What are Primary Agricultural Credit Societies? Can the cooperative push alone help in achieving the twin targets of boosting rural economy and mainstreaming small and marginal farmers?

Cooperative Central board → district cooperative board → PACS RBI → responsible for 14% Credit → PACS → not under RBI; not follow banking regulation

Cooperative Push can aid in

a) boosting Rural Economy

1. NABARDS refinance can be effectively mobilised by PACS due to awareness of local credit history.

② Increased customised credit flow enables attraction of Private investment ③ Can help via Priority Sector lending MSME Sector → real growth engine [ES-2020] of economy ④ Reduce burden on Schedule commercial banks

b) Main streaming Small & Marginal farmer ① SAS survey (Agri census) - 85% Small & Marginal ② Help channelize idle money of farmers into productive sectors of economy ③ Can promote creation of FPO to leverage economies of Scale ④ Prevent Small and marginal farmer from borrowing → Predatary non-institutional lenders.

limitation of Cooperatives

① Wide spread corruption due to problems of dual regulation. eg → PMC ② lack of professional handholding → inefficiency ③ Limited Credit Creation due to hesitancy of farmers. ④ Outdated digital infrastructure - eg > NCAER → 35% PACS no computer ⑤ Excessive Political interference

Way forward

① Connecting Cooperative banks with Core banking Solutions

② Using NBFC to further augment PAC capacity

③ Allow insurance & Pension Company to invated in Cooperative banks → credit creation

④ Capacity building via Panchasutra Principles