Multipurpose PACs to usher in prosperity in the Northeast

The need for Primary Agricultural Credit Society (PACs) has been emphasized by the Minister of Home Affairs and Co-operation Amit Shah on October 7. The government is very keen to make the PACs a working body that can improve the condition of rural farmers. He has promised to start 65,000 PACs in Panchayati Raj Institutions of the country with a promise to make the benefits accessible to the northeastern states is something exemplary.

However, the information about what is PAC is what Business Northeast has dive into.

The Primary Agricultural Credit Societies (PACS), being registered cooperative societies, have been providing credit and other services to their members.

It constitutes the lowest tier of the three-tier Short-term cooperative credit (STCC) in the country comprising approximately 13 crore farmers as its members, which is crucial for the development of the rural economy. PACS account for 41 percent (3.01 Cr. farmers) of the Kisan Credit Card (KCC) loans given by all entities in the Country and 95 percent of these KCC loans (2.95 Cr. farmers) through PACS are to the Small and Marginal farmers.

The other two tiers, namely, State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) have already been automated by the National Bank for Agriculture and Rural Development (NABARD) and brought on Common Banking Software (CBS).

How to form a PACS?

It is, in fact, a basic unit and the smallest co-operative institution in India that works at the gram panchayat and village level. PACS act as a final link between the ultimate borrowers, that is, rural people on the one hand, and the higher agencies, that is, the Central Co-operative Bank, State Co-operative Bank, and Reserve Bank of India on the other.

A primary agricultural credit card 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.

It is just an association of persons that confers equal rights to all its members without considering their holding of share and their social standing.

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.

The primary credit societies' working capital is derived from their own funds, deposits, borrowings, and other sources.

Share capital, membership fees, and reserve funds are all part of the company's own funds.

Deposits are made by both members and non-members.

Borrowings are primarily made from central cooperative banks.

PACS provides the following facilities to its members:

i. Input facilities in form of cash or kind component
ii. Agriculture implements on hiring basis
iii. Storage facility

Computerization of PACS:

The Cabinet Committee on Economic Affairs chaired by Prime Minister Shri Narendra Modi has approved the computerization of Primary Agricultural Credit Societies (PACS) with the objective of increasing efficiency of PACS, bringing transparency and accountability in their operations; facilitating PACS to diversify their business and undertaking multiple activities/ services.

This project proposes the computerization of about 63,000 functional PACS over a period of 5 years with a total budget outlay of Rs. 2516 crore with a Government of India share of Rs. 1528 crore.

The declaration of Amit Shah to bring a huge number of Primary Agricultural Credit Society is actually the need of the hour. The PACs will create better opportunities for rural dairy farmers and other agriculturists to achieve their financial goals. However, emphasis should be given to financial literacy among the rural people so that they can avail this opportunity and work for its success with proper knowledge.

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