Published on: February 20, 2023

Primary Agricultural Credit Societies

Primary Agricultural Credit Societies

Why in news? Union Cabinet approves setting up 2 lakh primary agricultural credit societies


  • The decision was taken at a Cabinet meeting, setting an “initial” target to establish two lakh multi-purpose PACS, dairy and fishery cooperatives
  • The plan will be implemented with the support of NABARD, National Dairy Development Board and National Fisheries Development Board through the convergence of various schemes of the Ministry of Fisheries, Animal Husbandry & Dairying by leveraging the ‘whole-of-government’ approach
  • According to the plan, the National Programme for Dairy Development and Dairy Processing & Infrastructure Development Fund of the Department of Animal Husbandry and Dairying, as well as Pradhan Mantri Matsya Sampada Yojana and Fisheries and Aquaculture Infrastructure Development will be converged


  • Village level cooperative credit societies
  • Serve as the last link in a three-tier cooperative credit structure
  • Headed by the State Cooperative Banks (SCB) at the state level
  • Credit from the SCBs is transferred to the district central cooperative banks, or District credit Cooperative Banks (DCCBs), that operate at the district level
  • DCCBs work with PACS, which deal directly with farmers
  • Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them. A village can have multiple PACS


  • 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, fertilisers etc
  • Banks extend this credit at 7 per cent interest, of which 3 per cent is subsidised by the Centre, and 2 per cent by the state government
  • Effectively, farmers avail the crop loans at 2 per cent interest only


  • The attraction of the PACS lies in the last mile connectivity they offer. For farmers, timely access to capital is necessary at the start of their agricultural activities. PACS have the capacity to extend credit with minimal paperwork within a short time
  • With other scheduled commercial banks, farmers have often complained of tedious paperwork and red tape. For farmers, PACS provide strength in numbers, as most of the paperwork is taken care of by the office-bearer of the PACS
  • In the case of scheduled commercial banks, farmers have to individually meet the requirement and often have to take the help of agents to get their loans sanctioned. NABARD’s annual report of 2021-22 shows that 59.6 per cent of the loans were extended to the small and marginal farmers
  • Since PACS are cooperative bodies, however, political compulsions often trump financial discipline, and the recovery of loans is hit. Chairpersons of PACS participate in electing the office-bearers of DCCBs. Political affiliations are important here as well.