Maharashtra State Co-op Bank to directly finance PACs

Maharashtra State Cooperative (MSC) Bank plans to directly finance Primary Agriculture Credit Societies (PACs) in order to help ailing District Central Cooperative Banks (DCCBs) in the state.

MSC Bank is an apex body for 31 DCCBs which have about 3,746 branches, with a third tier of around 2.21 lakh PACS which directly lend to farmers and the rural population. This bank generally refinances the DCCBs and also extends working capital to sugar mills, after the latter pledge their sugar stock and the DCCBs, in turn, finance the PACs.

Vidyadhar Anaskar, chairman, administrative board, MSC Bank, said “At present, lending to PACs in some parts of the state is completely stopped since the DCCBs have high NPAs.. MSC Bank has, therefore, decided to establish a separate account for PACs and the old accumulated dues of PACs will not be taken into consideration here. Instead, farmers will be given finance and DCCBs, in turn, will get a margin of 1% and a 0.5% on recovery of the loans.”

“These BCs would give details of eligible borrowers (Primary Agriculture Credit Societies) to us; we would give them fund which they can disburse as loans to the needy borrowers”, Anaskar said, adding that in return MSC Bank would give 1% commission to DCCBs for providing the details of borrowers.