CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND OF THE STUDY

The Central Bank of Nigeria in December 2005 published regulatory and supervisory framework for the regulation of microfinance banks and mandated all community banks operating in the country to submit to it plans for conversion latest by September 30th, 2006 and to finally convert latest 31st December, 2007.  The practice of microfinance banking in Nigeria is culturally rooted and dated bank to several centuries. The traditional microfinance institution provides access to credit for the rural and urban dwellers and low income earners. They are mainly of the informal Self Help Groups (SHGs) or Rotating Saving and Credit Associations (RSCA) types. Other providers of microfinance services includes saving collector and cooperative societies.   In order to enhance the flow of the financial services to the Nigeria rural areas, Government has in the past initiated a series of publicity financed micro credit programmes and policies targeted at the poor.

1.1   STATEMENT OF PROBLEM

This research work will basically treat the impact of microfinance banks in stimulating the banking habit of the rural dwellers in Nigeria. Furthermore to look into the features of microfinance banking and how it stimulates the banking habit of the rural dwellers in Nigeria.

1.2   OBJECTIVES OF THE STUDY

The objectives of the study is to know the impact of microfinance banks on the banking habit of people in Nigeria and also to make recommendation on how such microfinance banks can improve their services so as stimulate the banking habit of the people in Nigeria especially those living in the rural parts of the country. Also to know the rapid enhancement of the development of productive activities in the rural areas, hence, the improvement of the economic status of both the rural people and the promotion of the emergence of an effective and integrated national financial system that responds to the needs of the whole economy.

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