In March 2022, Ramesh Jadhav — a smallholder cotton farmer in Khandala village, Ahmednagar district, Maharashtra — owed ₹1.4 lakh to a private moneylender at 36% annual interest. By January 2026, he was debt-free, had ₹80,000 in savings, and had just taken a ₹2 lakh crop loan at 4% interest from a cooperative he once dismissed as a dead institution. The difference between those two realities was a single gram sabha resolution passed on a humid evening in June 2022.
The Night That Rewired a Village’s Economics
Khandala is not a famous village. It has no tourist attractions, no celebrity sons. What it has is 412 farming families, most cultivating cotton and soybean on plots smaller than two hectares. For decades, the village’s Primary Agricultural Credit Society (PACS) existed only on paper — a rubber-stamp entity controlled by a local political family that used it primarily to channel subsidised fertiliser to loyalists. Most farmers, including Ramesh, had never seen the inside of the PACS office.
That changed when a group of younger farmers, many of whom had returned from city jobs during the pandemic, pushed for a gram sabha vote to reconstitute the PACS under new, elected leadership. The resolution passed 247 to 38. Within weeks, a retired bank officer named Sunil Kale was elected chairman, and the village had, almost accidentally, set in motion a financial transformation that cooperative experts now point to as a replicable model.
Why One Village Matters at a National Scale
India has approximately 1.02 lakh PACS spread across its rural landscape, forming the last-mile backbone of the three-tier cooperative credit structure. The Ministry of Cooperation has been pushing aggressively since 2023 to convert these societies into multi-service centres — offering not just credit but insurance, input sales, warehousing, and even common service centre functions. Yet the reality on the ground is that thousands of PACS remain dormant, politically captured, or financially unviable. Khandala’s story matters because it demonstrates what happens when a community reclaims its cooperative from within — without waiting for a government scheme to rescue it.
The Deep Roots of Village Credit Cooperatives
The idea of village-level cooperative credit in India dates back to the Cooperative Credit Societies Act of 1904, passed under Lord Curzon’s administration. The logic was elegant: pool the savings of villagers, lend to members at reasonable rates, and break the stranglehold of the sahukar (moneylender). Over the following century, PACS became the foundation of rural finance, feeding into district central cooperative banks (DCCBs), which in turn connected to state cooperative banks.
NABARD, established in 1982, became the apex refinancing body, channelling thousands of crores annually into this structure. By the 1990s, however, the system had calcified. Political interference, poor accounting, loan defaults treated as entitlements, and a lack of professional management turned many PACS into liabilities rather than assets. The Vaidyanathan Committee report of 2004 laid bare the rot — recommending sweeping reforms, most of which were adopted slowly or not at all.
Khandala’s PACS, registered in 1961, followed this national arc almost perfectly. It functioned reasonably well until the 1980s, then slowly decayed as elected positions became stepping stones for local politics rather than genuine service roles.
How the Revived Cooperative Actually Works
What Sunil Kale and the new management committee did in Khandala was not revolutionary in theory — it was revolutionary in execution. I find the specifics instructive for anyone interested in cooperative governance.
| Parameter | Before Revival (2021) | After Revival (2026-26) |
|---|---|---|
| Active members | 43 | 389 |
| Annual deposits mobilised | ₹2.1 lakh | ₹1.14 crore |
| Crop loans disbursed | ₹4.8 lakh | ₹78 lakh |
| Average interest rate for members | N/A (most went to moneylenders) | 4-7% |
| Services offered | Fertiliser distribution only | Credit, insurance, soil testing referrals, custom hiring |
| Audit status | Pending since 2017 | Current, digitised under PACS computerisation |
The first step was a membership drive — going door to door, collecting the ₹100 share capital, and registering women as joint or independent members. The second was applying for the PACS computerisation programme being rolled out by the Ministry of Cooperation and NABARD, which gave them accounting software, a digital ledger, and connectivity to the district cooperative bank’s CBS platform.
The third, and arguably most important, step was transparency. Monthly financial statements were posted on the PACS notice board and shared via a WhatsApp group. For the first time, members could see exactly how much was lent, to whom, and at what rate. This alone destroyed the patronage networks that had kept the old PACS opaque.
The Challenges That Nearly Derailed Everything
I would be dishonest if I painted this as a frictionless success story. The old chairman filed a legal challenge with the district cooperative registrar, claiming procedural irregularities in the gram sabha vote. That dispute took eight months to resolve. During that period, the PACS could not access its own bank accounts, and the new committee had to operate with personal funds and informal collections.
There is also the structural problem of DCCB health. Ahmednagar’s district cooperative bank, while better managed than many, still carries a significant NPA burden. The PACS depends on the DCCB for refinancing, and any deterioration at the district level flows directly down to the village. Climate volatility adds another layer — Khandala received 40% below-normal rainfall in 2023, leading to a spike in loan restructuring requests that tested the new system’s resilience.
Political interference remains a lurking threat. Maharashtra’s cooperative sector is deeply entangled with state politics, and a well-functioning PACS with over ₹1 crore in deposits becomes an attractive target for capture during the next election cycle.
A Comparison That Sharpens the Lesson
Contrast Khandala with Hivare Bazar, another Ahmednagar village famous for its community-led water management under sarpanch Popatrao Pawar. Hivare Bazar’s transformation took over 15 years and depended heavily on one charismatic leader. Khandala’s cooperative revival, while still early, has been driven by a committee of seven rather than a single individual — making it potentially more sustainable but also more fragile, because consensus is harder to maintain than vision.
Internationally, the Desjardins Group in Quebec, Canada — which began as a single parish credit union in 1900 — offers a long-horizon parallel. It grew by federating small, community-owned credit units into a system that now manages over CAD 400 billion. India’s PACS network has the scale to attempt something similar, but only if individual units like Khandala can be replicated by the thousands.
What the Next Five Years Could Look Like
The Ministry of Cooperation’s ambitious target of computerising and converting all PACS into multi-service centres by 2027 is the single biggest policy lever that could multiply the Khandala effect. If the technology backbone holds — digital accounting, Aadhaar-linked KYC, real-time reporting to NABARD — the scope for corruption and dormancy shrinks dramatically.
The NCDC has also been expanding its direct lending to PACS for non-credit activities like warehousing, cold storage, and value addition. A cooperative that can store a farmer’s soybean for three months and help them sell at a better price is vastly more valuable than one that only gives loans. Khandala’s committee has already applied for an NCDC-funded custom hiring centre for farm equipment — a service that could generate revenue independent of the credit cycle.
The risk, as always, is that policy enthusiasm fades before ground-level capacity is built. Software without trained operators is just an expense. I believe the real test comes not when governments launch schemes, but when they sustain funding and oversight for a decade.
Back to Ramesh Jadhav’s Field
When I think about what changed for Ramesh, the numbers tell only part of the story. Yes, he saved roughly ₹45,000 a year in interest costs by switching from the moneylender to the PACS. Yes, he used a cooperative crop insurance linkage to recover ₹32,000 after the 2023 drought. But what he describes as the real shift is simpler — he now walks into the PACS office, sees his name on the member register, and knows that the institution belongs to him, not to a local strongman.
That sense of ownership is the fundamental promise of the cooperative model. Khandala did not wait for a saviour. Four hundred families made one collective decision, and then did the grinding daily work of making it real. If you are part of a village or community where a dormant cooperative sits waiting, their story is worth studying — and perhaps replicating. The infrastructure exists. The policy support exists. What is often missing is the first decisive act.