Back credit and lending function as we are aware evolved from a rather humble beginning as a result of the discovery made by the gold smith some continues ago, though only a small proportion of the money kept with him for security purpose was indeed required by the depositors at any one time and that he could safely lend the rest to borrowers and make interest charge thereon. The banking habit that latter inherited such practice felt that only about nine(9) to ten (10) percent of the bank deposit at a give time were therefore demand by the depositors.

However the commercial banks role of pooling funds together for the more surplus economics units to the deficit units of the country’s economy is what is regarded to as their leading function banks have in recent time been described as a machine of economic growth in an economy for the fact they perform this resources allocation function by mobilizing and channeling resources from savings surplus economic units to savings defeit units. In this position, they help in accelerating the trend of economic activities in various sectors of the economy, there by increasing the level of utility and wants of individuals and corporate bodies.

Well, as the above function is met, they would be more involved in the development of the economy because their raw material (money) is where other sector and sub-sector of the economy rotate.

More so, commercial banks have proved and are likely to remain the dominate financing intermediaries in Nigeria for they at present account for over 520 of the resources of the financial system to the economy and seemed to be more then units or sub-sectors able in all respects to influence the course of development.

This is why, not with standing the deregulation of the economy, banking is yet regarded as one of the most controlled or regulated in Nigeria. In monetary amendment guideline circular No 21 of January, 1987 the central bank of Nigeria (CBN) quoted as this in order to enhance the development of financial position and achieve a realistic resource allocation, the following change effected all control on interest rates were then removed in line tooth the emphresis on deregulation of the economy the second condition without in order to server as a signed to the desired direction of interest rate changes, the minimum rediscount rate would continue to be fixed by the central bank. This has gone further to show the benefits of commercial banks in the growth of the country’s economy. This is because in spite of the deregulation in the whole economy. The banks are still kept in check always and forced to operate within the policies of the monetary authorities.

1.2 STATEMENT OF THE PROBLEM

In Nigeria, as in most other developing countries of the world, poor banking awareness (especially in the rural areas) and under-litches militating against economic development. This ugly trend is as a result of poor and under develop banking system which has been identified for long. Actually, failure to develop a favourable bank lending policies and implication was pointed out as a major short coming of the west African currency Board (WACB) promoting the establishment of the central bank of Nigeria in 1958.

It was in 1937 that internal autonomy was achieved another commission was set up. During this period the federal government engaged the service of another financial expert of the bank of England, Mr. J.B. Loynes, it was his recommendation that led to the establishment of the central bank of Nigeria by the central bank of Nigeria ordinance of 17^th march, 1959. it commenced of N1.5million of which N1.25 million was the amount paid up what infact