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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.


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