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8th February 2023 (7 Topics)

Primary Agricultural Credit Societies


The Budget has announced Rs.2,516 crores for the computerisation of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years.

The budget aims to bring greater transparency and accountability in their operations and enable them to diversify their business and undertake more activities.

What are Primary Agriculture credit societies (PACS)?

  • PACS are village-level cooperative credit societies that 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.

The DCCBs work with PACS, which deals directly with farmers.

PACS in the country:

  • ·   There are about 95,000 PACS in the country of which only 65,000 are active at present.
  • ·   According to the union home minister, all Panchayats must have one such body by 2027.
  • ·   This will be helpful in promoting farming and dairy activities at the grassroots level.
  • ·   The cooperation ministry is working on a plan to set up multi-purpose PACS in Panchayats over the next five years.

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 loans.
  • At the start of the cropping cycle, farmers avail credit to 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

NABARD’s annual report for 2021-22 shows that 59.6 per cent of the loans were extended to small and marginal farmers.

Functions of PACS

  • Maintaining the supply of the hired light machinery for agricultural purposes.
  • To arrange for supplying 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 DCCBs are 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.
  • The computerisation of PACS has already been taken up by a few states, including Maharashtra.

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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