THE STUDY’S BACKGROUND
In Nigeria, a community bank is a self-sustaining financial institution that is owned and managed within a community and provides financial services to that community. The national board for community banks (NBCB) handles applications for community bank formation. The first community bank opened its doors in December 2000; since then, the NBCB has granted provisional licenses to 1,366 community banks, which are expected to be granted final licenses by the CBN after two years of operation.
There were 90 licensed insured banks, 282 licensed community banks, 74 licensed primary mortgage institutions, and 6 development financial institutions as of the end of December 2002. (DFLS). With the exception of DFLS, all of these institutions accept deposits from members of the public in some form or another. However, universal banks serve as the hub of the banking and financial services industries in general.
By definition, community banks are unit banks that are expected to focus on small savers in their host community. Rural areas contributed substantially about 92 percent of the nation’s agriculture products, despite the fact that the rural dwellers, who are predominantly farmers, are denied any government support in terms of increased institutionalization of agricultural credit, concessionary interest rate policy, flexible conditions on borrowing incentive to farmers, decentralization of institutional agencies, and impoverishment.
Based on the foregoing, this research will be conducted under an investigative analysis of what reforms the federal government is enunciating for community banking programs in rural communities, followed by an identification of all allied strategies and their relevance to the revitalization of the dwindling rural economy in the face of Nigerian economic deregulation. It is essential to investigate how the non-institutional financial sector supplements current development strategies. This research will also look at the difficulties that come with running a community bank.
Despite the government’s recognition of grass-roots operators through the establishment of community banking programs, it appears that such gestures have yet to be accepted by rural operators. On the other hand, despite its obvious need, the informal financial sector has received no support due to the emergence of problem-ridden development strategies or programs.
Some people have come together to express their displeasure with the government’s reckless neglect of informal financial institutions. The institutions are consistently underfunded, limiting the scope of economic activity. It can provide support, and it is also believed that insufficient liquidity and difficulty identifying the structure of interest rates are some of the issues confronting the institution.
Gain (1991) believes that the stampeded Babangida administration’s establishment of development programs aimed at reviving the country’s rural sectors is nothing more than a ruse to hoodwink and mislead the innocent, the aggrieved, and the oppressed. Community banking, according to Solarin, is a gimmick with no substance. He seriously believed that the programs were more conceptual expressions that existed only in the imagination of the government.
Among the goals of this research project are:
a. To assess the role of community baking in the development of the Nigerian economy in Auchi community bank.
b. To make recommendations for ways to improve community banking in the study area.
c. Determine whether the financial requirements of rural operations are adequately met.
d. To understand how to record priorities in terms of investment activities.
QUESTIONS FOR RESEARCH
The following principles will guide this research:
a. What are the services that your bank offers in the Auchi area?
b. What are the problems with community rural banking in the area?
c. How does your bank make these issues easier to deal with?
THE STUDY’S IMPORTANCE
This study will be useful to community banks because it will allow them to tailor their credit delivery system to the environment and circumstances of their rural operations. The study will be beneficial to both the government and the credit seekers because it will allow the government to create a new orientation and initiate measures to sanitize the operations of existing programs, as well as express credit seekers to many sources of short-term fiancés. Finally, the study will aid future researchers in their pursuit of information.
The study was titled “The Impact of Community Banking on the Nigerian Economy: A Case Study of Auchi Community Bank, Auchi.” The research looks at the history of community banking, as well as the nature and characteristics of the informal savings pattern. The research also looks at the expected roles of community banks in rural development, as well as emerging trends and the complementarity of community banks with informal units.
A bank is an organization that provides financial services, particularly the safekeeping of money.
Banking: The business of accepting deposits and lending money to customers is known as banking. It is a business, just like any other, because it has customers who do business with it.
A community is a “sentiment area” with an emphasis on affective interrelationships, or it is a group of any size whose members are conscious of living a common life and sharing a common destiny.
Development can be defined as a transition from one state to another in which the new state differs from the formal in terms of development.