Primary Agricultural Credit Societies (PACS)
2022 JUN 29
Preliminary >
Economic Development > Indian Economy and Issues > Cooperatives
Why in news?
- Cabinet approves digitisation of 63,000 Primary Agricultural Credit Societies.
About Primary Agricultural Credit Societies (PACS):
- It is a village-level institution that works directly with rural residents.
- It encourages agriculturists to save, accepts deposits from them, makes loans to deserving borrowers, and collects repayments.
- The first Primary Agricultural Credit Society (PACS) was formed in the year 1904.
- PACS are the lowest unit in a three-tier structure:
- The other two tiers — State Cooperative Banks (StCB) and District Central Cooperative Banks (DCCB) — have already been automated by the NABARD and brought on the Common Banking Software (CBS).
Who regulates PACS?
- PACS are registered under the Co-operative Societies Act and also regulated by the RBI.
- They are governed by the “Banking regulation Act-1949” and Banking Laws (Co-operative societies) Act 1965.
Who can form PACS?
- A primary agricultural credit society can be formed by a group of ten or more people from a village.
- The society’s management is overseen by an elected body.
- The membership fee is low enough that even the poorest agriculturist can join.
- Members of the society have unlimited liability, which means that each member assumes full responsibility for the society’s entire loss in the event of its failure.
Why digitization is needed?
- PACS account for 41% (3.01 crore farmers) of the Kisan Credit Card (KCC) loans given by all entities in the country
- Computerisation will bring transparency and link all credit societies to a common accounting system.
- It will also help PACS to become a nodal centre for providing various services such as Direct Benefit Transfer (DBT), Interest Subvention Scheme (ISS), Crop Insurance Scheme (PMFBY) etc.
PRACTICE QUESTION:
Consider the following statements regarding ‘Primary Agricultural Credit Societies (PACS)’:
1. Only members can make deposit in Primary Agricultural Credit Society
2. PACS are registered under the Co-operative Societies Act and also regulated by the RBI
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
B
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