Problems And Prospects Of Community Banks In The Rural Development

INTRODUCTION
1.1 PROBLEM IDENTIFICATION AND PURPOSE OF THE STUDY
The community bank is a financial institution established to carter to the savings and credit needs of small – scale producers throughout the country. Thus, the institution represents the coalescence and modernization of traditional institutions with which most Nigerians are very familiar with, the rotating savings and credit institutions known as “isusu” and the other town union or community development association.
It was clear that inspite of government policy such as the agricultural credit quarantee scheme, conventional commercial banks and even development banking institutions face serious constraints in attending to the credit needs of millions of small producers in which most of whom have no collateral to put down on security.
The purpose of the study in this research includes:
a. To evaluate the role of Ogui Community Bank in rural development.
b. To investigate the problems facing the community banking system with special emphasis on community bank.
c. To make recommendations for the improvement of community banking system represented by Ogui Community Bank.

1.2 RATIONALE OF THE STUDY
The rationale of the study is aimed at helping researchers to evaluate the role of Ogui Community Bank in rural development.
Thus, they enlighten the community on the effective use of credit and other banking services so as to enhance individual, collective and community production and development. It will help them perform non – banking functions that promote grassroots development such as supporting individual, co-operatives and group formation activities, assisting clients in marketing of agricultural, rural, industrial and other products.
Thus, they provide financial and other extension services to clients and other community members.

1.3 SIGNIFICANCE OF THE STUDY
When this project is completed, it will help researchers to work further on areas of development open to community banks.
It will also assist customers of the bank to know the services provided by the bank. Ogui Community Bank Ltd. Could also use it to their own advantage especially with regard to areas where they are lacking.
This study will also help the Community Bank explore other alternatives to improving their services. It will also remind the bank whether they have achieved their mandate.

1.4 BACKGROUND OF THE STUDY
The historical development of the banking industry in Nigeria shows the initial exclusion of the generality of rural community in the provision of banking services. Government has in those days made several but less successful efforts to encourage the spread of banking services to the rural areas. It is this limited success that led to the realization of the need for a different set of banks to operate within the peculiarities of the rural environment. This led to the introduction of the community banking program in 1990.
Ogui Community Bank of Nigeria Ltd. Thus came into being in july 1992. It is situated at the heart of Ogui New Layout and encourages the development and growth of Ogui Urban community. Most profits made in this bank are re-ploughed back into the community for self – help project. Many other benefits occur to this community by the establishment of this bank.

1.5 DEFINITION OF TERMS
a. Community Bank: this is a self sustaining financial institution owned and managed by a community or groups 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. They are established for financing grassroot development in order to build a strong foundation of rural economy and those that benefit from their services are mainly farmers, roadside mechanics, transport operators etc. Other community banks include: Umuchinemere Community Bank, Umueze Community Bank, Ndi – Afia Community Bank and Umuoma Community Bank.
b. Bank: a bank is a financial institution duly incorporated to perform banking functions of accepting cash for the purpose of lending or investing money from the public repayable on demand by cheque or cash.
c. Loan: This is the borrowing out of a sum of money to a customer repayable at an agreed interest by a bank. It is also a separate account on its own whereby the whole sum is granted to the customer is released in a lump, at a time. Individuals and institution can obtain loan from a bank which will be repayed later with the interest agreed.
d. Credit: They are offered to customer on request when a customer is gives loan by a bank, he is said to be a creditor to the bank.
e. Profitability: The ability of a bank to make profit from any facility granted. It is the rate of interest charged on loan that determines the profit.
f. Portfolio: This is a list of securities held by an investor.
g. Mortgages: A mortgage is a conveyance of land designed to secure the payment of money. It is also a pledge of designated property is security for a loan.