Primary Agricultural Credit

Primary Agricultural Credit

• The Government has taken five new decisions to increase the income of Primary Agricultural Credit Societies (PACS), as well as increase the employment opportunities in rural areas.

What are Primary Agricultural Credit Societies

• 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.
• PACSs provide short-term, and medium-term agricultural loans to the farmers for the various agricultural and farming activities.
• The first PACS was formed in 1904.

Significance:

• Access to Credit:
  • They provide small farmers with access to credit, which they can use to purchase seeds, fertilizers, and other inputs for their farms. This helps them to improve their production and increase their income.
• Financial Inclusion:
  • PACS help to increase financial inclusion in rural areas, where access to formal financial services is limited. 
• Convenient Services:
  • PACS are often located in rural areas, which makes it convenient for farmers to access their services.  
• Promoting Savings Culture:
  • PACS encourage farmers to save money, which can be used to improve their livelihoods and invest in their farms.

Issues with the PACS?

• Inadequate Coverage:
  • Though geographically active PACS cover about 90% of 5.8 villages, there are parts of the country, especially in the north-east, where this coverage is very low.
• Inadequate Resources:
  • The resources of the PACS are much too inadequate in relation to the short-and medium-term credit needs of the rural economy.
• Overdue and NPAs:
  • Large over-dues have become a big problem for the PACS.

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