A Primary Agricultural Credit Society (PACS) is a basic unit and smallest co-operative credit institution in India It works on the grassroots level (gram panchayat and village level).

Prime Minister Narendra Modi launched a new Central Sector Scheme of financing facility under the Agriculture Infrastructure Fund of Rs. 1 Lakh Crore. The scheme will support farmers, PACS, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.

This article will give details about the Primary Agricultural Credit Society  within the context of the IAS Exam.

Definition of Primary Agricultural Credit Society

Primary Agricultural Credit Societies are the grass root level arms of the short-term co-operative credit structure. PACs deal directly with the rural (agricultural) borrowers, give those loans and collect repayments of loans given. and also undertake distribution and marketing functions.

They occupy a predominant position in the co-operative credit structure and form its base. It serves as the final link between the ultimate borrowers on the one hand and the higher financing agencies, namely the Scheduled Commercial Banks, and the RBI/NABARD on the other hand.

Organisational Structure of PACS

• General Body of PACS: Exercise the control over board as well as management.
• Management Committee:Elected by the general body to perform the work as prescribed by the society’s rules, acts, and by-laws.
• Chairman, Vice-Chairman, and Secretary:Work for the benefit of the members by performing their roles and duties as assigned to them.
•  Office Staff: Responsible for performing day to day work.

Functions and Significance of Primary Agriculture Credit Society

Functions of Primary Agriculture Credit Society:

• It promotes economic interest of members in accordance with the co-operative principle.
• It provides short term and medium term loans. It promotes savings habits among members.
• It supplies agricultural inputs like fertilizers, seeds, insecticides, and implements. It provides marketing facilities for the sale of agricultural products .
• It supplies domestic products requirements such as sugar, kerosene etc.

Significance of Primary Agriculture Credit Society:

• For the uninitiated, a PACS is the first building block of the century-old cooperative banking system of India.
• PACS can play a colossal role during this time of strife, in bringing farmer communities closer to credit, inputs, market and value addition.
• No commercial bank branch can ever come close to providing the kind of services a Primary Agriculture Credit Society (PACS) can.
• PACS can also play a major role by integrating its warehouse with the physical and financial supply chain of agro-commodities in the upcoming Garmin Agriculture Markets (GrAMs) or large warehouses in the private sector.

Conclusion

To make all Primary Agricultural Cooperative Society viable and ensure adequate and timely flow of co-operative credit to the rural areas the RBI, in collaboration with State Governments, had been taking a series of steps to strengthen the PACS and to correct regional imbalances in cooperative development. These efforts are being intensified by providing larger funds to weak societies to write off their losses, bad debts and overdue

Primary agriculture co-operative credit societies as financial institutions that play a very important role at the grass roots level in the development of local areas. They are multifunctional organizations that dispense a host of activities like banking, on out supplies, marketing produce and trading in consumer goods.

Hence effective performance of primary agriculture co-operative credit societies is crucial.

The first Primary agricultural Credit Society (PACS) was formed in 1904. Since then these societies have been playing a significant role in providing short-term and medium term credit to the farmers. Till early seventies, this was the only institutional credit agency available to the people in rural areas. The PACS functioning at the base of the co-operative banking system constitute the major retail outlets of short term and medium term credit to the rural sector.

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