Pakistan Agriculture Finance
The State Bank of Pakistan (SBP) recently held a meeting of the Agricultural Credit Advisory Committee (ACAC) in Karachi to assess agricultural credit performance and discuss strategies for improving financial inclusion in the agriculture sector. SBP Governor Jameel Ahmad highlighted that Pakistan’s economy has regained macroeconomic stability, with real GDP growth reaching 3.7 percent in the first quarter of FY26 and a projected full-year growth of 3.75 to 4.75 percent. This stable economic outlook provides a favorable environment for enhancing agricultural finance.
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The Governor also noted that headline inflation has moderated to 5.8 percent, allowing monetary policy to support growth while maintaining price stability. The external account remains stable due to strong remittances and steady commodity prices. Agriculture, he emphasized, plays a critical role in increasing farm productivity, supporting rural livelihoods, and ensuring food security, which makes strengthening financial intermediation in this sector crucial for sustainable growth.
Record Agricultural Credit Disbursement in FY25 and FY26 Progress
During FY25, SBP and the banking sector achieved a record agricultural credit disbursement of Rs. 2,577 billion, marking a 16 percent increase over the previous year. In the first half of FY26, disbursements have already reached Rs. 1,412 billion, with 2.97 million borrowers benefiting from the programs. This increase demonstrates the growing role of banks in supporting farmers and promoting rural economic activity.
Key highlights include:
- Expansion of credit to small and medium farmers
- Collaborative efforts between SBP and commercial banks
- Focus on underserved and remote areas
- Encouraging adoption of modern farming practices
These efforts aim to increase borrower outreach and make agricultural credit more inclusive and accessible for all farming communities in Pakistan.
Zarkheze Platform and Digital Transformation of Agricultural Lending
SBP’s digital platform, Zarkheze, is designed to modernize agricultural lending by enabling digital onboarding, standardized credit assessment, and integration with land and crop data. The platform also ensures end-to-end traceability of loans while linking financing to certified agricultural inputs through a vendor network. This digital transformation is expected to make small-ticket lending commercially viable and expand outreach beyond high-volume regions.
Banks are urged to:
- Process applications promptly
- Strengthen internal ownership of the platform
- Develop a strong vendor ecosystem
- Provide advisory services to farmers through the platform
Zarkheze is becoming the core delivery channel for agricultural finance and is expected to improve accessibility, efficiency, and transparency in lending operations.
Crop Loan Insurance Framework (CLIS+) and Risk Mitigation
The upgraded crop loan insurance framework, CLIS+, is being developed under the ADB-funded Pakistan Insurance Transformation Program (PITP) to enhance the agriculture sector’s resilience against natural calamities. The program aims to expand crop coverage, establish an insurance consortium, and introduce technology-based assessments for faster claims and payouts.
Key benefits of CLIS+ include:
- Broader crop insurance coverage
- Improved risk sharing and farmer payouts
- Technology-enabled calamity assessment
- Loss-of-income support for farmers
The ADB Solidarity Fund will further support coverage for non-borrowing farmers and contribute to the development of a National Insurance Policy for Agriculture, strengthening the overall safety net for the farming community.
Scaling Electronic Warehouse Receipt Financing (EWRF)
Electronic Warehouse Receipt Financing (EWRF) helps farmers access post-harvest liquidity and reduces distress sales, thereby improving market linkages. By expanding accredited warehousing infrastructure and increasing bank participation in EWRF, farmers can store crops securely and access financing when needed. This system enhances transparency and enables farmers to obtain better prices for their produce.
Benefits of EWRF include:
- Improved post-harvest liquidity
- Reduced need for urgent crop sales
- Strengthened agricultural market linkages
- Incentives for banks to finance stored crops
EWRF represents a critical step toward modernizing the agricultural credit system and supporting farmer incomes across Pakistan.
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Banking Sector Priorities and Future Plans
SBP has outlined three strategic priorities for the banking sector to strengthen agricultural finance: delivery, inclusion with depth, and geographical diversification. Banks are encouraged to expand borrower outreach through microfinance institutions and small-ticket products, enhance financing for subsistence and small farmers, and extend credit to underserved areas.
| Priority | Objective | Key Action Points |
|---|---|---|
| Delivery | Expand borrower outreach | Focus on microfinance and small loans |
| Inclusion | Support small farmers | Provide productivity-enhancing credit |
| Diversification | Reach underserved regions | Strengthen regional banking coverage |
By focusing on these priorities and scaling platforms like Zarkheze, the banking sector can promote sustainable agricultural growth and financial inclusion.
Conclusion
The ACAC meeting reinforces SBP’s commitment to advancing agricultural finance in Pakistan. By promoting digital solutions, improving risk mitigation through CLIS+, expanding warehouse receipt financing, and emphasizing inclusive lending, the central bank aims to strengthen farm productivity, support rural livelihoods, and contribute to long-term economic resilience. Collaborative efforts between banks, provincial governments, and fintech partners will be key to achieving these objectives.
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FAQs
What is Zarkheze?
Zarkheze is SBP’s digital platform for agricultural lending that enables digital onboarding, loan tracking, and access to certified agricultural inputs.
What is CLIS+?
CLIS+ is an upgraded crop loan insurance program designed to protect farmers against natural calamities and ensure timely payouts.
How much agricultural credit was disbursed in FY25?
A record Rs. 2,577 billion was disbursed in FY25, marking a 16 percent increase from the previous year.
What is Electronic Warehouse Receipt Financing (EWRF)?
EWRF allows farmers to use stored crops as collateral to access liquidity and avoid distress sales, improving market linkages.
How can small farmers benefit from SBP initiatives?
Small farmers can access affordable loans, insurance coverage, and advisory services through Zarkheze and other SBP programs.