COMMUNITY BANKS - MEANING, OBJECTIVES AND FUNCTION

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A community bank is a depository institution that is owned and operated solely for the benefit of a particular community.

Community banks tend to concentrate on the needs of the community, providing services such as fund management and credit facilities.

The Bank and other financial institution Decree  (BOFID) of 1991 defined community banks as "banks whose business is restricted to certain areas in the country".

In essence, a community bank is locally owned and managed by an independent management team with decision-making authority in the community (or communities) it serves.

They primarily operate unit banking and are typically controlled by a community for providing critical financial services to its members.

Objectives Of Community Banks

1. To promote rural development through the provision of financial and banking services to underbanked communities.

2. To enhance and develop productive activities in both rural and urban areas

3. To improve the economic status of small producers in the informal sectors of the economy

4. To imbibe good banking habits among the low-income workers in the country

5. To promote the development of an effective and integrated national financial system that meets the needs of the entire economy, particularly at the local level.

Functions Of Community Banks

1. They accept various kinds of deposits from members of the communities

2. They provide essential financial services to their customers

3. They raise capital from the general public by issuing redeemable debentures to interested parties.

4. They provide financial advice to their customers.

5. They also use non-banking services to enhance grassroots development.

However,  all community banks in Nigeria have now converted to microfinance banks, following the announcement of the Microfinance Policy, Regulatory, and Supervisory Framework for Nigeria by then-President Olusegun Obasanjo.

So, what is now known as microfinance banks in Nigeria was formerly known as community banks.

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