CHAPTER ONE
BACKGROUND OF 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 orderâ€. 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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