ISLAMABAD, Nov 4 (Wealth Pakistan) — Pakistan’s banking sector disbursed agricultural loans worth Rs2.58 trillion during fiscal year 2024-25, slightly exceeding the annual target, as the State Bank of Pakistan (SBP) introduced new initiatives to strengthen credit access for small farmers and promote financial inclusion in the rural economy.
Lending surpasses annual target
According to the SBP’s Agriculture Credit and Financial Inclusion Department, banks disbursed 100.2 percent of the annual plan, marking a 16.3 percent increase from Rs2.22 trillion in FY24. The rise reflects the steady expansion of agri-financing and greater participation by banks under the SBP’s Agriculture Credit Expansion Plans (A-CEPs).
Currently, 47 formal institutions provide farm credit — including five large commercial banks, 13 mid-sized and small banks, six Islamic banks, two specialized banks, 11 microfinance banks, and 10 microfinance institutions and rural support programs.
Credit growth and borrower expansion
The outstanding portfolio of agricultural loans rose to Rs995.3 billion by the end of June 2025, up 13.8 percent from Rs875 billion a year earlier. Active borrowers also grew 7.3 percent year-on-year, reaching 2.9 million — a strong indicator of deeper financial inclusion across rural Pakistan.
Punjab led the lending drive with Rs2,045.1 billion in disbursements, achieving 103.6 percent of its target. Sindh followed with Rs453.4 billion (93.1 percent), while Khyber Pakhtunkhwa received Rs55.2 billion (68.9 percent). The remaining regions — Balochistan, Azad Jammu and Kashmir, and Gilgit-Baltistan — collectively obtained Rs23.6 billion.
Institutional performance
Among lending institutions, five major commercial banks performed strongly, providing Rs1,442.3 billion and achieving 108 percent of their annual targets. Specialized banks, including Zarai Taraqiati Bank Ltd and Punjab Provincial Cooperative Bank Ltd, together lent Rs85.6 billion, achieving 81 percent and 119 percent respectively.
Microfinance banks disbursed Rs252.3 billion (102.9 percent of target), while microfinance institutions extended Rs30 billion (95.3 percent of target), confirming their role in small-scale rural financing.
Sectoral breakdown
The farm and crop sector received Rs1,443.8 billion — about 56 percent of total disbursements — representing a 19.3 percent annual rise. The non-farm sector, which includes livestock, dairy, poultry, and agri-services, accounted for Rs1,113.4 billion or 44 percent of total lending, showing a 12.8 percent increase over FY24.
New SBP initiatives to promote inclusion
To further accelerate agricultural credit, the SBP has launched several targeted initiatives. The Risk Coverage Scheme for Small Farmers and Underserved Areas offers banks first-loss coverage of up to 10 percent on loans extended to small farmers. It also provides a Rs10,000 subsidy per borrower to offset onboarding costs and will remain effective until FY28. The scheme aims to generate Rs100 billion in new loans annually, benefitting an estimated 250,000 new farmers each year.
The National Subsistence Farmers Support Initiative introduces collateral-free digital financing for landless and small-scale farmers through integrated banking portals, helping expand credit access in previously unbanked communities.
Youth and digital credit innovations
Under the Prime Minister’s Youth Business and Agriculture Loan Scheme (PMYB&ALS), banks achieved 100 percent of targets in the first two phases, disbursing Rs32 billion through 20 partner institutions. The allocation for FY26 has been raised to Rs65 billion.
The Electronic Warehouse Receipt Financing (EWRF) system, launched in 2022, also gained momentum. It enables farmers, traders, and processors to borrow against stored commodities in accredited warehouses. During FY25, banks provided Rs1.996 billion to 518 borrowers, while total financing under the scheme has surpassed Rs10 billion.
Modernising credit infrastructure
The SBP, working with the Punjab Land Records Authority, has integrated 30 banks with the Land Record Management Information System for digital collateral verification. Satellite-based land mapping is also being adopted to improve transparency and efficiency in farm-loan processing.
Additionally, the Crop Loan Insurance Scheme and Livestock Insurance Scheme continue to protect borrowers from natural disasters and disease outbreaks. From July 2008 to December 2024, banks processed Rs11.93 billion in claims under these schemes, benefitting more than 7.1 million farmers nationwide.