Pakistan’s financial sector is witnessing a silent revolution — one led not by mega projects or bailouts, but by digital technology empowering small businesses and farmers. Historically, commercial banks in Pakistan have steered clear of small-ticket borrowers, citing high risks and costs. But that mindset is changing fast.
According to the State Bank of Pakistan, financing for small and medium enterprises (SMEs) surged by nearly 41 per cent to Rs690.98 billion in FY25, while agriculture credit rose 16.3pc to Rs2.58 trillion. The number of borrowers in both segments has expanded sharply — SMEs up by 56pc and agricultural borrowers by 9pc — signalling a shift in lending behaviour powered by technology. “Digitisation of the entire lending process — from loan application and verification to disbursement and recovery — is dismantling structural barriers that long excluded small farmers and entrepreneurs,” says Zafar Masud, President of the Bank of Punjab (BOP) and Chairman of the Pakistan Banks Association.
BOP has emerged as an industry leader in this transition. Through its Kisan Card and Karobar Card initiatives, the bank has approved nearly 550,000 loans worth Rs55 billion, with a recovery rate of 96.4pc, well above the industry average. More than half of these borrowers are first-time clients, meaning the initiative is not just about lending — it’s about inclusion. “Scaling up agriculture and SME finance through conventional methods was impossible. Digitalisation made it viable,” explains BOP Chief Digital Officer Nofel Daud, who designed the technology architecture for both schemes.
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In the Kisan Card scheme, farmers can apply, get verified, and receive disbursements digitally — visiting a centre only once to collect their card. For urban entrepreneurs, Karobar Cards are delivered directly to their business addresses. This dual approach reflects how digital models must adapt to the distinct realities of rural and urban borrowers.
But digital transformation is not just about convenience — it’s about risk management. Traditional banks relied on collateral and manual vetting, but the new system uses AI-driven credit scoring, psychometric testing, and data integration from multiple partners to assess creditworthiness more accurately. “We partnered with fintechs, government agencies, and global analytics firms,” Mr Daud explains. “From the NADRA database to land registries, meteorological data, and credit bureaus — all feed into our digital credit models. A Singapore-based firm is now helping us refine AI decision systems trained on 80 million global borrowers.”
The results speak for themselves: higher loan volumes, faster approvals, and safer portfolios. But both Masud and Daud caution that the digital shift still needs policy and institutional support. “It is the combination of digital infrastructure and government support that enabled us to scale financing,” Mr Masud notes.
The real constraint, experts say, is not technological but institutional adoption. Pakistan already has the digital rails, platforms, and infrastructure in place. What’s missing is the will among traditional lenders to make digital channels indispensable rather than optional.
The success of these initiatives marks a turning point in how Pakistan’s banking sector views small borrowers. With each digitally verified farmer and entrepreneur gaining a credit history, the base of formal borrowers expands — creating a more inclusive and dynamic economy.
If sustained, this digital lending revolution could finally bridge one of Pakistan’s most persistent divides: between the formal financial system and the millions of people it once left behind.