The regional rural banks are banks set up to increase the flow of credit to smaller borrowers in the rural areas. These banks were established on realizing that the benefits of the co-operative banking system were not reaching all the farmers in rural areas. Currently, there are 196 regional rural banks in India.

Regional rural banks perform the following two functions:

  1. Granting of loans and advances to small and marginal farmers, agricultural workers, cooperative societies including agricultural marketing societies and primary agricultural credit societies for agricultural purposes or agricultural operations or related purposes.
  2. Granting of loans and advances to artisans small entrepreneurs engaged in trade, commerce or industry or other productive activities.