This Bank was established by Late Shri Udaybhansinhji (Yuvraj of Porbandar state) in the year of 1951 in the erstwhile state of Saurashtra as an apex body for providing long term agricultural loans to agriculturists and was named as Saurashtra State Central Co-operative Land Mortgage Bank Ltd. Its jurisdiction was confined to the then state of Saurashtra consisting of 5 districts. Saurashtra was merged with Bombay state in 1957 but this bank continued to work as separate institution even in the bigger bilingual Bombay State but its area of operation was limited to the region of Saurashtra only. Consequent upon the bifurcation of Bombay state and on formation of separate State of Gujarat in 1960, this bank extended its jurisdiction to the whole of Gujarat State in 1961. Name of the Bank was also changed to Gujarat State Co-operative Land Mortgage Bank Ltd. to confer the jurisdiction suitably to cover whole of Gujarat. Thereafter, the name of the name of the bank was changed in 1965 to correlate is activities from "mortgage banking to " developmental banking" for land improvement and accordingly the name "Gujarat State Co-operative Land Development Bank Ltd. "was adopted from 1965. This name is also changed so as to be commensurate with the financing for non-farm sector and such other activities allied to rural development. The changed name is now "The Gujarat State Co-operative Agriculture and Rural development Bank Ltd."
Peculiar circumstances responsible for the establishment of this bank were the necessity to have banking agency to give loans to tenant cultivators to enable them to purchase occupancy rights over the land tilled by under the Saurashtra Land Reforms Act of 1949, and thereby to ensure speedy implementation of this enactment. Accordingly, this Bank was formed in a co-operative fold on the lines of mortgage banking as elsewhere in the country. In its initiate stage of lending, this bank gave loans to nearly 56,000 tenants cultivators amounting to Rs. 2.64 crores and thereby it enabled them to become owners of the land tilled by them for years. Thus for the first time in the country, the land reforms measurers of the state government were successfully and speedily implemented through the media of Land Mortgage Bank. Thereafter this bank undertook mortgage banking activities by giving loan to farmers for various agricultural and allied activities.