Rural banking is small banking.

The term "rural banking" covers a lot of ground. In the United States, rural banking is an informal description of the activities of community banks in rural areas. Rural banking outside the United States refers to banking services in communities that are beyond the reach of formal banking systems. Internationally, rural banking is part of development efforts that serve the poor.

U.S. Banks in Agricultural Areas

Like rural banks in developing countries, America's rural banks are in underserved areas in which banking choices are limited. One 2013 report from the Federal Deposit Insurance Corporation defined rural banks as those serving counties with towns of about 10,000 people or fewer. The FDIC report also estimated that at the end of 2011, 16.3 million Americans would have been hard-pressed to find banking services if it weren't for small community banks.

Healthy, but Not Expanding

American rural banking is a mature and stable industry. Such banks are often located in agricultural areas that are losing population to more urban regions. Expansion for rural banks is hit or miss, but otherwise they have tended to be much healthier than their city cousins in recent years, partly because the agricultural industry has weathered recent economic downturns relatively well. Such banks tend to be run conservatively, partly because bankers are personally involved in the communities they serve.

Microloans for the Poor

Women in Bangladesh have benefited from microloans from the Grameen Bank.

On an international level, rural banking means bringing financial services to far-flung, poverty-stricken areas, in all likelihood for the first time in their histories. The Grameen Bank of Bangladesh was in the forefront of the trend. It began providing microloans in the 1970s to rural women wanting to start small businesses. The bank and its founder, Muhammad Yunus, received the Nobel Peace Prize in 2006 for this work. Microloans of the Grameen variety, however, are not designed to provide broader banking services. For one thing, some 96 percent of Grameen loans still go to women.

Banking Services for the Poor

In the language of development efforts, rural banking includes a wide range of banking institutions. Not all are even institutions per se, because some areas are so remote that the concept of corporate governance is unfamiliar. The World Bank even describes some such institutions as "informal self-help groups," with Grameen Bank borrowing groups among these types. These proto-banks -- social funds, as the World Bank calls them -- are among the few options for communities that are 19 miles or more from the nearest bank branch or microfinance institution.