Cabinet approves computerization of PACS

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved the computerization of the Primary Agricultural Credit Societies (PACS). The aim is to increase the efficiency of PACS, bring transparency and accountability to their operations, and facilitate PACS to diversify their business and undertake multiple activities/services.

This project proposes the computerization of about 63,000 functional PACS over a period of five years with a total budget outlay of Rs 2,516 crore with the Government of India’s share of Rs 1,528 crore.

PACS constitute the lowest tier of the three-tier short-term cooperative credit (STCC) in the country. Crucial for the development of the rural economy, they comprise about 13 crore farmers as their members. They account for 41 per cent (3.01 crore farmers) of the KCC loans given by all entities in the country. And 95 per cent of these KCC loans (2.95 crore farmers) through PACS are to the small and marginal farmers.

The other two tiers of STCC, viz. State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs), have already been automated by NABARD and brought on Common Banking Software (CBS).

However, majority of PACS have so far not been computerized and are still functioning manually, resulting in inefficiency and trust deficit. In some of the states, stand-alone and partial computerization of PACS has been done. There is no uniformity in the software being used by them and they are not interconnected with the DCCBs and StCBs.

Under the guidance of Amit Shah, Minister of Home and Cooperation, it has now been proposed to computerize all the PACS throughout the country, bring them on a common platform at the national level and have a Common Accounting System (CAS) for their day-to-day business.

Besides serving the purpose of financial inclusion and strengthening service delivery to farmers, especially Small and Marginal Farmers (SMFs), the computerization of PACS will also make them nodal service delivery points for various services and provision of inputs like fertilizers, seeds etc. The project will help in improving the outreach of the PACS as outlets for banking activities as well as non-banking activities apart from improving digitalization in rural areas.

The DCCBs can then enrol themselves as one of the important options for taking up various government schemes (where credit and subsidy is involved) which can be implemented through PACS. This will ensure speedy disposal of loans, lower transition cost, faster audit and reduction in imbalances in payments and accounting with StCBs and DCCBs.

The project comprises the development of cloud-based common software with cyber security and data storage, providing hardware support to the PACS, and digitization of existing records, including maintenance support and training. This software will be in vernacular language having the flexibility of customization as per the needs of the States.

Project Management Units (PMUs) will be set up at the Central and State levels. District-level support will also be provided at a cluster of about 200 PACS. In the case of states where computerization of PACS has been completed, Rs 50,000 per PACS will be reimbursed, provided they agree to integrate with/adopt the common software, their hardware meets the required specifications, and the software was commissioned after 1 February 2017.