Multipurpose Primary Agricultural Credit Societies

Context: Recently Government of India approves a plan to establish two lacks new multipurpose Primary Agricultural Credit Societies (PACS) / dairy/fishery primary cooperative societies for covering all the remaining Panchayats/ villages in the country.

What are Primary Agricultural Credit Societies (PACS)?

It is a cooperative credit institution at the village/lowest level.

• PACS is an association of borrowers and non-borrowers residing in a particular locality.
• The funds of the society are derived from the share capital and deposits of members and loans from a central cooperative bank.
• PACS is the foundation of the cooperative credit structure.
• The first PACS was established in 1904.
• PACS is the final link between the borrower at the village level on one hand and the higher agencies like the central cooperative bank, state cooperative bank and reserve bank of India.

Who regulates PACS?

• PACS are registered under the Co-operative Societies Act which means they are regulated by the State government (specifically administrative aspects) and also regulated by the RBI. 
• NABARD is a nodal refinancing agency for PACS including other cooperative banks.
• They are governed by the “Banking regulation Act-1949” and Banking Laws (Co-operative societies) Act 1965.

Objectives of PACS

• To raise the capital to meet the demands of its members
• To collect the deposits from its members.
• They also supply agricultural inputs and other services (in the form of money or in-kind) to their members.
• They can also provide a storage facility to produce its members.

Who can form PACS?

• Gorp of ten or more people in a village or from many villages can form PACS
• Membership fees are there to be a member of PACS but it is very low so that the poorest man can join it.
• Members of the PACS have unlimited liability, which means each member assumes full responsibility for the society’s entire loss in the event of failure.
• Management of the PACS is overseen by the elected body

What are the Capital Sources of PACS?

PACS derives its working capital from 

• Their own funds (share capital, membership fee, and reserve funds), 
• Deposits, 
• Borrowing and 
• Other sources

Significance of PACS

• PACS accounts for 41% of all KCC loans provided by all entities in the country.
• PACS is the main source of credit for rural marginal farmers because 95% of beneficiaries of PACS are small and marginal farmers,

Participants of Multipurpose Primary Agricultural Credit Societies 

• State Governments, 
• the National Bank for Agriculture and Rural Development (NABARD), 
• the National Dairy Development Board (NDDB) 
• the National Fisheries Development Board (NFDB) 

Approach and period of Multipurpose Primary Agricultural Credit Societies 

• The scheme will be implemented through the convergence of various existing schemes of the Government of India and by leveraging the ‘whole-of-Government’ approach in the next five years.

Other initiatives 

The Government of India has approved setting up of three national-level Multi-State Cooperative Societies (MSCS) one each for Organic, Seeds and Exports registered under MSCS Act, 2002 i.e. 

• National Co-operative Export Society, 
• National Co-operative Society for Organic Products and 
• National Level Multi-State Seed Co-operative Society

Purpose of national-level Multi-State Cooperative Societies (MSCS)

• These cooperative societies are expected to support the fisheries in the areas of supply of seed and quality fish marketing with a focus on the integrated project for the development of Inland fisheries, fisherwomen cooperatives, branding & trade promotion and capacity building. 

The Integration of Cooperatives data with the Gati Shakti Portal

• To utilise the infrastructure being developed by the Centre and State.