RURAL BANKING AND RURAL DEVELOPMENT, THE CASE OF SELECTED RURAL BANKS IN THE NORTHERN REGION

Abstract

The study assesses effects of rural banking activities on the development of the communities they operate in. The study adopted the case study approach; which involves procedures and techniques of investigating and understanding the dynamics of a particular system. Primary and secondary sources of data were used to seek information for the research. Both close and open ended Questionnaires were use in the collection of the primary and secondary data. Quantitative approach was also adopted to analyze the data. The study revealed that, clients use the loans granted to them by the rural banks for farming, to acquire land, and to invest in businesses. The study also revealed that the banks involved the communities in their activities. Majority (77.8%) of the respondents strongly agreed that the rural banks are agents for development in the rural areas. It was found out that the banks educate customers, provide Educational scholarships, enhance their income through farming and trading, Provision of SMEs education to raise income, Construction of School buildings, sponsoring non formal education programs, sponsoring programs in the community, such as malaria control, Support businesses, Support to farmers in their farming activities, and traders in their trading activities, Use of project officers to assist customers improve upon their businesses. The findings however indicated that loan processing to customers took rather long to be completed. It was recommended that the credit officers of the bank should meet frequently to consider loan applications. It was also recommended that the board of directors should ensure that customers are relieved of pressure by making repayment period flexible to avoid defaults. Finally the bank should open small agencies if not branches in its catchment areas to mobilize funds from the neighboring communities.