There has been a lot work on the contribution of commercial bank in financing small scale industries in Nigeria, but the available few have given an in depth up-to-date, study of its operation. Most of the writers made immense contribution on topics related to this course of the study in wider horizon (Adeyemi and Badmus, 2001). In the Nigeria economy, attention has been drawn to the fact that small scale enterprises had received little attention where as they provide employment for approximately triple the number engaged large scale manufacturing as well as playing their roles of crucial importance to our developing economy. This is why it is important to reconsider the problem hindering the growth of this sector. There have been numerous opinions and commentaries on the role banks should pay in financing and advising the small scale enterprises since the federal government shift in policy with greater emphasis towards small scale business in the achievement of set-reliance (Adeyemi and Badmus, 2001).

The successive development plans of Nigeria have laid emphasis on the attainment of self reliance. The need for this national objective is because much is expected from individuals from the view point of providing employment opportunities self reliance in basic food and material production high per capital income, foreign exchange earnings and the production of industrial raw materials.
In Nigeria, small scale businesses constitute over ten percent of all registered companies. They are considered to have specific importance to the economic development of the country for a number of reasons.

According to Adegbeni, Fasanya and Abdulrahman (2013), these enterprises provide opportunity for employment on a large scale and therefore, make possibility of the equitable distribution of national income more realistic. The enterprises also provide the means of creating more opportunity at relatively low cost. Thus, in a labour abundance economy, like Nigeria, and in the present economic down-turn, they are even more relevant in the mobilization of capital and human resources that otherwise be left idle.

Okporobie (1989:10) observes that Nigeria small scale industries continued to decline despite the so called priority given to the sector. However, the discovery by the central bank that this policy was not enough by it self led to the central bank request with effect from 1970/80 that all commercial bank must reserve a proportion of the minimum credit allocation to indigenous borrowers for small scale Nigeria enterprises. The target prescribed in 1979 was ten percent (10%) which subsequently raised to sixteen percent (16%). Even though available data showed that performance of commercial banks against this directive has been disappointing. The central bank intends to spare no effort in ensuring that banks fully couple without compromising the smooth functioning of the nation banning system.

Okporobie further observed that without the development of small scale industries in Nigeria, the nation’s quest for industrialization will certainly remain forever at stake. It is the opinion of the researcher that future development in our industrialization must address the basic issues of creating linkages without the economy to begin to produce real inputs to our manufacturing activities.

Ekenyong and Nyong (1992) observed that small scale enterprises are regarded an organic part of a viable structure for the attainment meaningful economy development in developing economic like Nigeria. They are significantly more cost effective in bringing about development than large enterprises because of the perceived linkage and multiplier effects which small scale enterprises have on the performance of the economy and economic growth in general.

The key problem facing most Small and Medium-Scale Enterprises (SMEs) is inadequate finance; whether for the establishment of new industries or to carry out expansion plans. The bulk of commercial bank lending to industries is working capital which goes to well-entrenched blue-chip enterprises which have enough bargaining power to negotiate better borrowing terms. The negative bias against SMEs was demonstrated by commercial banks’ preference to pay penalty rather than meet the 20% target lending to Small and Medium Scale Enterprises (SMEs) by making risky investments when the Central Bank’s credit guidelines were in force. It is therefore not surprising that their lending to Small and Medium Scale Enterprises (SMEs) drastically declined after the abolition of the guidelines in 1996.

The inability of SMEs to attract bank credit or resources has hindered or stifled their growth. The reasons for this inadequate fund can be attributed to the following reasons; high rate of inflation that led to the vast depreciation of Naira exchange rate, thus making it difficult for most Small and Medium Scale Enterprises to obtain and high rate of interest charged on loans, which scared off potential small and medium scale entrepreneurs.

Also, inability of specialized financial institutions such as the Bank of Agriculture (BOA), Bank of Industry (BOI), Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN) etc, to provide for their funding because of the peculiar problems with these specialized institutions which make it impossible for them to provide enough fund for the Small and Medium Scale Enterprises. Therefore, this study seeks to evaluate the role of commercial banks in financing Small and Medium Scale industries in Nigeria.

The objectives of the study include:
a) To examine role of commercial banks in financing Small and Medium Scale Enterprises in Nigeria.
b) To ascertain the extent to which the union bank of Nigeria plc has helped to finance small scale industries.
c) To identify the problems encountered by the small scale industrialists in obtaining finance from union bank of Nigeria plc.

The following research questions were generated to guide this study:
a) What role do commercial banks play in the development of Small and Medium Scale Enterprises in Nigeria?
b) To what extent does Union Bank of Nigeria plc helped to finance small scale industries?
c) What are the problems encountered by the small scale industrialists in obtaining finance from union bank of Nigeria plc?

1. Commercial banks do not play any role in the development of Small and Medium Scale Enterprises in Nigeria
2. Union Bank of Nigeria Plc does not helped to finance small scale industries

This study is concerned with the role of commercial banks in financing small scale industries in Nigeria using Union Bank of Nigeria Plc. The research intends to highlight the essential problems encountered by Small and Medium Scale Enterprises and suggest ways by which they can be adequately and efficiently financed.

However, there wee constraint imposed on the researcher this includes the following.
a. Time a study of this nature, needs a relatively long time during which information for accurate or at least near accurate inferences could be drawn. The period of the study was short, hence time posed as a constraint to the researcher.
b. Cost: The researcher would have extent the survey to areas. But limitations here included cost of transportation to source for materials and cost of type setting the already completed work.
c. Dearth (Scarcity) of statistical data: lack of statistical data from our financial institutions like Central Bank of Nigeria (CBN) Ministry of Economic Development, commercial and merchant bank posed constraints. Commercial banks adhere strictly to the rule of secret; in banking thus they refused to release information.

This study is significance because it would help to evaluate the operations of a vital segment of the industrial sector (Small and Medium Scale Enterprises), which have been identified as having very high potential in promoting economic growth and development. This study will highlight problems associated with the role of commercial banks in financing small scale industry in Nigeria.

It will give information on the possible areas for improvement. Furthermore, the study will help commercial banks to assess and appraisal their role in financing small scale industries in Nigeria.

Moreover, suggestions and recommendations made in this paper will help policy makers formulate new economic policies maintain or modify the existing one. It will equally serve as a guideline to researchers who may wish to carry out research on the similar topic. It would also help small scale entrepreneurs to make sufficient preparation in their request for credit assistance.

1. SMALL-SCALE INDUSTRY: Any industry with capital not exceeding N750,000 including capital but excluding cost of land.
It is also defined by center for industrial research and development of Obafemi Awolowo University Ile Ife as those industries whose total assess in plant equipment and working capital do not exceed N250,000 with not more than 50 employees.
2. COMMERCIAL BANK: A financial institution that acquires deposit from savings surplus unit and gives out loans to savings deficit units.
3. INDUSTRIAL DEVELOPMENT CENTER: Provide management, technical, consultancy and extension services for the small scale.
4. INDIGENISATION DECREE: A decree that stipulates that most business become, at least 60 percent owned by Nigerians.
5. SOLE PROPRIETORSHIP: Is a business owned and conducted by one person presumably assisted by one or more persons for intakes wife and children.

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