{"id":284674,"date":"2024-02-27T19:00:09","date_gmt":"2024-02-27T13:30:09","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=284674"},"modified":"2024-03-01T11:56:15","modified_gmt":"2024-03-01T06:26:15","slug":"primary-agricultural-credit-societies-pacs-explained-pointwise","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/primary-agricultural-credit-societies-pacs-explained-pointwise\/","title":{"rendered":"Primary Agricultural Credit Societies (PACS)- Explained Pointwise"},"content":{"rendered":"

\"Primary<\/p>\n

The Government of India (GOI) has been placing its emphasis on the cooperative sector, particularly on the Primary Agricultural Credit Societies<\/span> (PACS<\/span>) for the rejuvenation of Indian Agricultural Sector. GOI, has crafted a central role for PACS, in the execution of the world’s largest grain storage infrastructure project of 700 lakh metric tons<\/a>.<\/p>\n

Govt has also started the process of modernisation of PACS<\/span> by allocating Rs 2,516 crore<\/span> for digitization<\/span> of 63,000 Primary Agricultural Credit Societies<\/span> (PACS<\/span>) over the next five years<\/span>. The formation of Ministry of Cooperation is indicative of the priority of government, on the cooperative sector in India.<\/p>\n\n\n\n\n
Table of Contents<\/strong><\/td>\n<\/tr>\n
What are Primary Agricultural Credit Societies (PACS)?<\/a>
\nWhat are the advantages of Primary Agricultural Credit Societies (PACS)?<\/a>
\nWhat are the challenges?<\/a>
\nWhat are the Govt schemes for PACS in India?<\/a>
\nWhat should be the way Forward?<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/a>What are Primary Agricultural Credit Societies (PACS)?<\/strong><\/span><\/h2>\n

PACS-<\/strong> PACS are the cooperative credit societies at the Village level. They are the last link, at the village level, in the rural cooperative banking structure in India.<\/p>\n

Structure of Cooperative Banking in India
\n<\/strong><\/p>\n\n\n\n\n\n\n
Cooperative Banks in India<\/strong><\/td>\n<\/tr>\n
Rural Cooperative Banks<\/strong><\/td>\nUrban Cooperative Banks<\/strong><\/td>\n<\/tr>\n
Short Term<\/strong><\/td>\nLong Term<\/strong><\/td>\nScheduled<\/strong><\/td>\nNon-Scheduled<\/strong><\/td>\n<\/tr>\n
1. State Cooperative Banks<\/strong> (StCBs)- State level<\/span>
\n2. District Central Cooperative Banks<\/strong> (DCCBs)- District level<\/span>
\n3. Primary Agricultural Credit Societies<\/strong> (PACS)- Village level<\/span><\/span><\/td>\n		1. State Cooperative agriculture and Rural Development Banks<\/strong> (SCARDBs)- State Level<\/span>
\n2. Primary cooperative agriculture and Rural Development Banks<\/strong> (PCARDBs)- District and Village Level<\/span><\/td>\n		1.UCBs Operating in a single state-<\/strong> Registered under State Cooperative Societies Act<\/span>
\n2.Multistate UCBs operating in one or more states-<\/strong>\u00a0Registered under Multi State Cooperative Societies Act, 2002.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Functioning of PACS-\u00a0<\/strong>PACs provide short-term<\/strong>, and medium-term agricultural loans<\/span> to the farmers. Credit from the State Cooperative Banks<\/span> (StCBs) is transferred<\/span> to the District Central Cooperative Banks<\/span> (DCCBs). DCCBs provide credit extension to the farmers through PACS.<\/p>\n

<\/a>What are the advantages of Primary Agricultural Credit Societies (PACS)?<\/strong><\/span><\/h2>\n

1. Extension of Credit to Agriculture-<\/strong> PACS have the capacity to extend agricultural credit with minimal paperwork within a short time. For ex-<\/strong> The Kisan Credit Card<\/span> (KCC) scheme<\/span>, launched by the government to provide short term agricultural credit, is also facilitated through PACS.<\/p>\n

2. Solving Farmer’s Problems through group\/collective strength- <\/strong>PACS play a colossal role during times of strife like droughts<\/span>, agricultural distress<\/span> for the small and marginal farmers, by extending them credit and group support.<\/p>\n

3. Grassroot presence facilitating Financial Inclusion-<\/strong> As per RBI report<\/span>, there are 1.02 lakh<\/span> PACS<\/span> at the grassroot level (March 2021). PACS offer the last mile connectivity and promote financial inclusion. For ex-<\/strong> Social security schemes<\/span> like Atal Pension Yojna<\/span> (APY), Pradhanmantri Suraksha Bima Yojna<\/span> (PMSBY) are extended through PACS.<\/p>\n

4. Agricultural Marketing-<\/strong> PACS also assist farmers in the marketing of their agricultural produce and provides support in finding better markets. Thus, these help in improving farmers\u2019 income and reducing dependency on middlemen. For ex-<\/strong> In Kerala, PACS play an active role<\/span> in marketing cash crops<\/span> like rubber and spices.<\/span><\/span><\/p>\n

5. Training and Capacity Building-<\/strong> PACS also conduct the training programs on modern<\/span> agricultural practices and<\/span><\/span>\u00a0organic farming<\/span> for small and marginal farmers.<\/p>\n

<\/a>What are the challenges?<\/span><\/strong><\/h2>\n

1. Inadequate geographical Coverage and representation-<\/strong> PACS are largely concentrated<\/span> in the western parts of the country<\/span>. There are numerous exclusions in the membership of PACS<\/span>. For ex-<\/strong> Lack of adequate women and marginalised community members.<\/p>\n

2. Inadequate Financial Resources-\u00a0<\/strong>Primary Agricultural Credit societies have low deposit mobilization<\/span>, and they are largely dependent<\/span> upon the devolution from higher financing agencies<\/span> like District Central Cooperative Banks and State Cooperative Banks.<\/p>\n

3. High Losses due to overdues and NPAs-<\/strong> As per RBI report<\/span>, out of ~1 lakh PACS<\/span>, only 47,297 are in profit<\/span>. Large over-dues and NPAs have hit PACS profitability. According to the RBI report, PACS have NPAs of Rs 72,550 cr out of the total lending of Rs 1,43,044 cr.<\/p>\n

4. Politicisation of PACS-\u00a0<\/strong>PACS as a credit institution has been politicised with the election of dominant local politicians as the chairperson<\/span> of PACS. There is a partisan basis of awarding loans.<\/p>\n

5. Governance Challenge- <\/strong>PACS are not under RBI control<\/span> and the provisions of Banking Regulation Act 1949 does not apply to them. Further, the small size and scattered nature of these cooperative societies, makes their governance and regulation, a challenge for the regulators.<\/p>\n

6. Infrastructural Challenges-<\/strong> These cooperative societies face logistical challenges like substandard softwares<\/span> and substandard booking keeping systems<\/span>, which has made them susceptible to frauds.<\/p>\n

<\/a>What are the Govt schemes for PACS in India?<\/strong><\/span><\/h2>\n\n\n\n\n\n\n
Model Bye-laws for PACS<\/strong><\/td>\nEnable PACS to diversify their business activities<\/span> by undertaking more than 25 business activities<\/span> like dairy, fishery, floriculture, setting up godowns, procurement of foodgrains, fertilizers, seeds etc.<\/td>\n<\/tr>\n
Computerisation of PACS<\/strong><\/td>\nThis project entails bringing all the functional PACS<\/span> onto an ERP<\/span> (Enterprise Resource Planning<\/span>) based common software, linking them with NABARD through State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs)<\/td>\n<\/tr>\n
World\u2019s largest grain storage plan<\/strong><\/a><\/td>\nTo address the shortage of agricultural storage infrastructure<\/span> in the country by creating infrastructure such as godowns, etc. at selected<\/span> \u2018viable<\/span>\u2019 Primary Agricultural Credit Societies<\/span> (PACS).<\/td>\n<\/tr>\n
Pradhan Mantri Jan Aushadhi Kendras through PACS<\/strong><\/td>\n2,000 Primary Agricultural Credit Societies<\/span> (PACS<\/span>) have been selected across the country to open Pradhan Mantri Jan Aushadhi Kendras<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Read More UPSC Topics-<\/strong><\/h2>\n\n\n\n\n
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