FinMin reviews national initiative to unlock uncollateralised credit for small farmers

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a key meeting at the Finance Division on Tuesday to review the progress and receive an update from the Task Force on Uncollateralised Formal Credit to Smallholding Farmers, according to an official statement issued by the Ministry of Finance.

The meeting brought together senior representatives from Pakistan’s financial sector, including commercial banks, development finance institutions (DFIs), regulators, and subject matter experts from the Development sector who constitute the core of the Task Force. The session focused on the recommendations presented as part of the National Subsistence Farmers Support Initiative, aimed at unlocking uncollateralized financing for small-scale farmers through innovative, technology-based solutions.

The minister was briefed that these recommendations were developed following an in-depth diagnosis of the practical and systemic challenges faced by smallholder tenant farmers, with the objective of proposing a sustainable, scalable solution to support their inclusion in the formal financial system. 

The initiative seeks to revitalise Pakistan’s rural economy and strengthen food security by enabling smallholders to access credit without traditional collateral barriers.

The minister was also updated on proposals to support farmers through a holistic approach promoting sustainable agriculture and rural uplift, anchored in a technology-driven framework. The proposed scheme would employ an end-to-end digital process to ensure transparency, efficiency, and a seamless customer experience.

Designed as a federal programme with nationwide coverage, the initiative aims to align provincial and national efforts to boost agricultural productivity, enhance food security, and contribute meaningfully to GDP growth through inclusive agri-development. 

A revised scorecard was presented by the Task Force with a greater emphasis on agronomic factors, raising the weightage of agronomy from 40 to 60%, while maintaining a 40% weight on financial indicators, thereby rebalancing priorities to better reflect the realities of smallholder farming.

The prototype scheme, developed by the Ministry of Finance’s Task Force on Access to Finance, calls for a multi-bank and microfinance institution (MFI) delivery model implemented through a unified methodology, ensuring wide outreach and operational standardisation across financial institutions.

Finance Minister Aurangzeb welcomed the recommendations and emphasised the importance of making the entire process time-bound and action-oriented to achieve a lasting impact. He also highlighted the critical need to develop a parallel, tech-supported model for the dairy and livestock segment, recognising that most smallholder farmers maintain herds but face difficulties in securing financing for livestock acquisition, maintenance, and dairy product marketing.

Noting the dual economic and nutritional value of dairy for the rural population, the minister urged the Task Force to integrate crops and livestock under a unified financial framework. He stressed that the approach must keep the client experience at the center, prioritising ease, inclusivity, and accessibility through a robust digital journey that delivers benefits across the agricultural landscape.