The Primary Agricultural Cooperative Societies (PACS), popularly referred to as societies or samitis in villages, are set to get transformed with a different name and have a CEO to undertake infrastructure development, building and managing community centres, hospital or educational institutions, and dealership in petrol or diesel, if States agree to accept the draft bye-laws prepared by the Centre.

The Centre wants to have uniform bye-laws for PACS across the country so that, when the scheme to set up more PACS is rolled out, the existing societies do not face any financial difficulties with a lower geographical spread from the current level. The Co-operation Minister, Amit Shah, said the government hopes to take the number of PACS to 3 lakh from the current 63,000 (active societies) in two years.

As per the draft bye-laws shared with the States on July 1 for feedback, the new name is Bahu-Uddeshiye Prathmik Gramin Cooperative Samiti. It says: “The Chief Executive Officer, by whatever name he may be called, shall be appointed by the Board of Directors to look after the day-to-day affairs and administration of the Society as per the Act, Rules, and Bye-law. He should possess the necessary educational qualifications, experience, and training as decided in the Staff Service Rules of Society by the Board of Directors.” Currently, PACS have secretaries as administrative heads, while the Board of Governors is elected representatives of members.

Ratifying through resolution

The Centre has proposed the PACS may, by a resolution passed at the General Body Meeting by a majority of members present and voting, promote subsidiary organisations, such as farmer producers organisation (FPO) with 100 per cent funding from the society for the furtherance of its stated objectives.

The Centre’s proposals enrollment of members under two classes—A and B. While A class members (shareholders) will have voting rights and claims over dividends, the B-class (nominal members) will not get voting rights or contest for Board of Governors. “A person who desires to have a business relationship with the society shall be admitted as a nominal member by payment of an admission fee of ₹100, which is non-refundable and shall be credited to the Reserve Fund of the Society,” the draft said.

It further allows PACs to avail facilities owned by the B-class members, which may be beneficial for the Society and its members, on mutually-decided terms and conditions operated within or outside the operational area of the Society.

Funding medical expenses

While it continues to allow PACs to provide their members with timely and adequate short-term and medium-term credit for the development of backward and forward activities related to agriculture and its products, the draft says the objective of these societies should be to offer credit to their members “for consumption or medical purposes against collateral/pledge financing like commodities/bonds/securities.”

For disbursing long-term loans, PACS should get prior approval from the concerned district cooperative bank (DCCB). But, in a departure from current practice of limiting the operation within a few villages, the draft allows PACS to undertake marketing and similar activities “outside its Area of Operation” for the benefit of the members of the society.

The draft bye-laws prescribes the society to borrow from banks and financial institutions to meet its financial requirements. The maximum outstanding borrowings received shall not at any time exceed 25 times of the paid up share capital and reserves, it said. The PACS shall accept deposits from its members only and the interest rate of deposits and loans shall be fixed by the Board of Directors.

As part of maintaining financial discipline, the draft says PACS “shall appropriate 25 per cent of net profit every year towards its Reserves and Surplus Fund or as per provisions of the local cooperative Act. The Reserve Fund is allowed to be utilised or invested, either in full or part, in business with the approval of the General Body.”

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