A rural bank is a financial institution, which helps rationalize the developing regions or developing country to finance their needs specially the projects concerned to agricultural progress. Traditionally rural and semi-urban areas have been looked upon as requiring help and lacking in skilled management. This approach in policy formulation, regulations, and procedures governing the rural banking system has left the rural system in poor health, as was revealed during recapitalization/restructuring exercises on RRBs, which had operated under unfavorable regulatory constraints. Liberalization of RRBs’ activities has permitted them to participate in more profitable businesses. A single, strong, merged RRB setup would bring to the rural economy a well-directed banking apparatus to take care of infrastructure, export financing, traditional businesses etc. This will necessitate better management or setting up new RRB branches in district locations and state capitals, regional boards, and a central board for operational policy governance. Such a bank should be charged with developing connection between rural and urban areas to provide commercial banking services and not merely rural finance.
Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focused on the agro sector.
The Haryana State Cooperative Apex Bank Ltd. commonly called as HARCOBANK plays a vital role in rural banking in the economy of Haryana and has been providing aids and financing farmers, rural artisans, agricultural labourers, entrepreneurs, etc. in the state and giving service to its depositors.
National Bank for Agriculture and Rural Development (NABARD) is a development bank in the segment of Regional Rural Banks in India. It provides and regulates credit and gives service for the promotion and development of rural areas mainly agriculture, small scale industries, cottage and village industries, handicrafts.
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