Primary Agricultural Credit Societies (PACS)

Context: The Union Budget has announced for computerization of Primary Agricultural Credit Societies (PACS) over the next five years.

About PACS:

• 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.

Financial Structure:

• The primary credit societies’ working capital is derived from their own funds, deposits, borrowings, and other sources.
• Deposits are made by both members and non-members.
• Borrowings are primarily made from central cooperative banks.
• Credit from the Scheduled Commercial Banks is transferred to the district central cooperative banks, or DCCBs, that operate at the district level.
• The DCCBs work with PACS, which deal directly with farmers.
• PACS are involved in short term lending — or what is known as crop loan.
• At the start of the cropping cycle, farmers avail credit to finance their requirement of seeds, fertilizers etc.
• Banks extend this credit at 7 percent interest, of which 3 per cent is subsidized by the Centre, and 2 per cent by the state government.
• Effectively, farmers avail the crop loans at 2 percent interest only.

Organizational Structure:

• Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them.
• The membership fee is low enough that even the poorest agriculturist can join.
• A village can have multiple PACS.

Source: Indian Express

Previous Year Question

Q.1) Consider the following statements:

1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.

Which of the statements given above is/are correct? (2020)

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q.2) Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes ? (2020)

1. Working capital for maintenance of farm assets harvesters,
2. Purchase of combine tractors and mini trucks requirements of farm
3. Consumption households
4. Post-harvest expenses
5. Construction of family house and setting up of village cold storage facility

Select the correct answer using the code given below:

1. 1, 2 and 5 only
2. 1, 3 and 4 only
3. 2,3,4 and 5 only
4. 1, 2, 3, 4 and 5