THE ROLE OF COMMUNITY BANKS ON THE DEVELOPMENT OF RURAL COMMUNITIES

CHAPTER ONE
1.1       INTRODUCTION
This chapter is mainly concerned with the efforts at expanding the economic base of the rural area which are always backwards because of scarcity of and restrictive access to loanable funds.  In solving the problem, previous government in their economic policies have lied on development banking and rural branch banking of orthodox banks.  The word Community Banking is defined as a self sustaining financial institution owned by a community or a group of communities.  Unlike commercial banks, community banks were established mainly to promote productive activities in the rural area.  Specially, they are meant to facilities the programmes of directorate of food, roads and rural infrastructural producers.        
Community bank has no other branch because it is established to operate within a community alone. It is well known that 75 percent of the country’s resource and ointment are in the rural areas.  So our development project and programme can not achieve any appreciable improvement until this is focus on those rural areas.

1.2   BACKGROUND OF THE STUDY        
The federal government of Nigeria 1990 budget speech decided to establish community bank in order to strengthen its programmes of grassroots economic development.  The fundamental concept of a community banks is of a self-sustaining financial institution, owned and managed by a community for the purpose of providing credit deposit, banking and the service to its members. It is designed to ensure that a community may establish a community bank for the purpose of promoting rural development throughout the provision of finance and banking service improving the economic status of small scale producers both in the rural and urban areas, enhancing the rapid development of production activities especially in the rural economic growth in Nigeria. 
A bank licensed under the community bank decree shall accept from persons various types of deposit including savings and time savings. Receive or collect money on behalf of its customers, operate equipment leasing facilities which is designed to ensure access of its customer to farm input. Community bank in Nigeria banking system dates back to 1990 when the budget speech was delivered by the president commander in Chief of the Armed Forces, General Ibrahim Babangida.
Since then, each state of the federation now has a minimum of at least twenty (20) community banks. Even the federal capital territory has four (4).Community banks acts under the control of National Board for Community Banks (NBCV) and the Central Bank of Nigeria.  National Board for Community Banks is established for monitoring promotion, development and general supervisions of the community banks.