THE CONTRIBUTION AND CHALLENGES OF MICRO FINANCE BANK IN THE RURAL AREAS

THE CONTRIBUTION AND CHALLENGES OF MICRO FINANCE BANK IN THE RURAL AREAS CHAPTER ONE 1.0 INTRODUCTION BACKGROUND OF THE STUDY Robust economic growth cannot achieved without putting in place a well focused programme to reduce poverty through empowering the people by increasing their access to factors of production especially credit. The lastest capacity of the poor for entrepreneurship would be significantly enhanced through the provision of microfinancve service to enable them engage in economic activities and be more self reliance, increase employment opportunist, enhance household income and create wealth. Micro finance is about providing financial service for the poor who are traditionally not saved by the conventional financial institution. It has three features, these are:  The smallness of loans advanced and savings collected.  The absence of assests based collaterals  Simplicity of operations. In Nigeria, the final financial institutions save about 35% of the economically active population while the remaining 65% are excluded from access for finanmcial service. The non-regulation of the activities of some of those institution has serious implication for the central bank of Nigeria (CBN’S) ABILITY TO EXERCISE ONE ASPECT OF ITS MANDATE OF PROMOTING MONETARY STABILITY AND A SAID FINANCIAL SYSTEM. A micro financial policy which recognizes the existing inamal institution and brings the within the supervisory provision of the CBN would not only enhance monetary stability but also expand the financial requirement of the micro small and medium enterprises (MSME) such sub-sector that should adequately integrate into the main steam of the standard and provide a strategic plat form for the evolution of micro finance institution, npromoting appropriate regulation, supervision and adoption of best practices. In these circumstances, an appropriate policy has become necessary to develop a 1.2 statement of the problems The research study is defined to review the challenges facing micro finance bank in Nigeria as well as their contribution providing financial services to the poor who are not traditionally serve by conventional financial institution. It will also highlight the contribution of micro finance bank in development of rural and urban sector of the society. It will also seek to cover the majority of the poor but economically active population thereby creating millions of job opportunities and reducing poverty. This will also mobilize domestic savings and promote the banking culture among low income grups. If so, how will those rural dwellers benefit from such bankng institution? 1.3 objectives of the study The objectives of the study are stated below: 1. To examine the performance of micro finance bank in the rural and urban area communities and how they affect the lives of the people in that area. 2. To be used in partial fulfillment of award of national diploma in the department of banking and finance. REASEARCH QUESTIONS This research work will provide answers to the following research questions 1. In what way does the micro finance bank help the active poor. 2. Does micro finance bank actually bring developments to the rural dwellers ? 3. Does the government and public benefit from the services rendered by micro finance institution 4. Are they loan requirement stringent for small and modern scale enterprise ? 1.5 SIGNIFICANT OF THE STUDY The significance of this study cannot be over emphasized. It is expected that a number of people and micro finance bank would benefit from it. Firstly, the finding will be used to reshape the financial sector of the country. It will also assists government to modify practice necessary for a healthy banking practice in the urban and rural communities, where micro finance banks operates and the bank customers will also benefit since it will encourage rural banking habit as well as reduces or instill confidence in them. Lastly, it is expected to benefit from banks in Nigeria and student who may research on this topic in future. It will be of particular relevance to the active poor in the society on the issue of micro finance banks is a negative or positive effects. 1.6 SCOPE OF THE STUDY This study will cover a review of challenges and contribution of micro finance bank in develop-ments of the rural areas. Emphasis will be placed on those that operate in the rural areas and how they will be contributing to the rural transformation. For the purpose of the study, we will be looking at the micro finance bank (i.e.) oche micro finance ltd and unique trust micro finance bank all in imo state. 1.7 LIMITATIONS OF THE STUDY In the course of carrying out this study many problems were encountered. Some the difficulties were strange while some were routine problems. Generally speaking, the problems facing this study are not farfetched. 1 this study should have covered the entire country since the micro finance bank ltd and unique trust micro finance has the whole country as its market but due to the inadequate time needed to cover every aspect of the variable under study to take oche micro finance bank ltd as a case study. 2 there was the problem of ignorance lack of the co operation on the part of respondents 3 inadequate literatures, journals, articles, magazines etc that were published with respect to the contributions and challenges of micro finance bank in the rural areas. 1.8 DEFINITION OF TERMS This section will deal with some times which were used for easy comprehensive. Some of these terms are as follows: CAMA- Company and allied matters act CBN- Central bank of Nigeria NGO- Non-governmental organization NAFCC- National micro finance consultation committee MFBS – MICRO FINANCE BANKS DECAP- DEVELOPMENT CAPITAL FUND FINCA- FOUNDATON FOR INTERNATIONAL COMMUNITY ASSITANCE ACGS –AGRICULTURE CREDIT GUARRANTEES. CBS –COMMUNITY BANKS. FEAP FAMILY ECONOMIC ADVANCEMENT PROGRAMME . NAPER – NATIONALPOVERTY ERADICATION. call for the material on 08032849308