THE ROLE OF COMMUNITY BANKS ON THE DEVELOPMENT OF RURAL COMMUNITIES

By

ISIBOR RACHEAL

Presented To

Department of Accountancy

TABLE OF CONTENTS

Title page

Approval page

Dedication

Acknowledgement

Table of content

CHAPTER ONE

Introduction

1.1 Background of the study

1.2 Statement of problem

1.3 Scope of the study

1.4 Objective of the study

1.3 Significance of the study

1.4 Limitation of the study

1.7 Definition of terms

CHAPTER TWO

2.0 Review of related literature

2.1 Introduction

2.2 Rural banking scheme in Nigeria

2.3 Nature and concept of community banks

2.4 Ventral bank control measure to community banks

2.5 Functions of community banks in rural areas

2.6 Why most community banks are folding

2.6 Procedure for the establishment of community banks.

References

CHAPTER THREE

3.1 Summary of findings

3.2 Recommendation

3.3 Conclusion

Reference

CHAPTER ONE

1.1 INTRODUCTION

This chapter is mainly concerned with the efforts at expanding the economic base of the rural area which are always backwards because of scarcity of and restrictive access to loanable funds. In solving the problem, previous government in their economic policies have lied on development banking and rural branch banking of orthodox banks. The word Community Banking is defined as a self sustaining financial institution owned by a community or a group of communities. Unlike commercial banks, community banks were established mainly to promote productive activities in the rural area. Specially, they are meant to facilities the programmes of directorate of food, roads and rural infrastructural producers.

Community bank has no other branch because it is established to operate within a community alone. It is well known that 75 percent of the country's resource and ointment are in the rural areas. So our development project and programme cannot achieve any appreciable improvement until this is focus on those rural areas.

1.2 BACKGROUND OF THE STUDY

The federal government of Nigeria 1990 budget speech decided to establish community bank in order to strengthen its programmes of grassroots economic development. The fundamental concept of a community banks is of a self-sustaining financial institution, owned and managed by a community for the purpose of providing credit deposit, banking and the service to its members.

It is designed to ensure that a community may establish a community bank for the purpose fo promoting rural development throughout the provision of finance and banking service improving the economic status of small scale producers both in the rural and urban areas, enhancing the rapid development of production activities especially in the rural economic growth in Nigeria.

A bank licensed under the community bank decree shall accept from persons various types of deposit including savings and time savings. Receive or collect money on behalf of its customers, operate equipment leasing facilities which is designed to ensure access of its customer to farm input.

Community bank in Nigeria banking system dates back to 1990 when the budget speech was delivered by the president commander in Chief of the Armed Forces, General Ibrahim Babangida. Since then, each state of the federation now has a minimum of at least twenty (20) community banks. Even the federal capital territory has four (4).

Community banks acts under the control of National Board for Community Banks (NBCV) and the Central Bank of Nigeria. National Board for Community Banks is established for monitoring promotion, development and general supervisions of the community banks.

1.3 STATEMENT OF THE PROBLEM

The statement of the problem include the following: -

1. How can loanable funds made accessible to rural borrowers to enhance their economic activities?

2. How can the loan be secured other than asking for tangible security like collateral?

3. How rural banking habit can be improved to assist in rural development?

1.4 SCOPE OF THE STUDY

The highlighting the scope of the study certain factors are to

be considered that hinders the research to be fully successful. These are as follows: -

1. Lack of adequate financing

2. No bargaining strength

3. Serious marketing problems

4. Time

5. Distant

A Enugu is the only state that could be visited during this research methodology, there are also some areas, it covers.

The problems of the study, objectives and aims of the study, limitations of the study and so much more.

1.5 OBJECTIVE OF THE STUDY

The studies conducted by the researcher on the role of

community banks in rural development reveals that the objective of the study includes the following: -

6. To determine the eligibility for loans by community banks

7. To determine how rural dwellers had responded to the services of community banks.

8. To identify the type of customers that patronize community banks.

9. To determine the type of services that are rendered to the public by the community banks.

10. To determine any other non-banking services that are rendered to the public by the community banks.

11. To ascertain the extent to which granting of loan to rural dwellers has any effect on unemployment level.

12. To find out the extent to which improvement on banking habit is dependent on the level of banking awareness campaign.

13. To examine if the availability of the loan has reduced the level of rural urban migration.

14. To find out possible area of interest the community bank can invest on.

1.6 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to the

government especially the rural development authority, as it will give them the opportunity to assess their performance in rural development. It will also be a great value to the community banks to assess their performance. Hence, it will be beneficial to the generality of the public. It will also be of a great importance to people carryout research in related topic.

The study is as much as it attempt to achieve the purpose of promoting the rural development by providing financial and banking services, credit and deposit services as well as other facilities. It is also to achieve the festering of the spirit of community ownership and of economic assets and its maintenance on a suitable basis.

To the economy at large, this study is of a great value since rural development involves providing those social amenities in the urban area to the rural area. This to some extent restrict the usual movement. Restriction will lead to the promotion of rural financial and banking services and integrated national financial system that responds to the need of the whole economy.

1.7 LIMITATION OF STUDY

This research work was chosen with the intention to analyze

the role of community banks in the rural development. In the process of carrying out the study. The researcher encountered some problems which limited her ability to come out with a comprehensive report.

Some of these limitations includes time constraints, finance, and unavailability of the needed data.

The time lag between the approval of the research topic and the submission was virtually short to carryout a comprehensive research. Also due to the economic hardship in the country, the researcher could not travel to far distance for collection of data.

Lack of availability of statistical data also posed its own problem. Even when the data are available, they are sometimes related to out dated information.

This limitation not withstanding, the researcher still came up with a well articulated study that will add to the stock of solution to the rural development.

1.8 DEFINITION OF TERMS

For the purpose of this research work, the definition of terms

used with the UN Standard Industrial classification of economic activities.

1. Economic: Is the study of how a society organizes its money, in order to encourage its nation.

2. Rural Areas: In a little communities that is not as larging like the city

3. Community: Is all the people living in a particular area.

4. Community Bank: Is a self sustaining financial institution owned by a community or a group of community.

5. Loanable: This is the money that can organization such as a bank lend out money.

6. Funds: Is the amount of money that has been saved or that has been made available for a particular purpose.