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In Context
- Recently, the Union Budget has announced Rs 2,516 crore for computerisation of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years.
Aim
- The step aims to bring greater transparency and accountability in the operations of PACS.
- Also, to enable PACS to diversify their business and undertake more activities.
What are PACS?
- About:
- 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.
- Financial Structure:
- The primary credit societies’ working capital is derived from their own funds, deposits, borrowings, and other sources.
- Deposits are made by both members and non-members.
- Borrowings are primarily made from central cooperative banks.
- 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 deal directly with farmers.
- PACS are involved in short term lending — or what is known as crop loan.
- At the start of the cropping cycle, farmers avail credit to finance their requirement of seeds, fertilizers etc.
- Banks extend this credit at 7 percent interest, of which 3 per cent is subsidized by the Centre, and 2 per cent by the state government.
- Effectively, farmers avail the crop loans at 2 percent interest only.
- The primary credit societies’ working capital is derived from their own funds, deposits, borrowings, and other sources.
- Organisational Structure:
- Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them.
- The membership fee is low enough that even the poorest agriculturist can join.
- A village can have multiple PACS.
Significance of PACS
- It is a village-level institution that works directly with rural residents.
- PACS provides the last mile connectivity to the farmers as the timely access to capital is necessary at the start of their agricultural activities.
- PACS have the capacity to extend credit with minimal paperwork within a short time.
- PACS typically offer the following services to their members:
- Input facilities in the form of a monetary or in-kind component
- Agriculture implements for hire
- Storage space
Where is computerisation needed?
- While SCBs and DCCBs are connected to the Core Banking Software (CBS), PACS are not, therefore a compatible platform is necessary to bring about uniformity in the system.
- Computerisation of PACS has already been taken up by a few states, including Maharashtra.
Source:IE
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