Reaching Pakistan’s small and medium-sized enterprises and smallholder farmers has long been a challenge for commercial banks. Traditional branch networks and lending processes are not designed to cater to small-ticket, widely dispersed borrowers, making credit for these segments expensive and risky. As a result, access to formal financial services for SMEs and farmers has historically remained limited.
That dynamic is changing rapidly as digitalisation reshapes credit delivery. The growing use of technology across the lending chain is making it possible to scale credit access at unprecedented speed and efficiency. Both SME finance and agriculture credit have seen exceptional growth over the last fiscal year, reflecting how digital tools are enabling banks to reach more borrowers and manage risk more effectively.
According to the State Bank of Pakistan, SME financing grew by almost 41 percent to Rs690.98 billion in FY25 compared to Rs491 billion in the previous year. The number of borrowers increased nearly 56 percent to 276,593. Similarly, the Finance Ministry reported that agriculture credit rose by 16.3 percent to Rs2.58 trillion, with the number of borrowers expanding by 9 percent to 2.95 million. These figures highlight a structural shift in how credit is being delivered, underpinned by technology.
Digitalisation is not just a front-end transformation. It touches every stage of lending, from application and verification to credit scoring, underwriting, disbursement and recovery. The Bank of Punjab has emerged as a notable leader in this space, using its Kisan Card and Karobar Card programmes to expand lending to farmers and small entrepreneurs at scale.
Zafar Masud, the bank’s president, notes that digitisation is breaking down barriers that previously excluded millions from formal credit. Chief Digital Officer Nofel Daud adds that conventional methods would not have allowed the bank to reach such volumes. During the first crop cycle, nearly 550,000 loans worth Rs55 billion were approved, with around 392,000 borrowers using Rs37 billion for farm inputs. The recovery rate stands at an impressive 96.4 percent, well above industry averages.
A major achievement is that between 500,000 and 600,000 of these borrowers are first-time customers. With their credit history now established, they can access additional financing in the future. This creates a multiplier effect for financial inclusion, encouraging other banks to enter these segments more actively.
Behind the scenes, much of the innovation lies in automating risk assessments and loan approvals. In the Kisan Card scheme, the process from application to disbursement is fully digital, requiring only one physical visit. For Karobar Card, delivery happens directly at the business premises. This differentiated approach shows how digital models can adapt to different borrower segments.
Partnerships also play a critical role. The bank relies on external partners such as National Database & Registration Authority, the Punjab Land Revenue Authority, the meteorological department, credit bureaus and fintech firms for data verification and decision-making support. Additionally, psychometric testing developed by a UK firm and AI credit scoring models in collaboration with a Singapore-based company further strengthen risk assessment capabilities.
While the infrastructure to support digital lending is already in place, the key challenge is adoption. Daud emphasizes that Pakistan has the rails, platforms and tools needed. The focus now must shift to making digital solutions an integral part of lending strategies across the sector.
Masud also underscores that government support has been essential to scaling these initiatives. Expanding SME and agriculture credit is not just a technological shift but a coordinated effort between financial institutions, regulators, and the broader ecosystem.
If adoption accelerates, Pakistan’s financial sector could unlock access to credit for millions more small businesses and farmers, driving economic inclusion and growth. The transformation is underway, but its full potential will depend on how quickly banks integrate digital lending as a core operational strategy rather than an optional add-on.
Follow the PakBanker Whatsapp Channel for updated across Pakistan’s banking ecosystem.