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1.1 Background Of The Study

Every country wishes to develop its urban and rural areas. Policies are developed to ensure that the nation’s overall development goals are met. For example, in Nigeria, a sizable proportion of the population lives in rural regions, raising the issue of rural development.

The majority of people in these areas are farmers, who provide the lion’s share of the country’s food, but there has been little progress in rural development.

There are no good roads, no electricity, and not enough water.

In acknowledgement of these issues, the various national development plans include provisions for the development of these sectors. However, several Nigerian governments have given different interpretations to rural development.

During colonial administration, efforts to develop rural areas were limited to those that benefited the colonial administration,

resulting in a greater emphasis on developing transport and communication systems to facilitate easier exploitation and movement of natural resources from rural areas to cities. The administration ignores the rural people who create the majority of these resources (Agricultural products).

Attempts have been undertaken since independence to address this neglect. The different natural development plans developed recognised that development of both urban and rural areas would provide a stable foundation for the country’s long-term economic and social development.

The development of rural areas, on the other hand, was understood as the development of agriculture. The belief was that because agriculture was regarded to be the primary activity of rural people, the government should develop agriculture as needed.

As a result, critical rural development issues such as good mobility, good communication, and the availability of cars to carry rural people and their goods to urban regions have emerged.

Banking services were not available in rural areas; however, the government launched the rural banking scheme in 1977, recognising the need of financial services in rural areas.

(a) Promote banking habits among rural residents.

(a) Gather rural savings for the purpose of channelling some into productive ventures.

(c) Provide finance to small-scale businesses through equity and loans.

(d) Promote rural agriculture and agro-allied industries in order to achieve the natural goal of self-sufficiency in food production.

(e) Reduce the discomforts of young men and women moving from rural to urban areas in terms of transportation and agricultural product mass production.

The government’s efforts to ensure rural development did not end with the establishment of recognises that agricultural development does not always imply rural development and has thus recently formulated a national rural development strategy with an emphasis on the alleviation of rural problems and the improvement of rural dwellers’ quality of life.

The Directorate of Food and Rural Infrastructures (DFRRI) was founded in 1986 to carry this out. It is clear from the government’s varied initiatives to develop the nation’s rural areas.

Aside from infrastructure, financial services are required to complete the rural development programme, which has failed to produce positive outcomes due to a variety of causes, the most important of which was funding.

1.2 Statement of the Problem

People in rural areas mostly engage in considerable farming, necessitating government attention in the growth of the agricultural industry in rural areas.

The contributions of banking sector loans to rural development have been a source of contention among famous academics. According to one school of thinking, the biggest obstacles experienced in developing rural areas were stringent lending laws combined with high lending criteria of the banking sector.

Okorie and Miller (2005) went on to suggest that the benefit of banking sector lending to rural development will remain a mirage unless the banks solve the rural populace’s major challenges.

Another school of thought holds that rural development is only possible with the engagement of the financial sector, particularly in lending to the rural population.

However, as we investigate each school of thought’s statement, certain banking sector difficulties in rural lending may begin to increase.

For starters, banking industry lending intentions to the rural often do not materialise for a variety of reasons ranging from a lack of collateral to the inability of the borrowers to repay.

Second, due to the lack of excellent roads and piped water, the banking sector’s rural banking services are only skeleton.

Finally, the rural banking habit of the populace has to be nurtured because the majority of the inhabitants are unaware of the banking sector’s services and the assistance that may be obtained from them.

1.3 Research Questions

(1) Are there any requirements for banks to lend to the

Agriculture-related rural development?

(2) Do rural inhabitants acquire an interest in obtaining bank loans because it is assumed that their occupation is agriculture?

(3) Do rural residents repay the bank for the loan they received?

(4) Do rural residents believe that one of the prerequisites for bank lending is the availability of collateral?

1.4 Significance of The Study

Rural banking services provided by various banking sectors are dynamic; rural assistance systems must encourage the production of both small and large-scale farmers, as well as the entire rural economic activity.

Rural residents have simple access to banking services and operations, but only if rural branches are opened closer to them.

This can be accomplished by effective and well-coordinated rural banking services, which can also aid in reversing rural urban drift by boosting farming in rural regions,

which will hopefully lead to the growth of Afro-based companies in such areas. As a result of this endeavour, employment opportunities for unemployed persons have increased.

Rural banking services can go a long way towards mobilising and organising rural residents into effective active cooperative organisations and bringing about communities through the active participation of local communities where they exist.

1.5 Scope and Limitations of The Study

This paper examines all of banking’s contributions.

Union Bank as a case study in rural development sector lending Enugu, as well as the quantity of availability and inability to repay, have all contributed to the lending levels.

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