Collateral-free loans: SBP launches ‘NSFSI’ for small farmers

KARACHI: The State Bank of Pakistan (SBP) has introduced a fully digital platform, “National Subsistence Farmers Support Initiative” (NSFSI) to facilitate subsistence farmers to obtain collateral-free financing from banks and MFBs.

In a major step to boost rural livelihoods, in August, the federal government launched a Risk Coverage Scheme for Small Farmers, a landmark initiative aimed at expanding bank financing to small, marginalized, and previously unserved farmers.

The move aligns with the Prime Minister’s vision to modernize and strengthen the country’s agriculture sector, ensuring financial inclusion and protection for those at the heart of Pakistan’s food economy. The scheme has been notified by the State Bank on August 20, 2025.

Now in order to further enhance the scope of the scheme, the SBP in consultation with banks has developed an end-to-end digital solution titled as NSFSI to facilitate subsistence farmers/tenants to obtain collateral-free financing from banks and MFBs.

According to the SBP, the NSFSI will enable the farmers to apply for agriculture loans at a centralized portal, without the need to visit a bank branch. After necessary verifications and agronomic assessment through Land Information Management System (LIMS), the application will be forwarded to the bank(s) chosen by the applicant for further processing.

A key feature of the NSFSI is the in-kind disbursement of at-least 75 percent of the financing to ensure provision of the quality inputs (seed, fertilizers, pesticides and diesel etc.) to the farmers from reputed Agri-merchants on-boarded by banks/MFBs while up to 25 percent can be disbursed in cash to meet other farming expenses.

Further, respective farmers will also be provided Agri-advisory services for improving their crop productivity. While, most of the Banks/MFBs have already integrated their systems with the centralized portal and LIMS and have on-boarded the Agri-merchants, the others are encouraged to complete their integrations and Agri-merchants on boarding processes at the earliest.

To ensure a seamless and uniform rollout across the industry, SBP has developed a standardized Process Flow consultation with the Banks/MFBs.

The financing extended to small and marginalized farmers under NSFSI will not only have the 10 percent first loss coverage in line with the afore-said Risk Coverage Scheme for small farmers but also be entitled to operational cost subsidy of Rs.10,000 per borrower for net increase in the number of outstanding borrowers. The SBP has announced to encourage the Banks and MFBs to fully leverage the end-to-end digital solution for providing financing to the subsistence farmers.

In addition, to make the name of the portal and mobile app user friendly for farmers, NSFSI has been renamed as “Zarkhez-e” with a tag line “Asaan Digital Zarai Qarza,” and the same will be used for all communication and awareness purposes.

The Zarkhez-e is an initiative aimed at promoting collateral-free financing for the small farmers through tech-enabled end-to-end digital process & delivery channels for provision of quality inputs to farmers to raise their agricultural yields and support rural uplift.

Copyright Business Recorder, 2025