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The purpose of this research is to analyse rural banking habits in Nigerian rural areas and to identify the many issues impeding the proper implementation of rural banking awareness from the central bank annual report and statement of account 1999. According to the results of a survey, the country is underbanked.

Some reasonable proposals will be provided in this study to aid monetary authorities in fashioning out practicable and appealing incentives for banking that will ensure the attainment of the program’s objectives.

The research design and technique are shown in the third chapter.

The fourth chapter of this book discusses the topic’s summary of findings.

Finally, chapter five includes the topic’s conclusion and recommendations, as well as a bibliography. I hope that this effort would help the rural populations of Nigeria with their financial habits.



Since the official start of the rural banking programme for commercial banks in July 1997, the Nigerian economy has gone through several changes. Each government has continued policies it deemed relevant. Banks have recently been confronted with challenges,

and they have called for the introduction of one reform or directives to bring it up to date with our current economic realities. This position is concerned with what the correct duty of banks should be in the transformation of Nigeria’s alien economy.

In this regard, commercial banks’ rural banking programmes arose as a means to promote effective grass-root mobilisation, which led in the formation of the Okigbo financial system review committee in 1976. The following are the committee’s most important recommendations that have been accepted by the government:

1) Banks should aggressively promote the transformation of the rural environment by encouraging rural groups or committees to rapidly expand their banking habits. They will offer savings deposit accounts to their consumers, assisting in the mobilisation of rural finances outside of the banking system.

This provided cash for the formation of rural credit in the form of equity and loans for small scale farmers, co-operative societies, and enterprises.


2) That, while bank lending policies have historically favoured short-term lending, they should allow for medium and long-term lending to allow long-term instruments to mature.


3) Banks should align themselves with national objectives. They felt that financial decisions should be made locally.


4) Banks should devote a considerable amount of their profits to improving the quality of their services.


The most notable of these recommendations was on the basis of


That a commercial bank’s rural banking programme be developed, and that institutions assign specific loan portfolios to their rural bank customers.


The commercial bank’s rural banking project was launched with goals and incentives.


1) The establishment of financial practises among rural residents.


2) To rein down the excesses of crude banking practise, such practises expose money to termites and undermine the effectiveness of central bank monetary policy.


3) To establish an institutional entity to mobilise rural funds.


4) To increase agricultural productivity and the expansion of allied industries by offering appropriate credit to those sectors whose credit sources are local money lenders.


5) Diversification of the rural economy in particular and the national economy in general.


6) Other examples include tying rural-urban migration to the objective of eliminating urban unemployment.




To guarantee a smooth launch, various incentives were devised for innovative banks. The incentives are as follows:


a) Waiving the necessity for a feasibility report as a sole requirement for the creation of a rural branch.


b) Granting banks a two-year monopoly on providing banking services in their designated centres, beginning on the day of their opening.


c) Allowing banks to deduct the capital cost of constructing office buildings and staff quarters over a three-year period.


d) Exclusion of loans and advances granted within the first two years of existence in the event of:


(i) The rates of loan and advance growth.


(ii) Allocation of adjusted capital to loans and advances.


In fact, as of 1989, the rural banks’ monetary policy guidelines


were recruited to lend a minimum of 45% of the deposits acquired from rural centres to such centres. Ibrahim Babangida founded the first community in 1989.



The purpose of this research is to identify major endogenous and exogenous variables that influence the effective development of banking habits in Nigeria. The fundamental issue is a lack of adequate infrastructure in rural communities.

Savings and investment are both moving in the same direction. Current investment is a result of accumulated savings; nevertheless, mortality or our low level of economic activity have significantly diminished our proclivity to save.

The poor rural farmer regards fulfilment of basic biological (needs as a high priority. This low level of revenue has reduced the deposits available to rural banks, allowing credit to be released to actual small-scale farmers.

The non-institutional credit scheme’s competitive rule –

Many farmers have continued to be drawn to local money lenders. Rural residents are extremely unsatisfied with the performance of banks in terms of loaning. As a result, they turned to these greedy money lenders.

Banks must establish adequate tactics to improve the banking habits of rural inhabitants in order to challenge the activities of these local money lenders.

Banking in rural areas is challenged by a lack of trained and daring staff. In truth, banking in Nigeria is becoming increasingly dynamic and competitive. To survive in an increasingly sophisticated financial world,

banks must adapt their orientation towards their rural consumers. Banks should strive to understand their customers’ like demands (purchasing habits).


Management should create a marketing philosophy in order to make its operations more customer-oriented. Staff attitudes will have a significant influence in improving rural people’s banking habits only if they take a new strategy to addressing the problem of rural clients.

It is undeniable that the illiteracy rate in rural communities is extremely high. In our banks, there is a dearth of practical knowledge of new technology.

The rural dwellers are not adequately informed about the utility of banking as achieved in the perpetuation of the underdeveloped status of Nigeria’s rural areas.

Constant squabbles across communities have exacerbated the polarisation of these banks’ meetings. The issue of location has alienated many wealthy customers, who have decided to switch to other banks of their choice.

To encourage the development of rural banking habits, the site of any bank should prioritise economic variables such as lavational ease over political considerations.




This claimed that the goal of this is to


1. Determine the impact of a customer’s degree of income on the rural community’s support for a bank.


2. Understanding the relationship between the development of banking habits and the vocational advantages of such a bank


3. Understand the impact of banking staff attitudes on people’s banking habits.


4. Also, understand the impact of people’s banking habits on the development of rural communities in Nigeria.



The study will provide important recommendations to the government and the central bank on how to strengthen community banking schemes in order to effectively improve the banking habits of rural populations.

Although today’s environment is extremely sophisticated and more conducive to effective financial intermediation, opinions disagree on the ability of some new banks to cope with the relatively poor liquidity situation in our rural areas.

The study will be important to their survival as recommendations on the best techniques to take for the Nigerian economy’s dynamic and competitive financial market vis-à-vis the rural economy will be provided.


The principles that compose the cover of the book are discussed in this section.

The research is thoroughly discussed. This will aid in directing the thoughts and appreciation of the global evidence of the importance of developing effective banking habits in the rural community,

which has been defined by the United Nations as a place with a population of less than 100,000 people and characterised by highly integrated social interpersonal relations and work habits.

In Nigeria, the rural community is described as all economic activities outside of the urban economy, with agriculture being the most important.

In Nigeria, the central bank of Nigeria arbitrarily established rural communities to aid commercial banks in the selection of rural communities for effective development of the rural bank project.


1) Having a local government headquarters and a significant degree of economic activity.


2) Having a population of 5000 or more people and an established institution, such as a school.



Financing institutions used surplus unit savings to fund deficit unit investment proposals, putting them in a unique position to facilitate and accelerate the speed of economic growth and development.

Their internationally recognised function influenced how quickly banks are encouraged to develop and regulate themselves in order to ensure a stable and safe financial environment around the world.

As a result of the various types of banks, a concentrated institution held by a commodity for the purpose of granting credit deposits was formed.

BANKING HABITS: One of the program’s goals is to instill good banking habits in rural residents. The banking habit refers to the practise of successfully use banking.

Banking habits, according to J. Orjih, are the extent to which people in a given economy are willing to use banking services and sense.

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