KARACHI, (TW News) — Governor of the State Bank of Pakistan, Jameel Ahmad, has urged commercial banks to significantly expand agricultural lending, particularly targeting small farmers and underserved regions, while strengthening digital delivery channels to ensure sustainable growth in the farming sector.

He was speaking at a meeting of the Agricultural Credit Advisory Committee (ACAC) held in Karachi to review credit performance and discuss strategies for promoting inclusive and resilient agricultural finance.

The SBP governor emphasised that agriculture remains a cornerstone of Pakistan’s economy, playing a vital role in enhancing farm productivity, supporting rural livelihoods and ensuring national food security. He underlined the need to improve agricultural financial intermediation to facilitate value addition, better market linkages and long-term sectoral growth.

Highlighting recent progress, Ahmad stated that during FY2024-25, agricultural credit disbursement reached a record Rs2,577 billion, reflecting a 16 percent year-on-year increase due to coordinated efforts between the central bank and the banking industry. Building on this momentum, disbursements during the first half (July–December) of FY26 amounted to Rs1,412 billion, while the number of borrowers rose to 2.97 million.

On the broader economic outlook, the governor noted that Pakistan’s economy had regained macroeconomic stability and was transitioning towards a more durable growth trajectory. Real GDP growth stood at 3.7 percent in the first quarter of FY26, with full-year growth projected between 3.75 and 4.75 percent. He added that headline inflation eased to 5.8 percent by January 2026, enabling monetary policy to support growth while maintaining price stability.

To accelerate borrower expansion — especially among small and subsistence farmers — Ahmad urged banks to fully utilise initiatives such as the Risk Coverage Scheme for Small Farmers and Underserved Areas, along with Zarkheze, the SBP’s flagship digital agricultural lending platform.

The committee reviewed progress under Zarkheze, which enables digital onboarding of farmers, standardised credit assessment, integration with land and crop data, and end-to-end loan traceability. The platform also links financing to certified farm inputs through an integrated vendor network. The governor stressed that Zarkheze must be scaled up as a core channel for agricultural finance, particularly to make small-ticket lending commercially viable and to expand outreach beyond traditional high-volume regions.

He further directed banks to ensure timely processing of applications, strengthen internal ownership of agricultural schemes, and expand vendor ecosystems to improve farmers’ access to quality inputs and advisory services.

The meeting also discussed the development of an upgraded crop loan insurance framework, CLIS+, under the Asian Development Bank-funded Pakistan Insurance Transformation Programme. The proposed framework aims to enhance crop coverage, introduce improved risk-sharing mechanisms, deploy technology-based calamity assessments, and provide income-loss protection to farmers. The ADB’s Solidarity Fund is expected to support coverage expansion to non-borrowing farmers and contribute to the formulation of a National Insurance Policy for Agriculture.

Additionally, the committee deliberated on scaling up Electronic Warehouse Receipt Financing (EWRF) to improve post-harvest liquidity, reduce distress sales and strengthen agricultural market integration. Expanding accredited warehousing infrastructure and increasing bank participation in EWR-based financing were identified as key priorities.

Concluding the session, the SBP governor outlined three strategic priorities for banks: expanding borrower outreach through microfinance and small-ticket products; deepening inclusion by supporting productivity-enhancing credit for small farmers; and promoting geographical diversification by extending agricultural finance to underserved areas.

The ACAC meeting reaffirmed its role as a strategic platform uniting financial institutions and stakeholders to strengthen agricultural finance as a driver of inclusion, productivity and long-term economic resilience.