These co-operative banks were earlier known as Land Development Banks. They are now called Agriculture and Rural Development Banks. They operate under a two-tier system known as (a) State Co-operative Agriculture and Rural Development Banks (SCARDB) and (b) Primary Co-operative Agriculture and Rural Development Banks (PCARDB).

SC ARDBs have now been permitted to accept term deposits for a maturity period of 1 year and above like that of commercial banks. However, the aggregate outstanding deposits should not exceed or-aRDBs. 1 Funds (Capital plus free reserves and surplus profits minus losses, if any) of

The ARDBs make long-term lending for schemes associated with increasing the agricultural output such as digging of bore-well. In March 1998, 19 SCARDBs and 738 PCARDBs were operating in India. They generally provide loans for a maximum period of 10 to 15 years.

While the SCARDBs charge interest around 10 per cent on their loans, PCARDB’s interest on their lending average about 11% per annum. These institutions get refinance facilities from NABARD usually around 3 per cent lower than their lending rates.