OPERATION OF SAVINGS AND LOANS ASSOCIATION IN THE CIVIL SERVICE,. A RESEARCH PROJECT MATERIAL ON ACCOUNTING
1.2 BACKGROUND TO STUDY
According to J.K.Clnoh, “Savings and loans association are financial institution or intermediaries that channel funds on surplus economic units to deficit economic units”. The modern savings institution include the insurance companies, the federal savings Bank, provident fund, pension funds, co-operative societies and credit organizations.
However, some of the traditional savings and loan association include: “ESUS system”. Age Grade Association, married women Association, etc. what distinguishes all these association from other financial institutions is that they collect and mobilize savings from their members and gives loans to their members and the public in some cases.
They are organized solely for the benefit of their members. The savings and loans association are different from commercial banks because thy do not create money. That is, commercial banks create money but saving and loans associations do not create money. It is voluntary because each member determines the actual amount of regular savings to make. In other words the principle of self imposed but group influenced mandatory savings is what operates in these association. For the purpose of this research, co-operative society as a form of savings and loans association will be extensively studied with particular interest on thrift and loans types as operated by salary/wages earners in government ministries/parastatals.
There is hardly any community in Nigeria today where one type of informal credit association or the other does not exist. Such association have existed from immemorial. The traditional “ESUS system” as earlier mentioned is still very much with us. These association operate on the premise that people would actuate more if their individual resources were pooled together. It was hot until mid 1930’s that formal co-operation was introduced in Nigeria.
Even after that and up till the present informal association are mentioned above still exist side by side with co-operative societies.