Banking system is an important topic for #upscprelims, especially RBI, schedule commercial banks, credit societies.
In budget, this year gov announced 2516 cr for computerization of PACS and multi state cooperative societies bill was introduced in loksabha in Dec 2022.
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Hence, credit societies become very important.
In this 🧵we will see following things.
1) What are PACS?
2) Types of cooperative credit structure?
3) How are PACS helpful to farmers?
4) Need of reforms?
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1) What are PACS?
Primary agriculture credit societies are village level cooperative credit societies that serve as the last link in the 3 tier cooperative credit structure.
As per RBI, there are 1.02 lakh PACS of them only 47297 were profitable.
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2) Types of cooperative credit structure in India
The 3 tier cooperative credit structure in India is:
a) State cooperative banks (SCBs) at state level
b) District central cooperative banks (DCCBs) at district level
c) PACS at village level
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3) How are PACS helpful to farmers?
a) Offer last mile connectivity
b) Timely access to capital
c) Minimal paperwork involved
Other commercial banks involve tedious paperwork and red tapism.
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4) Need of reforms?
PACS are cooperative bodies hence, there is involvement of political interference and problem of loan waivers that increases the NPA.
SCBs and DCCBs are connected to core banking software but PACS are not connected.
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Addressing the above issues can bring transparency and accountability in their operations and enable them to diversify their business and undertake more activities.
The end.
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