1.1 BACKGROUND OF THE STUDY
Banking has hitherto been very essential to human invention and economically aid to the society as far as business transactions are concerned. Thus, bank can be seen as a service-oriented to individual and the society at large. That is the reason Peterson (2007) viewed banks as the agencies or institution which are service-oriented to individual, companies and various organizations etc. Bank is giving at various financial services such as deposit collection, credit delivery and dealing with negotiable instruments and securities in issue of service charges, interests etc. Similarly, a bank is also seen as an institution or a person licensed as such whose major business is to accept deposits that are repayable on demand or at short notices and as well lending it out with a view to make profit in return.
Based on these analyses, Anyanwaokoro, (2001) emphasized that the main aim and objective of banks is that of deposit collection and credit delivery while all other services that banks render are complementary to these two sides of financial intermediation-deposit collection and credit extension.
Bank services can be traced back to the operation of the early London goldsmith who accepted gold deposit from the London merchant and keep them for safe custody and upon and agreed charge on demand. That is to say that the charge is payable whenever they draw their money or gold. However, the development of Nigeria banking services has its origin from the colonial days. The activities of the colonial merchants in the former West African colonies and the establishment of settled territorial government created the need for local based financial institutions.
The establishment and activities of the colonial banks and even those of the non-indigenous banks have been urban oriented-the phenomenon over the years made the banking services sound strange to those who dwelled in the rural areas. This there were no banking operations from the grass root of the economy. Although peoples bank was set up in 1989 to meet the credit need of the rural and urban poor farmers, artisan, carpenters etc, hence its supply led and heavily depended on subvention from the federal government for its operation, the economy of loan has not been very efficient and it is facing problem of undercapitalization as the result of heavy overheads that outstrip earning which led many people to high level of poverty. To address this issue the need for the establishment of various microfinance banks were conceived to solve some of the observed weaknesses in credit delivery to the grass root levels.