Most of the communities in Nigeria are still seriously in the dungeon of making solid development. Under-development according to a professor is a stage of development that most communities in Nigeria are still aspiring to achieve and that modern facilities; It is yet to be implemented in social life. Thus the Community Bank was established by Decree 46 of 1992 to reach rural areas, but began operations in 1990. It is meant to supplant the banking scheme in Nigeria and operate as a unit banking.
Community bank was started or rather established to achieve the following:
- To accelerate the development of rural areas: One of the sole responsibilities of a community bank is to help accelerate development in rural areas. The development of rural areas is very important for the overall development of the country; This is because the effects of these government activities are felt by the rural residents as well. The presence of these banks in the areas will definitely improve the economy of the community and its surroundings.
- To reduce the rural-urban drift: One of the problems that the government is interested in is how to control rural-urban migration. Excessive immigration to urban areas will result in problems in terms of facilities especially for urban areas. One of the ways the government is handling this is by setting up community banks in rural areas to meet the financial needs of the people. This is likely to reduce the rural-urban drift.
- For providing loan facility: One of the major challenges that a hardworking rural man faces is the lack of funds to execute his business plans. To be clear this contributes greatly to the growth of snail pace in Nigeria especially in rural areas. The establishment of community banks in these rural areas will ensure that those living at the grassroots level get timely credit facilities, which are very convenient to make payments. I would like to say that this has greatly improved the condition of the rural residents.
The principal principle of community bank operation is to be identified only with the economic fortunes of the community in which it is located; The plain fact is that many of these banks have left this path long back. But despite this, the few remaining still have viable linkages that encourage the community it serves; Thus, each bank contributes to the overall development of the banking system in the economy by serving its particular sector.