Primary Credit Societies

Primary Cooperative Credit Societies are formed at village or town level. A primary credit society refers to any cooperative society other than a primary agricultural credit society. It is basically an association of members residing in a particular locality. The members can be borrowers or non-borrowers. The funds of this society are derived from the share capital of the deposits and also the loans from central cooperative banks.

According to the norms, the  paid-up share capital and reserves of a Primary Credit Society should be less than Rs 1 lakh. Such as society can do banking business without being required to take a licence from the RBI. However, the Banking Laws (Amendment) Act, 2012 has permitted RBI to assume additional regulatory powers over co-operative banks. It also gives the regulator the power to withdraw freedom given to primary co-operative credit societies to operate as banks without a licence from RBI.

In the Primary Cooperative Credit Society, the borrowing powers of the members as well as of the society are fixed. It generally gives small credit for farm inputs, fodder, fertilizers, pesticides etc.