ABSTRACT

Not, every Nigerian knew exactly the paramount impact of Community Banks to our dear nation and to economic growth and development of our father land Nigeria. Most of the time, it sounds aloof and appears trivial to the ignorant and the unconcerned. We just hear about this bank without really care how to set it up or even support it.

          However, Community Banks established in Nigeria to help remedy the problem of lack of development that has been facing Nigeria since after World war II in some areas of the country.

          The fundamental concepts of a Community bank is of  self-sustaining financial institution owned and managed by community or a group of communities for the purpose of providing credit deposit, banking and other financial services to its members, largely on the basis of their self-recognition and credit worthiness.

          This research, work has five chapters. The first chapter of this document contains a general discussion ie introduction of the topic of scrutinizes Community Banking. It want further to state the background of the study, statement of problems, objectives of the study, statement of hypothesis, scope and limitations of the study, finally the definition of terms.

          A number of past related literature were vividly reviewed in chapter two for the purpose of effective and comprehensive study in other words, highlighted the objectives and functions of Community Banks vice-versa.

          Chapter three deals with the research design and methodology, method of research design, sources of data, selection of population, sample and sampling techniques. It also deals with method of data presentation and analysis.

          The data got from research survey were analyzed and interpreted in chapter four.

          Finally, the fifth chapter made by the researcher saw to the summary of findings, recommendation and conclusion.

          The major findings of the study is that Ndiafia Community Banks been the case study of this research work could be rited as fair and good as regards its roles in her services and this is obviously manifested by their performance since the bank was open.

TABLE OF CONTENT

Title page                                                                                i

Approval page                                                                        ii

Dedication                                                                               iii

Abstract                                                                                  iv

Acknowledgement                                                                             vi

Table of content                                                                      ix

CHAPTER ONE

1.0     Introduction                                                                            1

1. Background of the study                                                         1
2. Statement of the Problem                                                        3
3. Purpose/objective of the study                                                5
4. Research Questions                                                       6
5. Research Hypothesis                                                     7
6. Significance of the study                                                         9
7. Scope and Limitation of the study                                 10
8. Definitions of terms                                                       11

Reference                                                                       12

CHAPTER TWO                           

2.0     Review of Related Literature                                         13

1. Origin of community Banks                                          13
2. Nature and Scope of Community Banks                       16
3. Concept of Community Banks                                                18
4. Objectives of Community Banks                                   20
5. Functions of Community Banks                                             21
6. Ownership Structure of Community Banks                            22
7. Functions of National Board for Community Banks     23
8. Central Bank of Nigeria Control measures                             

to Community Banks                                                    25

1. Community Bank and the National financial institutions       26
2. Community Bank and Local Economic Development   27
3. Problems confronting Community Banks                      33

References                                                                      36

CHAPTER THREE

3.0     Research Design and Methodology                                38

1. Research Design                                                            38
2. Sources of Data                                                             38
3. Population                                                                     40
4. Sample and sampling Techniques                                  40
5. Method of Data Analysis                                                        41

References                                                                      43

CHAPTER FOUR

Data presentation and Analysis Interpretation                       44

1. Analysis by percentage Distribution                              44

CHAPTER FIVE

Summary of Findings, Recommendation and Conclusion                64

1. Findings                                                                         64
2. Recommendation                                                           66
3. Conclusion                                                                     68

Bibliography                                                                  70

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

          In Nigeria and in other developing countries alike the problem of credit extension to the rural dwellers (who usually dominate the population) and cannot afford the much sough collateral being demanded by conventional financial institutions has been such a persistent Nigeria case, that government after government have been making persistent efforts to remedy the situation. The financial needs of these rural dwellers pose a double problem in that part from the risk inherent in such credit in extension, it is not case effective because of the large number of accounts involved with little amounts. Also the inability of those group to have access to credits compounds the vicious circle of poverty in the economic system (Ugwuoke K. 2000 p.21).

          However, the development of these rural areas where majority of the population dwell happens to be bed rock of the economy. The establishment of Community Bank was done in order to strengthen its programmes of grassroots economic development (YOKUBU M.O. 2000 p. 36)

          The fundamental, concept in the establishment and operation of Community banking system is that of a self sustaining financial institutions, owed and managed by a community or a group of communities for the purposes of providing credit, deposit, banking and other financial services within the area to its members largely on the basis of their self recognition  and credit worthiness. It is in contradiction to the near total reliance as the basis for giving credit, it was designed to ensure that bank Community or group of communities may establish bank for the purposes of promoting rural development improving the economic status of small-scale producers both in the rural and urban area enhancing the rapid development of productive activities especially in the rural areas to support desirable and sustainable rural economic growth in the Nigeria Banks that are licensed under persons various types of deposits including savings, time and target deposit issue for the purpose of raising funds, redeemable debentures to interested parties.

          In the same vein the Community banking took off in 1990. when president on power ( C in C General Ibrahim Babangidi) in his annual budget speech announced that the Community Banking system would be introduced into the Nigerian Financial system. The Community bank implementation committee (CBIC) which established for general supervisions, promotion, monitoring and development of the Community Bank act under the control of (NBCB) National Board for Community Banks and (CBN) Central Bank of Nigeria (Ukamenam C. O. 2001 p. 9).

1.2     STATEMENT OF THE PROBLEM

a.       The major problems which Community banks faces is how harness those abundant resources for the development of the rural areas, bearing in mind that those resources are minutely held by the vast population of the rural dwellers.

b.       The banking sector as the prime mover of the nations economic life is seen as the most viable sector to make this dream a this dream a reality, but then given the Nigerian situated especially (Enugu Urban) with vast area of land and how income base, the task before community banks are quite enormous with the problem of ignorance and illiteracy of the majority of people whom the bank are dealing with and also the problem of infrastructure facilities.

c.       Another most delicate problem is that the depositors in community banks do not have their deposits as is obtainable in Commercial and Merchant Banks.

d.       In addition, the current distress syndrome have eaten deep into the confidence response on banks; the common saying “you are working in a bank” in rural areas about higher spenders is no longer in vogue. This is because villagers that regarded bank as a “cidatel of money store” has discovered to chagrin that you can go to the store for your money and come back empty handed and this confidence will take time and effort to restore and community banks not equipped and in a position to restore this confidence not now and also some of those distressed commercial banks.

e.       Finally, lack of banking habit among the rural dwellers who still use old tradition ways of savings mobilization like the daily savings method or issued or the social meetings. How can the bank make rural dwellers less apprehensive of the bank and use the services provided by them to enhance their welfare.

1.3     PURPOSE/OBJECTIVE OF THE STUDY

a.       The objectives of this study is to determine and analyse the promotion of rural development by providing financial banking services (credit and deposit services) as well as other facilities to communities adequately supplied with such facilities.

b.       To determine and analyze its effects in the natural economic development and asses how these developments created by the Community Banks have gone in alleviating the rural economic development problems.

c.       The inculcation of disciplined banking habits in the masses of low workers in Nigeria especially those in the rural areas, it is believed that at the end of this study, rural economic development would be identified and possible solution given.

d.       The rapid enhancement of the development productive activities in both rural and urban areas, and hence the improvement of the economic status of small producers in the informal sectors of the national economy.

e.       Fostering of the spirit of community ownership, and use of economic assets and maintenance of such facilities, and organizations on a sustainable basis.

f.       Promotion of the emergence of an effective and integrated national financial system that responds to the need of the whole economy especially at the grassroots community level.

1.4     RESEARCH QUESTIONS

          The study is to find out the problems associated with community banks investing activities and their impact on the economy in rural area. As stated above, some banks in Nigeria is the scope of this research. Kindly respond objectively to the questionnaire as all responses will be treated with strict confidence. It will be highly appreciated if you could respond objectively to this statement without prejudice.

          Thanks for your co-operation.

1. Do you think that your bank can encourage rural dwellers to engage in investing with bank that is closer to them?
2. Can you bank alleviate rural economic development in terms of infrastures in the rural areas?
3. Does your liable of enormous problem of ignorance and illiteracy among the dwellers.
4. Does your community bank grant and encourage insurance/security to investors at a normal level?
5. What does your bank normally require collateral before granting loans to investors?
6. Does your bank provides expert financial advice to the management of funds by beneficiaries?

1.5     RESEARCH HYPOTHESIS

The following hypothesis have been designed for analysis:

Ho     -        That there is no significant relationship between the

establishment of Community Banks and growth of small scale industries.

H1     -        That there is significant relationship between the

establishment of Community banks and growth of small scale industries

Ho     -        That the establishment of Community banks in

Nigeria especially in Enugu urban has not led to increase awareness and uses of banking services by the people.

H1     -        That the establishment of Community banks in

Nigeria especially in Enugu urban has led to increase awareness and uses of banking services by the people.

Ho     -        That the level and amount of services providing by

these banks in Enugu urban have not justified the objectives of Community banking.

H1     -        That the level and amount of services providing by

these banks in Enugu urban have justified the objectives of Community banking.

1.6     SIGNIFICANCE OF THE STUDY

          This research work will be a great help to the government especially the rural development authority as it will give them the opportunity to access their performance in rural economic development.

          It will also be of immense value of the community banks to access their performance and improve in the area of poor performance.

          Hence it will be beneficial to the generality of the public and also of great important to people carrying out research in related topic.

          To the economy at large, this study is of great value since the economic development involves providing those amenities in the urban areas to the rural areas. This will go some extent restrict the usual movement of the rural dwellers to urban areas.

          The movement restriction will lead to massive agricultural and industrial productions the promotion of emergence of an effective and integrated national financial system that responds to the needs of the who economy.

1.7     SCOPE AND LIMITATIONS OF THE STUDY

          This research work was chosen with the intention to analyze the role of community banks in the economic growth and development of Nigeria.

          In conducting this research work, the researched, some problem so first was that the researcher had to operate within the each of limited available financial resources in the face of high cost of stationeries and transportation.

          There is also a problem of secretly in the nature of financial institutions in the country’s this secretive act has resulted into unavailability of limited date on this issue. The work has to be done within one academic year in addition to the lectures which will be taken including our examinations.

          These limitation not with standing, the researcher still comes out with a well articulated study which will add to the stock of solutions to the rural economic development and national economy in general.

1.8     DEFINITIONS OF TERMS

Community Banks:        A Community bank is a financial

institution established to carter for the savings and credit needs of small-scale producers throughout the country.

REFERENCES

Ugwoke K. (2000), Banking Process and Methods Hossanna

Publication Enugu p. 21

Ukemenem C.O. (2001), Practice of Banking Oktek Publishers,

Enugu p.9

Yokubu M.O. (2000), The Nigeria Financial System Macmillan

 Publication, Otta Ogun State p. 36