The success of Rural Financial Institutions (RFIs) is largely dependent on their financial strength. Co-operative banks are key financial institution at the grass-root level which shoulders responsibility of meeting credit needs of different types of rural borrowers. The main purpose of this article is to trace the main problems that are being encountered by rural co-operative banks. One of the problems is the wide disparity in the performance of the co-operatives with some of them exhibiting phenomenal performance such as Amul of Gujarat while others are poor performers. Based on analysis certain suggestions have been made with a view to improving the working of co-operative banks. One of the important recommendations is to learn from the success story of the successful co-operatives and adopting their working model for the poor performing co-operatives.

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Keywords: Co-Operatives, Rural Credit, Rural Financial Institutions.