Karachi, September 15, 2025 – The State Bank of Pakistan (SBP) has officially launched the Climate Risk Fund (CRF-I) under the World Bank–supported Resilient and Accessible Microfinance (RAM) Project.
The initiative aims to provide critical financial protection to small farmers and microfinance institutions who remain highly exposed to recurring natural disasters.
Pakistan has consistently been ranked among the most vulnerable nations to climate challenges. Over the past decade, the country has endured severe climate-related shocks, including the devastating floods of 2022 that displaced millions and destroyed vast stretches of agricultural land. These disasters not only affected food security but also placed immense pressure on the microfinance sector, leading to liquidity shortages, rising loan defaults, and slowed growth of rural financing institutions.
To address these risks, the federal government has established CRF-I, which will be managed by the SBP under a dedicated Trust. The fund is specifically designed to promote climate-resilient agriculture and ensure liquidity support for farmers in the aftermath of floods.
The CRF-I will operate through two specialized facilities:
1. Innovative Agriculture Liquidity (IAL) Facility – This facility will allow Microfinance Providers (MFPs) to design and extend agriculture loans bundled with agri-tech services. By adopting modern farming practices, climate-resilient crop varieties, and sustainable cropping methods, farmers can strengthen productivity while reducing vulnerability to future environmental shocks.
2. Contingent Liquidity Facility (CLF) – This mechanism will provide quick financing to MFPs following major flooding events. The financing will enable MFPs to restructure or top-up loans, as well as issue new ones, so that affected farmers can resume their income-generating activities without prolonged disruption. Importantly, the CLF will also help microfinance institutions maintain asset quality and operational stability during climate-induced crises.
The SBP has issued detailed rules, along with Environmental and Social Management System (ESMS) guidelines, to ensure transparent and effective operation of the fund. Microfinance institutions interested in participating must submit their applications with the required documentation by September 30, 2025.
Through this initiative, the SBP hopes to strengthen the resilience of Pakistan’s most vulnerable farmers and safeguard the future of the agriculture sector against the growing threats of climate change.