IntroductionCredit requirements of farmers can be classified into two types: productive loans and unproductive loans. The former include loans for the purchase of seeds, fertilizers, tools, etc., to pay taxes to the government and to make permanent improvements to the land, such as digging and deepening wells, fencing the land, etc. All these forms of credit help farmers in their farming operations or in improving their land. Apart from these, Indian farmers often take loans for unproductive purposes, such as for solemnizing marriages, births and deaths, for disputes etc. Unproductive loans obtained at exorbitant interest rates are highly improper and unjustified. Objectives of the Study The specific objectives of the study are: 1) To analyze the performance of Andhra Pragathi Grameena Bank operating in Anantapuramu district of Andhra Pradesh; 2) evaluate the impact of Andhra Pragathi Grameena Bank financing on generation of additional income and employment among sample borrowers; and3) suggest measures, in the light of the empirical study, for the effective functioning of regional rural banks in general and Andhra Pragathi Grameena Bank in particular. The Universe and the Sample The Andhra Pragathi Grameena Bank has lent for various productive purposes to a greater extent and for consumption purposes to a very limited extent. Since the main objective of the study is to examine the role of Andhra Pragathi Grameena Bank in asset creation as well as generation of additional income and employment among the poorest families and to evaluate the repayment performance of the borrowers, it was decided to limit the study to investment loans (excluding crop loans) in Agriculture and Allied Activities and other...... middle of paper ......gs through their innovative deposit mobilization schemes. Works Cited1. CR Reddy Rural Banking in India, Rainbow Publications, Coimbatore; 1987, p. 154.2. International Cooperative Alliance, State Banks and Cooperative Development Banks, Bangalore; Allied Publishers, 1971, pag. 10.3. Third Annual Report, Andhra Pragathi Grameena Bank, 2008-2009.4. C. A. Kumar and D. Dakshina Murthy, “Mobilization of Savings: Role of Commercial Banks,” The Indian Journal of Commerce, Vol. 35 (13), September 1982, p.46.5. Quddes Mohammed, Control of Commercial Banks in India, Sahitya Bhavan, Agra, 1976, p.27.6. BP Sharma, The Role of Commercial Banks in the Developing Economy of India, Sultan Chand and Company Private Limited, New Delhi, 1974, p. 60.7. First Annual Report, Andhra Pragathi Grameena Bank, 2006-2007.8. Third Annual Report, Andhra Pragathi Grameena Bank, 2008-2009.