Rural Cooperative Banking in India

Rural Cooperative Banks supports the growth of Indian rural economy by providing rural credit to farmers, self employed persons and small scale industries of rural India. Rural Cooperative Banks started operating in India 100 years ago and has evolved with the changing times.
Rural Cooperative Banking in India plays a vital role in fulfilling the credit requirement of the rural agricultural sector of India. At recent times, the rural credit flow through the rural cooperative banks of the country has risen substantially in order to keep pace with the growing demand for credit in the rural parts of India.

But, according to a study, the performance of Indian Rural Cooperative Banks has revealed a deteriorating trend. To improve efficiency of the Rural Cooperative Banking System, Indian govt. had set up many committees in the past in order to identify the actual problem of rural cooperative banks.
But, the suggestions of these committees had not been taken care of . The recommendations and suggested policies had not been implemented properly in India.

Structure of Rural Cooperative Banks
The concept of Rural Cooperative Banking came in India almost 100 years ago. From that early times, Rural Cooperative Banks started operating in India. Although, all the Rural Cooperative Banks in India are registered under the Co-operative Societies Act, they are regulated by Reserve Bank of India. The Rural Cooperative Banks of India abide by the laws that were formulated by Banking Regulations Act 1949 and Banking Laws Act 1965.

Functions of Rural Cooperative Banks
The Rural Cooperative Banks mainly provide loans to the rural farmers and also to the rural people who are engaged in cattle breeding and own hatcheries. But, in the recent times, the Indian Rural Cooperative Banks have extended their financing service. Now, they also provide finance to the self employed individuals and small scale industries of rural India. The growth of Rural Credit and better functioning of Rural Cooperative Banks can be achieved if the rural cooperative banks concentrate on improving personal interaction with the customers and identifying their actual credit need.

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Last Updated on : 30th July 2013