CHAPTER ONE

1.1         BACKGROUND OF THE STUDY

The idea of micro finance banking became necessary due to the inability of the previous banking scheme to mobilize the demand funds in rural area and channel them into needy factor.

Besides, small business and he rural farmers needed to unrefined banking culture. their ideal fund needed to mobilized for onward lending to the productive sectors hence the need for micro finance arises.

Much effort have been made in the past by successive government to involve urban and rural reside in Nigeria in the modern banking practice and extend credit to them or term that are easily accomplished.

Before on, in obedience to central bank directives, the commercial banks opened rural branches in many rural communities. Inspite of the open of about 756 of such rural branches, it was not possible to make banking alternative to rural reside. This was because banking operation even in the rural branches have continued to complex, difficult and too complicated for the level of education and enlightenment for the level of participation, it was not just possible.

The purpose of rural banking is to effectively mobilize savings in the rural area and bring credit close and within the reach of the long credit starved farmers.

Although, like the previous scheme aimed at small business in the rural/urban areas and farmers to mention but few, the rural banking scheme has failed to accomplish its set of objectives.

1.2    STATEMENT OF PROBLEM

The banking industry is quite a risky business and lot of fear is been exercised in establishing Bank branches in rural areas because of inadequate security and fear of losses in course of operation.

This project work is to investigate the provision of services for the bank and rural dwellers through the micro finance banking programme to improve the lives of rural dwellers.

There is a problem associated with the provision of loans to rural farmer’s reduction in rural/urban drift, creation of employment, opportunity and accessibility of infrastructure like electricity, road, and water among other which have been denied the rural communities.

This research work is aimed at investigating and recommending measure at solving this problem. The purpose of this study is to evaluate to effectiveness of micro finance bank in the rural areas with references to micro finance bank Oleh most especially solution to the problem are sought.

(a) What impact has the micro fiancé banks on the rural areas?

(b) Why have the micro finance bank not yielded to the desired result?

 Although the micro finance is aimed at enhancing the socio-economic well being of the rural people. The micro finance bank has its peculiar problems

1.3    RELEVANCE OF STUDY

The micro finance banking service which is the corner stone of rural commercial activities is one of the basic requirements in the rural areas. Nigeria as a whole is made up of a large number or rural dwellers both in Edo and the inter land. The present farmers and fisher men definitely required loan to reduce the hardship involved in acquiring input as well as cultivating their farms. therefore, the study is essentially relevance in that, it is geared towards accessing the activities of the micro finance bank towards making the large number of rural dwellers into Nigeria feels a change of standard of living which is a criteria aimed encasting economic standard.

Based on the research findings, possible recommendation and suggestion were offered at it is hoped and believed that the findings of this research work will contribute promotion of the micro finance banking system.

Finally, it is hoped that the important recommendation to be made in this study will be applied in tackling the problem of micro finance with particular reference to micro finance e bank Oleh.

1.4   SCOPE OF STUDY

 This study is limited to the service or activities of micro finance bank in Nigeria with references of micro finance bank Oleh.

It essence therefore, the scope of study were limited to micro finance bank Oleh. The reader should no effect that the entire problems in practice were covered, as this were the limitation on the ability of the scope of coverage of this project.

The objectives and effectiveness of micro finance bank were also covered. this data obtained were however restricted from textbook, questionnaire and oral interview.

1.5    LIMITATION OF STUDY

In carrying out this research work, some problems were discovered and such problem are bound to effect or have force against the success of the project. Such problem are finance which lead to the narrowness to the scope of study.

Due to non availability of adequate money engineered the restriction on the number of journey made for the purpose of data collection.

Such problem are finance

This project work were carried out in the face of limited time. Having to cope with sessional and academic work involving lectures. Assignment and continuous assessments.

The time available has to be apportioned and this has worked against success of this project work.

1.6    DEFINITION OF TERMS

i.    FINANCE: - This is the act of providing the means of payment.

ii.  MICRO FINANCE BANK :- Micro finance bank is seen as self sustaining financial institution owned and managed by a community for the purpose of providing credits, banking and other financial services to its members largely on the basis of self recognition and credit worthiness.

iii.DEPOSIT: - Money kept in the bank not to be withdrawn without notice on which interest is payable.

iv. INTEREST RATE: - Is the price paid for money borrowed.

v.   CREDIT: - Money lend to customer with a view of paying interest. Credit can also be seen as money that is borrowed from the bank with interest.

vi. SAVINGS: - An amount of money deposited in the bank which interest is payable, which also can be withdrawn by the depositor at will.

viii CDA- Community development association

Ix DFRRI- The directorate of food, rural and rural infrastructure

X CDC- community development council

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