THE ROLE OF COMMERCIAL
BANKS IN THE DEVELOPMENT OF SMALL – SCALE ENTERPRISES
INTRODUCTION
1.1
BACKGROUND
OF THE STUDY
The aims of every government is to provide its
people with basic services leadership and protect the entire people’s interest
within its power, for government to this, it must have a sound and adequate
financial planning to make it possible to cater for the people’s needs.
To a larger extent any government which comes into
power has to depend on banks and other financial institution for keeping of
some of its development project so also, the government agencies and general
public depends largely on loan from the banks to carry out their day to day
business affairs.
Generally, the main aim of every bank is to
minimize the lost of running affairs of the bank and at the same time maximize
owners profit. Some bank like the Central Bank of Nigeria (CBN) and development
Bank was established purposely to develop some section of the economy e.g Small
Scale Business, Industry, Agriculture etc.
Therefore, this bank despite the fact that they
make profit, they are not profit oriented.
Therefore this research is based on the role
played by commercial banks to the promotion of small scale enterprises in
Nigeria with particular interest on the role played by the first bank of
Nigeria Plc at it is the oldest commercial and leading bank in the country
having been in prevailing economic problems brought about by the structural
adjustment programme.
1.2
STATEMENT
OF THE GENERAL PROBLEM
The banking industry plays an important role to
the economy of any nation and there is no doubt, it plays an indispensable role
for the development of Small Scale business.
This is not to say that they do not have lapses.
Among the factors that lead to the inefficiency in the banking industry are:
a)
Financial
Distress: This financial distress in Nigeria
financial system is a problem that has recent assume an intractable dimension.
b)
Bad
Management: This singular factors leaves a
high stone of management which usually determined by academic/professional
qualification, relevant experience, technical know how, business reflect,
ability to formulate and implement good policies leadership qualities and style
etc. because of the relative attractiveness of banking especially, people from
different profession find them self in the mid system of banking operations
without proper grooming the fact that banking is a district profession of its
own with intricacies and idiosyncrasies.
c)
Inadequate
Capital Bases: There is a saying that says “Life guard in a swimming pool must himself
be a good swimming,” for a bank to enjoy confidence of depositors, it must
have strong capital bases as evidence of strength. It is important that bank
operates portability for the shareholders have to increase through accreting to
statutory and general in service.
d) Risk Assets
Portfolio: This is no doubt a reflection of poor
management. Most banks do not have clear investment or credit policy and there
is absolutely no control on credit. In most cases it is the managing director
or chairman or the promoters of these banks, who have lending power and they
lend mainly to their own business and to friends without business or without following the due assessment or
control.
e)
Board
Room Crisis: It is unfortunate that s
business which begins in a spirit of annuity and cordially at times turns into
loss face and tension among the sponsors problems have in the past arisen on
such topic as who plays what roles and people instability to concentrate on
another people’s opinion have cause dissentients in the boardroom even physical
frame as autocracy on the part of these who see themselves as the promoters or
major shareholders can often caused board room crisis.
The monetary authorities had to be called into the
management of some banks when thing get out of hand until the crisis is over.
Board member engage in protected legal battle and by the end of the day who
losses the rest of us.
1.3
OBJECTIVES
OF THE ESSAY
The objective of this essay is to investigate in
to the role played by commercial banks, which cannot be over emphasized in the
small – scale development.
The purpose of carrying out this research work is
to present a details and clear picture of the role played by commercial bank in
small scale development. Example to what extent commercial banks have fulfilled
their role in small scale development in Nigeria.
Expose factors which affects and determine the
role of commercial in small scale development, suggest ways for improving banks
participation in the development of small scale and the growth of the economy
as a whole.
1.4
SIGNIFICANCE
OF THE STUDY
The significance of the study is therefore based
on: identifying and analyzing to commercial bank on how to apply the small
scale business situation in Nigeria. Also in identifying analyzing and
providing advise to the government and central bank of Nigeria, on how to
adjust or improve the banking regulation.
It is hoped that the finding of this research work
regardless of its limitation would give the banking industries an insight
knowledge of identifying ways to improve customer services in term of small scale
development.
In enlightening customers of services available
which are unknown to them.
1.5
SCOPE
OF THE STUDY
The research specifically covers comprehensively
the banking industry to the small scale and economy of Nigeria.
The primary responsibilities of all types of banks
that we have in the industry have been touched in the literature review.
Generally the author attempted to examine their
role of commercial bank to the small scale, thought there are several financial
and banking industries to banking industries. A particularly consider the
sources of fund to the bank and how these funds are fully utilized to make it
own contributions to our national development and at the same time, maximize
owners profit.
1.6
DEFINITION
OF TERM
BANK:
It can be seen as an institution set up purposely for safe keeping of money,
valuable goods and documents like wills and others. Its could be seen as a
places where money is until the owners requires it.
COMMERCIAL
BANK: It can be seen as “a Financial
Institution set up for keeping and lending money to people, owned by
individuals, organization or governments, for the main purpose of making
profit.”
SMALL SCALE
ENTERPRISE: It can be seen as a business
which is independently owned and operated by one person, and is not dominant in
it field of operated in local area.
DEVELOPMENT:
it can be seen as an increase in income per capital and financial side of
people, social and administrative structures as well as social behaviour and
attitude of people’s including sometimes the people’s customs and beliefs.