Bihar’s state government has unveiled a sweeping plan to integrate 2,456 Primary Agricultural Credit Societies (PACS) with district central cooperative banks. Under the initiative, each PACS will directly access credit facilities of up to ₹5 lakh to bolster activities in agriculture, rural tourism, small-scale manufacturing, and local product marketing.
Strengthening Rural Finance Infrastructure
The ambitious scheme aims to leverage PACS—village and gram-panchayat–level cooperative institutions—by linking them to formal banking channels. This move will enable PACS to obtain credit lines to support their members’ diverse economic ventures. The project’s framework includes financing livelihoods such as poultry, dairy, rural crafts, agro-based processing, and tourism.
Agriculture and cooperation minister, in a recent state cabinet meeting, emphasized that this strategy would reduce dependence on informal lenders and reinforce “participatory rural finance.” Enhanced connectivity between PACS and district banks is also expected to streamline fund disbursal and loan recovery.
Empowering Local Enterprises and Tourism
In addition to typical agricultural credit, PACS will now facilitate loans for value-added rural enterprises. These include village tourism homestays, weaving, pottery, and food processing. This diversification aligns with the government’s mission to expand rural income and strengthen local economies.
Under the scheme, PACS members can apply for loans through joint livelihood group models. The government plans robust monitoring through cooperative committees at the district and block levels. PACS leaders will also undergo training on fund management, digital record-keeping, and ensuring timely loan repayment.
Backdrop and Rationale
Bihar had 8,463 functioning PACS as of 2022, reflecting strong grassroots credit penetration. However, many PACS have been stifled by limited capital and a lack of integration with formal banking channels.
By elevating the credit ceiling to ₹5 lakh per society, the government seeks to unleash entrepreneurial energy among rural communities. The initiative is also expected to reduce migration by creating local employment opportunities and enhancing access to cooperative resources.
About the Author – Anirudh Mittal is a B.Sc. LL.B. (Hons.) student at National Forensic Sciences University, Gandhinagar, with a keen interest in corporate law and tech-driven legal change.