The banking requirements of the rural sector of the island is mainly provided by the co-operative Rural Banks. Co-operative Rural Bank scheme was established in 1964.Rural indebtedness was a major drawback to develop agricultural activities of the country. Villagers had to go for informal sources of financing and the village money-lenders exploited them. Co-operative rural banks were setup to uplift the living standard of the member through assisting them by providing credit facilities mainly for income generating activities. Through the expected results could not be achieved fully due to various reasons, these rural banks have assisted to uplift the rural masses from a heavy burden of indebtedness and have provided financial assistance to implement agricultural and industrial projects.
During the past 20 years, alliances of Rural Banks were formed at the district, provincial levels and national federation.