In the pre-independent India, formal banking system, mostly owned by the rich, always aimed at serving the rich strata of the society. It was never felt that the masses of the country also needed banking services, particularly credit facilities. The have-nots of the country had no access to any formal credit for taking up any economic activity. Rural banking was traditionally a monopoly of the moneylenders till the colonial government enacted the Cooperative Societies Act in 1904 with a view to making the cooperatives the premier institutions for disbursement of credit to rural masses. The government was also providing agricultural loans, usually called Takkavi loans, which have since been discontinued.

However, post-independence, the Government of India felt the necessity for providing the poor of the country with access to formal credit and initiated steps in that direction. The RBI Act vested a unique responsibility of rural credit to the central bank. All India Rural Credit Survey (1951) of the RBI opined that the cooperatives were an `utter failure' in providing rural credit, but added they had a vital role in agriculture credit.

Professional Banker Magazine, Global Banking, Cooperative Societies Act, Rural Development, Banking Services, National Credit Council, Agriculture Refinance and Development Corporation, ARDC, Rural Infrastructure Development Fund, RIDF, National Bank for Agriculture and Rural Development, NABARD, Rural Employment.