India is an agrarian economy finds the funding mechanism of the cooperative banks as a crucial reaching the rural India. The cheapest and the best source of rural credit in India is definitely the co-operative finance. The cooperative banks catered to the needs of agricultural sector through their huge network of credit societies in the institutional credit structure. In India the active primary agricultural credit societies (PACS) cover nearly 86 per cent of the Indian villages and account for nearly 36 per cent of the total rural population of the country. Though co-operative land development banks have partially met this need, their impact on the farm economy has been far below expectations.