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ABSTRACT
The study was designed to determine the effects of rural banking in SMEs performance in Abraka, Delta State using First Bank Nigeria Plc as a case study. Five research questions and one hypothesis guided the study. The population comprised of thirty-three (33) First-Bank staff and 213 small and medium entrepreneurs (SMEs) doing transaction with First-Bank branch in Abraka. Sample size of 110 respondents was drawn using purposive random sampling technique. Data was collected from respondents using structured questionnaire and hypotheses were tested using Pearson moment correlation. The results of the analysis revealed that the social-economic characteristics of SMEs in Abraka such as educational qualification, age, marital status and nature of business where positive indications of business performance. Majority of the respondents sourced their capital funds from personal savings. Providing collateral as a means of acquiring loan is a major constraint confronting SMEs. First Bank provided soft ground for SMEs to meet their fund requirement. Rural banking measures provided by First Bank improved performance indices such as SMEs working capital, monthly turn over, improved capital base, social lifestyle of SMEs and helped to improve business strategies. Rural banking measures provided by First Bank indirectly enhanced economic growth of Abraka. The study established that there is significant relationship between First bank lending requirements and SME performance in Abraka. The study Recommended that Banks should significantly expand loans to SMEs with little collateral so as to reduce the risk exposure to SMEs. The government should use credit allocation through the banking system as a tool for supporting SMEs. The Central Bank should enforce its Financial Supervision and Credit Operation Guidelines to assist rural banking for the development of business for a functional living
