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CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

The origin of what is today known as Bank has been associated with different countries. However, some prominent histories have attributed its origin to VENICE; a city in Italy. The proponents of this history argue that the word “Bank” was derived from the Italian Word “Banko” which means a bench. A bench in the other hand, is a market place where it was customary to exchange money. This exchange was done by Lombard Jews. Some authorities as Lombard Merchants commenced the business of money dealings, employing bills of remittances at about the inception of the thirteen century. Virtually at that same period, this type of practice was equally prevalent in the south of France.

However, authorities in the south of France origin: positing that they were placed before the church doors for the purpose of exchanging money from foreigners, instead of the market sequel to the efficiency of the latter merchants, they took further steps to extend their business to the other countries of the world. As the days rolled by, the tenths imposed by the merchants on the people was brought under supervision. Some wealthy and notable members of the society were appointed to oversee this practice. These supervisors in beginning their works ordered that the merchants deposit a certain amount of money as a guarantee for their good fate.

At the long run, both groups of merchants found their way to England and carried on their trade on the streets which they selected for their operations. Though, banking activities did not start first in England; the country however embraced it with a difference. Thus bank of England became prominent after some rigors have been overcome. The saying that; “Uneasy lies the head that wears the crown, applied to England in the course of improving on their banking innovation.0

Then in England, many people left their valuables with the King of the country, as many reasons accounted for this. The king was the only person whom many people had confidence in and could trust, and nobody is likely to leave his money or valuables with a person he does not trust. He had also private armies and could be relied upon to defend his palace successfully in situations of crisis and external attacks. Money and valuables left with the king were therefore, considered to be much safer than when it was kept or deposited any where else. On the other hand, the king was constantly in need of money, particularly for the purpose of executing wars which was the order of the day.

Consequent upon the above development, the king often used up the money deposited with him and defaulted as a result of that. People at this point in time, became very reluctant to leave their money with the king for safe keeping because financial infidelity betrayed the trust. Moreover, they refused to lend him since no guarantee of safety covered their money or valuables any more. Resultantly an end to this ugly development was sought and banking was the best answer to it.

Banking has developed many years before the development of the Bank of England; this is proven by the table below.

PLACE     DATA (INAD)

Bank of Venice       1171

Bank of Geneva      1345

Bank of Barcelona   1401

Bank of Genoa         1407

Bank of Amsterdam   1607

Bank of Hamburg     1619

Bank of Rotterdam   1635

Bank of Stockholm    1688

Bank of England       1694

As has been shown above, the impetus for the development of banking arose from people search for a safe custody for their money and other valuables. In this search, many wealthy members of the society were considered for this purpose. This class of people included accountants, solicitors, who were then known as scriveners and goldsmith. The goldsmiths were found most suitable, not necessarily because of their deal in gold, but because they had safes and had won the confidence of the community as highly responsible members of the society and hence, could be trusted without reservation.

These goldsmiths received valuables from the public in exchange for receipts, which they issued. They undertook to repay the valuables on presentation of the receipts to the goldsmiths for payment; the depositor would simply send somebody to the goldsmith with the receipts for payment. Since they had earned the confidence of the commercial community, the goldsmiths realized that they could safely land enough to enable them to pay those who wanted the real money. The goldsmiths made a charge for the safe keeping of money. They also make a change for lending money. The profitability of this business led to the fourth stage in the evolution of banking, rather than waiting the goldsmiths set out to attract deposits, by offering to pay interest. They did this because the more deposits they acquired the more lending they could undertake and the more profit they made. These therefore were the various stages in the evolution of banking with this in mind , we can now define banking or a bank.

The Oxford Advanced Learners Dictionary defines a Bank as “an  establishment for the custody of money, which pays out on a customers order”. One can easily see that this definition is unsatisfactory as it gives the impression that a bank is not more than cloakroom where one deposite a valuable, like a briefcase and then makes a return for that same briefcase. This may however, be the earliest banks operated but no bank operates that same way today.

From the foregoing, one can understand clearly that banking activities transcend mere keeping of money. Thus, banking can be defined as an act of dealing in money and management of debts, which equally involves the preservation of non-perishable valuables like gold, silver and other materials easily convertible to money. In Nigeria, the cities received the banking services earlier than those in the rural areas, as the former paraded learned and businessmen; hence there are the banking services into the rural areas of the country. This process was called Rural Banking.

Rural Banking in Nigeria dated back to 1921 but became more effective in1970s as a result of the Central Bank of Nigeria effort to consolidated banking services to all parts of the country. At the implementation of the programme, the Apex Bank ordered then existing commercial banks to establish their branches in rural communities while the Central Banking gives them other logistic support. At the first phase of the programme, 200 branches of commercial banks were established in different parts of the country. The second and third phase of the programme saw more commercial banks into game and more branches were established in the rural areas.

Nevertheless, banking in the rural areas of Nigeria did not go without some initial troubles. Since it involved transacting a literate kind of business among illiterate and peasant farmer, its acceptance in the mind of the rural populace suffered some hitches. Not only that, the rural communities were full of illiterates, they were also conservatives about the new innovation. In the other hand, those that were ready to accept it, might not have enough to keep in the bank. Furthermore, absence of social amenities like access road, pipe borne water, electricity etc. further compounded problems of rural banking are highly limited to its productivity.

However, the aforementioned problems of rural banking could be said to be on the decrease due to the universal globalization and recent competitiveness in the banking sector. Today above (70%) of the rural areas have acquired basic education capable of equipping them with the minimal knowledge required to operate a bank account. Sequel to this, the conservativeness initially nursed by rural dwellers towards banking gradually fizzled out. The government at different levels has also increased their allocation of social amenities in the rural areas.

Finally, the existence of different commercial bank branches in the rural areas has set a great competition among the banks, thus, resulting to a better operation in today’s rural banking. All the above factor sum up together to give the modern rural banking a better shape. Yet, one cannot conclude that rural banking in Nigeria is without any problem, since each stage of development is a problem of its own.

1.2   STATEMENT OF THE PROBLEM

The notion nursed by rural people towards banking could be divergent and very wide when viewed from different perspectives. These views could include such things as:

a) The rural people do not accept their banked money in the way as the money kept in their houses.

b) The rural people do not really understand the place of banking in their society.

c) It is not easy to participate in rural banking as excessive time wastage and sometimes denial of services are the orders of the day.

d) On the side of the banks, the poor banking attitudes of the rural dwellers married with their little financial contributions, may not be enough to sustain effective banking services in the rural areas.

The problem here, does not only end with the rural people knowing of the existence of bank and banking activities, but also deals with, the accessibility of banking facilities in the rural areas. There are proofs that fewer banks than required, exist in the rural communities hence, the hectic process involved in rural banking. At times, many rural dwellers are discouraged from further dealing with the bank after an initial disappointment in collecting money or other valuables lodged with the bank. The reason for this behavioural withdrawal is not far fetch; the rural dwellers have built their lives on the foundation of tight schedules, any hindrance to that (e.g. bank) is highly rejected. Thus, the lengthy time spent in the bank married with some inconsistencies in the banking services, all fuse together to pose a great threat towards rural banking.

(1.3)  PURPOSE OF THE STUDY

(i)  To determine the attitude of rural dwellers towards banking.

(ii) To determine the factor that influences the attitude of rural people towards banking.

(iii) To determine the level of awareness of rural people towards banking in the rural communities.

(iv) To determine the opinion of bankers on the attitude of rural people towards banking.

(v) To determine the measure taken by the central bank of Nigeria to encourage rural banking in the country.

(1.4)   SIGNIFICANCE OF THE STUDY

This research is of great importance to different classes of people not only within the school setting, but also the wider society. These classes of people include:

(i) The Researchers: The research among other things has adequately exposed the researchers to research finding ability which is indisputably works. The findings and recommendations of the researchers can equally act as a reference material of the order researchers outside the group.

(ii) The government: It is obvious from all ramifications that the researcher went far and wide sourcing for vital information about the topic, thus, recommendations made by this group could be a vital instrument in the hands of the government for both planning and budgeting in the future.

(iii) The Bank: Banking from the people’s bank to the apex bank (CBN) the project has outlined different steps and roles owned by the different  body (ies) towards ensuring a functional rural banking.

(1.5)   RESEARCH QUESTIONS

(i)  What are the attitudes of rural people towards banking?

(ii) What are the factors that influence the attitude of rural people to banking?

(iii) What are the levels of awareness of rural people to banking services?

(iv) What are the opinions of bankers on the attitude of rural people to banking?

(v) What are the measures taken by the Central Bank of Nigeria to encourage banking in the rural areas?

(1.6)   THE SCOPE OF THE STUDY

This study is intended to be limited to Enugu East local Government Area where these are such banks as:

i.  First Bank of Nigeria PLC

ii. United Bank of Africa (UBA)

(1.7)   DELIMITATION

Achieving success and accomplishment in this project work was made possible by collective effort from a lot of people; the researching group, the supervisor, the entire school, the bank community and the rural dwellers, not forgetting our sponsors, parents and guardian. The academic vibrancy and research inclination of the leader is worth mentioning at this point, peaceful co-existence and potency marked his leadership.

(1.8)   LIMITATIONS

Despite the above unity of the different people that saw to the success of this project work, challenges were inevitable. Time and financial constraints posed a great threat to the poor students who could be best described as slaves of time and finance, moreover, getting information from the rural dwellers or even having access to the communities were also hectic and tedious. Though, all these huddles were overcome to make the research academic heroes, they did not find the work easy.

(1.9)   DEFINITION OF TERMS

1.  Attitudes: The behavioural pattern of reaction of a person

toward a particular issues.

2.  Banking:  The act of managing debts and dealing in money

3.  A banker:A person who engages himself in banking work.

4.  A bank: An institution that deals with dept management and transaction in real money and other valuables.

5.  Rural People:   people who live in less developed areas and usually without some essential social amenities.

6.  Valuables: Precious pre-servable materials of an individual that can be sold to make money.

7.  Goldsmith: On who makes jewelries out of gold

8.  Interview:  A means of getting information from an individual, in an oral or written form.

9.  Questionnaire: A structured or non-structured form of writing down question aimed at eliciting information from its respondent.

10.  Local Government Area: The third tier of government

in the Nigeria Political System.

11. Central Bank of Nigeria: The apex bank of the

Nation that oversees the action.

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