Government Launches Zarkheze to Digitize Agricultural Finance for Small Farmers

The Finance Division, in collaboration with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA), has launched Zarkheze, a digital platform designed to improve small farmers’ access to formal credit.

The initiative is aimed at addressing long-standing gaps in agricultural lending, particularly for smallholder and landless farmers who often operate outside the formal banking system due to limited documentation and complex loan procedures.

How Farmers Can Apply for Agricultural Credit Through the Zarkheze Platform

Under the Zarkheze initiative, farmers can apply digitally through the Zarkheze mobile application for financing of up to Rs1 million.

Once an application is submitted, it undergoes verification and agronomic assessment. After this process, the application is forwarded to the bank selected by the farmer for credit processing and approval.

Officials said the digital workflow is designed to reduce delays, paperwork, and uncertainty, key factors that have historically discouraged small farmers from approaching banks.

In-kind financing and advisory support

A key feature of Zarkheze is its focus on productive use of credit rather than cash-based lending alone.

Under the programme:

• 75 per cent of the approved financing will be disbursed in kind
• Funds will be used for purchasing quality agricultural inputs
• Purchases will be made through banks’ pre-approved agri-vendors

This model is intended to ensure that financing is directly linked to farm productivity and reduces the risk of loan diversion.

Access to digital advisory services

In addition to financing, farmers will receive advisory services through the Land Information Management System (LIMS). These services are expected to help farmers make informed decisions on crop selection, input usage, and farm management.

Officials said the product is designed not just as a credit facility but as a productivity-enhancing tool that combines finance, inputs, and knowledge.

Government incentives to boost bank lending

To encourage banks to scale up lending to small farmers, the government has introduced targeted risk-sharing and cost-support measures.

These include:

10% first-loss coverage to reduce banks’ credit risk

• This means the government will cover the first 10% of any loan losses if a farmer fails to repay a bank loan.
• For banks, this reduces the risk of lending, so they are more likely to approve loans for farmers.
• Example: If a farmer takes a loan of Rs100,000 and cannot repay Rs10,000 of it, the government will cover that Rs10,000, protecting the bank.

Operational cost subsidy of Rs10,000 per borrower for the net increase in outstanding borrowers

• The government will pay Rs10,000 to banks for each new farmer they lend to as an incentive to expand lending.
• “Net increase in outstanding borrowers” means this applies only to new loans or new farmers added, not existing borrowers.
• Effectively, this lowers the cost for banks to manage new loans, encouraging them to reach more farmers.

The incentives are aimed at making small-ticket agricultural lending commercially viable for banks while expanding outreach in rural areas.

Finance Minister Muhammad Aurangzeb described Zarkheze as part of the government’s broader push for financial inclusion and rural development. He said the initiative would help strengthen agricultural productivity and contribute to national food security goals, especially at a time when the sector faces rising input costs and climate-related challenges.

SBP Governor Jameel Ahmad termed Zarkheze “a pivotal step in improving small farmers’ access to finance”.

PBA Chairman Zafar Masud said the banking industry would continue working closely with the Ministry of Finance and the SBP to expand outreach and streamline processes nationwide.

“By leveraging advanced technology and innovative credit assessment methods, we aim to improve access to finance for smallholder, particularly landless, farmers operating within a largely undocumented sector,” he said.

Availability and onboarding

The Zarkheze application is available on the Google Play Store, allowing farmers to begin the application process digitally.

For those unfamiliar with smartphones or digital platforms, officials said farmers can also visit their nearest bank branch for assistance with onboarding and application submission.

Agriculture remains a critical pillar of Pakistan’s economy, yet small farmers have long struggled to access affordable, timely credit. By combining digital applications, risk-sharing incentives, in-kind financing, and advisory services, Zarkheze represents a shift toward a more structured and inclusive agricultural finance model.

If implemented effectively at scale, the platform could help formalise rural lending, improve farm productivity, and strengthen the resilience of Pakistan’s agricultural sector.