The purpose of this study is to examine the Urban Banking Scheme as a tool for economic development with emphasis on the First Bank of Nigeria Plc, Benin City, Ring Road branch. The over riding problem in Nigeria which affects the development of Urban Banking is the developed and poorly adopted financial practices which prevail in the country. The project takes a look at the content to which Urban Banks have been able to meet the needs of the people through their policies in financing projects. In chapter one, it looks at the historical background, statement of problem, research questions, objectives of the study, the significance of the study, scope of the study, limitation of the study and the definition of terms. Chapter two, the researcher had to consult so many literatures by several authors including articles published by many people. so many references have to be made in the course of writing, before the literature review was finally produced. In the third chapter, the methodology used in collecting information was questionnaire and analysis was also done. In chapter four, the presentation of data collected and findings of the investigations carried out in the Bank and officials and customers to the Bank is shown. In conclusion, which is chapter five of the project, policy recommendations and conclusion were made.





Background of the study

Historical background of First Bank of Nigeria

Statement of problem

Research questions

Objective of the study

Significance of the study

Scope of the study

Limitation of the study

Definition of terms


Review of related literature




Research design


Sample and sampling technique



Method of data collection

Data analysis


Data analysis and interpretation



Summary, conclusion and recommendations






A long debated issue in banking theory is the recognizing and degree of bank output. Although the strategic tool which banks in monetary theory and in real world, there is little agreement on what it is that banks produce and it is sometimes conflicting output measures service researchers especially in estimating a banks’ production function (Benston 1982 and 1988). Banking is characterized by certain features, which set it apart from other degree of bank output. Banking is a service industry, and it performs many diverse roles which include: depositing, safe advice, performing trust service, transferring and collecting funds etc. Modern commercial banking in Nigeria date back to the early colonial period when the African Banking Cooperation opened on office in Lagos way back in 1982. Being the oldest unit of the Nigeria financial system, it has been one of the most advanced of the financial institutions. The other financial communication (intermediaries) are officially secret (restricted) both in their capital resources and in their scope of activity, most of them are new developments.

This enable the commercial banks an edge over others, particularly the similar institution, example are the federal saving Bank, Merchant banks and Mortgage banks in collecting deposits and extending credit to the economy. The activities of banking commenced in Nigeria in the year 1872 with the establishment of the African Banking Cooperation which has the responsibility of distributing banks of England note for the British Treasury. The bank of British West Africa, which is now the First bank was set up in 1892. The National Bank of Nigeria came into existence in 1983 as the First indigenous Bank. From 1933 to 1945 numerous banks were established. According to Foluso Olabisi in his book introduction to banking almost 150 banks were established. Meanwhile, only the Continental Bank and the WEMA banks that struggle to survive. Furthermore, within the period of 1950-51 which is normally referred to as the period of the bank boom (sudden increase) in Nigeria. During these times almost eighteen (18) banks were quickly established. By the end of 1954 all of them have gone into voluntary liquidation with any merchant Bank in 1960. Based on the lone performance of the indigenous banks, the government set up G. P. patron commission to look in the failures of indigenous banks. The reports of the commission goes to the setting up of the central bank of Nigeria (CBN) in the year 1958.

Moreover, it is interesting to note that before decree (an official order) establishing the central bank of Nigeria in 1958. Nigerians were becoming increasingly skeptical (NAME) of the deliberate act of discrimination of expatriate (a person who is not living in his country) banks against indigenous borrowers and even competing unfairly with the narrow financial base on the indigenous bank. The establishment of the central bank of Nigeria marked a turning point in government effort to harness or achieve the activities of the banks and completely change (revolutionized) them for the nation’s development. The actual revolutions in banking commercial with the banking decree of 1969. This was followed by the indigenization decree of the hands of Nigerians. The climax of the revolution in banking came into existence in 1976 when the federal government set up the Okigbo committee to review the financial system. In 1977, the federal government accepted some of the official suggestion or recommendations was the extension of banking services to urban areas. Before the enactment (a law which has been made official) of programme in urban sectors, the urban dwellers were in a total hardship in terms of exchange and the promotion of their businesses. Some of these dwellers sometimes dug (dig) up holes to hide their money or lend them out to people who might in turn fail to pay back the money.  As a result of the forgoing there was no; proper redistribution or sharing of money and it also lacked effective circulation. The urban banking scheme is also part of the government effort to assist the agriculturists who mostly reside in the urban areas and also to discourage the migration of workers moving from the urban areas to rural centres.


The First Bank of Nigeria Plc for over a century has distinguished itself as a leading banking institution and a major contribution to the economic advancement and development of Nigeria. It was founded in 1894 by a shipping magnate from Liverpool, Sir Alfred Jones, the bank commenced as a small operation in the office of Elder Dempster and Company in Lagos. It was incorporated as limited liability Company on March 31st, 1894 with head office in Liverpool. It started business under the corporate name of the Bank for British West African (BBWA) with a paid up capital of 12, 000 pounds sterling after absorbing its predecessor (a thing such as a machine, that has been followed or replaced by something else), the African Banking Corporation, which was established earlier in 1892. This signated the preeminent (important) position, which the bank was to set up in the years of operations, the bank recorded an impressive growth and worked closely with the colonial government in performing the traditional functions of a central bank, such as issue of specie in West African sub region.

To justify its West African courage, a branch was opened in Accra, Gold Coast (now Ghana) in 1896 and another in Freetown Sierra Leone in 1898. These marked the genesis of banks international banking operations. The second branch of the bank in Nigeria was opened in the old Calabar in 1890 and two years later, services were extended to Northern Nigeria. With 339 branches spread throughout the federation, the bank maintains the largest branch network in the industry in Nigeria. To satisfy the needs of its customers, First bank has diversified into a wide range of banking activities and services. These include corporate and retail banking registraship, trusteeship and insurance brokerage. In addition as part of its strategy of progressive internationalization (to bring something under the control of protection of many nation) in November 2002, the bank became the first financial institution in Nigeria to establish a subsidiary (business company) bank in the United Kingdom.

In the 1957, it changed its name from bank British West Africa to Bank of West Africa. In 1969, the bank was incorporated locally as standard bank of Nigeria limited with the company decree of 1968. Changes in the name of the bank also occurred in 1978 and 1991 to First Bank of Nigeria limited and first bank of Nigeria Plc respectively in 1985, the bank introduced a decentralized structure with time regional administrations. This was reconfigured (to make changes to the ways that things are arranged to work) in 1992 to enhance the banks’ operational efficiency. In 1996 the bank introduced the FBN (First Bank of Nigeria) century 11 project to revolutionalize its operations in line with the dynamic of the environment.


The major problem that affects the upliftment of urban banking is merely the indigent poorly adopted financial practices which prevail in the urban sectors. Most people have this questioning thought regards the impacts of the urban banking scheme on the urban areas and its dwellers. The researcher has a strong belief that bank are supposed to be one of the institutions which government uses in facilitating the economic growth. One of the best methods in reviewing the economy is by paying attention on the urban areas in order to increase or promote agricultural activities which in future will assist to raise standard of living. For this reason looking at the urban communities they were being left to do their banking and credit in the traditional way by using different methods including “AJO” (daily savings collection), “Osusu” (money lenders) which has not been so easy to develop the modern banking habit practices.

In addition, the absence or inadequacy of infrastructures (the basic system and services that are necessary for country or an organization to run smoothly). Institutional machinery for mobilizing saving for investment purpose has hampered (prevent) the growth of urban sectors.


The following research questions were formulated to guide the study.

Does the bank provide job opportunities to the indigenes of Edo state?

How effective has the contributions of banks affected the economy of individuals?

What are the problems encountered by the banks in the performance of services to the urban dwellers?

To what extent have the banks in this area influence the life style of the inhabitants?

Do the banking activities progress in the urban sectors of Edo state?

Does the banking system really bring development to the urban areas?


The major purpose of this study is to look at the economy and its progress in the urban areas of Edo state. In other words, to know the extent in which the banks in this area have influenced the life style of the inhabitants. The researcher work also geared (designed) or organized) towards how banking service have helped in the development of agricultural productivity because most of the urban inhabitants engaged in agricultural activities. Another objective of the study ids to examine the problem encountered by the bank branches in rendering their services to urban dwellers.


The quality of any research work is embarked based on the necessity to the society, that is the present need of the society. The urban banking scheme is conceived as a source for increasing saving for allocation to the productive sector of the urban economy most especially the agricultural sectors with a view to boosting the well being and overall development of the urban communities. This research is also concerned with the conception the bankers have toward the urban banking, that it is costly and nonprofit able venture. In the view of this research project although the scheme might be short run, it will however be a major way in boosting the rapid (happening very quickly) growth and development of the urban unorganized money market have influenced on the economy for efficient utilization.

Nevertheless, the research will help students to know more about how urban banking scheme serve as a tool for economic development and likewise meeting the needs of the inhabitants through lending policies to finance some project like agriculture, small scale indigenous business, government project etc.


This research study will use first bank of Nigeria Plc Edo state Benin City located at Ring Road as a case study. The research will also examine how the urban bank helped in boosting the overall economic development of Edo State, in the area of mobilization of saving and needy sectors of economy. It also look at the operations of the bank with respect to its lending policies adopted to boost the agricultural sectors and the small scale indigenous industries in the area.


Bank: Bank can be defined as a financial institution where money and other valuable things are kept for security purpose. Moreover, bank is a place where money can be deposited and to be repaid on demand or due time. It is a place where loans are negotiated. Urban Banking

Banker: A person who owns or manages a bank that is someone who looks after the bank.

Banking: It is the business activities of a bank such as lending money, receiving deposit, issuing notes discounting bills etc.

Deposit: A sum of money deposited or paid into a bank or similar institutions to establish or to add to an account which the raw materials needed for the operation of the bank. Urban Banking

Account: It is a written statement of money that is owned to a business and of money that somebody has with a bank.

Fixed deposit account: It is a special type of deposit account operated by individuals, firms or public corporations with a commercial bank, it is withdraw able only at the agreed time. Urban Banking

Current account: This type of account is normally operated by traders, industrialists, public corporations as well as individuals. The customer deposits a sum of money and can withdraw it without notice. The withdrawal is made by using a cheque.

Loan: Is a credit facility granted by a bank to its customers. It can be obtained from banks, private sources and other financial institutions.

Cheque: Is a special printed form on which an order to a bank to pay a sum of money from one’s account to another person is stated.

Investment: The money that you invest or the thing that you invest in and the act of giving time or effort to a particular task in order to make it successful.

Urban area: they are places that are distinguished from villages.

Economic development: Is the expansionin the productive restructuring of that society to reflect quantitative and qualitative changesin the mode of production and the improvement of the life pattern of a vast majority of its people.

Osusu/Ajo: It is a traditional institution which act as a means of safe keeping money collected from a group of individuals at the interval of every month every week or market day at the end of which the person takes possession of the whole money contributed. It continues until it has gone to the turn every.