The government has stepped up efforts to expand access to formal agricultural credit for small and underserved farmers through digital lending, targeted financing, crop insurance, and alternative collateral arrangements. The work is part of a wider initiative led by the State Bank of Pakistan (SBP), in coordination with federal and provincial governments, which aims to reduce lending risks and improve the flow of funds to the agriculture sector. A key initiative is Zarkheze, Asaan Digital Qarza, which was launched on October 14, 2025 to provide collateral-free crop financing to small and subsistence farmers. The facility offers loans of up to Rs 1 million to eligible landowners and Rs 500,000 to tenant farmers, repayable within 12 months, and 75 percent of the amount is disbursed in kind through a verified network of agricultural merchants, while the remaining 25 percent can be provided in cash.
Financing has also increased under the Prime Minister’s Youth Business and Agriculture Loan Scheme, which allocated Rs 65 billion to 21 banks for the agriculture sector during FY2025-26. By June 30, 2026, banks had disbursed Rs 63.46 billion, which is around 97.6 percent of the allocated amount. Another major facility is Electronic Warehouse Receipt Financing, which lets farmers and commodity traders obtain bank loans against agricultural produce stored in accredited warehouses. It was introduced for maize and rice and later extended to wheat, and it has facilitated more than Rs 15 billion in financing since its launch in February 2022. During FY2025-26 alone, banks disbursed Rs 5 billion to 864 borrowers under the mechanism.
The SBP is also promoting the integration of digital land records with banking systems to simplify ownership verification and speed up the processing of agricultural loans. In Punjab, 30 banks have been connected to the system of the Punjab Land Records Authority, which generated 143,583 land ownership documents, known as fards, and created 43,786 charges between July 2025 and June 2026. The SBP has advised banks to integrate their agricultural lending branches with the provincial system by October 2026, and the authority introduced the Green Property Certificate through its Land Management Portal in June 2026, with its integration into banking systems under way. On the insurance side, the revised Crop Loan Insurance Scheme Plus, launched on April 20, 2026, extends cover to potatoes, uses the Space and Upper Atmosphere Research Commission (SUPARCO) for technology-based assessment of natural calamities, and sets up a co-insurance consortium. It provides one-time income-loss support of Rs 15,000 for male farmers and Rs 17,500 for female farmers, and personal accident cover of Rs 250,000 and Rs 275,000 respectively.
The federal government bears the insurance premium costs for eligible borrowers, and during FY2025-26 the Ministry of Finance reimbursed Rs 1 billion in claims under the Crop Loan Insurance Scheme and Rs 140 million under the Livestock Insurance Scheme for Borrowers. On climate risk, the SBP has engaged the Alliance for Financial Inclusion for technical assistance, with the aim of promoting climate-smart farming practices and helping banks include climate considerations in their lending decisions. To encourage lending to small farmers and underserved areas, the SBP has introduced a Risk Coverage Scheme that gives banks first-loss cover of up to 10 percent on agricultural loans to small farmers in Punjab and Sindh and to all farmers in the other provinces. Banks are also eligible for a subsidy of Rs 10,000 per borrower, linked to the net annual increase in their agricultural borrower base, and the three-year facility will remain in effect from FY2025-26 to FY2027-28.
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