The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday, approved the computerisation of primary agricultural credit societies (PACS) with the objective of enhancing their efficiency, bringing transparency and accountability to their operations; facilitating them to diversify their business and undertake multiple activities/services.

This project proposes computerisation of about 63,000 functional PACS over a period of five years with a total budget outlay of Rs 2516 crore with the Central government’s share of Rs 1528 crore.

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The PACS constitutes the lowest tier of the three-tier short-term cooperative credit (STCC) in the country comprising of approximately 13 crore farmers as its members, which is crucial for the development of the rural economy. They account for 41 percent (3.01 crore farmers) of the KCC loans given by all entities in the country and 95 percent of these KCC loans (2.95 crore farmers) through PACS are to the Small and Marginal farmers.

The other two tiers viz State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) have already been automated by the NABARD and brought on Common Banking Software (CBS). However, a majority of PACS have so far not been computerised and are still functioning manually resulting in a lack of inefficiency and trust deficit.
In some states, stand-alone and partial computerisation of the 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 able guidance of Amit Shah, Minister of Home and Cooperation, it has been proposed to computerise all the PACS throughout the country and bring them on a common platform at the national level and have a Common Accounting System (CAS) for their day to day business,” an official statement said.

Computerisation of the PACS, besides serving the purpose of financial inclusion and strengthening service delivery to farmers especially Small & Marginal Farmers (SMFs) will also become 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 digitalisation in rural areas. The DCCBs can then enroll themselves as one of the important options for taking up various government schemes (where credit and subsidy are involved) which can be implemented through the PACS. It will ensure speedy disposal of loans, lower transition cost, faster audit and reduction in imbalances in payments and accounting with state cooperative banks and district central cooperative banks.

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