Pakistanâ€™s economy is agrarian in nature and character. Agricultural sector is the main source of income for majority of population in the country. Subsistence kind of cultivation hardly allows the farmers to use high quality seeds, sufficient amount of fertilizers and other improved farm techniques. Small farmers are generally characterized as having low income, less saving and low capital formation. Apparently, credit seems to be the dire need of these clusters of farming community. This research endeavors to analyze the effect of agricultural credit advance by Zarai Taraqiati Bank Ltd (ZTBL) on crop production in district Peshawar Khyber Pakhtunkhwa (KP) province. For this purpose a house hold level survey was conducted and primary data were collected from a sample of 113 randomly selected farmers in a village (Urmar Maina) of District Peshawar. There were 818 (402 male and 416 female) family members in all the house- holds. Farming was the main occupation of all the respondents, 51(45%) had secondary occupation as well. most of the respondents utilized the loan for agriculture activities i.e. Purchase of improved seed, insecticides, fertilizer, machinery, Farm yard manure (FYM).