The Reserve Bank of India (RBI), in its latest report, provided an in-depth analysis of the performance of Primary Agriculture Credit Societies (PACS), 44.7% of the total PACS were profit-making in 2022-23, with their combined profits rising by 18.3% to Rs 2,142 crore. Simultaneously, the losses of the remaining PACS declined by 4.3% to Rs 3,585 crore.
Despite these improvements, the sector as a whole recorded net losses of Rs 1,443 crore, with the western region emerging as the only one to post net profits, while the southern region reported the highest losses.
The asset quality and recovery-to-demand ratio of PACS saw significant improvements during the year, although concerns remained regarding the high gross non-performing asset (GNPA) ratio.
On the financial front, PACS experienced an increase in total resources due to higher borrowings and a rise in total reserves. On the assets side, outstanding loans and advances grew substantially, driven by a nearly 20% surge in short-term loans.
PACS, which form the foundational tier of India’s rural cooperative structure, served 16.03 crore members and 4.9 crore borrowers as of March 2023.
Notably, 45.6% of the members and 57.3% of the borrowers were small farmers. The borrower-to-member ratio, a critical measure of credit penetration, improved to 30.7% in March 2023 from 28.6% in March 2022. This improvement reflected a decrease in membership alongside an increase in borrowers.
Agricultural credit remained the core focus of PACS, with over 80% of their loans being short-term and directed towards agricultural activities.
The western region dominated in terms of the number of PACS, accounting for 29.1% of the total, while the southern region led in deposits and loans, with a commanding 79% and 46.2% share, respectively.
As of March 2023, India had 1,06,955 PACS operating across 6.5 lakh villages, underscoring their extensive presence in the rural credit landscape.
The RBI’s report highlighted the need for continued efforts to enhance credit delivery, improve asset quality, and reduce regional disparities to strengthen the role of PACS in supporting India’s rural economy.