Primary Agricultural Credit Societies (PACS)

Primary Agricultural Credit Societies (PACS)

News: In order to improve the viability of Primary Agricultural Credit Societies (PACS) and diversify their business activities to transform them into vibrant economic entities at Panchayat/ village level, Model Byelaws have been framed by Ministry of Cooperation.

What are the model byelaws?
• The Model Byelaws will enable PACS to diversify their business activities by undertaking more than 25 business activities, including dairy, fishery, floriculture, setting up godowns, procurement of foodgrains, fertilizers, seeds, LPG/CNG/Petrol/Diesel distributorship, short-term & long-term credit, custom hiring centers, Fair Price Shops (FPS), community irrigation, Business Correspondent activities, Common Service Centre, etc. Provisions have also been made to make the membership of PACS more inclusive and broadbased, giving adequate representation to women and Scheduled Castes/Schedules Tribes.

How will it help farmers?
• The Model Byelaws will help farmers in getting short-term, medium-term and long-term credit and other services such as fertilizers, seeds, pesticides, storage facilities, banking services, etc. at one stop for meeting their varied needs.
• Farmers will also be able to obtain benefits of social security schemes, micro insurance, more than 300 e-services of CSC, etc.

What are PACS?
• Primary Agricultural Credit Societies (PACS) are the grass root level arms of the shortterm co-operative credit structure in India.

What role do they play in rural and agricultural development?
• Access to Credit: PACS provide small farmers with access to credit, which they can use to purchase seeds, fertilizers, and other inputs for their farms. This helps them to improve their production and increase their income.
• Financial Inclusion: PACS help to increase financial inclusion in rural areas, where access to formal financial services is limited. They provide basic banking services, such as savings and loan accounts, to farmers who may not have access to formal banking services.
• Training and Capacity Building: PACS conduct training sessions to enhance financial literacy and create awareness amongst farmers.
• Convenient Services: PACS are often located in rural areas, which makes it convenient for farmers to access their services. This is important because many farmers are unable to travel to banks in urban areas to access financial services.
• Marketing of Agricultural Produce: They help farmers in the marketing of their agricultural produce, it reduces their dependency on middlemen. (For example, in Kerala, PACS play an active role in marketing cash crops like rubber and spices.)
• Promoting Savings Culture

Challenges:
• Inadequate access, Inadequate resources and lack of proper coverage (especially in North-east)

Government of India initiatives to strengthen PACS:
• The budget 2023 has announced Rs 2,516 crore for Computerisation of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years, with the aim of bringing greater transparency and accountability in their operations and enabling them to diversify their business and undertaking more activities.
• PACS are linked to the National Bank for Agriculture and Rural Development (NABARD), enabling them to access financial resources and expertise for better functioning.
• Delivery of CSC services through PACS is a big step towards empowering them.