Banks are showing willingness to participate in the recently launched Zarkhez-e (Asaan Digital Zarai Qarza) initiative, the Pakistan Banks Association (PBA) said on Thursday, noting that the scheme has been structured as a commercially viable incentive model for agricultural loan. The statement sought to clarify that lender engagement was based on business logic rather than regulatory pressure.
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Responding to earlier criticism that described the model as “coercive sustainability”, the PBA argued that borrower eligibility under Zarkhez-e does not translate into automatic loan entitlement. The decision to lend, it added, remains entirely at the discretion of banks, which retain the right to assess risk, determine credit limits and seek collateral as per their internal policies.
The association also dismissed the impression that the State Bank of Pakistan or the Ministry of Finance had compelled banks to participate. Instead, it pointed to structured incentives designed to offset the legal and operational risks that traditionally discourage agricultural credit expansion.
At the same time, the PBA acknowledged that weak recovery mechanisms remain a longstanding challenge for the sector, particularly when dealing with smallholders and climate-exposed crops. To mitigate these risks, Zarkhez-e offers a 10 per cent first-loss government guarantee and optional crop insurance to protect lenders against defaults and weather-related losses.
The scheme further leverages digital verification tools, including real-time biometric checks through Nadra, SIM validation against CNIC data, and land information digitisation to improve credit assessment and reduce fraud. According to the PBA, these features collectively make the initiative a rational business proposition rather than a politically driven push.
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The Zarkhez-e programme is part of an effort to expand formal credit to the agricultural sector, improve productivity and modernise agronomic data systems. It is expected to attract additional banks as the digital infrastructure and risk-sharing mechanisms continue to mature.