One of the basic objectives with which the SBI established is to provide banking facili­ties to rural areas. The Rural Credit Survey Committee envisaged a dominant part for the State Bank in rural finance. The SBI provides agricultural and rural finance in the follow­ing ways:

1. Expansion of Rural Branches. Direct finance to farmers

2. Loans and advances to co-operative banks

3. Loans and advances to co-operative marketing and processing societies.


4. Financial assistance to Central Land Development Banks

5. Small Farmers Scheme

6. Farm Graduates Schemes

7. Agricultural Development Branches


8. Village Adoption Scheme and Service Area Approach

9. Sponsoring Regional Rural Banks

10. Ware Housing Finance

11. Integrated Rural Development Programme (Now merged with SGSY scheme)


1. Expansion of Rural Branches:

Branch expansion is the basic requirement for the eco­nomic development of the country. To gather the scattered savings in villages lying idle and utilizing them for the development of village economy the SBI has opened branches in rural and semi-urban areas to mobilize rural savings. Through the rural and semi-urban branches of SBI and associate banks, the SBI extended credit of Rs.8794 crore to agriculture during 1997-98 the growth is 12.6% over the year 1996-97.

2. Direct Finance to Farmers:

The bank provides the following assistance to the farmers.


3. Loans and Advances to Co-operative Banks:

The SBI provides loans and advances to State and Central Co-operative Banks at concessional rate of interest against Government securities. It provides such facilities to them at half per cent below the bank rate because of this facility; the co-operative banks can assist the co-operative societies in their respective areas.

4. Loans and Advances to Co-operative Marketing and Processing Societies:

The SBI grants short-term advances to co-operative marketing and processing societies. This in turn helps such societies to provide loans for marketing and processing activities in rural areas.


5. Small Farmers Scheme:

SBI has introduced various special schemes like Small Farm­ers Scheme. Through these schemes the bank provides financial facilities to small farmers. Under this scheme loans given to individuals or guaranteed by all the farmers in the group. This group borrowing enables small farmers even without land or with small land to get enough credit for their farming activities.

6. Farm Graduates Scheme:

The Farm Graduates Scheme is intended to help graduates in agriculture, dairy science, veterinary sciences, Agricultural Engineering who have farm development projects but do not have finance.


7. Agricultural Development Branches:

To assist and develop agricultural activities, the SBI has opened specialized Agricultural Development Branches. These branches are engag­ing on agricultural related functions. The basic purpose of these branches is financing for agricultural development. Such developmental branches are opened in backward areas.

8. Village Adoption Scheme and Service Area Approach:

The financing of agricultural de­velopment requires a close involvement of the bank in identifying potentiality of the area and formulate the programmes to cater to the credit needs of agriculturists.

Under this scheme, the backward villages are grouped together and the entire credit requirements of the farmers in these villages for agricultural and allied activities are provided by the desig­nated branch of the bank. The SBI also engaging in village adoption scheme to provide the various credit facilities to the villages adopted.

With the introduction of Service Area Approach, the villages are more benefited on various aspects. The village adoption scheme is merged with Service Area Approach.

9. Sponsoring Regional Rural Banks:

The bank has sponsored 30 RRBs spread over districts in 16 states. A network of 2343 branches of these RRBs accounts for 16% of all ranches in the country. As on month 2001-02 the deposits and advances of the RRBs sparred by the bank stood at Rs. 4706.31 crore and Rs. 1876.48 crore respectively

Financial restructuring by way of funding of losses has been initiated in 25 of the RRBs and the Bank has contributed Rs. 62.94 crore for funding the losses. This is popularly known as recapitalization of RRBs. The performance of the RRBs sponsored by the bank was closely monitored with the objective of enabling these RRBs break even by March 1999.

10. Warehousing Finance:

The Rural Credit Survey Committee stresses the need for providing storage facilities in villages by constructing a network of Warehouses in rural areas. Once the agriculturist can raise finance by storing his crop in village god owns he need not sell his produce in haste for a low price at the time of harvest.

He can increase his income by releasing the stock in the market at the appropriate time when the prices are high. Banks finances to cultivators against the warehouse receipts can to some extent elimi­nate the middlemen between the cultivator and the consumer.

The State Bank helps the development of warehouses by opening its branches in places where the warehousing cor­poration have constructed god owns. It lends money to cultivators against the warehouse receipts.

11. Integrated Rural Development Programme:

The IRDP aims at overall development of the rural areas. As a major partner in the government sponsored schemes for rural development and poverty alleviation, the bank assisted 2, 50,851 beneficiaries to the extent of Rs. 336.88 crore under the IRDP during the year.

SC/ST and women beneficiaries constituted 35.8% and 24.9% respectively of the total number of beneficiaries. The pilot project under which the bank identifies its own beneficiaries was extended to 32 districts in addition to the 13 dis­tricts where it was already implemented. Under the Prime Minister Rojgar Yojana 55,501 beneficiaries have been assisted to the tune of Rs. 360 crore so far.

The banks assistance to weaker sections of including Scheduled Castes and Schedule Tribes, small and marginal farmers, landless labourers, scavengers, self-help group’s ant. Beneficiaries of IRDP and DRI schemes stood at Rs.7052 crore, constituting 7.05% of net -bank credit at end March 2002.