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AN ASSESSMENT OF THE BANKING HABITS OF RURAL DWELLERS AND COMMUNITY BANK (A case study of Nasarawa Micro-Finance Bank, Nasarawa, Nasarawa State)



The importance of rural banking service to rural development cannot be over stressed. The introduction of Micro-Finance bank in Nigeria has inculcated the banking habit among rural dwellers and reduce keeping among them ideal and made possible effective mobilization of rural resources which are channel into productive investment, thereby enhancing the income for entrepreneurship, employment opportunity. This work is an attempt to ascertain the contributions of Micro-finance bank to economic development in Nigeria using Chi-Square as a statistical tool for analyzing the data. Results will be expected to show whether or not Micro Finance bank has immensely contributed to agricultural sector of the rural area. The bank should define properly who the true farmers are and should not charge interest above the prevailing rate.



1.1     Introduction

The most essential and important sector of the economic is banking. The Nigeria economic is not run with exception. Banking is intermediary between borrowers and lenders for economic growth. The central bank must ensure this through a number of objectives. For instance, it issues legal tender currency; maintain external reserves to safeguard the international value of the country. The concept “bank” is defined as an organization or place that provide financial services to customers who keep their money for safety and it pay out when needed by means of cheques.


Micro Finance Banking started as a concept to provide financial services to the world poor, those who by circumstances of not being rich are excluded from access to the conventional commercial banks and other financial institutions due to lack of collateral.


To bridge the gap, successive Nigeria government in the past had initiated series of publicity Financed Micro-Rural Credit Scheme and policies targeted at poor. But all these have remained unsustainable as they always die with each successive government.


However, real attempts at introducing officially administered Micro Finance Bank Scheme in Nigeria started when the Military President general Ibrahim Badamasi Babangida in 1990, introduced the Defunct People Bank that later metamorphosed into Community Banks and later to Micro Finance Banking in Nigeria is a new development which was introduced out of the need to maintain and promote financial cohesion particularly in the rural areas. Micro Finance bank context is define as a self-sustaining financial institution own and manage by a community of group of communities that provides financial services to that communities charged with the responsibility of establishing Micro-Finance Bank.


According to Nmai (1964), in his book, essential of Micro Finance Bank defined the micro finance bank as self-sustaining financial institution for the purpose of providing credit deposition and other financial services to members of its community largely on the bases of their recognition of its credit worthing.

1.2     Background Knowledge of the Studies

The Nasarawa Micro Finance Bank limited is situated at no 17, Umaru Makama Dogo Road, P.O. Box 257, Nasarawa LGA, Nasarawa State.

The Nasarawa Micro Finance Bank Limited was established on 8th March, 1993. Some of the motives that gave rise to the establishment of Nasarawa Micro Finance Bank include:

a.       To promote banking activities in the rural areas.

b.       To offer loans to the members of the communities where they    are situated.

c.       To help in the development of rural communities.

d.       To raise those who are financially handicap in terms of financing their business and help contractors to get their L.P.O financed.

e.       To tailor to meet the most immediate needs of the communities which conventional banks or government have shun on account for the higher patronage accorded these banks.


The bank had its first managing director in the person of Mallam Abdullahi O. Usha and the recruitment of staff started which finally led to the commissioning of the bank by the executive governor on 8th April, 1993.

It was gathered that, the bank took off into a work force of about 5 staff.

The Nasarawa Micro Finance bank has had from its inception to date different Managing Directors as follows:

i.        Mall. Abdullahi O. Usha (1993 – 1996)

ii.       Alh. Yunusa muktar (1996 – 1997)

iii.      Alh. Nuhu Abdullahi (1997 -2007)

iv.      Alh. Nuhu Abdullahi (2007 – Date)

Currently, the Nasarawa Micro Finance Bank has the total of 22 staff under the leadership of Alh. Nuhu Abdullahi as the MD/CEO.


1.3     Statement of the Problem

The major problem that prompted the researcher to write on the assessment of the banking habits of rural dwellers and community bank is:

i.        The need for local or rural dwellers to admit the importance of banking, and that, communities are out to play a vital role in the development of their locality and services to them.

ii.       To arouse or to keep the rural area awake, that community keeps for customers deposited account services as an important link between the rural dwellers and the government as far as they are concerned.

iii.      It raised those marl arears of mere financially handicapped. This project seeks to the solution or leap community awareness of the street problems above those enabling them get the awareness.


1.4     Objective of the Study

The objectives of this study are as follows:

i.        to highlight the procedures involved in the development of Micro-Finance Bank in the rural areas.

ii.       The study will further highlight on the importance and the impact of the organization on the banking habit of the rural dwellers.

iii.      This project will also attempt to determine the process involved in the management control of the organization as well as limits of the organization.


1.5     Significance of the Study

The researcher work is expected to bring to light the bearing of the micro finance bank activities on the rural areas based on the following perspectives;

i.        To the organization, the need to create or step up awareness of its activities to the people concerned and starting the direct benefit, therefore.

ii.       To the researcher: it provide the researcher with a firsthand information and how best to utilized these activities.


1.6     Scope of the Study

Micro Finance are spread across the country. This study does intend to cover all of them, but will rather concentrate on micro Finance Bank Nasarawa, it will take into consideration of all the operational activities of the banking divisions, general credit service division of the bank and will also cover the staffs of the bank with Labia community.


1.7     Research Question

i.        What is banking habit?

ii.       How should rural dwellers be enlightened on the need of putting money in bank?

iii.      Who are the rural dwellers?

iv.      What are the importance of saving?

v.       What can be done to improve the participation of the rural dwellers in the development of community banks.

vi.      What is the government role in the banking system in the rural areas.


1.8     Research Hypothesis

The following hypothesis is drawn:

HO:   The impact of Micro Finance Bank is not felt in Nigeria.

H1:    The impact of Micro Finance Bank is felt in Nigeria.


1.9     Organization of the Study

The Nasarawa Micro Finance Bank has the below organization structure:





Like any other work, this research is surrounded by some limitation. A good number of these are stated below. The first and foremost, is that some information are categorized as secret by the organization and terms. Confidential by the organization are not to be disclosed easily to the researcher according to the management, finance is a major contract: (Material photocopies etc.) entails a greater part of commitments. Most of the times, respondents have proceed reluctant to disclosed relevant information or even return the questionnaires. This constitutes a serious problem. The problem of having access to a suitable and good text book those are reliable to support the research work. Books on banking generally pay much attention on Merchant Commercial Bank and Central bank of Nigeria. A point worthy of noticing is the limited time scheduled for the semester coupled with other stresses which involved assignments, tests, and other academic works or activities.


1.11   Definition of Terms

The researcher has decided to define the following terms for simplicity and clarity of readers.

i.        Financial Accounting: (Investopedia inc. US, 2013) defined Financial accounting as the process of recording, summarizing and recording the myriad of transactions from a business, so as to provide an accurate picture of its financial position and performance.

ii.       Cohesion: According to nelson C.R (1972) define cohesion simply as sticking together. It is a term commonly used in fostering banking activities.

iv.      Income: According to Barr. N. (2004) defined income as the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary term.

v.       Bank: According to Burton I.C (1969) defined the term “Bank” in its broadest sense may be applied to any organization engaged in any or all of the various functions of banking i.e. receiving, transferring, paying, lending, investing, exchanging, and servicing (self-deposit) custodianship, agency, trusteeship, money and claims to money both domestically and internationally.

vi.      Cash: According to Beckham J. (1962) defined cash as any medium of exchange that can be acceptable by bank and used by deposition with restriction.

vi.      Call Money: Bogen J.I (1960) defined call money as money lent by bank usually to stock exchange brokers which may be called or demand may be made for payment at any time.

vii.     Call Loan Rate: according to Bogen J.I (1960) defined call loan rate as the rate of which money lent at bears interest. This is subject to exchange each day if the renewal rate is changed

viii.    Call Loan: according to Kroos H. (1960) call loan is defined as a loan on a demand and basis that is, which either the borrower or lender may terminate at will.

ix.      Overdraft: according to Ihringan M.L (1984) defined overdraft as an agreement made by bankers whereby the banker agrees to honour Cheques drawn on a current account up to stated sum when that account has sufficient funds to meet such cheques this types of credit is given only to current account owners and the interest charged is on the actual amount used.

Pages: 63
Format: MS-Word
Chapters: 1-5 (Complete)

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