COMMUNITY BANKING PROBLEMS AND PROSPECTS
ABSTRACT
            This research work dwelt on the assessment of the problem and prospects of community banks.  This research work is divided into three chapters as summarized below.
            CHAPTER ONE:  This focuses on the introduction part which is the back ground of the study and some parts of the body of the topic which include the statement of the problem, objective of the study, concept of community banking and the need for community banking.
            CHAPTER TWO:  This chapter lay more emphasis on the body of the topic which include the government policy and community, problems of community banks, objectives of establishing community banks and achievement of community banks.
            CHAPTER THREE:  This chapter involves the finding of the study the conclusion and the recommendation of study including the bibliography.
TABLE OF CONTENTS
TITLE PAGE
CERTIFICATION PAGE
DEDICATION
ABSTRACT
ACKNOWLEDGEMENT
TABLE OF CONTENTS
CHAPTER ONE
1.0              INTRODUCTION
1.1    BACKGROUND OF THE STUDY
1.2              STATEMENT OF THE PROBLEM
1.3              OBJECTIVE OF THE STUDY
1.4              CONCEPT OF COMMUNITY BANKING
1.5              THE NEEDS FOR COMMUNITY BANKING
CHAPTER TWO
1.6              GOVERNMENT POLICY AND COMMUNITY BANKING
1.7              PROBLEM OF COMMUNITY BANKING
1.8              PROBLEM ASSOCIATED WITH LOCAL INFLENCE
1.9              OBJECTIVES OF ESTABLISHING COMMUNITY BANKS
2.10  ACHIEVEMENT OF COMMUNITY BANKS
CHAPTER THREE
2.0              SUMMARY OF FINDINGS
2.1     CONCLUSION
2.2     RECOMMENDATION
2.3              BIBLIOGRAPHY
CHAPTER ONE
1.0              INTRODUCTION
1.1BACKGROUND OF THE STUDY
            Community Banking is a bank owed and managed by an individual, a group of individual community development association or any other association that meets up with the requirement or establishing one.  In Nigeria, it can be said that activities of established banking institution in the rural areas in such that the branch will be guided by the rules, traditions and policies if its headquarters.  But relative to commercial banks, community banks were opened in the rural areas to see for financial needs of its occupants by mobilizing their resources into saving and current accounts, which is turn within the resources of banking institutions.  It concerned to multiply and extend to the rural dweller’s way of credit for the purpose of improving their product activities either as individual, groups of them, farmer’s industrialist or co-operative societies etc.
            The Nigeria Banking System, its Operation, Location and Services per 1977 were concentrated in the urban area of the country.  This brought the concentration of economic activities of the urban areas at the harm of rural communities.
            However, the reasons for establishment of banks in the urban areas were because of lack of infrastructure facilities in the rural areas, law level of economic activities, the colonial policy of establishing banks in urban areas where economic activities have been in existence.  In the attempt to correct this abnormally banking system, the Central Bank of Nigeria (CBN) in 1977 introduced the moral.  Banking scheme, this force bank to establish bank branches in the rural areas that has potential facilities for contributing to the Nigeria’s economic development.  It involves the establishment of new bank branches of new and existing banks in the rural areas of the country and the provision I of banking services to the rural communities that have developed and show moral characteristics.
            The scheme was phased into four the first phase was to establish 200 bank branches between 1997 and 1980.  However, this phase ended up in achieving only 12 branches.  CBN Bulletin January/March 1987 page 29.  The second phase which started from 1981 with 266 banks branches to be opened but 258 banks branches were actually opened during this period.  The third phase also commenced in 1985 with a total bank branches of 300 to be opened consequently, the total number of bank branches establishing under the rural banking programmed raise by 73 to 602 in 1988.  Similarly, the number of urban branches increased by 124 in 1988 bringing the number of such branches to 1, 101.  The fourth phase of the rural banking is about to be set in motion but there have been mixed feeling as to be its implementation.  According to (Business Times Monday 9th April 1990) the United Bank for Africa (UBA) has made a proposal for the scrapping of fourth phase of the rural banking programmed of the government.  Instead they adopted for the establishment of more urban bank branches, which have better promises of increased economic activities.  The Managing Director (UBA) ALHAJI Sulaiman Baffa, emphasized that banks have reached their limits if setting up the rural banking programmed only to observe that its prospective were lean and stretched from between. As a result of those community bank was established.
1.2              STATEMENT OF THE PROBLEMS
Nigeria is highly under banked country.  The Central Bank of Nigeria
(CBN) introduced the rural banking scheme (RBG) in 1977 with a three-phase calendar of 1979 – 1980 – 1985 and 1985 – 1988.  Also community-banking scheme was introduced in Nigeria in the 1990 budget speech.  The existing bank officers are concentrated in the urban and commercial centers, because the bulk of the population live in these areas.  The absence of banking institution in these rural areas has immensely restarted economic development not only of these areas but of the country at large.
            This have adversely affected economic growth and development.  This and the following, forms the statement of problems for the research work  
1.                  Whether the ownership structure of community banks allows for growth and development.
2.                  Whether community banks are adequately funded.
3.                  Whether community banks have prospects in the light of distress witnessed in the banking industry.
4.                  Whether liquidity mobilization and investment is adequate in community banks.
5.                  Whether there are prospects for community banks
1.3              OBJECTIVE OF THE STUDY
The objective of this is to investigate into the achievement of the
Community banks in Enugu State especially Ogui – Ubran Community Banks as well as the problem that need been militating against their efficiency since their inception.
            Specifically, the research intend to achieve the following specific objectives:
1.                  To identify the achievement of Community banks especially Ogui – Urban Community Bank with regards to credit mobilization granting of loans and advances and improving and the banking habits of the inhabitants.
2.                  To examine into the services of community banks and their efficiency.
3.                  To examine the problems Militating against Community Banks especially Ogui-Urban Banks.
4.                  To examine whether the distress syndrome of most Commercial and merchant banks have degenerated into Community Banks.
5.                  To fund means of improving the services rendered by Community Banks.
1.4              CONCEPT OF COMMUNITY BANKING
Although the actual commission of the first community bank in
Nigeria that place December 1990, the idea to establish such a bank date 1970’s when it was observed that the existing financial institution could not fully meet the needs of the economy for rapid development especially in rural area.  Also having find out by the Federal Government.  It is not possible to start building house from the rooftop.  In the same way sustainable economic development in the Nigeria can text cannot take off without effective grass roots participation.
            It was because of this, the Federal Government in a bid to address the death of Financial Services in rural areas, promulgated a decrees in 1869 aimed at forcing commercial banks to extend their services to rural areas.  At this time, much of the Nigeria and in particular the rural economic was informed and underground, there was the need to moieties the rural economy.  This was a logical move because monetary policy with directs an economic towards full employment and non-inflationary levels of output, incomes and prices must permit the entire spectrum to achieve its desired objectives.
            However, the rural banking scheme did not give a lasting solution to the failure of the scheme because commercial banks which are profit oriented found the scheme unprofitable/due to such factors like poor infrastructure facilities in the rural areas, resultant high operational cost and poor patronage.
            Therefore, the community banking system was introduce to address and achieve the aim and objectives of the Federal Government towards the rural banking scheme which due to commercial banks have failed to achieve.
1.5              NEEDS FOR COMMUNITY BANKING
The Central Bank of Nigeria (CBN) introduced the rural banking
Scheme (RBS) in 1977 with a three-phase calendar of 1977 – 1980, 1980 – 1985, and 1985 – 1988.  At the end of 1992, 756 branches stipulated that at least 50% of deposits in rural area should be advanced as credit to rural borrowers.
            Vogel and Burkett (Mobilizing small scale savings) report that by 1977, there were 1,125 communities without banking facilities.  As one can recall in some ten twenty or eighty years ago, communities offered free land and buildings to attract banks to their areas, much of this without success, for some even the local post office building is a community effort.  Not much will change until our rural dwellers take on the task of change; the reluctance of the big banks to set-up shop in our rural towns is partly understood.  Profit is the bottom line for decision-making and very few rural communities can have the appetite of big banks in this regard.
            Then came the community banks in just over five years, the National Board for Community Banks has provisionally licensed over, 1,014 community banks, thanks to the community leaders who refused to give up or their communities.  The good news is that more of the total number of community banks are successful operating oneself.  Sustaining financial institutions owned and managed by the communities.  This system has also created many jobs and exposed rural citizenry at board and management leads to more sophisticated ideas in many cases now to the local environment. The most recent report sheet by the National Board of Community Banks (NBCB) is impressing.
            As of June 1995, there are 1,961 banks already commissioned, they have assets worth over #700 million.  The combined (multiplies) effect of these figures would make a impact any day any anywhere in Nigeria.