Modernising agri finance: a collective commitment, not coercion

ISLAMABAD: While the Pakistan Banks Association (PBA) welcomes constructive debate on financial policy, we feel it is important to clarify the structural realities of the Zarkhez-e (Asaan Digital Zarai Qarza) scheme to ensure a fair public record.

PBA believe the skepticism expressed regarding the scheme’s viability is misplaced. A key distinction of Zarkhez-e is that eligibility does not equate to entitlement. The decision of who to lend to, and who not to, rests squarely with the banks.

Furthermore, contrary to the impression of rigid mandates, banks remain free to obtain security and collateral in line with their internal risk policies.

PBA also wish to address the narrative of “coercion” or “directed lending.” The banking industry’s participation in this scheme is not a result of pressure from the State Bank of Pakistan or the Ministry of Finance.

Rather, banks are engaging with this initiative because it is structured as a commercially viable incentive scheme.

PBA acknowledged the valid concerns raised regarding the general need to strengthen recovery laws in Pakistan. A weak recovery framework is indeed a challenge for the sector.

However, the Zarkhez-e scheme has been specifically designed to mitigate these legal risks through robust government-backed incentives. The scheme offers a 10 percent first-loss guarantee which provides a tangible buffer against default that is usually absent in open market lending.

Additionally, the framework facilitates crop loan insurance as a tool to de-risk the portfolio, though it is important to note that this is not mandatory.

Copyright Business Recorder, 2026