Effect Of Rural Banking Scheme In Nigeria; Implication For Economic Growth And Development

ABSTRACT

The rural banking scheme was established in 1977 by the central bank of Nigeria, following the perceived need to redress the lopsided nature of the bank expansion/distribution between the rural and urban centres (Nzotta, 2004). Conceptually, the rural banking sought to propel development in the rural areas. Development projects were to be initiated and financed by the rural branches of banks. Under the scheme, every commercial bank was allocated a specified number of branches which it must establish at designated rural locations, within a giving time frame. The programme had three phases (Chizea, 1985). The first phase stretched between 1977 and 1980. a total of200 bank branches were involved. The central bank took into consideration prior involvement in rural banking in its allocation of branches to banks. The essence was to bring each bank ratio of rural and urban branches to the same level. The second phase (July1980 Dec. 1983) involved 266 rural branches, while the third phase (August 1985-July 1989) has 300 rural branches.