PRIMARY AGRICULTURAL COOPERATIVE SOCIETY

(PACS)
1.
2.

PACS IS A FORMAL BODY CREATED BY ITS MEMBERS TO MEET

THEIR EMERGING CREDIT NEEDS.
ITS FUNCTIONING IS GUIDED BY THE PRINCIPLES OF
COOPERATION.

PRINCIPLES OF COOPERATION:
1
2
3
4
5
6
7

Voluntary and open membership

Democratic member control
Member Economic Participation
Autonomy and Independence
Education, training and information to members.
Cooperation among Cooperatives.
Concerned for Community.
Members and his welfare are the central theme of PACS.
MEMBERSHIP OF PACS :
1.
Membership Fee along application for membership.
2.
Purchase at least on SHARE OF PACS (Rs. 100 /-)
3.
Give details of landholding and other information.
4.
Minimum 100 Members required for Registration
of NEW PACS.
OBJECTIVE OF PACS:
1.
To assess the credit needs of members.
2.
To disburse credit ( loans)
3.
Recover loan instalments or in lump-sum.
4.
Promote economic empowerment of members.
5.
Deposit Mobilization from members and others.
MANAGEMENT:
Democratic set up for Managing the affairs of PACS.
Election Commissioner organizes elections amongst
Members and Boad of Directors are elected who control and manage the PACS.
There are 11 members on Board.

GENERAL BODY:
General body consists of all members. Annual General Body meeting is held for
Policy Decisions. Two-third majority decisions are taken. Annual Budget is passed and
Income and Expenditures are discussed and approval is given.

POSITIVE CONTRIBUTIONS OF PACS:(Strengths of PACS)

1. Client is the owner i.e. membersthus a unique
2.
3.
4.
5.

Organization
Wide network More than 1 lakh PACS and 13.7 crore
Clientele.
Intimate knowledge about the needs of members.
Most of the members are Small and Marginal farmers.
Short term and Medium term Agricultural loans are
Disbursed to members.

DRAWBACKS OF PACS (Weaknesses of PACS):

1.
2.
3.
4.

Dependence on higher financing agencies (DCCB) for Resources leading to

decline in market share.
Diminishing asset quality ( Large NPA)
No diversification, despite opportunities.
Poor housekeeping and no concern for systems and
Procedures.

6.
7.
8.
9.

Low motivation among staff.

Political interference affecting the performance.
Unsatisfactory working results( losses in PACS).
Inadequate guidance and support from upper tiers.

HOW TO IMPROVE WORKING OF PACS ?

a)
b)
c)
d)
e)

Timely credit, regular follow-up and prompt recovery.

Adding more members and covering more members with additional area.
Mobilising at least a part of funds as deposits from membersmore money to
society and door step banking facility to members.
Working for profit- count every rupee- earned or spent.
Team worktogether PACS can do more.

FUNCTIONS OF SECRETARY (Chief Executive Officer of

PACS)
1.
2.
3.
4.

Responsibility in accordance with the Act, Rules and Bye-laws of the PACS.
Business responsibilities (Distribution of Seed, Fertiliser, Pesticides and
Insecticides and other items for agriculture.
Responsibilities relating to day to day management of office.( Writing of books of
accounts and other books)
General responsibilities (Maintenance of office and other duties including field
duties).

BUSINESS RESPONSIBILITIES OF SECRETARY OF PACS:

1.

Assessment of Credit requirements of members and

2.
3.
4.
5.
6.
7.
8.
9.
10.

Submission of the same to lending bank for sanction of limits, release of

instalments etc.
Submission of Drawl application to lending bank to
Facilitate timely disbursement of credit by society.
Disbursement of loan on behalf of the society.
Execution of loan documents on behalf of the society.
Issue of demand notice for recovery of loans.
Making arrangements for execution of decrees to facilitate attachment of
properties for recovery of loans in default.
Deposit mobilisation on behalf of the society.
Issue of receipts for cash received by the society.
Safe deposit of cash in the societys bank account at the end of each day.
Maintain adequate stocks of inputs and items of trade based on the nature of
business undertaken and the needs of the members.

PRODUCTION ORIENTED LENDING SYSTEM :

1)
2)

3)
4)
5)

6)
7)

Introduced by RBI in 1966.

DSTC deliberates and fixes the scales of finance for crops grown in each
District.
Scales of finance includes cost of inputs, labour and other costs and
inputs from land preparation till marketing of produce.
PACS assesses the member-wise crop loan requirement based on area
under cultivation, crops grown and scale of finance.
Based on this normal credit limit application of society is prepared.
Based on credit limit, the society is sanctioned a limit by DCCB.
Presently KCC( Kisan Credit Card) is in practice for sanction of crop
loans to members of PACS.

ESSENTIAL FEATURES OF K.C.C.

1.
2.
3.
4.
5.

Limit will be operative for 5 years.

Aggregaate limit includes production component (Crop loan), investment
credit component (Agril. and allied activity asset) and consumption
component (20% of eligible production limit).
The scales of finance fixed by DLTC are indicative and banks could lend
based on package of practices adopted by farmers.
Multiple drawals and repayments allowed.
Card holder covered under Personal Accident Insurance scheme through
payment of a small premium.

COMPREHENSIVE CROP INSURANCE:

(i)
(ii)
(iii)
(iv)
(v)

Mitigation of risk on account of natural calamities.

Every loanee farmer has to pay a fixed premium based on Crop, as a multiple
of area under cultivation.
Society remits the premium so collected every month to Agricultural
Insurance Corporation.
Insurance premium is a part of scale of finance.
In the event of natural calamity, based on the results of crop cutting
experiments, the corporation releases the
to the credit of loan account of the borrower.

(vi)

compensation, direct

Non- loanee farmers could cover themselves through voluntary coverage .

PRODUCTION LOANS (other than Agriculture) FOR

OTHER ACTIVITIES:
1
2
3
4

Weavers.
Rural Artisans (Carpentery, Blacksmithy, )
Small business and Retail Traders.
Hand looms and Handicrafts (Purses, Table cover, Wall hangings, handbags,
Decorative items, Carpets etc.)
5
Other rural service units ( Electrician, Motor Mechanic, Barber-saloon,
Tailoring,
6
Computer Training centre,
7
Telephone Booth/Photocopier shop/Fax machine
8
Mobile shop, Mobile repair, Cash card recharge coupens etc.
9
Repair shops ( Motor-cycle, Cycle, Tractor, EPS/DPS etc.)
Facility could be either Block Capital, or Working Capital or
a Composit loan covering both.

COOPERATIVE BANKING STRUCTURE

=
Cooperative is a State Subject, hence decided by
=

Cooperative Department of State Government.

Cooperative Banking Structure may be of two types :
(A)
Unitery(Two Tier-Structure)
(B)
Federal
(Three-Tier Structure)

UNITERY STRUCTURE:
State Cooperative Bank
|
Branches of State Coop. Bank
|
PACS(Borrower Members)

FEDERAL STRUCTURE:
State Cooperative Bank
|
District Central Cooperative Bank
|
Branches of DCCB
|
PACS
(Borrower Members)

1. GENERAL INFORMATION ABOUT A DCCB:-1.

2.
3.

DCCB is a Federation of PACS and other Cooperative Societies

functioning in the District.
DCCB is an intermediary institution between a PACS and State
Cooperative Bank.
DCCB is a Rural Development Institution for District.

4.
5.
3.

DCCB is one of the implementing agency of State/Central Government.

State Govt. is one member to DCCB, contributing on Share Capital
of the Bank for its development.

MEMBERS:
A)
B)

All PACS working in the District.

All other Primary Cooperative Societies, such as Marketing Society,
Consumer Cooperative Society, Labour Cooperative Society, Housing
Cooperative Society, Oilseed Growers Cooperative Society, Fisherman
Cooperatives, Handloom Cooperative Society, Weavers Cooperative
Society, Salary Earners Cooperataive Society etc.
C)
State Government.
Above Members have at least one Share of the DCCB. The Value of one share is
Rs.500/- or Rs.1000/- (differ from one State to other in our country.

NOMINAL MEMBER
Individual borrowers are enrolled as Nominal Members. For this purpose an Individual
member have to Deposit Rs.11/- as Membership-Fee and Fixed Deposit of Rs.500/-to
become a Nominal Member. For example a businessman who want a Cash Credit Limit or a
person want a Vehicle Loan has to be enrolled as Nominal Member and then only such
individual persons are granted different types of loans .

IMPORTANT FUNCTIONS OF A DCCB:

1.

To fulfill All types of Credit needs of PACS, such as S.T., M.T. and L.T
2 Commercial Banking Functions:
Accepting Deposits from Public and granting various types of loans including
overdraft facility.
4.
Collection of Cheques, Bills,
5.
Advancing loans to Individuals & other Cooperative Societies.
6.
To grant Loan against Deposits and Securities ( such as NSC,KVP,IVP, etc.
7.
To act as Balancing Center amongst all Societies.
8.
To sanction cash credit limits for Supply of Seed and Fertilizer and Food-grains.
9.
To Sanction Non-Farm Loans to Public such as :-(i)
Personal or Consumer Loan
(ii)
Education Loan
(iii) House Loan
(iv) Traders Limit
(v)
Working Capital finance to businessman and Small & Medium
Enterpreneurs.
(vi) Loans to Professionals such as :Advocate, Engineers, Doctors,
Architect, MBAs to start their own business.
10.
To Supervise and Control PACS (To conduct
Inspection of all PACS).
11.
To sanction loans to Poor people in Rural Area through
PACS SHGs & MFIs.
12.
To keep close Liasen with DRDA and DDM (Nabard)
For implementing various Central/State Govt. Schemes (as Govt. is assisting by
way of subsidy for Small and Marginal farmers and Weaker Section and SC/ST
people).

MANAGEMENT OF DCCB:1.
2.

Management of DCCB is in the hands of its Board of Directors.

BOD are Elected by Election.

3.

There are 11 Members on the Board of DCCB (in Rajasthan). Similar

members are on BOD in other States also.
Members on Board are representing as under :
(i)
6 Members represent PACS.
(ii)
1 Member from Marketing Coop.Society of District.
(iii)
1 Member from Consumer Coop. Society.
(iv)
1 Members from other coop. societies.
(v)
1 Member is representative of State Govt.
(vi)
1 Member Managing Director (CEO) by virtue of post (May be from
State Govt./SCB/ DCCB.

4.

GENERAL BODY:1. All members from different Cooperative Societies constitutes General Body of DCCB. In
general, Chairmen of PACS and Chairman of other Coop. Societies are members on General
Body.
2. General Body is the highest authority for DCCB to decide Policy Matters and it delegate
powers to BOD for general administration and functioning of the Bank.
3.At least one Annual General Body Meeting is held once in a year. On demand by 2/3
majority of members an AGM may be called at any time with specific agenda on banking
issues. Two-third majority decisions are taken in the AGM.
4.AGM approves the Budget and Loaning and Deposit policies of DCCB and declare
dividend to be distributed for the year to its Members, as per the provisions of bye-laws and
State Cooperative Society Act.

LOANING POLICY & OTHER POLICY MATTERS:

Loaning policy is decided as per the Development Action Plan prepared by the
Bank for particular year on following :-1.
For Agricultural Finance.
2.
For Allied to Agriculture.
3.
For Minor Irrigation activities.
4.
For Animal Husbandry Activities.
5.
For Housing purposes
6.
For Traders limit/Working Capital purposes.
7.
For Industries and Small & Medium Enterpreneurs.
8.
For ISB Sector (Industries, Setvice and Business)
9.
For SMF/SC/ST (20% finance is compulsory-RBI Norms)
10.
For Insurance work Agril. Ins. Corpr. /IFFCO-Tokyo and other General
Ins. Company.
11.
For Staff loans.
12.
For Procurement of (a) Fertilizer (b) Food-grains (c) Consumer goods
and (d) Other essential commodities.
13.
For Deposit Insurance with DICGC
14.
For Rural God owns to Individual farmers.
15.
For Financing to SHGs and NGOs/MFIs for financing SHGs.
16.
For Rural Development Projects.
17.
District Credit Plan (Annual Credit Plan) is finalized.
STRRENGTHS:
1.
Good Branch network.
2.
Sufficient manpower.

WEAKNESSES:
1
2

Non-Professional Management.
Heavy Over -dues (NPA).

SUGGESTIONS FOR IMPROVEMENT:

1.
2.
3.
4.

Raise cheaper deposits

Improve loaning policy.
Recovery of Overdue loans And reduce NPA.
Training to Employees.

5.

Recruit Qualified Professionals.

6.
7.

Create sufficient provisions for Bad & Doubtful debts.

Adopt diversified activities.

8.

There should be no interference of State Govt. in day-to-day activities and

Management.

CONCLUSION:
DCCB is one of the important institution working for rural development in the district
for all types of people. It needs Professionals to work and proper training to its personnel.
(Cooperatives have failed, but it must succeed As said by Late
Pandit Jawahar Lal
Nehru)

ORGANISATIONAL SET-UP OF A DCCB

|
GENERAL BODY
|

BOARD OF DIRECTORS
|
CHAIRMAN
|
MANAGING DIRECTOR
|
CHIEF MANAGER
|
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