Agricultural credit disbursement rose nearly 15 percent during the first nine months of FY26, reaching Rs. 2.16 trillion as banks and financial institutions expanded lending to farmers and agribusinesses across the country.
According to the latest Economic Survey 2025-26, agricultural financing reached Rs. 2,161.6 billion during July-March FY2026, compared with Rs. 1,880.4 billion during the same period last year.
Lending achieved 70.6 percent of the annual agricultural credit target of Rs. 3.06 trillion for the current fiscal year.
Outstanding agricultural loans also increased by 22.6 percent to Rs. 1.17 trillion by the end of March 2026, while the number of outstanding borrowers rose 1.2 percent to 2.96 million.
The banking sector remained the largest source of agricultural financing. Five major commercial banks disbursed Rs. 1.05 trillion during the period, while domestic private banks contributed Rs. 620.6 billion.
Islamic banks extended Rs. 181 billion in agricultural financing, whereas microfinance banks provided Rs. 209.7 billion.
Overall, 46 formal financial institutions, including commercial banks, Islamic banks, specialized banks, microfinance banks, and rural support programs, participated in agricultural lending.
Farm sector financing accounted for the majority of lending activity, receiving Rs. 1.19 trillion, or 55.2 percent of total disbursements. Credit to subsistence farmers increased by 41.6 percent to Rs. 554.7 billion, while financing to economic holding farms rose 40.8 percent to Rs. 170 billion.
Lending to small farms recorded one of the strongest increases, rising 47.2 percent to nearly Rs. 320 billion during the period. Non farm agricultural activities, including livestock and agribusiness operations, attracted Rs. 967.7 billion in financing, up 14 percent from a year earlier.
Production loans continued to dominate agricultural financing, accounting for nearly half of all disbursements. Banks extended Rs. 1.06 trillion in production loans, while development loans increased 22.6 percent to Rs. 133.7 billion, indicating growing investment in farm machinery, infrastructure, and productivity-enhancing activities. Working capital financing for non-farm agricultural businesses also climbed to Rs. 901 billion.
To expand financial inclusion in rural areas, the SBP has introduced several new initiatives. These include ZarKhez e, a technology-enabled agricultural lending ecosystem launched in October 2025 to help small farmers access formal credit through digital channels.
The platform uses alternative data sources, automated risk assessment, and multi-bank financing arrangements to reduce barriers for borrowers who traditionally struggle to obtain loans from formal financial institutions.
The central bank has also expanded Electronic Warehouse Receipt Financing, allowing farmers to store produce in accredited warehouses and obtain bank financing against stored commodities. During July-March FY2026, warehouse storage capacity under the program increased to approximately 380,000 metric tons, while banks extended financing of Rs. 3 billion to 507 farmers through warehouse receipts.
Other reforms include the digitization of land records for agricultural financing, the revised Crop Loan Insurance Scheme Plus, and a new Risk Coverage Scheme for Small Farmers and Underserved Areas.
Under the latter initiative, the government and SBP aim to support lending to 750,000 new borrowers by FY2028, with cumulative disbursements projected at Rs. 300 billion.
The scheme provides first-loss risk coverage and offers banks incentives to expand lending to previously underserved farming communities.
The growth in agricultural financing comes alongside a broader recovery in the farm sector. Agriculture expanded 2.89 percent during FY2026, supported by higher wheat, rice, and sugarcane production, stronger livestock performance, increased fertilizer usage, and improved availability of certified seeds.
Policymakers expect continued expansion in agricultural credit to support farm productivity, strengthen food security, boost exports, and improve rural incomes in the coming years.
