The Role Of Commercial Banks In The Development Of Rural Areas Of Nigeria (A Case Of United Bank For Africa Plc (U.B.A) Onitsha-Anambra State)

Project and Seminar material for Banking and Finance

Project and Seminar material for Banking and Finance


Banks operate with a number of branches at the urban rural areas. At the rural areas, the rural branches are intended to mobilize savings from the rural people dwellers and bring development to these rural communities this trying to halt rural- urban face drift.

The objective of this study is to appraise the performance of commercial banks in rural areas with the view of finding out how they carry out their role.

Secondly, to identify the problems facing the commercial banks operating in rural areas.
Chapter one will deal with the introduction, brief historical back ground of the study, establishing the purpose of study, statement of the problem, research questions, significance of the study, limitations and finally the definitions terms used in the work.

Chapter two will deal with literature review, and easy referencing. It consists of extracts from primary and secondary data. The primary data were collected by the use of questionnaire and interview, while the secondary data were collected from textbooks, journals and other publications.

Chapter three will dissents steps taken by the researcher in the order in which they were carried out, high lighting the basis research design, sources of data and qualitative technique used.

Data collected were analyzed in chapter four using distribution table and tested using percentage method and the discussions of the findings were made.

In chapter five, the summary, recommendation and conclusions were made.

Table Of Contents

Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 Statement of the Problems
  • 1.2 Purpose of the Study
  • 1.3 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Significance of the Study
  • 1.6 Scope of the Study
  • 1.7 Limitations of the Study
  • 1.8 Definitions of Terms

Chapter Two

2.0 Literature Review

  • 2.1 Background of the Study
  • 2.2 Evolution of Commercial Banking in Nigeria
  • 2.3 Structure of Commercial Banks
  • 2.4 Management Structure of Commercial Banks
  • 2.5 Features of Commercial Banks
  • 2.6 Functions of Commercial Banks
  • 2.7 The Roles of Commercial Banks in Economic Development of Rural Areas.
  • 2.8 United bank for Africa (UBA)’s contribution in the Economic Development of Rural Areas using their 2007 Abridged Financial Statements
  • 2.9 Problems of Commercial Banks in Rural Areas.

Chapter Three

3.0 Research Methodology

  • 3.1 Design of the Study
  • 3.2 Population and Sample of the Study
  • 3.3 Sources of Data
  • 3.4 Method of Data Collection
  • 3.5 Technique of Data Analysis
  • 3.6 Sample and Sampling Technique

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Data Presentation
  • 4.2 Data Analysis
  • 4.3 Test of Research Questions
  • 4.4 Discussion on Findings

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • Bibliography

Chapter One

1.0 Introduction

Banking system is an essential ingredient in the development of any national economy. The traditional business of banking is financial intermediation between surplus and deficit-spending segments of the economy.

Though banking is not yet so common among Nigerians in the rural areas, but banking practice has grown considerably. Days are gone when people have keep their money in their houses and economic transactions were on very small scale. Economic transactions that the banks are imperation to facilitate their success.

Commercial banking started in Nigeria before 1892.The Africa Banking Corporation was incorporated by some South African (A.B.C) function for only two years. Its assets and habilities were taken over by the British bank for West Africa in 1894.

Commercial banking institution that existed before 1929 can be best described as expatriate banks or supra national banks. The ownership structure and management were foreign dominated. The first four decades of commercial banking in Nigeria was a period in which there was indigenous bank and the few supra- territorial banks that existed were very discriminatory against Nigerian entrepreneurs.

This geared the indigenous individuals to own a bank, which would be Nigerian by all standards, pursuing Nigerian missions and would also be Nigerian in its policies.

The merchant bank limited was the result of the concerted effort of Dolenty and H.A. subair. The bank failed in 1936. Inspite of the failures, the determination of Nigerians to own, control and manage their own bank continued.
Olusanya 1978 defined bank as an institution that solicit for and accept deposits, repayable on demand thereby

providing a safe custody for and undertaking a liability on such deposits. There are two forms of banks. They are: central Bank and the commercial Banks.

Asuzu 1995 sees the central bank as the government bank that is responsible for the printing and issuing of currency notes and coins. It is also the bankers bank because it regulate the activities of the commercial banks and responsible for the monetary policies of the country.

Commercial bank is retail financial institutions specializing in receiving deposit and other valuables, remitting foreign and domestic exchange, collecting cheque, drafts, notes and other obligations on behalf of their customers.
It could be seen as the heart of an economy. They hold deposits of millions for persons, government and other business units. They make funds available through their lending and investing activities to their customers.

Since commercial banks are the only accessible bank to the general public and people in rural areas, their role in economic development cannot be over-emphasized. On people and it only has meaning if the takes various form and shape. It ranges from political, social, and cultural to economic. But the purpose of this study is for economic aspect.

As pointed out earlier, development only has meaning if the people concerned benefit from it. Commercial bank are the only accessible bank to the people and it is only through these banks that people in the rural areas benefits from the services of the banks.

The importance of services of the banks lies in the fact that they provide the people in rural communities with essential tools for development in the areas.

1.1 Statement Of Problem

The problem in this study wants to deal with the hindrances encountered by commercial banks on the process of their operation in rural areas.
Some of these problems can be state as follows

  1. Lack of manpower of commercial banks passes a problem for them in their operations.
  2. Lack of cordial bank /customer relationship in rural areas due to numerous branches
  3. Illiteracy of customers in rural areas.
  4. Inadequate security outfit in the rural areas to secure the bank premises
  5. Insufficient volume of business of the attitude of farmers, hunters, market sellers etc to banking
  6. Problem of Accommodation encountered by bank staff

1.2 Purpose Of The Study

The concern of this study is on the role of commercial banks in the economic development of rural areas.

Specifically, the study focuses on how these banks carry out their role to enhance economic development especially among commercial banks in rural areas.

1.3 Objective Of The Study

The central bank of Nigeria set up a programme of rural banking in 1977 with the primary aim of extending facilities in the rural areas. The scheme that came into being in July, 1977 has the following as it main objectives.

  1. To assess the problems encountered by commercial banks
  2. To examine the reasons why commercial banks isolate themselves opening branches the rural areas.
  3. To help fiancé agriculture through their credit activities and to mobilize inscent rural deposit.
  4. To help integrate the rural and urban sector of the economy.
  5. To determine the impact of rural banking scheme on the rural dwellers.
  6. To determine the extent of the rural banking

1.4 Research Questions

  1. What are the basic problems encountered by commercial banks in rural areas?
  2. Why does commercial banks isolate themselves from operating in rural areas?
  3. How far have the banks gone in financing businessmen in the rural areas?
  4. How far have the banks gone integrating the rural and urban sector of the economy?
  5. Where impact has the rural banking on the rural dwellers?
  6. What is the extent of rural banking in Nigeria?

1.5 Significance Of The Study

  1. This study tries to examine how the rural dwellers make use of the bank
  2. It also helps in finding out the problems of the rural banking.
  3. It goes further to find out if the rural banking scheme has succeeded in embarking on the promotion and cultivating the banking habits, creating of credit for small scale ventures and creating rooms for employment for the population.

1.6 Scope Of The Study

The study will not be complete if the researcher failed to focus the mind of the reader on the need and reason why commercial banks do not open their branches in the rural areas.

The scope covers only the united bank of African (U.BA) plc Port Harcourt road branch Onitsha in Anambra state.

1.7 Limitations Of The Study

The study has many limitations that made the study difficult they include

  1. Time and financial constraints
  2. Lack of research facilities/equipment such as computers
  3. Scanty information base in the sense that there was difficult in reaching and reviewing all relevant materials relating to the subject of the study
  4. Un corpora ting of the respondence cased by their illiteracy especially the farmers.
  5. Lack of security in the rural areas which made it difficult for the researcher to reach certain areas.

1.8 Definition Of Terms


Easy to approach or enter




Prepare for active service, organize for a purpose.


Person’s or corporation body’s function or duties.


Make or become larger or organized

Rural Area

An under-developed place in the country.


Enough to give a good return for by money.


Engaged in or financed commercial:


Establishment, for safe- keeping of money and valuables

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Summary

No bank is happy over these increased criticisms although perfections have never been reached in any part of the country.

Surely, the bankers are always making vigorous attempts to give efficient services to their customers.

The public expect bankers to improve the standard of services in order to ensure even development among urban and rural areas.

Therefore, it is only banks that are expected to improve upon their services to satisfy their customers and will continue to enjoy the patronage of the people. The present situation where customers are neglected to the background and treated with non-challant attitude does not augur well for the banks.

In this write-up, the researcher high-lighted the contribution which banks can make towards the economic development of rural areas.

5.2 Conclusion

Conclusively, commercial banks have greater parts to play in the economic development of rural of Nigeria. If there have been enough commercial banks in the rural areas. I believe that Nigeria will not be seen as under developed country. On that note, commercial banks are encouraged to open branches in rural areas.

Again, banks are not expected to show favoritisms or particularity in given of loans and overdraft.

5.3 Recommendations

The researcher wishes to make the following recommendation which would facilitate the affective carrying out of banking roles in rural areas.

  1. Banks should put a stop to lending to only those who have accounts with them. To this, the researcher recommended that any interested person who meets their requirements should be given loan. Poor people should also be given loan.
  2. Government should try to define the role of commercial banks to the rural dwellers so as to help them understand clearly what the roles of commercial banks are all about. Through this, rural areas can react positively and not negatively to commercial banks.
  3. All commercial banks should actively involve in the saving and investment process.
  4. The rural dwellers should continue their various business in rural areas as there should be enough money and should not drift to urban areas
  5. The economic development of rural areas should be enhances by the commercial banks.
  6. Finally in order to alleviate the unemployment problem that is common in our rural areas, commercial banks should try to device a means through which some of our graduates will be absorbed and employed.

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