Pakistan expands agricultural and small business financing

Pakistan’s outstanding agricultural financing has reached Rs1.329 trillion, supporting approximately 3.5 million borrowers. During a meeting of the Access to Finance Steering Committee in Islamabad, Finance Minister Muhammad Aurangzeb emphasized the need for faster loan disbursements to ensure credit reaches farmers and small businesses effectively.

To broaden credit access, the State Bank of Pakistan (SBP) has introduced a new framework allowing commercial banks to partner with microfinance banks, non-bank microfinance companies, and non-bank financial companies. This initiative utilizes wholesale financing and agency arrangements to reach underserved communities. Under this framework, participating banks can use authorized institutions to handle loan origination, credit appraisal, and monitoring.

Specific limits have been established for small enterprises, with maximum financing of Rs1 million through non-bank microfinance companies and up to Rs5 million through microfinance banks and non-bank financial companies. Additionally, the Zarkhez-e: Asaan Zarai Qarza Scheme has approved over 20,000 loan applications, including Rs2.34 billion in collateral-free loans specifically targeted at smallholder farmers to remove traditional barriers to borrowing.