Traditional banking rotatory credit and thrift societies are booming all over the country and are making a lot of money in circulation out of the banking system.
This largely accounts for the 30 per cent of the entire money in circulation which Central Bank of Nigeria, CBN once reported is out of the banking system.
In Lagos workers as well as farmers form themselves into groups and make regular contributions in shift for members.
Workers through this means task them have enough money to buy their needs once they receive the contributions.
In some cases these societies takes the form of daily or weekly contributions in which money thus realised are kept. At the end of the fixed period the meeting is dissolved and shared.
The contributions from these rotatory or thrift credit societies are advanced as loans to member as well as non-members. The interest rate chargeable for the two groups are different.
For members up to 10% interest is charged on the naira for a year while for non-members up to 40% is chargeable. A good number of people interviewed saw the system as working fine.
In Kano according to our investigation a good number of the people are involved in the practice especially among the cattle Fulanis who have nothing to do with the modern banking. There an Alhaji told The Republic that money is hoarded and moves among individuals.
In parts of Imo and Anambra states, the rotatory credit society is used as a means raising loans to finance children‚Äôs education.
Isoko, a local government area in Bendel State is said to be one are where the practice thrives most. Rotatory credit has been used there to finance development projects.
Financial experts who spoke on the issue said most people are taking to the practice to avoid the usual delay in cashing cheques from banks.
Some banks customers saw the new trend as a way of reacting to the poor banking system.
What worries financial experts is that the traditional banking system is keeping a lot of money out of banking system. This they say, does not allow for the full mobilisation of savings in the country for capital development.
With increase in the activities of rotatory credit and thrift societies expert believes that about 50% of currency in circulation is out of the banking system.