Fostering Trust Thejourney Of Pacs Towards Enhanced Credibility Inner

Primary Agricultural Credit Societies (PACS) are the backbone of India’s rural credit system. At the grassroots level, they stand face to face with farmers, providing them with vital loans, collecting repayments, and even helping in distribution and marketing. It is the last important link in the farmers’ interaction with higher financial institutions.

These institutions have been facing a lot of difficulties in the past and have failed to catch up with technology. However, knowing well that they form a systemic backbone to provide support to Small and Marginal Farmers (SMFs), the Government of India has recently launched a mammoth exercise. Under the Centrally Sponsored Project for Computerisation of PACS, all of them are being provided with digital tools for five years from 2022-23 up to 2026-27.

This is a welcome step, and the digital PACS will considerably strengthen itself. However, for lasting success, trust must be a pivotal component. This piece will delve into the critical significance of trust in the connection between PACS and the farmers they cater to. We will explore the tactics and methods that Primary Agricultural Credit Societies PACS can employ to foster more robust, reputable connections with their agricultural patrons.

Factors Eroding Trust In PACS

Building trust is a key determinant of financial success for any financial institution. PACS is no different. While PACS have a key role to play in the rural credit structure of India, their success can depend only on the level of trust the agricultural community has in them.

The following are some major challenges that have dented the trust of the people in the past:

1. Legacy Issues: Previous occurrences of operational inefficiencies, corruption, and a lack of transparency have spawned a lasting influence. Unfortunately, these concerns have engendered a pessimistic outlook among farmers, causing reluctance to fully adopt PACS as their predominant monetary ally.

2. Accessibility Constraints: Although PACS have geographically expansive coverage, reaching nearly 90% of India’s villages, there exist worrisome inequalities. Particularly, the Northeastern regions show inferior levels of PACS penetration.

Moreover, even within encompassed villages, membership inclusion remains restricted, with a mere 50% of rural households currently incorporated. The limited accessibility of PACS services creates a strong feeling of exclusion for a significant portion of the rural population, who could greatly benefit from them.

3. Perceptions Of Bias: Regrettably, PACS’ reputation has been sullied by accusations of preferential treatment towards well-established agrarians. Such a notion, that marginalized farmers – oftentimes the most disadvantaged and reliant on financial aid – are unjustly neglected by PACS, can instill a sense of inequity and deter them from seeking assistance from the very establishment meant to uplift them.

Initiatives To Build Trust In PACS

Role Of Technology

The Government has launched a significant project to computerize PACS, recognizing the limitations of traditional methods. This ambitious initiative aims to equip 63,000 functional PACS with common, nationwide Enterprise Resource Planning (ERP) software. Through State Cooperative Banks and District Central Cooperative Banks, this digital transformation will connect PACS with NABARD, fostering transparency and streamlining operations.

There are three components of aid for the PACS:

1. Hardware: Each PACS within the program will receive a computer, webcam, VPN, printer, and biometric device to facilitate the completion of the remaining tasks.

2. NLPS/ERP: An advanced Enterprise Resource Planning (ERP) system is currently being constructed for the National Level PACS Software (NLPS). This innovative development will equip the organization with the ability to digitize its daily operations, enhance member services, and accurately reconcile financial accounts. NABARD has successfully partnered with a prestigious NLPSV to spearhead this pivotal project and develop state-of-the-art ERP modules.

3. System Integrator: An SI will assist each PACS in digitizing their legacy data, implementing the ERP, and modifying it to adhere to state policies. Additionally, by leveraging digital platforms for loan applications, repayments, and communication, farmers can enhance accessibility and convenience.

The project envisions a comprehensive ERP solution that includes all PACS activities such as short-term loans, medium-term loans, long-term loans, procurement processes, Public Distribution System (PDS) operations, business planning tasks, and warehousing and human resource management. This not only improves efficiency but also provides easier access to credit for farmers across various timeframes.

Government Efforts

The Government is actively working to revitalize PACS through policy reforms and technological advancements. They have collaborated with various stakeholders (States/Union Territories, National Federations, and others) to develop Model By-laws for PACS, aiming to expand the scope of PACS operations and enhance their financial resources.

These revised regulations empower PACS to engage in a wider range of agricultural and non-agricultural commercial activities, including both credit and non-credit sectors. This expansion aims to increase PACS revenue and create new employment opportunities in rural areas.

PACS-Led Initiatives

PACS can actively initiate measures to restore trust on a local scale, surpassing government efforts. Through financial education programs, farmers are equipped with the necessary tools to make informed financial choices and confidently navigate PACS services.

By encouraging member involvement in decision-making processes, ownership and transparency can be fostered. PACS can successfully regain the confidence of India’s agricultural ecosystem by exemplifying a sincere dedication to elevating the livelihoods of rural farmers through proactive outreach initiatives and transparent communication channels.

Through concerted efforts towards open dialogue, PACS can effectively showcase its unwavering commitment to fostering the prosperity of rural farmers, reinstating trust, and reaffirming its indispensable role in India’s agricultural framework.


The government’s endeavors to digitize PACS are enhancing its modernization, but the key element of true triumph lies in restoring trust with farmers. This can be achieved by acknowledging previous inadequacies, embracing transparency, and fostering a sense of solidarity through financial education initiatives, active member engagement, and open communication channels.

By shifting from mere loan providers to reliable financial allies, PACS has the potential to not only facilitate individual transactions but also empower farmers and fortify the foundation of India’s agricultural industry. EnFuse Solutions is poised to aid PACS with advanced AI & ML methods. Our team of experts can aid PACS in utilizing AI & ML to monitor and scrutinize information, enhance resource allocation, and devise resolutions for forthcoming obstacles.