The Union Budget 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 undertake more activities.
GS III- Indian Economy
Dimensions of the Article:
- About primary agricultural credit societies
- Objectives of PACS
- Functions of PACS
- Why need digitization?
About primary agricultural credit societies:
- PACS is the smallest cooperative credit institution in India and a basic unit.
- The initial Primary Agricultural Credit Society (PACS) was founded in 1904.
- It has a grassroots effect (gram panchayat and village level).
- PACS serves as the last point of contact between the primary borrowers, or rural residents, and the higher agencies, such as the Central Cooperative Bank, State Cooperative Bank, and Reserve Bank of India.
- PACS are governed by the RBI and registered under the Co-operative Societies Act.
- The “Banking Regulation Act-1949” and the “Banking Laws (Co-operative societies) Act 1965” are in charge of them.
Objectives of PACS
- To raise capital for the purpose of making loans and supporting members’ essential activities.
- To collect deposits from members with the goal of improving their savings habit.
- To supply agricultural inputs and services to members at reasonable prices,
- To arrange for the supply and development of improved breeds of livestock for members.
- To make all necessary arrangements for improving irrigation on land owned by members.
- To encourage various income-generating activities through supply of necessary inputs and services.
Functions of PACS
- PACS typically offer the following services to their members:
- Input facilities in the form of a monetary or in-kind component
- Agriculture implements for hire
- Storage space
Why need digitization?
- PACS account for 41 % (3.01 Cr. farmers) of the KCC loans given by all entities in the country and 95 % of these KCC loans (2.95 Cr. farmers) through PACS are to the small and marginal farmers.
- The other two tiers viz. State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) have already been automated by the NABARD and brought on Common Banking Software (CBS).
- Majority of PACS have so far been not computerized and still functioning manually resulting in inefficiency and trust deficit.
- Computerization of PACS will increase their transparency, reliability and efficiency, and will also facilitate the accounting of multipurpose PACS.
- Along with this, it will also help PACS to become a nodal centre for providing services such as direct benefit transfer (DBT), Interest subvention scheme (ISS), crop insurance scheme (PMFBY), and inputs like fertilizers and seeds.
-Source: Indian Express