market with specialized financial products and services that will help stimulate SME development and pro poor growth in the country.