One of the major sectors hit hard by the Financial Crisis and global slowdown of economy is Development Finance. The decline in our domestic economy has had severe impact on the Development Finance Sector in Pakistan. The deterioration in DF portfolio which started a year and half ago still continues and by conservative estimates it will take some time to recover. Credit extension to SMEs and Housing sectors has shrunk considerably mainly due to the cautious approach of financial institutions towards these areas.  SBP has been making efforts to arrest the decline in DF portfolio which is expected to carry a positive impact on our financial and economic outlook. Keeping in view the current international and domestic economic meltdown, SBP brought about changes in its Regulatory & Policy Framework to facilitate financing to Agriculture, Microfinance, Infrastructure, Housing, Infrastructure and SME sectors. Moreover, consistent efforts are being made to develop Market Supporting Mechanisms as well as focus on the capacity of commercial banks to bring these sectors under the net of Financial Inclusion.