Primary Agricultural Credit Society (PACS)

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Union Cooperation Minister Amit Shah recently said that the Centre has decided to ensure formation of Primary Agricultural Credit Societies (PACS) in every village by 2027.
Addressing an event, he said the Centre has introduced 20 new activities to be associated with PACS, enabling them to generate profits.
The computerization of PACS has opened up many possibilities for their development, he said.
He launched the National Cooperative Database and released the ‘National Cooperative Database 2023: A Report’.
- The database aims to identify and address the gaps through a comprehensive analysis.
He said the work on the National Cooperative Database has been carried out in 3 phases.
- In the first phase, mapping of approximately 2.64 lakh societies in three sectors, namely Primary Agricultural Credit Societies, Dairy, and Fisheries, was completed, he said.
- In the second, data from various National Federations, State Federations, State Cooperative Banks (StCB), District Central Cooperative Banks (DCCB), etc. were collected/mapped.
- In the third, data mapping of all remaining 8 lakh primary cooperative societies in other sectors was carried out, he said.
After this, it was revealed there are over 8 lakh registered societies in the country, which are connected to over 30 crore citizens, he said.

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 (DCCBs), that operate at the district level.
- The DCCBs work with PACS, which deal directly with farmers.
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.
PACSs provide short-term, and medium-term agricultural loans to the farmers for the various agricultural and farming activities.

The first PACS was formed in 1904.
Currently, there are more than 1,00,000 PACS in the country with a huge member base of more than 13 crore farmers.
However, only 63,000 of them are functional.

The attraction of the PACS lies in the last mile connectivity they offer.
For farmers, 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.
- With other scheduled commercial banks, farmers have often complained of tedious paperwork and red tape.
For farmers, PACS provide strength in numbers, as most of the paperwork is taken care of by the office-bearer of the PACS.
In the case of scheduled commercial banks, farmers have to individually meet the requirement and often have to take the help of agents to get their loans sanctioned.

Since PACS are cooperative bodies, political compulsions often trump financial discipline, and the recovery of loans is hit.
Many committees have pointed out various issues plaguing the cooperative system such as;
- Lack of active participation by the members,
- Lack of professionalism,
- Absence of corporate governance,
- Bureaucratisation,
- Ageing and unenthusiastic employees.