Agricultural credit disbursement in Pakistan increased 21.4% year-on-year to Rs2.79 trillion during the first 11 months of FY2025-26, reflecting stronger lending activity across the formal financial sector. According to the State Bank of Pakistan’s Performance Overview of Agricultural Credit Expansion Plans, total agricultural financing increased during July-May FY26, with commercial banks continuing to account for the largest share of lending. However, the expansion has also highlighted differences in the reach of agricultural financing, particularly between commercial banks and institutions serving smaller and underserved farmers.
Commercial banks disbursed Rs2.41 trillion in agricultural credit during the 11-month period, representing a 22.3% increase from Rs1.97 trillion during the corresponding period of the previous financial year. The increase indicates a significant expansion in formal banking sector financing for agriculture, although the distribution of credit across different categories of borrowers remains an important consideration for the sector.
Mid-sized commercial banks recorded the strongest growth during the period, with their agricultural credit disbursements rising 64.8% to Rs809.4 billion. Bank Al-Habib recorded the largest increase within this group, with agricultural lending reaching Rs233 billion, representing growth of 126%. Bank of Punjab followed with disbursements of Rs189.3 billion, up 76.6%, while JS Bank increased its agricultural lending by 69.6% to Rs34.4 billion.
Islamic banks also expanded agricultural financing during the period, although at a comparatively slower pace. Their agricultural credit disbursements increased 12.4% to Rs216.4 billion during July-May FY26. Meezan Bank remained the largest lender among Islamic banks, with agricultural financing reaching Rs125.1 billion, an increase of 25.9% compared with the previous year. Faysal Bank’s agricultural lending increased 11.3% to Rs37.5 billion.
Despite the overall increase in lending, a significant portion of agricultural financing continues to be directed toward production requirements rather than longer-term development needs. Financing for mechanisation, irrigation systems, storage facilities, livestock and other farm infrastructure remains an area where greater access to credit could support improvements in agricultural productivity and the capacity of farmers to manage production and post-harvest requirements.
The outstanding stock of agricultural credit also recorded substantial growth. By the end of May 2026, the total outstanding agricultural credit held by borrowers reached Rs1.182 trillion, representing a 27.1% increase from Rs930.1 billion a year earlier. Commercial banks accounted for Rs708.3 billion of the outstanding agricultural credit portfolio, registering year-on-year growth of 41.8%.
The number of agricultural credit borrowers also increased during the period. Total outstanding agricultural borrowers rose 14.7% to nearly 2.98 million by the end of May 2026. The increase was largely driven by commercial banks, whose agricultural borrower base almost doubled during the year. Commercial bank borrowers reached approximately 1.21 million, representing a 96.3% increase.
The sharp increase in the number of borrowers served by commercial banks contrasts with developments in the microfinance segment. Microfinance banks recorded a 17.7% decline in their outstanding agricultural borrowers, bringing the number to around 976,800 by the end of May 2026. This decline occurred despite an increase in the amount of agricultural financing disbursed by microfinance banks during the period.
Microfinance banks disbursed Rs258.2 billion in agricultural credit during July-May FY26, representing an increase of 13.4% compared with the same period of the previous year. The rise in disbursements alongside a decline in the number of outstanding borrowers suggests that higher lending volumes have not necessarily translated into broader borrower outreach within the microfinance segment.
Microfinance institutions and Rural Support Programmes also recorded higher disbursement volumes during the period. Combined agricultural credit disbursements by these institutions reached Rs27.4 billion during July-May FY26, increasing 4.9% year-on-year. However, their combined number of outstanding borrowers declined by 13% to 353,674 by the end of May 2026, compared with 406,650 a year earlier.
The decline in the number of borrowers served by microfinance institutions and Rural Support Programmes presents a different picture from the broader growth in agricultural credit. These institutions traditionally play an important role in extending financial services to smaller farmers and communities that may have limited access to conventional bank financing. A reduction in their borrower base, despite higher overall disbursements, raises questions about the distribution of agricultural finance across different segments of the farming community.
The latest SBP figures therefore show that Pakistan’s agricultural credit market expanded significantly during the first 11 months of FY26, led by commercial banks and supported by growth from Islamic banks and microfinance lenders. At the same time, the changing composition of borrowers indicates that growth in the overall value of agricultural financing is not being matched evenly across all lending channels.
The increase in formal bank lending, particularly the near doubling of commercial bank borrowers, represents a major expansion in the reach of conventional agricultural finance. However, the decline in borrowers served by microfinance banks, microfinance institutions and Rural Support Programmes highlights the need to assess how effectively smaller farmers are being reached. The distribution of credit toward production financing rather than longer-term agricultural development also remains an important factor in determining whether the increase in lending can translate into sustained improvements in farm productivity and rural economic activity.
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