India is the second largest populated country after China in the world. More than 60 per cent population makes its living in villages. India has recognized since fifties that for long term sustainability of economic prosperity and social development and take benefit of growth to rural India is critical. At the commencement of the process of planned economic development in 1950-51 it defined the role of banks, financial institutions as they are vital link between various production elements of economic activity. It strengthened in sixties the foundations of Indian banking system by encouraging mergers among small banks and compulsory amalgamation to take banking to rural India.
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