A bank can be defined as an organization whose principal operation are concerned with the accumulation f temporarily idle money of the general public for the purpose of advancing it to others for expenditures

John Paget defined a bank as “A corporation or person defined a bank as “A corporation or person(s) who accepts money on current account, pays cheques on such account on demand and collects cheque for customers”.

Oxford Advanced Learners Dictionary defines a bank as organization or a place that provides a financial service or a place where something a financial service or a place where something is stored ready for use.

The establishment of modern banking Nigeria dates back to the colonial era when the African Banking Corporation was formed in 1892 to distribute currency notes of Bank of England for the British Treasury subsequent developments were encouraged by colonial trade in the bid to address the credit needs of indigenous entrepreneurs, Nigerian later ventured into the banking business, initially through private initiatives and later through deliberate government policy.

The problem of distress in the financial sector, including the outright bank failure, has been observed in Nigeria as far back as 1930 when the first bank failure was reported indeed, between 1930 and 1958 when the Central Bank of Nigeria(CBN) was established, over 21 bank failure were recorded. However, the degree of intensity and scope of the distress has never been as serious as it has been observed since June, 1989 when the government directive to withdraw deposits of government and other public sector institutions from bank to the CBN exposed the weak financial condition of most financial institutions and severity of problem has progressively increased.

The distress condition has been traced to a wide range of causes, some of which are listed on literature review. Eventually, when distress came into the scene, fears of loosing funds to the banks influence negatively, the banking habit of the rural dwellers.

1.2 STATEMENT OF PROBLEMS

With the wave of distress spreading in the finance companies,. Community Banks and primary mortgage institutions, a total of 24 banks were distressed in 1993, as against 10 in 1992, 31 finance houses were classified distressed while 118 were in default of mature obligations, 456 complaints against 136 finance companies for non resumption of matured funds, however, however, total assets and liabilities of 395 finance firms stood at #2.44 billion reported for the proceeding year (1992).

The situation was attributed to the followings:

1. Prevailing economic recession, policy induced shock poor and decorating assets quality arising from large portfolio of non –performing credits, non-maintenance of assets and liabilities.

2. Poor Management bothering on sharp practice and lack of experience, which is the most serious problem associated with bank distress in the rural areas.

3. Ineffective, inefficient and poor performance of the financial sector on the role of promoting and supporting economic development in the rural areas.

The problem in focus above, triggered off the interest of the researcher to carryout study in the area.

1.3 PURPOSE / OBJECTIVE OF STUDY

Under the purpose of study, which in other words is the objectives of study, the researcher will try to ascertain the following:

1. To find out what distress is all about.

2. To find out how distress has affected banking habits of rural dwellers.

3. To find out causes of Bank Distress.

4. To enlighten the rural dwellers on the need for putting their money in banks.

5. To encourage and ensure effective rural savings.