On May 12, 2025, the Government of Gujarat officially launched a pilot project aimed at strengthening cooperative banking in Banaskantha and Panchmahal districts. This initiative, titled ‘Cooperation Amongst the Cooperative’, requires all dairy cooperative members and Primary Agricultural Credit Society (PACS) members in these districts to open accounts in their respective district cooperative banks. The project focuses on enhancing financial inclusion, digital transactions, and inter-cooperative collaboration, aligning with the central government’s vision of ‘Prosperity Through Cooperation’ as advocated by Union Home and Cooperation Minister Amit Shah.
What the Policy Actually Says
The pilot project mandates that all PACS and dairy cooperative members in Banaskantha and Panchmahal districts must open accounts exclusively with their district cooperative banks. This directive is part of a broader strategy to consolidate cooperative finances, improve transparency, and strengthen grassroots banking. Key provisions include:
- Account Opening: Mandatory opening of accounts for all cooperative members in district cooperative banks.
- Bank Friends System: PACS and dairy cooperatives act as ‘bank friends’ to facilitate banking services, including deposits, withdrawals, and loan applications.
- Digital Infrastructure: Installation of micro-ATMs and ATMs at cooperative society premises to promote digital transactions at the village level.
- Kisan Credit Card (KCC) and Rupee KCC Cards: Issuance of these cards to eligible members for easy access to credit.
- Commission-Based Incentives: PACS and dairy cooperatives receive commissions for banking services they facilitate, creating an additional revenue stream.
The government’s cooperation department, under the Gujarat State Cooperation Ministry, is overseeing project implementation. The initiative is officially documented under the Gujarat Cooperation Department’s notification dated April 30, 2025 (Notification No. GCD/2025/042).
Who Is Affected and How
The primary beneficiaries are the members of dairy cooperatives and PACS in Banaskantha and Panchmahal districts, both key agricultural regions of Gujarat. Banaskantha is known for its robust dairy sector, contributing significantly to the state’s milk output, while Panchmahal has a strong agrarian base with numerous PACS.
- Dairy Cooperative Members: Approximately 1.5 lakh members in Banaskantha and around 90,000 in Panchmahal are now required to open accounts in their district cooperative banks, facilitating smoother financial transactions.
- PACS Members: Over 5,000 PACS societies with combined membership exceeding 3 lakh are included.
- District Cooperative Banks: Banaskantha and Panchmahal district cooperative banks have seen a substantial increase in deposit accounts, which strengthens their lending capacity.
- Cooperative Societies: Acting as bank friends, these societies receive commissions for transactions, improving their financial sustainability.
This model aims to reduce dependency on non-institutional lenders by providing easier access to formal credit and banking services. Furthermore, the introduction of digital banking tools at village levels empowers members to conduct financial transactions without traveling long distances.
Why the Government Made This Change
The cooperative banking sector in Gujarat has historically faced issues such as fragmented financial resources, limited outreach, and low digital penetration among rural populations. The government’s objectives with this pilot project are:
- Financial Inclusion: To extend banking services to rural cooperative members who previously had limited access.
- Resource Consolidation: Encouraging all cooperative institutions to centralize funds in district cooperative banks improves liquidity and credit availability.
- Digital Transformation: Promoting digital transactions aligns with the state’s broader push for digitization, as seen in initiatives linked to the Gujarat Budget 2025-26 that emphasize technology adoption.
- Strengthening Cooperative Ethos: The move reflects one of the seven guiding principles of cooperation—‘Cooperation Amongst Cooperatives’—to build solidarity and mutual financial support.
- Economic Growth: By improving credit flow to farmers and dairy producers, the policy supports Gujarat’s agricultural economy, which is vital alongside its industrial sectors.
Union Minister Amit Shah’s involvement highlights the central government’s support, intending this pilot to serve as a model for nationwide implementation.
What Critics and Stakeholders Say
Stakeholders have generally welcomed the scheme, citing its potential to revitalize cooperative banking. Key feedback includes:
- Positive Views: Dairy unions and PACS chairpersons present at the May 12 meeting in Gandhinagar praised the increased revenue from commissions and the convenience of digital banking. Shankarbhai Chaudhary, Speaker of the Gujarat Assembly, called it a “transformative step for rural financial inclusion.”
- Concerns Raised: Some small cooperative societies have expressed concerns over the initial training requirements for digital transactions and the need for robust IT infrastructure to prevent technical glitches.
- Financial Experts: Analysts note that while the pilot’s early results are promising, long-term sustainability depends on expanding digital literacy and ensuring cybersecurity measures in rural areas.
The government has addressed these concerns by initiating extensive member training programs and increasing the installation of micro-ATMs, reaching 6,689 units across Gujarat as of January 2024.
What This Means for You
If you are a member of a dairy cooperative or PACS in Banaskantha or Panchmahal, here is what you need to do to benefit from this policy:
- Open Your Account: Visit your local district cooperative bank branch or cooperative society to open your account if you haven’t done so. Carry valid identity proof and cooperative membership documents.
- Obtain KCC/Rupee KCC Cards: Apply for the Kisan Credit Card or Rupee KCC card through your cooperative society to access credit facilities efficiently.
- Learn to Use Digital Tools: Attend training sessions organized by your cooperative society on using micro-ATMs and digital transaction platforms.
- Utilize Bank Friends: Use the services of PACS and dairy cooperatives acting as bank friends for easier banking without traveling far.
- Monitor Transactions: Keep track of transactions and report any discrepancies to the district cooperative bank immediately to avoid fraud or errors.
Digitization efforts mean you can now conduct deposits, withdrawals, and loan applications from your village, saving time and reducing dependency on cash transactions.
Data and Impact Overview
- Account Openings: 23,94,900 new accounts opened in district cooperative banks across Gujarat since project inception.
- Deposit Growth: ₹11,095 crore increase in deposits through cooperative banks.
- Digital Infrastructure: Installation of 6,689 micro-ATMs and ATMs at cooperative premises.
- Bank Friends: 6,856 PACS and dairy cooperatives appointed as bank friends.
- KCC Cards Issued: 2,27,537 new Rupee KCC cards and 3,35,299 KCC/KCC (AH) cards distributed.
- Transactions: 84.96 lakh digital transactions worth ₹6,170 crore processed at the village level.
Given this success, the Gujarat government is preparing to scale the model statewide and in coordination with the Ministry of Cooperation, Government of India, for potential replication in other states.
For more details or assistance, cooperative members can contact the Gujarat State Cooperation Department at their headquarters in Gandhinagar or visit Gujarat Cooperation Department Official Website.