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It is, no doubt, true that in the case of underdeveloped countries, the process of transformation, either germinating within the rural segment or bringing the latter within its orbit of influence, will play a crucial role and should, therefore, occupy an important position in their development strategy. It is, however, equally true that the rural and the urban processes are inseparably interwoven in the socio-economic fabric and that the strategies of rural development cannot be operationalized outside the total development process straddling the rural - urban continuum. The growing importance of the financial intermediaries has led the government to realise the necessity of slowly transferring the ownership of some of the important financial institutions from private ownership to state control (Clifford Gomez, 2010: p.11). Accordingly, the Government took initiative for setting up of new financial institutions and to nationalize some existing private financial institutions. As a result, in 1948 the Reserve Bank of India was the first institution that was nationalized by the government. Further, Industrial Finance Corporation of India (IFCI) was the first development financial institution established in the year 1948. This institution was set up by an Act of the Parliament with an objective of providing medium and long-term credit to the industrial concerns in India. It was originally incorporated as statutory corporation but with a view to impart greater operational flexibility as also to enhance its ability to respond to the need of changing financial system, it was incorporated as a company in May 1993 (Mathura et al. 2005: p. 93). Later on, it has been realized that, it was not possible for a single institution to meet the diverse credit needs of small and medium enterprises dispersed in other parts of the country.