CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF PROBLEM AND THE PURPOSE OF THE STUDY
Beside these economic policies to help rural economic development, the banking habits of rural did not improve appreciably. The problems remains that community banks are nearly operating exactly the some way as conventional banks do not grant loans to small scale producers. The banks require collaterals before credits are given which the rural dwellers or developmental association may not be able to afford. The banks also lack adequate capital. This makers it very difficult for them to grant loans to rural dwellers the how saving of the people mean that there is little to put into the bank. This create more problem for the community banks. Apart from these problems to community banks the rural dwellers have the knowledge that bank are for the rich and the elites of the society, given the fact that the community banks have and employed incapable personal who could not educate proper banking information to rural area. In view of these, the study would address itself to the following problem
v How can loan able fund be made accessible to rural borrowers to enhance their economic activities.
v How can rural banking habit be improved to assist in rural development.
v In addition, the main purpose of these study was to examine the role of community banks in of the rural economy. The point further arises as follows
v The nature of the economic activities of the area.
v Whether the attitude of the dwellers to public money affected the level of loan available for borrowing.
1.2 RATIONALE OF STUDY
The rapid enhancement of the development of production activities in both rural and urban areas and hence, the improvement of the economic status of small producers and rural farmers in the informal sectors of the national economy. The promotion of rural development providing financial and banking services as well as other facilities or services. It encourages the spirit of community ownership and the use of economic assets and the maintenance of such facilities and organization on a suitable basis.
1.3 SIGNIFICANCE OF THE STUDY
This study intends to help student who may wish to carryout further research on this subject. It will provide information that will be of importance to entrepreneurs and chief executive of financial institution or business organization. The result of this study will be of available services to other financial institution. The mangers of public business organization farmers society, government establishment and administrators can benefit indirectly from this work, hence management is basically the same banks agent public relations officers and information officers will gain a lot form this work because it will encourage them to remain committed to the practice of their professions. The role of community bank in rural area will enlighten the public and interest the general reader who want to acquire knowledge in the area of bank management and its role in the community banks.
1.4 BACKGROUND OF THE STUDY
In general Babanojda 1990 budget speech, he announced government decision to establish, community banks. A community bank is defined as a self sustaining financial institution owned and managed by a community group of comities to provides financial services to that community. A minimum study share capital # 250,000.00 is required to establish a community bank. The community bank implementation committee (CBIC) receives and process application for the establishment of community banks. The first community bank took off in December 1990 in alherir local government area of Kaduna state.
Already, another set of Nine (9) community banks have been approved for licenship are ready to be commissioned. Another thirty (30) community bank promoters respectively had applied to be inspected preparatory to being licensed. Among them, twenty one (210 had been inspected and the nine others were yet to be inspected. Moreover, the incorporation document had been submitted by them, respectively to the corporate affairs commission in Abuja in respect of one hundred and eighty (180) community banks of which ninety three (93) have now been incorporated.
1.5 DEFINITION OF TERMS
Bank rate: this is the rate a which the central bank re discounts first class bills of exchange and government securities presented it when the firms is acting as lenders of last resort.
Guarantee: it is a written promise made by one person to be collaterally answerable for the debts, default or miscarriage or another.
Security: it is bankers safety net which he requires if unforeseen circumstances renders the proposed loan repayment programmes unattainable
Bank loan: it involves the bank laundering money to a customers over a given period of time same interest are attached to such lending
Overdraft: this is bank issue cheques to a customer for a total sum greater than the amount standing to the credit of his account
Commission: it is the charge for services render to current account holder must of the charges one determined by the central bank of Nigeria through the bankers tariff .