THE IMPACT OF COMMUNITY BANKS IN ECONOMIC DEVELOPMENT OF NIGERIA

1.1     BACKGROUND TO THE STUDY
In Nigeria and in other developing countries like the problem of credit extension to the rural dwellers who cannot afford the much needed collateral being demanded by most financial institution has been such a persistent migraine case, that government after government have been making persistent efforts to remedy this situation.  The financial needs of these rural dweller pose a double problem in that part from the risk inherent in such credit in extension, it is not cost effective because of the large number of accounts involved with little amounts.  Also the inability of those group to have access to credits compounds the vicious circle of poverty in the economic system (Ugwuenyi .W. 1997 P.235).
The fundamental concept in the establishment and operation of communities for the purpose of providing credit, deposit, banking and other financial services within the area to its members largely on the basis of their self recognition and credit worthiness.  It is in contradiction to the near total reliance as the basis for giving credit.  It was designed to ensure that bank community or group of communities may establish community banks for the purpose of promoting rural development improving the economic status of small-scale producers both in the rural and urban area enhancing the rapid development of production activities especially in the rural areas to support desirable and sustainable economic growth in the Nigerian Banks.
The community-banking program took off in 1990 when president on power (Line General Ibrahim Babangida) in his annual budget speech announced the community banking system would be introduced into the Nigeria financial system.  The Community Bank Implementation Committee (CBIC), which established for general supervision promotion, monitoring and development of the community banks.  The bank act under the control of National Board for Community Banks.  The banks and the Central Bank of Nigeria.
1.2  STATEMENT OF PROBLEM
a. How to harness those abundant resources for the development of the rural areas, bearing in mind that those resources are minutely held by the vast population of the rural dwellers.
b. The banking sector as the prime maur of the nation economic life is seen as the most viable sector to make this dream a reality.
c. The depositors in community banks do not have their deposit as is obtainable in commercial and merchant banks.
d.  Lack of banking habit among the rural dwellers who still use old tradition ways of saving mobilization like the daily saving method.
1.3  OBJECTIVE OF THE STUDY
a. The objectives of this study is to determine and analyse the promotion of rural development by providing financial banking services.
b. The inculcation of disciplined banking habits in the masses of low workers in Nigeria especially those in the rural areas.
c. Determine and analyse its effects in the national economic development and asses how these development created by the community banks have gone in alleviating the rural economic development.