The Reserve Bank of India (RBI), in its Report on Trend and Progress of Banking in India 2023-24, has outlined the operational profile, financial performance and ongoing transformation of Primary Agricultural Credit Societies (PACS), which form the grassroots-level institutions of the short-term cooperative credit structure.
PACS are owned by individual members, largely farmers, and are mandated to promote thrift and mutual help. They cater to the credit requirements of their members and also provide credit-linked services such as input supply, storage and marketing of agricultural produce.
As at end-March 2024, PACS had a total membership of 16.37 crore, serving 4.95 crore borrowers. Of the total members, 44.2 per cent were small farmers, while 24.9 per cent belonged to Scheduled Castes and Scheduled Tribes. The borrower-to-member ratio, which is used as an indicator of credit penetration, stood at 30.2 per cent at end-March 2024, compared with 30.7 per cent a year earlier.
During 2023-24, the growth in total resources of PACS decelerated to 9.8 per cent from 14.2 per cent in the previous year. According to the RBI, this moderation was led by a slowdown in deposit growth. Deposits constituted 41.5 per cent of total resources.
More than 80 per cent of total loans and advances outstanding were short-term in nature and were extended for agricultural purposes. A reduction in the growth of short-term loans contributed to the deceleration in the overall growth of loans and advances.
In terms of regional distribution, the western region accounted for the largest share in the number of PACS, at 29.4 per cent. However, the southern region continued to dominate in business volumes, accounting for 76.9 per cent of total deposits and 49.6 per cent of loans and advances.
The RBI report notes an improvement in the number of profit-making PACS during the year. In 2023-24, 49,238 PACS reported profits, up from 47,794 in the previous year. At the same time, the number of loss-making PACS also increased marginally to 37,662 from 37,357 a year ago.
Overall, PACS recorded lower net losses in 2023-24 compared to the previous year. Regionally, PACS in the northern, north-eastern and western regions reported net profits, while those in the southern and central regions reported net losses.
Asset quality, however, showed deterioration. The gross non-performing asset (GNPA) ratio of PACS increased to 26.2 per cent at end-March 2024 from 23.3 per cent at end-March 2023.
The RBI report also highlights ongoing efforts to transform PACS into modern, multifunctional entities.
The Government of India is implementing a centrally sponsored scheme from 2022-23 to 2026-27 for the computerisation of PACS, with the objective of onboarding nearly 80,000 PACS onto a unified enterprise resource planning (ERP) platform. This initiative is aimed at strengthening accounting systems, supervision and linkages with District Central Cooperative Banks (DCCBs) and State Cooperative Banks (StCBs).
In addition, the Government of India has launched a plan to establish two lakh new multipurpose PACS, dairy and fishery cooperatives over a five-year period. PACS are also being integrated into the ‘Cooperative Stack’ digital ecosystem to enable the delivery of a wider range of rural services and financial products. Convergence initiatives have further enabled PACS to function as common service centres, Jan Aushadhi Kendras, and LPG and fertiliser distribution points.
According to the RBI, these measures are intended to deepen financial inclusion, improve operational viability and reposition PACS as comprehensive rural service institutions within the cooperative credit structure.
