Published: 9th Feb, 2023
Context
The Budget has announced Rs.2, 516 crore for computerisation of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years.
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The budget aims to bring greater transparency and accountability in their operations and enabling them to diversify their business and undertake more activities. |
What are Primary Agriculture credit societies (PACS)?
- PACS are village level cooperative credit societiesthat serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
- Credit from the SCBs is transferred to the district central cooperative banks, or DCCBs, that operate at the district level.
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The DCCBs work with PACS, which deal directly with farmers. |
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PACS in the country:
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Why are they significant?
- Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them. A village can have multiple PACS.
- PACS are involved in short term lending— or what is known as crop loan.
- At the start of the cropping cycle, farmers avail creditto finance their requirement of seeds, fertilisers etc.
- Banks extend this credit at 7 per cent interest, of which 3 per cent is subsidised by the Centre, and 2 per cent by the state government.
- Effectively, farmers avail the crop loans at 2 per cent interest
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NABARD’s annual report of 2021-22 shows that 59.6 per cent of the loans were extended to the small and marginal farmers. |
Functions of PACS:
- Maintaining the supply of the hired light machinery for agricultural purposes.
- To arrange for supplying of agricultural inputs. Examples -are seeds, fertilizers, insecticides, kerosene, etc.
- It will carry out activities like the sale of gas and petrol and the storage and marketing of dairy and farm products to alleviate poverty and empower women.
- It helps its members by providing marketing facilities that could enhance the sale of their agricultural products in the market at the proper prices.
- Generating optimum financial benefits for people engaged in animal husbandry and allied sectors.
Importance of Digitisation:
- While SCBs and DCCBsare connected to the Core Banking Software (CBS), PACS are not.
- Some PACS use their own software, but a compatible platform is necessary to bring about uniformity in the system.
- Computerisation of PACShas already been taken up by a few states, including Maharashtra.
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The Maharashtra State Cooperative Bank has plans to directly lend to PACS in districts where the DCCBs are either financially weak or have lost their banking licence. |
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