A PERFORMANCE EVALUATION OF RURAL BANKS CREDIT PORTFOLIOS AND DEVELOPMENT IN IREPODUN AND OYUN LOCAL GOVERNMENT AREAS IN KWARA STATE

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Date
1993-03
Authors
ADENIYI, JOSEPH SUNDAY
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Abstract
The stagnation or outright decline of rural production and hence the living standards of the masses residing at the rural space in Nigeria call for a number of deliberate policies and programmes. Formal institutional credit scheme amongst other programmes represent a potent strategy for effecting greater rural productivity; and this is articulated in Nigeria via Rural Banking Programme. The scheme was introduced in 1977 by way of master plan that involves the allocation of specific number of rural branches to be established by major commercial banks in the country. In order to ensure relevance and effectiveness, the monetary authorities in the country through credit guidelines require the operating banks to allocate and extend a minimum portion of their loan portfolios to priority sectors of rural economy. From the empirical study of commercial bank branches in Irepodun and Oyun L.G.As of Kwara State, the rural banking scheme was found to have failed to meet the expected loan requirements of rural producers. Total loan extended in relation to financial resource mobilised by the rura] bank branches over a period of eight years (1985-92) increasingly fell below the minimum policy targets. Similarly, the prioritised sectors of rural economy namely, agriculture and manufacturing activities were found to be grossly under financed by the bank branches as the actual loan granted fell wide of the expected portfolio to each sector. The agricultural sector loan was particularly more deficient in relation to others. The banks loathing situation is not unconnected with the perceived greater level of uncertainty that surrounds rural business activities. Banks profitability obsession in this case seems to be largely at variance with the equity objective of government rural credit programme. In addition, the loan policies being adopted by banks in the form of short-term advances, stringent collateral arrangements, long lending protocol etc. represent key variables that often force the rural entrepreneurs to either shy or divorce banks for alternative credit sources. From the point of resource mobilisation and sustainability, rural banking scheme via conventional branch outfits forms a leading model par excellence. The network of branches coupled with the diversities of deposit lines make their savings records to be unparaIlel. However, from the point of popular access of rural producers to loan, the banking scheme still leaves much to be desired. It is in the light of this, that the study recommends policy revision in the the form of increased de-regulation of interest rates, loan quotas and portfolios. This is in addition to improved rural infrastructure and market to stimulate the level of demand for loan business at rural level. As a bridge in our rural banking scenario, the community banks scheme should be given more operational experiment on a rational scale.
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A THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL AHMADU BELLO UNIVERSITY, ZARIA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE (M.Sc.) RURAL DEVELOPMENT DEPARTMENT OF GEOGRAPHY AHMADU BELLO UNIVERSITY, ZARIA
Keywords
PERFORMANCE,, EVALUATION,, RURAL,, BANKS,, CREDIT,, PORTFOLIOS,, DEVELOPMENT,, IREPODUN,, OYUN,, LOCAL GOVERNMENT,, KWARA STATE
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