PRIMARY AGRICULTURAL COOPERATIVE SOCIETY (PACS)

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:
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.

1. 2. 3. 4.

MEMBERSHIP OF PACS : Membership Fee along application for membership. Purchase atleast on SHARE OF PACS (Rs. 100 /-) . Give details of landholding and other information. Minimum 100 Members required for Registration of NEW PACS.

OBJECTIVE OF PACS: To assess the credit needs of members. To disburse credit ( loans): ST/MT/LT Recover loan in instalments or in lump-sum. Promote economic empowerment of members. Deposit Mobilization from members and others. To arrange Inputs like Seeds, Fertilizers, Pesticides, Insecticides and Equipments etc. for members.

MANAGEMENT: Democratic set up for Managing the affairs of PACS. Election Commissioner organizes elections amongst Members and Board 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 Organization 2. Wide network More than 1 lakh PACS and 13.7 crore Clientele are there in India.

3. Intimate knowledge about the needs of members. 4. Most of the members are Small and Marginal farmers. 5. Short term and Medium term Agricultural loans are disbursed to members. 6. Other various services for members as required in the area of PACS, such as Insurance, Consumer Store, Storage of produces, banking services etc. etc.

DRAWBACKS OF PACS (Weaknesses of PACS): 1. Dependence on higher financing agencies (DCCB) for Resources leading to decline in market share. 2. Diminishing asset quality ( Large NPA) 3. No diversification, despite opportunities. Now PACS adopting diversification in activities.

4. Poor housekeeping and no concern for systems and Procedures. 5. Low motivation among staff (Scope is limited). 6. Political interference affecting the performance. 7. Unsatisfactory working results( losses in PACS). 8. Inadequate guidance and support from upper tiers.( Govt. Coop. Deptt. & DCCB)

HOW TO IMPROVE WORKING OF PACS ?

Timely credit, regular follow-up and prompt recovery. Adding more members and covering more members with additional area. Mobilizing 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)

Responsibility in accordance with the Act, Rules and Bye-laws of the PACS. Business responsibilities (Distribution of Seed, Fertilizer, 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

Assessment of Credit requirements of members and Submission of the same to lending bank for sanction of limits, release of installments etc. Submission of Drawal 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 mobilization 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

Introduced by RBI in 1966. DLTC 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.

Limit will be operative for 5 years. Aggregate 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

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 compensation, direct to the credit of loan account of the borrower. Non- loanee farmers could cover themselves through voluntary coverage.

PRODUCTION LOANS (other than Agriculture) FOR OTHER ACTIVITIES: Weavers. Rural Artisans (Carpentry, Blacksmithy, ) Small business and Retail Traders. Hand looms and Handicrafts (Purses, Table cover, Wall hangings, handbags, Decorative items, Carpets etc.) Other rural service units ( Electrician, Motor Mechanic, Barber-saloon, Tailoring, etc.)

Computer Training centre, Telephone Booth/Photocopier shop/Fax machine Mobile shop, Mobile repair, Cash card recharge coupens etc. 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 :
Unitary (Two Tier-Structure) 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)

GENERAL INFORMATION ABOUT A DCCB:DCCB is a Federation of PACS and other Cooperative Societies functioning in the District. DCCB is an intermediatory institution between a PACS and State Cooperative Bank. DCCB is a Rural Development Institution for District. 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.

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

To fulfill All types of Credit needs of PACS, such as S.T., M.T. and L.T Commercial Banking Functions: Accepting Deposits from Public and Granting various types of loans including overdraft facility. Collection of Cheques, Bills, Advancing loans to Individuals & other Cooperative Societies.

To grant Loan against Deposits and Securities ( such as NSC,KVP,IVP, etc. To act as Balancing Center amongst all Societies. To sanction cash credit limits for Supply of Seed and Fertilizer and Food-grains. To Sanction Non-Farm Loans to Public such as :- Personal or Consumer Loan Education Loan House Loan Traders Limit Working Capital finance to businessman and Small & Medium Entrepreneurs. Loans to Professionals such as :Advocate, Engineers, Doctors, Architect, MBAs to start their own business.

To Supervise and Control PACS (To conduct Inspection of all PACS). To sanction loans to Poor people in Rural Area through PACS SHGs & MFIs. To keep close Liaison 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
Management of DCCB is in the hands of its Board of Directors. BOD are Elected by Election. 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:

6 Members represent PACS. 1 Member from Marketing Coop.Society of District. 1 Member from Consumer Coop. Society. 1 Members from other coop. societies. 1 Member is representative of State Govt. 1 Member Managing Director (CEO) by virtue of post (May be from State Govt./SCB/ DCCB.

GENERAL BODY
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. 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.

 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. Twothird majority decisions are taken in the AGM. 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 :- For Agricultural Finance. For Allied to Agriculture. For Minor Irrigation activities. For Animal Husbandry Activities. For Housing purposes For Traders limit/Working Capital purposes.

For Industries and Small & Medium Entrepreneurs. For ISB Sector (Industries, Setvice and Business) For SMF/SC/ST (20% finance is compulsory-RBI Norms) For Insurance work Agril. Ins. Corpr. /IFFCO-Tokyo and other General Ins. Company. For Staff loans. For Procurement of (a) Fertilizer (b) Food-grains (c) Consumer goods and (d) Other essential commodities. For Deposit Insurance with DICGC For Rural Godowns to Individual farmers. For Financing to SHGs and NGOs/MFIs for financing SHGs. For Rural Development Projects. District Credit Plan (Annual Credit Plan) is finalized.

STRENGTHS Good Branch network. Sufficient manpower. WEAKNESSES Non-Professional Management. Heavy Over -dues (NPA).

SUGGESTIONS FOR IMPROVEMENT

Raise cheaper deposits Improve loaning policy. Recovery of Overdue loans And reduce NPA. Training to Employees. Recruit Qualified Professionals. Create sufficient provisions for Bad & Doubtful debts. Adopt diversified activities. 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)

MEMBERS
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.