INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Concerted efforts were m ad for many years to involve sub- urban and rural people in Nigeria in modern banking practices. Apart from encouraging the establishment of commercial banks, merchant banks, specialized development bank were created focusing or mortgages
Agriculture, savings, co- operatives and other specific areas. Beyond this, rural branches were mandatory for the commercial bank so that the interest of the rural people could be catered for. Inspite of these efforts, the rural people could not fit into conventional banking system as they aye required to fill several forms, obey certain rules and are generally made to feel lost as their request for credit facilities are never met.
The problem persisted over the years and has led the government and some of agencies to seek acceptable solution to the problem. The central Bank of Nigeria mandated that specific number of rural branches of commercial banks be opened. Thi8s directive was complied with, but proved ineffective as the low –level education and outright illiteracy of the rural people have made them unable to understand the complex and sophisticated operations. Development at the grass- root level has been stalled most tine b y the lack of pro per economic structures, This was the rationale for the central Banks continued search for monazite the rural economy through the establishment of rural- co-a solution to operatives bank. This did not take off properly because of low capital base and poor management. The Directorate of food, Roads Rural infrastructures [DFRI] by virtue of its grassroots unit banks which would aid the programme of rural development, self reliance and better economic well being for the majority of the people in sub- urban and rural areas.
The community banking system was thus launched with the opening of Alheri community Bank, Kaduna b y the then president I.B.Banangida on 31st December. However, community Banking was formally introduced in Nigeria by Decree NO 46 of 1996.
Grassroots banking is a new phenomenon in Nigeria it attempts to reach the toiling masses who have not been able to cope with modern banking systems with its attendant complex and sophisticated operations
and emphasis on collateral.

1.2 STATEMENT OF PROBLEM
Poverty is all-pervasive it does not discriminate by the colour or creed. All over the world, there are the are the haves and the have- nots. As some live in affluence, so do others live in abject poverty and their daily existence is threatened by hunger and depravation. This is more so in a developing country like Nigeria. Many governments across the need world have been faced with the issue of how best the needs of their ordinary citizens can be addressed such that they become more self-reliant and productive- ‘’ Experience has shown that government largesse through subsidized foods, agricultural inputs and implements, credits, education and other social infrastructures are in sufficient, inconsistent , bureaucratic poorly managed and incapable of alleviating, the problem of the poor.
Because of this, the government made concerted efforts over the years to involve sub- urban and rural people in Nigeria in modern banking practice. The outcome of these efforts was the establishment of the community banking system. the objectives of establishment of the system include.
A. The promotion of rural development by providing financial and banking service as well as other facilities to communities inadequately supplied with such facilities.
B. The rapid enhancement of the development but productive activities in both rural and urban areas.
C. The promotion of the emergence of an effective and integrated national financial system tat responds to the economy, especially at the grassroots level.
D. The inculcation of disciplined ban king habit6s among the masses of low-income works in Nigeria especially these in the rural areas.
E. The fostering of the spirit of community ownership and use of economic asset and the maintenance of such facilities and organization on a suitable basis.
Since the establishment of the first community bank in 1990, not many have really gone into any meaningful appraise the performance of community banks and see if they have really attained the objectives for which they were established.

1.3 OBJECTIVE OF THE STUDY
1.4 The objective of the this study among others things include
a) To examine the aims of setting up community banks in Nigeria.
b) To ascertain the functional relevance of the community Banking system in Nigeria
c) To examine the achievements of community banks since inception.
d) To compare the Nigeria community Banking experience with that of other countries.
e) To examine the problems facing banking in Nigeria
f) To proffer possible solution to the problems encountered by community banks in Nigeria.
g) To make recommendation for improvement in the activities of community banks in Nigeria

1.4 STATEMENT OF HYPOTHESIS
This work is designed to test the following hypothesis
i) Ho- There is no aims of setting up community banks in Nigeria.
Hi- There are aims of setting up community banks in Nigeria
ii) H0- There is no functional relevance of the Community Banking System in Nigeria.
H1- There is no functional relevance of the Community Banking System in Nigeria.
iii) H0- There has been no achievement of the community banks since inception.
H1- The community banks have recorded some achievements since inception.
iv) H0-The Nigeria community banking experience cannot be compared with that of other countries.
H1-The Nigerian community banking experience can be compared with of countries
v) H0-There are no problems facing community banks in Nigeria.
H1-there are no problems facing community banks in Nigeria.

1.5 SIGNIFICANCE OF THE STUDY
The significance of the study at this point in the development of community banking in Nigeria cannot be overemphasized. Specifically, the following among others will benefit immensely from this work.
1. Future researchers
2. Staff and customers of community banks
3. The government and regulatory authorities
4. Students and educators
5. The general public
Other researchers into community banking will benefit from this work bearing in mind that it is by no means exhaustive.
From this work, staff of community banks will come to realize that efforts are really yielding dividends while the customers will discover other ways of availing themselves of the opportunities provided by community banks.
The government and the regulatory authorities of community banks such as NBCB, CBN and NDK can use this work to appraise the performance of community banks and also identify shortcomings and these take remedial actions towards eliminating those shortcomings.
Student will use this work for academic work as well as for research assignments; lecturer in turn can use it as a teaching aid in the field of community banking. This will expose the activities of community banks to the general public and also educate them on how to avail themselves of the services being rendered by these banks.

1.6 LIMITATIONS & SCOPE OF THE STUDY
This study basically centers on a performance appraisal of community banks in Nigeria. Since the researcher is a student in full time academic pursuit who has to combine his studies with research, it is obvious that he will face a lot of limitation to the scope of the work.
Thus, the scope is limited to Umudioka Community Bank ltd. Anambra State. It is strongly believed that the results, findings and recommendations pertaining to this area of study will apply to all other community banks in Nigeria. Any variations will be so minor as to be significant.
Specifically, the constraints and problems encountered by the researcher during the research work includes; time constraints, paucity of data, shortage of finds; non response problems, lack of cooperation etc.

1.7 ASSUMPTION OF THE STUDY
For the purpose of this study, it is assumed when making the analysis and reporting the findings, that all information obtained from the people interviewed and respondents to questions in the questionnaire are correct to the best of their knowledge and that the response are true and fair representation of their opinions on the issues raised.

1.8 DEFINITION OF TERMS
1. Collateral: Property or something valuable promised to a person or bank in case of default in loan repayments.
2. Credit Worthiness: The quality of being worthy of credits it being able to attract credit.
3. Development Association: This refers to such community organizations, town, unions, district association of similar bodies that represent the planning and directing development activities within a community. The Development Association is the primary promoter of a community bank.
4. D F R R I: The Directorate of Foods, Roads and Rural Infrastructure establishment by the Babangida Administration to enhance structural development in rural areas. They made the proposal for the community banking system.
5. Equity: This refers to the ordinary shares of a company i.e shares carrying voting rights.
6. Grassroots: The ordinary people as opposed to those with knowledge and power.
7. Rural People: People living in rural areas i.e village as against in towns.
8. Suburb: An outer area of a town or city where people live.
9. Unit Bank: A bank having only one office from where all operations are ran having no branch.