RE-ORGANISATION OF

AGRICULTURAL CREDIT
SOCIETIES, MULTIPURPOSE
CREDIT SOCIETIES

NAME – DILSHAD AKHTAR

ROLL NO. - 21AEM05
ENROLL NO. – GM9172
AGRICULTURAL CREDIT SOCIETIES

Agricultural Credit Societies (ACS) play a vital role in

providing credit facilities to farmers in India. These
societies are formed at the grassroots level to cater to the
credit needs of small and marginal farmers who do not have
access to formal banking institutions.
PROBLEMS OF AGRICULTURAL CREDIT SOCIETIES

1. Lack of Capital: ACS often suffer from a shortage of capital, which restricts
their lending capacity. This is because members of ACS often have limited
financial resources, and the society may not have access to adequate external
sources of funds.
2. Inadequate Infrastructure: ACS often lack adequate infrastructure,
including physical infrastructure, such as offices and storage facilities, and
technological infrastructure, such as computer systems and internet
connectivity. This affects the efficiency and effectiveness of their operations.
3. A Limited Technical Knowledge: Members of ACS may lack technical
knowledge of financial management, loan appraisal, and recovery
techniques. This can lead to poor credit appraisal, high default rates, and
inefficient recovery processes.
4. Limited Reach: ACS have a limited reach due to their small size and
lack of outreach programs. This restricts their ability to provide credit
facilities to a larger number of farmers.
5. Poor Management: ACS may suffer from poor management practices,
including weak governance, lack of transparency, and inadequate
monitoring and evaluation. This can lead to mismanagement of funds,
fraud, and corruption.
6. Competition from Formal Financial Institutions: The emergence of
formal financial institutions, such as banks, has increased competition for
ACS. Banks have better infrastructure, larger lending capacity, and more
extensive outreach programs, which make it difficult for ACS to compete.
RE-ORGANIZATION OF AGRICULTURAL CREDIT
SOCIETIES

1. Strengthening the Primary Agricultural Credit Society (PACS): The

PACS is the primary unit of the agricultural credit structure. The re-
organization process should start with strengthening the PACS by
providing them with adequate capital and technical support.
2. Capacity Building: Capacity building of the ACS members is necessary
to ensure that they are equipped to handle credit operations efficiently.
Training programs can be conducted on financial management, loan
appraisal, and recovery techniques to enhance their skills.
3. Use of Technology: Technology can be leveraged to streamline the
credit process and make it more efficient. Digital platforms can be
developed to facilitate loan disbursement, repayment, and monitoring of
credit activities.
4. Risk Management: Proper risk management practices should be
implemented to minimize credit risk. Credit assessment procedures
should be followed strictly, and creditworthiness of borrowers should
be evaluated before disbursing loans.
5. Collaboration with Banks: Collaboration between ACS and formal
banking institutions can be established to provide farmers with a range
of financial products and services. This can be done by forging
partnerships with commercial banks, cooperative banks, and regional
rural banks.
6. Monitoring and Evaluation: Monitoring and evaluation of the re-
organization process is crucial to assess its effectiveness. Periodic
reviews should be conducted to measure the progress made and to
identify areas that require improvement.
MULTIPURPOSE CREDIT SOCIETIES
 Multipurpose credit societies, also known as multi-state cooperative societies
or simply multi-state societies, are financial cooperatives that provide financial
services to their members.
 These societies are registered under the Multi-State Cooperative Societies Act,
2002, and are governed by the Central Registrar of Cooperative Societies.
 Multipurpose credit societies offer a wide range of financial services such as
savings accounts, current accounts, fixed deposits, recurring deposits, and
loans to their members.
 These societies are formed with the objective of promoting thrift, self-help,
and mutual aid among their members.
 They aim to provide affordable and accessible financial services to their
members, especially those who are not able to access such services from
traditional financial institutions.
FUNCTIONS OF MULTIPURPOSE CREDIT SOCIETIES

1. Making Arrangement for Credit

The main task of these credit societies is to arrange for short term credit for its
members in order to help them to improve their agriculture and other trade and
business.

2. Offering loans at lower rates

Credit societies offer loans at lower interest rates than traditional banks and other
lenders. This is because credit unions are not-for-profit organizations, and any
profits they make are returned to their members in the form of lower rates on loans
and other financial products.

3. Marketing and Business

These societies not only help the farmers to improve their agriculture but also help
them for marketing of the goods. Through such facilities they get proper price for
the agricultural products and other goods produced by its members.
4. Set up of Subsidiary Cottage and Small Scale Industries
These societies help their members to set up other trades and industries.
Though these cottage industries and small-scale industries, the economic
condition of the members is improved and they are able to improve their
standard of living.

5. Helping Members to Increase Their Standard of Living

These co-operative societies by providing various types of facilities for their
members, improve their standard of living. They also carry out the programme
of health, education and social education. They make arrangements for health
and economic facilities, education and recreation for their members.
6. Encouraging the Member for Saving
These societies act as saving agencies and encourage their members to save a
part of their income for their future needs. Through these savings, the
members of such co-operative societies are able to get loans and also solve
their problems.
7. Other Functions
The multi-purpose Co-operative societies apart from these functions
discharge the following functions:
a) Purchase various things for their members at a reasonable price and supply
them.
b) In order to convert the un-economic holding into economic, these
cooperatives societies take a consolidation of holdings.
c) Try to solve the disputes between members through arbitration and
adjudication.
THANK YOU