Primary Agricultural Credit Societies (PACS)

Over the next five years, the Union Budget has allocated Rs 2,516 crore for the computerization of 63,000 Primary Agricultural Credit Societies (PACS).

Primary Agricultural Credit Societies (PACS)

  • PACS are village-level cooperative credit societies that serve as the final link in a three-tier cooperative credit structure led by state-level State Cooperative Banks (SCB).
  • Credit is transferred from SCBs to district central cooperative banks, or DCCBs, which operate at the district level.
  • The DCCBs collaborate with PACS, which deal with farmers directly.
  • Individual farmers are members of the PACS because they are cooperative bodies, and office-bearers are elected from within them.
  • A village may have several PACS.

What is its lending mechanism?

  • PACS are involved in crop loans, which are short-term loans.
  • Farmers use credit to finance their seed, fertiliser, and other crop-related needs at the start of the cropping cycle.
  • Banks extend this credit at 7% interest, with the Centre subsidising 3% and the state government subsidising 2%.
  • Farmers effectively obtain crop loans at a 2% interest rate.


  • According to NABARD’s annual report for 2021-22, small and marginal farmers received 59.6 percent of loans.
  • According to a report released by the Reserve Bank of India on December 27, 2022, the number of PACS is 1.02 lakh.
  • Only 47,297 of them were profitable at the end of March 2021.
  • According to the same report, PACS reported lending totaling Rs 1,43,044 crore and NPAs totaling Rs 72,550 crore. Maharashtra has 20,897 PACS, with 11,326 of them losing money.

Why are PACS appealing?

  • The appeal of PACS is the last-mile connectivity they provide.
  • Farmers require timely access to capital at the start of their agricultural activities.
  • PACS have the ability to extend credit quickly and with minimal paperwork.
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