Revitalizing primary credit cooperatives in India
Primary credit cooperative societies at the village level form the core of the short-term cooperative credit structure in India. India has a large population, of around 1100 million. Seventy per cent of the population live in over 600,000 villages. Universalizing provision ﬁnancial services in such a context is a daunting task. With more than 95,000 outlets, the PACS play a crucial role expanding the reach of the formal ﬁnancial system in the rural India. The total number of PACS is more than double the rural and semi-urban branches of both the commercial banks and regional rural banks taken together. Their outreach is signiﬁcant not merely in absolute numbers, but also in terms of location of outlets. The number of PACS located in hilly terrains, deserts and other areas with poor access far exceeds the number of rural branches of commercial banks and RRBs (GoI, 2008a). The PACS have a total membership of around 120 million. Conservative estimates show that cooperative membership touches the lives of nearly 480 million rural people, or more than half of the rural population.13 They also play a very important role in supporting agriculture. Cooperatives have a 37 per cent share in the aggregate crop loans provided by the rural ﬁnancial institutions (RFIs). However, in many districts, particularly in remote, hilly and desert areas, their share is more than 50 per cent. More importantly, the PACS have a much better record in providing ﬁnancial services to the poor and the underprivileged who are dependent on agriculture, the mainstay of rural economic life. The PACS have 50 per cent more accounts than scheduled commercial banks (including RRBs), and 70 per cent of their clients belong to the marginal and sub-marginal farmer category (GoI, 2008a).