CHAPTER ONE INTRODUCTION BACKGROUND OF THE STUDY
In Nigeria, it can be said that the activity of the stabilize banking in the rural area is such that the branches were beguiled by the rules, traditions and policies of the headquarters. But relative to the commercial bank, community bank were opened in the rural area to meet the financial needs of the occupants by mobilizing their resources into current and saving account. This in turn within the resources of the banking institution can concerned with the cr3eatrion of credit for the rural dwellers for the purpose of increasing their production activity either as individual or a group of industrialist, farmers or o-operative society, the Nigeria banking system, its operation, location service in pre – 1977 were concentrated in the urban areas of the country and this brought the concentration of economic activity on the urban areas at the detriment of the rural communities. However, the reason for establishing banks in the rural area was because of lack infrastructures facilities in the rural areas, low level of economic activity.
The colonial policy of establishing banks in the urban areas where economic activity has been in existence, the preference of the bank worker to work in the urban areas where faculty and comfortable living are available. In the attempt to correct the abnormal banking system, the (CBN) central bank of Nigeria in 1978 introduced the rural banking scheme (the Nigeria 1987 by Herbte O. Orji 2015) the first bank to establish its bank branches in he rural area, that have potential capability for contribution to the Nigerians economic development. It involves the establishments of new bank branches of new and existing bank in the rural areas of the country and the provision of the banking service to the rural communities that has developed and show rural characteristics. By this the central bank of Nigeria will have to determine the situation where the rural community which have a population of at least not less than (500) five hundred people and an establish economic and social institution such local industries adequate on the local market, hospitals, schools and other private and government institution.
The scheme was phased into four; The first phase was to establish 200 banks between 1977 and 1980. However the phase ended up in archiving only twelve braches C.B.N bulletined January/ march 1987, Page. 29 The second phase which stated in 1981 with 266 bank branches to be opened but 258 chess bank were actually spend during that period. The third phase also commence in 1954 with the total branches of 300 to be opened. The number of the commercial bank branches opened in 1988 under this phase of the programme increase from 72 to 144. Also during this period under the review one more branched were opened on the second phase bridging the number to 258. Consequently the total number of banks establishes under the rural banking programme raise from 72 to 602 in 1988. Similarly the number of urban bank increases by 124 in 1988 bringing the number of the total branches to 1101. The fourth phase of rural banking is about to set in motion but ther4 has been nice tiding of the implementation.
According to business time Monday 9th April (1990) the united bank of Africa has made a proposal for the scrap [ping of the fourth phase of the rural banking programme of the government, instead they adopted for the establishment of more urban banks branches which has a little promise of more economic development. The augment on the line is the rural banking scheme program to support bankable project, economic project and economic activity whereas the banking in urban still has a lot of untapped resources that can be mobilized through a deliberate programme of increased urbane banking braches.
The managing director U.B.A Allahaji Sulaiman Baffa emphasis that bank has reach the limit’s in setting up the rural banking program only to discover that this prospect where lean and stretched far between. As a result of this community bank were established. The community as a financial institution established to cater for the saving the credit need of the small-scale producers. The shareholders are normally the customers. They have a share capital of 250,000.00 and only one tenth of the amount is guaranteed to the customers as a loan. The decree establishing this bank has promulgated in the in 1990 and the bank has a board hat laid out policies and did the managers head a management. The policies are guided by the decree of the 1990. The works of the community bank are numerous.
STATEMENT OF PROBLEM
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