Regional rural Banks plays a vital role in the agriculture and rural development of India. The RRBS have more reached to the rural area of India, through their huge network. The success of rural credit in India is largely depends on their financial strength. RRBs are key financing institution at the rural level which shoulders responsibility of meeting credit needs of different types of agriculture credit in rural areas. At present, most of the regional rural banks are facing the problems of overdue, recovery, nonperforming assets and other problems. The first recommendation for the establishment of regional rural banks was made by Banking Commission in 1972. As the result of this recommendation a working group headed by Mr.M.Narsimham Rao, RRB's came into existence in 26th September, 1975 and RRB Act, 1976 with an objective to ensure sufficient institutional credit for agriculture and other rural sectors.

RRBs were established to mobilize rural areas small saving and provide other banking facilities to the small and backward areas. RRB's are usually sponsored by public sector banks thus they keep their deposit with these bank & are also dependent for their loan operations & finance on sponsor bank and NABARD.

The main objective of RRB's is also to promote saving investment hands which helps to collect adequate deposits that enable them to work at low cost as compared to commercial banks