By Azeem Ahmed
It started with a quiet record — one that could change how farmers borrow money across Pakistan. For the first time, banks issued more than Rs2.58 trillion in agricultural loans during the 2024–25 fiscal year, slightly exceeding their annual target. Behind this growth is a push by the State Bank of Pakistan (SBP) to make credit more accessible for small farmers and improve financial inclusion in rural areas. The Sindh Small Industries Corporation delays have already shown how bureaucracy slows development — but in contrast, the SBP’s reforms in agriculture are speeding up lending and support.
Steady Rise in Agricultural Lending Across Pakistan
According to a document from the SBP’s Agriculture Credit and Financial Inclusion Department, the disbursement reached 100.2 percent of the yearly plan — showing continued growth in farm lending nationwide. The amount was 16.3 percent higher than the Rs2.22 trillion issued a year earlier.
The SBP said it has been working with banks and other partners under its Agriculture Credit Expansion Plans (A-CEPs) to strengthen financing for the farming sector. At present, 47 financial institutions are lending to agriculture — including five large commercial banks, 13 smaller ones, six Islamic banks, two specialized banks, 11 microfinance banks, and 10 rural support programs.
More Borrowers Gain Access to Farm Loans
By June 2025, the total outstanding portfolio of farm loans had grown 13.8 percent to Rs995.3 billion, up from Rs875 billion the previous year.
The number of active borrowers also rose 7.3 percent to reach 2.9 million, showing that more people in rural Pakistan now have access to banking services.
Punjab continued to lead the country’s agricultural lending, receiving Rs2,045.1 billion, which was 103.6 percent of its target. Sindh followed with Rs453.4 billion (93.1 percent), while Khyber Pakhtunkhwa secured Rs55.2 billion (68.9 percent). The remaining regions — Balochistan, Azad Jammu and Kashmir, and Gilgit-Baltistan — collectively received Rs23.6 billion.
Big Banks Lead the Way in Agriculture Credit
Among the lending institutions, the five major commercial banks topped the list, disbursing Rs1,442.3 billion, which was 108 percent of their goal. Specialized banks such as Zarai Taraqiati Bank Ltd and Punjab Provincial Cooperative Bank Ltd together issued Rs85.6 billion, achieving 81 and 119 percent of their targets respectively. Microfinance banks and institutions also performed well, lending Rs252.3 billion and Rs30 billion, meeting 102.9 and 95.3 percent of their goals.
Farm and Non-Farm Sectors See Strong Growth
The farm and crop sector received the largest share — Rs1,443.8 billion, or 56 percent of total loans — marking a 19.3 percent rise over last year. The non-farm segment, which includes livestock, poultry, and related services, accounted for Rs1,113.4 billion, up 12.8 percent year-on-year.
To boost agricultural financing, the SBP and federal and provincial governments introduced several support schemes.
The Risk Coverage Scheme for Small Farmers and Underserved Areas offers first-loss coverage of up to 10 percent for banks that lend to small farmers. It also provides a Rs10,000 subsidy per borrower to help offset administrative costs.
Running through FY28, this plan is expected to add Rs100 billion in new loans annually and bring 250,000 new farmers into the formal credit system each year — totaling Rs300 billion and 750,000 borrowers by the end of its term.
New Schemes Support Small and Landless Farmers
Another major step is the National Subsistence Farmers Support Initiative, which introduces digital, collateral-free loans through bank portals to help landless and small farmers.
Meanwhile, the Prime Minister’s Youth Business and Agriculture Loan Scheme (PMYB&ALS) met 100 percent of its goals in its first two phases. By June 2025, banks had disbursed Rs32 billion through 20 partner institutions, and the next year’s allocation has been raised to Rs65 billion.
Digital Systems and Insurance Strengthen Rural Economy
The Electronic Warehouse Receipt Financing (EWRF) system, started in 2022, has also gained attention. It allows farmers and traders to get loans against goods stored in certified warehouses without needing property as collateral.
During FY25, banks gave Rs1.996 billion to 518 borrowers through this system. Since its launch, total financing under EWRF has crossed Rs10 billion.
The SBP, along with the National Institute of Banking and Finance, also trained more than 120 bank officers in Lahore, Karachi, and Islamabad to handle such loans.
Work is also underway to digitize land records to make farm lending easier and more reliable. In Punjab, 30 banks are now connected to the Punjab Land Records Authority’s system, while satellite mapping is being used to verify land ownership and improve loan processing.
The SBP has also strengthened its Crop Loan Insurance Scheme and Livestock Insurance Scheme to protect farmers from disasters such as floods, droughts, hailstorms, and animal diseases. From July 2008 to December 2024, banks processed Rs11.93 billion in insurance claims, helping more than 7.13 million farmers across Pakistan.
These efforts, according to this reporter, reflect a slow but steady move toward a more secure and inclusive rural economy — one where small farmers are finally beginning to get the support they’ve long been promised.
Author Profile
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Azeem Ahmed is an Islamabad-based journalist specializing in agriculture, business, and economic trends.
He provides insightful analysis on market developments and policy impacts shaping Pakistan’s economy.
