Performance of Primary Agricultural Credit Societies in Punjab, India

Abstract

Cooperative credit institutions are owned and operated by their members, primarily farmers, and aim to cater to the credit needs of the rural agricultural community. Cooperative credit institutions also play a crucial role in promoting financial inclusion in rural areas. Primary Agriculture Credit Societies (PACS) are the grassroots-level cooperative credit institutions that play a significant role in providing financial services and credit facilities to farmers and rural residents. The present study aims to evaluate PACS in Punjab. This study was conducted using secondary data collected from the Statistical Abstract of Punjab and the National Federation of State Cooperative Banks Ltd. (NAFSCOB) for the period 2003–2021. The overall findings of the study revealed that there was a decrease in the number of PACS in Punjab. Viable and potential number societies decreased over the study period. Paid-up share capital, reserves, deposits, and borrowings increased significantly, indicating improved financial strength of PACS. However, there were fluctuations in the trend of total reserves, with sharp increases in certain years. The agricultural loans showed a significant increase with a compound annual growth rate of 10.20 per cent, while the share of agricultural loans decreased over the period. It also revealed that outstanding agricultural loans increased substantially at a growth rate of 11 per cent. To strengthen PACS, the study suggests increased government support in meeting farmers’ credit needs, diversification of credit portfolios for marginal and rural farmers, and greater investment in technology and common service centres.  It is recommended that to ensure better economic performance of the society, cooperatives must work transparently, and there should not be political interference in the working of PACS.