BANKING HABITS IN RURAL COMMUNITIES
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BANKING HABITS IN RURAL COMMUNITIES
INTRODUCTION TO CHAPTER ONE OF BANKING HABITS IN RURAL COMMUNITIES
1.0 BACKGROUND TO THE STUDY
Banking encompasses all of the activities of a bank that engage in any of the following functions: receiving, investing, lending, exchanging money and clams, and other domestic and foreign transactions.
Banking habits refer to the tendency to act in a certain way or manner customary relating to banking transactions. Based on this definition, one can easily understand what is referred to as transaction or informal banking institution because they perform the function of modern banking institution in an unrefined form.
A rural community is a combination or merger of serve villages in this country. The rural communities are home to the majority of our people.
Farming is the principal activity, and as such, agriculture is their main source of income. Other rural activities include trading, food processing, wearing tolls, and poverty alleviation. These activities generate a considerable quantity of revenue for the rural inhabitants.
The establishment of institutional infrastructure in such places, such as banks, should respond to their financial demands by mobilising their resources into savings and extended credits for rural inhabitants,
so promoting their productive capacity. However, many rural residents do not use financial services for a variety of reasons, including the existence of informal banking institutions.
These informal banking organisations, like their urban counterparts, are heavily involved in financial interpretation. Examples of informal institutions include Age grade, Town union, local money lenders, family funds, and married women associations.
The specific factors that drew rural residents to informal banking organisations, as well as methods of encouraging, developing, and indicating modern banking habits in our rural communities.
1.1 STATEMENT OF THE PROBLEM
Following a detailed examination of the responses of the respondents, the researcher discovered that the key issues militating against rural populations are as follows:
– A lack of modern facilities, such as a computer institution.
– A lack of commitment on the part of the employees
– A lack of proper personnel training for this purpose.
– The bank’s internal structure is disorganised.
Another issue with rural banking is the lack of proper collateral security by the borrower or customer. Collateral is anything that the bank is willing to keep against the loan it makes to its customers.
Because of the inadequacy of organised and established stocks and securities markets such as the stock exchange, the banking system has been unable to operate efficiently, particularly in the field of economic development.
Another issue with banking in Nigeria is widespread illiteracy, particularly in the country’s rural areas. The concentration of most of our banks in cities creates its own issue since illiterates in our rural areas
will choose to hoard or retain their money in their homes rather than going to the bank to deposit it. For obvious reasons, one may not want to spend N50 on transportation to travel to the bank to withdraw or deposit N100.
1.2 GOAL OF STUDY
i. To promote banking activity, particularly in rural regions.
ii. To critically study the activities of informal financial institutions in order to identify their shortcomings and impact on rural residents, as well as to provide a viable remedy to their shortcomings.
iii. To identify the factors that contribute to the continuous existence of informal banking entities.
iv. Identifying the reason why modern people or inhabitants.
Finally, recommendations will be made to encourage the improvement and enhancement of informal banking services in our rural communities.
1.3 SIGNIFICANCE OF THE STUDY.
This research will be critical for rural bankers in particular, as well as other interest groups, whether corporate or individual.
i. The rural resident takes higher use of the services provided by informal financial institutions.
ii. Informal financial organisations have survived because of the particular services they provide to rural residents.
iii. Because of cultural factors in traditional society, informal financial institutions have emerged.
1.4 DEFINITION OF TERMS
The following are definitions for some of the terms used:
– Banking: The activities of a bank that include receiving, investing, lending, trading, and servicing money and claims in local and international transactions.
– Banking habits: This is the proclivity to act in a certain way or manner that is typical or relative to banking transactions.
– Rural community: A combination or fusion of service villages. They are also known as primitive society.
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