To ensure the success of the developmental initiatives adopted in the first 25 years of independence it was felt, in the early 1970s, that despite the wide banking network, a critical gap still exists in rural areas, particularly in meeting the credit needs of the rural poor. To find a solution for this, the Government of India established Regional Rural Banks (RRBs) through the Regional Rural Banks Act of 1976 to bridge the gap in the flow of credit to the rural poor. Despite the various measures taken by the Government and the RBI through social control and the nationalisation of 14 major commercial banks, a large proportion of the rural poor remained outside the banking fold. The Government of India appointed a working group on rural credit (popularly known as the Narsimham Committee) in July 1975. The Narsimham Committee observed that the cost of structure of commercial banks, the attitudes of their employees and the lack of a professional banking approach in the cooperative credit structure were the true difficulties in rural credit. It also observed that the deposits collected by banks in rural areas was not totally deployed in the rural areas. Keeping this in view, the Narsimham Committee recommended the creation of a new set of regionally-oriented rural banks which would combine the local feel and familiarity with problems of cooperative banks with the business acumen of commercial banks.