The Union Cooperation Minister directed the National Federation of State Co-operative Banks (NAFSCOB) to prioritise making Primary Agricultural Credit Societies (PACS) more viable, transparent, and modern.

Key Highlights of NAFSCOB Diamond Jubilee Celebration

• Focus on PACS Reforms: It was highlighted that out of 1.05 lakh PACS, only 65,000 are currently functional and require reform.
• Expansion of Cooperative Banking: To increase the number of district cooperative banks by 50% from the current 300 in the coming years with higher deposit targets and profit margins through a focus on low-cost deposits in local areas.
• Learning from Successful Models:  He recommended studying the success of institutions like Ahmedabad District Cooperative Bank and Gujarat State Cooperative Bank as benchmarks for improvement.

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About Primary Agricultural Credit Societies (PACS)

• Structure and Role: PACS are village-level cooperative credit societies serving as the grassroots link in the three-tier cooperative credit structure, which is headed by State Cooperative Banks (SCBs) at the state level.
  • The first PACS was established in 1904.
• Regulation and Administration: PACS are registered under the Cooperative Societies Act and are administered by the respective State Registrar of Cooperative Societies (RCS).
  • SCBs and District Central Cooperative Banks (DCCBs) are also registered under the State Cooperative Societies Act but are regulated by the Reserve Bank of India (RBI).
  • PACS are not governed by the Banking Regulation Act, 1949, and therefore are outside the regulatory purview of the RBI.
• Refinancing: PACS receive refinancing through DCCBs and SCBs, facilitated by the National Bank for Agriculture and Rural Development (NABARD).
• Functions: PACS provide short-term credit loans to rural borrowers and manage the collection of repayments.
  • They also offer input services, such as the distribution of seeds, fertilizers, and pesticides, to member farmers.
• Contribution to Agricultural Credit: PACS account for 41% of Kisan Credit Card (KCC) loans distributed by all entities in India.
  • Of these, 95% of KCC loans through PACS are allocated to small and marginal farmers as of 2022.
• Comparison with Other Credit Channels: Although commercial banks contribute the majority (73%) of agricultural credit in India, regional rural banks (RRBs) and cooperative banks have disbursed a higher share of loans to small and marginal farmers.

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About National Federation of State Co-operative Banks Ltd. (NAFSCOB)

• NAFSCOB was established on 19th May 1964 with a view to facilitate the operations of State and Central Co-operative Banks in general and Development of Co-operative Credit in particular; Planning, Research and Development (PRD).
• Membership: Consists of State Cooperative Banks (SCBs) from various states and Union Territories.
• Role of NAFSCOB:
  • Provides financial and technical assistance to SCBs.
  • Facilitates coordination and cooperation among SCBs.
  • Represents the interests of SCBs at the national level.
  • Acts as a bridge between SCBs and the Reserve Bank of India (RBI).

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