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 restrictive access to loanable funds. In solving the problem, previous government in their economic policies has lied on development banking and rural branch banking of 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 areas. Specially, they are meant to facilitate the programmers of directorate of food, road, and rural infrastructure by proving easy assess to credit for rural producers. Community bank has no other branch because it is established to operate within a community a long. It is well known that 7.5 percent of the country’s resources and ownership are in the rural areas. So our development project and program cannot achieve any appreciable improvement until it focuses on those rural areas.
1.1 BACKGROUND OF THE STUDY
The Federal Government of Nigeria 1990 budget speech decided to establish community back in order to strengthen its programs of grassroots economic development. The fundamental concept of a Community bank is 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 promoting rural development throughout the provision of finance and banking services improving the economic status a small-scale producers both in the rural and urban areas, enhancing he rapid development of production activities especially in the rural economic growth in Nigeria.
A bank licensed under the community bank decree shall accept from person various type of deposit including savings and time saving. Received or collected money on behalf of customers, operate equipment leasing for ties, which is designed to ensure access to its customers to form 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 federation now has a minimum of at least twenty (20) community banks. Even the Federal Capital Territory has four (4).
1.2 STATEMENT OF THE PROBLEM ASSOCIATED
The statement of the problem associated includes the following:
- How can loanable funds made accessible to rural borrowers to enhance their economic activities.
- How can the loan be secured other than asking for tangible security like collateral.
- How rural banking habit can be improved to assist in rural development.
1.3 OBJECTIVES OF THE STUDY
The studies conducted by the researcher on the role of Community banks in rural development reveals that the objectives of the study includes the following:
- To determine how rural dwellers had responded to the services of the Community banks.
- To identify the type of customer that patronizes Community bank.
- To determine the type of services that are rendered to the public by the community bank.
- To ascertain the extent to which granting of loan to rural dwellers had any effect on the unemployment level.
- To determine any other non-banking services that are rendering to the public by the community banks.
- To examine if the availability of the loan has reduced the level of rural urban migration.
1.4 THE SIGNIFICANCE OF THE STUDY
This research work will be of immense help to the government 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 the performance.
Hence, it will be beneficial to the general of the public. It will also be a great importance to people carrying out 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 suitable. To the economy at large, this study is of great value since rural development involves providing those social amenities in the urban area to the rural area. This will to some extent restrict the usual movement. Restrictions will lead to the promotions of rural financial and banking services and integrated national financial system that responds to the need of the whole –economy.
1.5 LIMITATION OF STUDY
The scope of this study is very wide if it has to carryout in all community banks inn Nigeria the study is limited, based on the fact that there is no time and material resources to see in the Rural Area. This study is limited to (Enugu) and the findings may not reflect as same in Rural Area these findings may not valid for the whole backs in Nigeria, but by large what applies to banks in Enugu city can be said to apply to other banks.
1.2 DEFINITION OF IMPORTANT TERM
The following terms used in this study should be taking to mean the following:
- Surplus Economic Unit
- Deficit Economic Unit
- Banking Business
i). Surplus Economic Unit: This is that economic unit that has idle find not directly proportional to its investment (ie the unit) that has it revenue more than its expenditure and therefore having excess fund which it cannot invest further.
ii) Deficit Economic Unit: This is on the other the opposite of surplus unit. It is that economic unit that has its revenue less than its investment, and needed more fund to invest further.
iii). Banking Business: As defined in the 1969 Act “it is the business of receiving monies from outside source as deposits, and the granting of money loans and acceptance of credit of the purchase of bills and cheque or the purchase and sale of securities for account of the insuring of the obligation to acquire claim in respect of loans prior to their maturity or the assumption of guarantee and other warranties for the effecting of transfers and clearing and such other transaction as the commissioner may on the recommendation of the central bank, or order published in the Federal Gazette designate as banking business.
NWOSU O.F (1997): THE ROLE OF GOVERNMENT IN THE DEPARTMENT OF THE CO-OPERATIVE MOVEMENT IN NIGERIA, ENUGU FOR THE DIMENSION PUBLISHERS.
OKIGBO P. (1993): REFORMING THE BANKING FOR THE 1980’S VOL. 3 NIGERIA INSTITUTE OF BANKS. C.O.D (1981): SUCCESS IN ELEMENT OF BANKING 2ND EDITION; LONDON MURRAY PUBLISHERS.
WOLE ADENIKE (1993): COMMUNITY BANK NEW LETTER’S VOLS. 1 & 2, LAGOS PUBLIC RELATION UNITY NBCB.
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