CHAPTER ONE

1.1 INTRODUCTION:

Since July 1997 which marked the official beginning of the rural banking programme for commercial banks, the economy of Nigeria has gone, through several changes each government continued policies it considered relevant banks have in recent times been confronted with challenges and they have called for introduction of one reform or directives so as to put it with our present economic realities. This role is about what should be the proper function of banks in the transformation of Nigeria alien economy. It is n this regard that the rural banking programe of commercial banks came as measure that will ensure effective grass root mobilization this resulted in settling up the Okigbo financial system review committee in 1976. This most important recommendations of the committee excepted by government include:

1) That banks should actively facilitate the transformation of the rural environment by promoting the rapid expansion of banking habits by the rural communities or committees. They will provide saving deposit facilities for their customers and there by help to mobilize rural funds outside the banking system. This served as a revenue for creation of credit in rural areas which will be in the form of equity and loan for small scale farmers, co-operative societies and entrepreneurs.

2) That bank lending policy in the past been in favour of short term lending, that they should allow the medium and long tern lending so as to give the long time instrument enough time to mature.

3) That banks should identify with national objectives. They maintained that decision making of banking should be localized.

4) That banks should be base a significant portion of their profit to improve the quality they offer.