ROLE OF COMMERCIAL BANK IN AGRICULTURAL FINANCING
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ROLE OF COMMERCIAL BANK IN AGRICULTURAL FINANCING
ABSTRACT OF COMMERCIAL BANKS’ ROLE IN AGRICULTURAL FINANCING
The goal of this research is to determine the critical role of commercial banks in agricultural financing in Enugu State, which has been a major impediment to agricultural development in the past.
The study emerged from the fact that achieving self-sufficiency in food produce is one of the most pressing issues confronting the majority of the world’s inhabitants today.
The first chapter discusses the issue statement, introduction, purpose and significance of the study, scope and limits of the investigation, and definition of terms.
The second chapter covers relevant literature, which includes policies and methods to brag agricultural scheme, loan factor types, and in agricultural financing.
The third chapter is about research design and technique. Data sources, data locations, and data collection methods.
The fourth chapter is about discovery and summarization.
The fifth chapter is about the conclusion and recommendations.
INTRODUCTION TO CHAPTER ONE
Agriculture is described as the science or practise of farming, which includes cultivating and producing raw materials for industries. Farming is commonly known to be the oldest occupation in the world,
and it continues to be one in which the greatest number of people are employed. Agriculture is fundamentally concerned with the production of food, which is a basic necessity of life for the great majority of the world’s population.
Because of the large capital required, the difficulties of capital security in agricultural output in most emerging countries are often cause for concern.
As a result of this development, subsistence agriculture now cultivates crops only for themselves and their immediate families, necessitating the need for commercial banks to actively participate in agricultural financing materials for key industries and major foreign exchange earners, adding to its primacy among all human occupations.
It cannot be carried out widely as a business unless finances are available for maintenance replacement, capital equipment procurement, and other expenses.
Typically, THREE TYPES OF CREDIT ARE REQUIRED.
(A) A short-term loan used to finance annual planting operations, seed, fertiliser, and agricultural expenses until the crop is sold.
The quantities involved here may not be credit in most cases felt by small farmers who have little or no savings to fall back on.
(B) Medium-term loan (less than three years but longer than one planting year). This is required for the procurement of breeding stock and is inexpensive with a relatively short life.
Long-term finance is required to purchase large machines and equipment, as well as to repair and maintain farm lands, structures, and storage facilities.
1.2 STATEMENT OF HE PROBLEM
In this day and age of increasing economic activity all over the world, particularly in Nigeria. Agriculture requires financial aid in the form of bank loans now more than ever to satisfy the increased demand for food production.
However, obtaining such loans has not been easy for farmers because to collection security, a lack of good accounting records and management, and other restricting factors.
Despite the importance of oil in the economy today, agriculture remains the mainstay of the Nigerian economy because it provides the most outlet for employment and food for the Nigerian populace. Its inherent status as a raw material supply for agricultural finance.
Agricultural credit is thus a crucial component in agricultural practises and farm output, especially when it is available in sufficient quantities and handled efficiently. Credit, on the other hand, is merely one of the “essential” for expansion and modernization; credit, in general, is not wholly unavoidable, but it is a crucial key to a more affluent future.
Commercial banks, for their part, have been replaced in their attempt to achieve what may be an optional level in banking lending.
1.2 PURPOSE / OBJECTIVE OF STUDY
People currently believe that low agricultural returns are entirely due to a lack of funds. The researcher seeks to find and analyse other issues raised alongside money (capital) against this context, which is supported by the statement of problem.
As can be seen, capital is the lifeline of any venture, and any venture with a shaky capital base is in significant jeopardy. If this one aspect is lacking, then other multiple difficulties such as labour, proper training such as acquiring new agricultural skills, and high marginal productivity per worker will naturally occur. As a result, attributing the lending role of finance would be a grave error.
The evaluation is relevant to the study’s objectives.
1.3 SIGNIFICANCE OF HE STUDY
People currently believe that low agricultural yields are entirely due to a lack of financial resources. The researcher seeks to identify and analyse other difficulties against this backdrop, which is supported by the description of problems. Issues mentioned in addition to financial.
1.4 LIMITATIONS OF THE STUDY
The scope of this study may have been endless but for the complex nature of the research activity, which normally included contacting the responder, who is often hesitant to provide the necessary information.
The gectic interview also included closures from the Central Bank of Nigeria, Afric Bank Plc, and the Ministry of Agriculture in search of vital information for the project’s creation.
Furthermore, one might agree that a commercial research in Nigeria is highly extensive and cumbersome because a single sample firm would be employed to carry out the study and the results obtained generalised because the banks operate inside the same economic bounds.
1.5 DEFINITION OF TERM
Commercial banks: These are the retasl bankers who deal with people’s deposits and whose activity includes the following:
(a) Accepting deposits such as time deposits, savings deposits, fixed deposits, and demand deposits. Making payments to others on behalf of their clients via cheques, mail, telegraphic transfer, and certified cheque, among other methods.
(b) Bill exchange and credit discounting.
Providing loan facilities
(d) Foreign exchange trading
(e) Establishing bank references for the storage of documents and valuables, as executors, trustees, and for stock exchange and other services.
Ventures: This term refers to the many activities that people engage in in order to survive.
Loans: Properly owned by on which another is temporarily used by mutual consent, as well as the transaction resulting from that usage.
Long-term debt: Debts that must be paid off a year or more after the loan arrangement is signed.
Working capital is defined as the difference between current assets and current liabilities. It is an important component in determining a company’s financial strength.
This refers to loans that must be paid off within a year of signing the loan arrangement.
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