helpful for management students for preparing internship report

Overview of Banking Depts of NBL

Dinesh Gautam

CHAPTER ONE-1 INTRODUCTION

1.1 Background of the Internship Report

Today¶s global world is becoming very competitive. competitive. Every sector of the economy has various var ious opportunities opportunities and threats to the general people. It¶s because of this various educational syste m is upgrading in Nepal. One of them is Bachelors in Business Administration BBA. It¶s a four year semester system imparting knowledge of management field. So at our eighth (last) semester, we are assigned to prepare an internship report by working any financial institution to know and implement theoretical knowledge knowledge in practical pract ical field. Thus internship report is the first ladder of any graduating student that makes him/her eligible to compete in real world. This internship report covers an overview of general banking procedures of Nepal Bank Limited. Here focus is made in knowing the framework and guidelines of various departments and their working process. The study is at its layer covering major six departments. They are remittance, bills/clearance, customer care, credit/loan, deposits, loan against a gainst gold/silver, and a nd cash management. management. This internship report covers all the activities learnt and contributed while tenured in between the two months. All departments¶ activities, procedures and processes are presented sequentially. Here I have come up with the recommendations and conclusions that I thought are lacking in this bank which is described in last chapter. Similarly, history of banking sector (global and Nepalese perspective), current scenario of banking sector, and major services of NBL is also described in upcoming chapters. 1.2 Objective of the study

The main purpose of my internship is to assess information about overall banking procedure of various departments of Nepal Bank Ltd. Besides this, the internship report has been prepared for the partial fulfillment of BBA course in Tribhuvan University. Putting it all together, the objectives of my study have been shown as below:

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1.2.1 General Objectives: 

To incorporate theoretical knowledge into practice.



To understand understand the nature natur e of real life problems arising in the organizational setting.



To develop real managerial skills to t o become a full fledged manager.



To gain an experience to work independently to formulate projects.



To be acquainted with overall organizational environment in Nepal Bank Ltd (commercial bank).

1.2.2. Specific Objectives: 

To have a knowledge of overall banking procedure of commercial banks and their impact on banks productivity and a nd profitability.



To know the level of activities essential in generating profit in bank.



To assess the similarities and differences of different banks performance.



To study how supervision and monitoring of activities are done in NBL.



To suggest suggest better means of managing activities activit ies with small changes cha nges and up gradation.



To visualize the quantitative and qualitative aspects of N BL.

1.3 Methodology of Study

My study is completely based on observation and learning that I got in various departments

of NBL as an intern for the period of two months. During this period I learnt about the procedures inside and outside the department and how they are managed. However, for the purpose of project report preparation both the primary and secondary data are used equally. This supported in making my report effective. 1.3.1 Sources of Data Primary Source: I collected first hand data from Nepal Bank Limited as follows: 

My Notes,



Guidelines,

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

Feedback Of Customers,



Discussion With The Bank Officers And



Personal Observation.

collect ed from: Secondary Source: Certain secondary data are collected 

Annual report of the Bank.



Brochures, magazines and leaflets of bank.



Different Statements.



Files, Balance sheet and various documents.



Websites of NRB and NBL.

Data Processing: Collected information is processed by the use of computer system.

Detailed analysis, working variables and working definitions embodied in the report.

1.3.2 Organizational Selection

Organizational selection was really a hectic task to do. I had approached a lot of organization in Nepal. Finally, I got the acceptance letter from Nepal Bank Limited. In searching organization the recommendation letter provided by college was a great help. After having been given the acceptance letter I was provided to seat in various departments on weekly basis. 1.3.3 Placement

After knowing about my area of interest for internship and the objectives of my study I was being sent to various departments viz. remittance, deposit, bill/clearance, customer care, credit/loan, loan against gold/silver, cash management. During two months of internship period I got familiar to the working environment of NBL and also to the t he various functions of each department. 1.3.4 Duration

As prescribed by Tribhuvan University I joined in Nepal Bank Limited, Dharmapath and completed my two months internship. It really helped me to develop my managerial and

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interpersonal skills. I was able to learn banks¶ c ulture, work environment, and proced pr ocedures during the period. I spent whole two months of my study in all departments as I was assigned. 1.4. Limitations of the study

The limitations of study are listed as below: i.

Time constraint:

Two months months of internship program is not not enough for learning

overall functioning of each Department at its core depth. ii.

regulation and secrecy norms did not not Organizational regulations : Organizational regulation allow accessing required data as to prepare and know in depth about bank.

iii.

Confined to single organization : Since the internship is conducted in a single

organization,

cross-sectional

analysis

and

comparative

study

of

different

organizations of the industry is not possible and the presentation is based only in trend analysis.

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CHAPTER TWO-2 INTRODUCTION OF THE BANKING INDUSTRY 2.1 World¶s Banking History

The term bank is derived from the Latin word µbancus¶, Italian word µbanca¶ and French word µbanque¶ all of which mean µa bench¶. At ancient times there used to be some moneylenders who sat in the bench for keeping, lending and exchanging of money in the market place. That was the origin of commercial bank. The origin of commercial bank can hence be traced back to the early times of human history. As early as 2000 BC some people peopl e had developed develope d a system of banking banki ng in Babylonia. Babylonia. In ancient Greece and Rome, the practice of granting credit was widely prevalent. At the same time, some rich people used to practice storing of precious metals and coins at sa fe places and loaning out money for public and private purposes on interest. According to Crowther, modern banking has three ancestors. They are the merchants, goldsmiths and moneylenders. moneylenders. The merchants or traders are entitled as the ancestors of the bank. As trading require

remittance of money from one place to another it involved the theft of metallic coins during transportation. So traders in those days began to issue documents which were taken as title of money. This gave rise to hundi which is the letter of transfer of money. It included the direction from one banker to another to pay the bearer of hundi the specified amount of money and debit the amount against the drawer. Thus in this way merchant banker form the earliest stage in the evolution of modern banking. The goldsmiths dealt with precious metals. In the period when money consisted of gold and

silver, people largely, because of the danger of theft, started leaving their precious money in the custody of goldsmiths. As the practice of safeguarding others¶ money became widespread, the goldsmiths became in charge for the safekeeping service. Performing the safekeeping duty, goldsmiths issued the receipt for deposits to the customer. Later such receipt for deposits with the goldsmiths began to be used as a means of payment. Then people started keeping gold, silver and coins with goldsmiths in exchange for receipts,

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which is called goldsmith note. It is the writer claims against the deposits. These receipts became a good medium of exchange and a means of payment. The next step in the development of banking arose when the goldsmiths became the moneylender . This development was based on the goldsmiths¶ discovery that it was not

necessary to hold hundred percent of the coins deposited with them. The goldsmiths soon realized that, on average, daily withdrawals were equal to daily deposits and only a contingency reserve was required for the period when withdrawals exceeded deposits. After keeping the contingency reserve, the goldsmiths loaned out the remaining deposits on interest. In this way, the system of fractional reserve banking was born. Thus, goldsmith becomes a banker. They started to perform the two major functions of a bank: 

Receiving deposits



Advancing loans

During the above discussed period, private individuals did the banking business. As public enterprise, banking made its appearance in Italy in 1157 AD when the µBank of Venice¶ was established. History shows the existence of the µ Monte¶ in Florence in 1336. The meaning of Monte is given in the Italian dictionary as a standing bank. During early 1349, the shopkeeper

of Barcelona carried on the banking business. Meanwhile, the local government restricted the shopkeepers to operate this business they had ha d given sufficient security. secur ity. During 1401, a public bank was established in Barcelona. It used to exchange money, receive deposits and discount bills of exchange. The bank of Amsterdam was established in 1609 to meet the needs of the merchants of the city. It accepted all kinds of precious metals, coins and currencies on deposits. These deposits could be withdrawn on demand. The facility of transferring the deposits from one account to another was also available their. The bank also provided the certificate of the deposits to withdraw within six months. Later, this came to be used in the same manner as the modern check. The beginning of the English banking may correctly be attributed to the London Goldsmiths. They marked a turning point in the history of English banking and lead to the growth of private banking with the establishment of the µBank of England¶ in 1694. Many of today¶s banking services were practiced in ancient Lydia, Phoenicia, China, and Greece, where trade

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and commerce flourished. The temple in Babylonia made loans from their treasuries as early as 2000BC. The temples of ancient Greece served as safe-deposit vaults for the valuables of worshippers. The Greeks also coined money and developed a system of credit. The Roman Empire had a highly developed banking system, and its bankers accepted deposits of money, made loans, and purchased mortgages. Shortly after the fall of Rome in 476 AD, banking declined in Europe. The increase of trade in 13th century Italy prompted the revival of banking. The moneychangers of Italian states developed facilities for exchanging local and foreign currency. Soon merchants demanded for other services, such as lending money and and gradually banking services were expanded. expanded. The first bank to offer most of the basic banking functions known today was the Bank of Barcelona in Spain. Founded by merchants in 1401, this bank held deposits, exchanged currencies, and carried out lending operations. This bank is also believed to have introduced the bank check. Three other early banks that were managed by a committee of city officials were the Bank of Amsterdam (1609), the Bank of Venice (1587), and the bank of Hamburg (1619). (1619). These institutions instituti ons laid the foundation for modern banks of deposits and tra nsaction. For more than 300 years, banking on the European continent was in the hands of powerful

statesman and wealthy private banker, such as the Medici family in Florence and the Fugger¶s in Germany. During the 19th century, members of the Rothschild family became the most influential bankers in all Europe and probably in the world. This international banking family was founded by German financier Mayer Amschel Rothschild [1743-82], but soon spread to all the major European financial capitals. The Bank of France was organized in 1800 by Napoleon. The bank had become the dominant financial institution in France by the mid-1800s .in Germany; banking experienced a rapid development about the middle of the 19 th century with the establishment of several issuing, or publicly owned banks. Banking in the British Isles originated in with the London goldsmiths of the 16th century. These men made loans and held valuables for safekeeping. By the 17 th century English goldsmiths created the model for today¶s modern fractional reserve banking- that is, the practice of keeping a fraction of depositors¶ money in reserve while extending the remainder to burrowers in the form of loans. Customers deposited gold and silver with the goldsmiths

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for safekeeping and were given deposit receipts verifying their ownership of the gold. These receipts could be used as money as they were backed by gold. But the goldsmiths soon discovered that they could take a chance and issue ad a dditional receipts against the other people who needed to burrow money. This worked as long as the original depositors did not withdraw all their gold at one time. Hence, the amount of receipts or claims on the gold frequently exceeded the actual amount of the gold, and the idea that bankers could create money. In early India, the religious book namely µ Manu¶ contains references regarding deposits, pledges, policy of loan and the rates of interest. The banking service in those days largely meant only money lending as the complicated mechanism of modern banking was not known to people then. 2.2 Evolution of Banking Industry in Nepal

The history of modern commercial banking industry dates back to 1937 AD in which Nepal Bank Limited was incorporated. The government owned 51 percent of the shares in the bank and controlled its operations to a large extent. It was headquartered in Kathmandu and had branches in other parts of the country as well. In order to regulate the economy and the unregulated use of money Nepal Rastra Bank was created in 1956 as the central bank. Its function was to supervise commercial banks and to guide the basic monetary policy of the nation. Its major aims were to regulate the issue of paper money; secure countrywide circulation of Nepalese currency a nd achieve stability in its exchange rates; mobilize capital for economic development and for trade and industry growth; develop the banking system in the country, thereby ensuring the existence of banking facilities; and maintain the economic interests of the general public. Nepal Rastra Bank also was to oversee oversee foreign for eign exchange rates and foreign exchange reserves. After almost 30 years another state owned commercial bank Rastriya Banijya Bank (National Commercial Bank, was established in 1966. The Land Reform Savings Corporation was also established in the same year to deal with finances related to land refor ms. During 1967AD 1967AD the Agricultural Development Bank was also established. Almost 75 percent of the bank was state owned; 21 percent was owned by the Nepal Rastra Bank and 5 percent by cooperatives and private individuals. Hence it is clear that since the 1960s; both commercial and

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specialized banks have expanded. More businesses and households had better access to the credit market although the credit market had not expanded. However, the decade of 1980s can be considered as the landmark in the modern banking history for Nepal. It was only in this decade government allowed the excess to foreign joint venture banks to be the part of the Nepalese banking business. During this period, three foreign commercial banks opened branches in Nepal. The first was Nepal Arab Bank established in 1984 AD. It was co-owned by the Emirates Bank International Limited (Dubai), the Nepalese government, and the Nepalese public. After that in 1984 came Nepal Indosuez Bank (currently Nepal Investment Bank) which was jointly owned by the Credit Agricola Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan (National Insurance Corporation), and the Nepalese public. Then Nepal Grind lays Bank was the third foreign joint venture to be established in Nepal which was co-owned by a British firm called Grind lays Bank, local financial interests, int erests, and the Nepalese public. Although government had started the liberalization of financial sector during the decade of 80s but this process speeded up only in early 1990s. In fact private sector rushed into the banking and financial industry after the restoration of democracy in 1990. Many commercial banks like Himalayan Bank, Everest bank, etc were established during this decade. After the period till date twenty eight commercial banks have been established in Nepal. The lists of all commercial commercia l banks in Nepal are given below: Table 2.1 List of Commercial Banks of Nepal S. No

Commercial Commerci al banks

Operation Operati on date

1

Nepal Bank Limited

1937/11/15

2

Rastra Banijya Bank

1966/01/23

3

NABIL Bank Limited

1984/07/16

4

Nepal Investment Bank Limited

1986/02/27

5

Standard Chartered Bank Nepal

1987/01/30

6

Himalayan Bank Limited

1993/01/18

7

Nepal SBI Bank Limited

1993/07/07

8

Nepal Bangladesh Bank Limited

1993/06/05

9

Everest Bank Limited

1994/10/18

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10

Bank of Kathmandu Limited

1995/03/12

11

Nepal Credit and Commerce Bank Limited

1996/10/14

12

Lumbini Lumbini bank Limited Li mited

1998/07/17

13

Nepal Industrial and Commercial Bank Limited

1998/07/21

14

Machhapuchhre Bank Limited

2000/10/03

15

Kumari Bank Limited

2001/04/03

16

Laxmi Bank Limited

2002/04/03

17

Siddhartha Bank Limited

2002/12/24

18

Agriculture Development Bank Limited

2006/03/16

19

Global Bank Limited

2007/03/16

20

Citizen Investment Bank Limited

2007/04/20

21

Prime Commercial Bank Ltd.

22

Bank of Asia Nepal Ltd.

23

Sunrise Bank Ltd.

24

Development Credit Bank Ltd.

25

KIST Bank Ltd.

2009

26

NMB Bank Limited

2009

27

Janata Bank Nepal Limted

2010

Furthermore there are other 4 banks that are in process to operate in 2010. Megha Bank

Limited will be the highest authorized share capital with 2 Arab and 11 Lakhs that has announced to open 4 branches at its inauguration. 2.3 Current Scenario of Banking

Currently the banking sector is evolving to be very competitive and challenging. The fastest growing and emerging industrial sector today is not other than banking. It is flourishing and upgrading day by day. Talking about its life cycle it is at its saturation point. Band-wagon is prevailing in the market with lots of new i deas and techniques to attract the customers. Banks are using various new technological advancements to provide timely, fastest and economical services to the t he customers.

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Banks with the collaboration of other financial institutions, IT¶s and other organization they always try to attract the customers. The different ages of banking sector clarifies the improving current scenario of banking. It can be summarized as in following points: a. Shift from traditional book keeping system to computerized system for keeping records. b. Use of various financial tools and software like NEWTON, PU MORI, for record keeping and networking. c. Emergence of MIS in banks for database, financial financia l analysis, research and a nd so on. d. Use of electronic tools for banking like AT M cards, Credit cards, ABBS, web remit, swifts, e-banking, mobile banking and etc. e. Shift to real estate investment, housing and other various schemes. But with the tightened policy of central bank, it is slowed down. f. Due to financial crisis occurred recently, banks are suffering from liquidity problem, inter bank loan, lower profitability etc, and slowly upcoming from it.

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Overview of B

i

Dept of NB

Di esh Gautam

CHAPTE CHAP TE

THR EE EE

TRODUCT RODUC T ON OF THE ORGANIZAT ORGANIZATION 3.1 Nepal Nepal Bank Li ank Li i ed: An Overvi Overview

K ing Tr i huvan inaugurated Nepa l Bank Limited in November 13, 1937. Th is marked

the beginning of an era of forma l bank ing i n Nepal. In that era, very few unders tood or had conf idence in this new concep t of formal bank ing. Rising equity shares were not easy and mob ili ation of depos its even more diff icult. This was evident when the bank f loated equity shares wor th NR s. s. 2,500,000, but

was

successfu l

only

in

ra ising

NR s. s.

842,000.

The total depos its for the f irst year was NR s. s. 17,02,025 where curren t deposits was abou t NR s. s. 12,98,898 f i ed was abou t NR s. s. 3,88,964 and sav ing was NR s. s. 14,163. Loan d isbursed and outstanding at the end of the f irst year was NR s. s. 1,985,000. rom the very concep tion and its creation, Nepa l Bank Ltd, was as joint venture between the government and the pr ivate sector. Out of 2500 equ ity shares of N R s. s. 100 face va lue, 40% was subscr i bed by the government and the ba lanced i.e. 60% was offered for the sa le t o pr ivate sector. Since its es tablishment the bank has been prov iding bank ing through hrough its branch off ices in the different geographical locations of the country. However dur ing the beginning of 2000, N BL

its. Nepa l R as was exper iencing diff iculty in terms of unpa id loan and decreas ing prof it astra Bank in its diagnostic review of the bank conc luded that the bank is in need of comp let e restructur ing. Government of Nepa l, in consu ltation and agreemen t with the Wor ld Bank

itability. The bank was pu t under came forward to restructure the bank and reform its prof it control of Nepa l R as astra Bank and hired the services of "The Bank of Scotland (Ireland) Ltd"., ICC Consulting effective from Ju ly 22, 2002 for the management of the bank for an initia l per iod of 2 years. The con tract was renewed up to July 2007. In its effor t to restructure the bank, the ICC team was successfu l in providing leadershi p p to return the bank to its former position of f inancial leadershi p p within the country. Numerous sys tems in every func tiona l area of bank managemen t e.g. Credit, Accounting, Human R esources, esources, Int erna l Audit, and

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Treasury were modernized. Voluntary Retirement schemes were successfully launched reducing the staff size by almost half. Large numbers of employees were trained in various disciplines. Online computerization of 44 bank branches was completed. Sustainable profitability was restored. After the restructuring process, it has 108 branches in different parts of the country, out of which about 50 are fully computerized and rest of them are in single computer networks. The branch network in five different regions of the country is given below. 3.2 NBL Network Overview: The table below shows the number of different branches of

NBL located all over the country. Table 3.1 Branches of NBL Kathmandu Region

27

Biratnagar Region

28

Birgunj Region

17

Pokhara Region

20

Nepalgunj Region

16

Total no of Branches*

108

Currently, NBL employs 2200 number of employees out of which 1700 employees are permanent and the remaining 500 employees are hired on c ontract basis. 3.3 Composition of Board of Directors

The bank is under the control of Central Bank of Nepal, Nepal Rastra Bank (NRB). NRB has appointed a four members management committee. This management committee performs all the functions as the board of directors of the bank. 3.4 Management Team

The bank is running under the leadership of Nepal Rastra Bank (NRB) appointed Chief Executive Officer and Director of NRB. The vision statement, mission statement and the objectives of Nepal Bank Limited are given below:

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3.5 Vision Statement: ³To remain the leading financial institution of the country´ 3.6 Mission Statement:

Nepal Bank Limited seeks to provide an environment within which the bank can bring unique financial value and services to all customers. It will be a sound institution where depositors continue to have faith in the security of their funds and receive reasonable returns; borrowers are assured of a ppropriate credit facilities at reasonable prices; other serviceserviceseekers receive prompt and attentive service at reasonable cost; employees are paid adequate compensation with professional career growth opportunities and stockholders receive satisfactory return for t heir investment. investment. 3.7 Objectives of NBL

Nepal Bank Limited has the following objectives y

Continue to maintain leading share of banking sector with a significant presence in all major geographical areas in the t he country.

y

Provide competitive and customer oriented banking services to all customers through competent and professional staff.

y

Reclaim leadership within the national financial community.

3.8 Shareholding Composition Table 3.2 Shareholding Composition of NBL S.N Ownership

Percent

1

Government of Nepal

40.49

2

'A' Class Financial Institutions

4.92

3

NRB Licensed Financial Institutions

3.42

4

Other Institutions

0.52

5

General Public

49.94

6

Others

0.71

Total

100

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Overview of Bank ing Depts of NBL

Dinesh Gautam

3.9. Products and Servi Services of NBL NBL Fi ure 3.1 Products and Servi Services of NBL NBL Products and Services of NBL

Deposit

C urrent

Fi xed

Sav ing

Ot her

Remittances

Loans and Advances

Corporate

C onsumer

Consor ti ti um

Persona l

Hypot hecati on

Auto

Work ing Cap it a l

Margin

web

swif t

fax

draf t

Home

Other Services

safe deposit

t rade f inance

sms bank ing

ABB S

A M

Educa tion

he above f igure is categor i ed according to four ma jor types of services that any commercial bank provides.

hey are fur ther categor i ed in sub-types that might constitute a

separate depar tment or separate service. here might other services that may fa ll under these categor ies. But the ma jor types of produc t/services provided by N BL are as shown above. Likewise, some services like loan aga inst gold/silver, customer care, customer inquir ies, payroll of other organi ation are not mentioned in the f igure.

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CHAPTER FOUR-4 LEARNINGS AND CONTRIBUTIONS 4.1 Learning and Contributions

As my internship was wa s for two months, I was posted in various departments. departments. So accordingly, I prepared my contribution and learning in the following manner. The department I worked was in total six namely remittance, credit/loan, deposit, bills/clearance, gold/silver loan and cash management, and last but not the least customer care. My two months passed on learning and contributing these six departments. The details of each department are presented below: 4.1.1DEPARTMENT-1: REMMITANCE [28 March- 6 April] Contributions Sodh Bharna Desk 

Preparing schedules (sodh bharna) and journals for outward r emittance.



Entry and readied the scheduled for dispatch schedules to respective branch of NBL.



Checking of amount and schedule number of dispatched schedules either found in the entry reports or not.



Debited the amount of outward remittance relative to fax, web or draft with code 2, 10, and 5.



Entry of dispatched schedules in DAK registers.



Typed the voucher schedule for faxing to outward remittance.



Faxed the voucher to the respective branch by printing the test key code.

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Dinesh Gautam

Web Remit Desk 

Inward remittance of various customers customers through web is extracted.



Entry in excel sheet and a nd submitted the form for print after verifying the respective customer.



Customers who brought the secret key for money was verified (passport, citizenship card, license as asked) as the authorized person and fulfilled the form for payment.



Customers whose a/c was not in NBL but who endorsed the check of NBL were paid through check draft and a nd verification of check.



Prepared commission vouchers, journal vouchers with respective account and customer name for web payment that are the a/c holder of other branch of NBL.



Big organizational web amount is extracted, preparing a journal and printed for the deposit in their respective account.



Sent OBC checks through thr ough web.

Learning 5

How to fill up the forms of web, fax, and draft.

5

How to enter the web information in web using s/w of NBL i.e. Web Remit.

5

Learnt to check if the a/c number is right or wrong using NBL s/w i.e. NEWTON.

5

Learnt to prepare schedules (sodh bharna), DAK registers, a nd journals.

5

Learnt briefly about SWIFT procedure for payment and sending which included major parts like SWIFT code, reference number, beneficiary¶s name, payee and payer bank¶s name.

5

Learnt the processes involved in backward after a consumer deposits the money or withdraws the money from remittance i.e. debit and credit cr edit process.

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Dinesh Gautam

4.1.2 DEPARTMENT-2: CREDIT/LOAN [7 April-16 April] Contributions 

Posted names, EMI amounts, a/c number, date of expiration, and other limits and valuation of loan, type of loan that is shifted from old register to the new one.



Calculated the interest amount of respective (auto loan, housing loan, overdraft, and margin lending) loan as per declared (quarterly, monthly using the days of either 79, 83 as months indicates).



Calculated penalty interest and compound interest whose time for payment was crossed over or become due.



Posted the calculated interest in respective loan holder¶s a/c number.



Checked the balance in current curr ent a/c or saving a/c of the loan holder holder to withdraw the equal amount of installment or interest payment at due date with prior notice to the a/c holder. If sufficient, their interest/installment amount was withdrawn and posted.



Prepared vouchers when payment of installment/interest amount is is paid by the th e loan holder to post in their account. a ccount.



Prepared load statement in excel exc el sheet for the month as required by the customer. customer.



Checked either the available documents presented by the loa n applicant is fulfilled as per the requirement by the bank with their cross checks, ex- auto loan documentation have cross check through chassis no, and license no.



Helped consumers who wanted to know their amount of loan, interest/installment amount that they need to pay. Similarly, solved other queries like due date for payment, new interest rates rat es applicable, applicable, benefts of early payment.



Briefed consumers who wanted to know the information regarding loan and their types (basically focusing consumer loans).

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Dinesh Gautam

Learning 5

About the requirements of documents for applying for various types of loans.

5

About how valuation of land, building, shares, jewels were made with the contingency features like margins, insurance and limits

5

Learnt how entries are made for posting the entries of interest, installments, loan clearing in the loan holder¶s register.

5

How to calculate interest for different types of accounts with their given criteria of SI, CI and penalty charge.

5

How to prepare loan statement in excel sheet consisting various columns of date, amount, interest charge and balance.

5

Learnt to check the balance amount, name of a/c holder from relative s/w i.e. NEWTON using code 1250, 210, and 1450.

5

Learnt to write vouchers for payment made by loan holders.

4.1.3 DEPARTMENT-3: DEPOSIT [18-23 April] Contributions 

Prepared vouchers, schedules of customer¶s who deposited amount in their a/c.



Posted the installment amount of the loan taken by the employees for medical and other accidental case.



Entry made in ledger for the records and circulated the schedules and voucher to the officer level sir/madam for cross check and verification



Filed the posted schedules to their respective files for future r eference.

Learning 5

June 2010

Procedures of opening a fixed deposit account.

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Dinesh Gautam

4.1.4 DEPARTMENT-4: BILLS/CLEARANCE [25 April- 8 May] Contributions Bills Desk 

Accepted other bank¶s checks for the clearance and deposit in their respective accounts.



Verified the check with the slip of deposit consisting check no, a/c name, amount, name of bank, and a/c number.



Checked either endorsement in the backside of check is done or not, if it¶s the check of any organization stamp of the relative organization is present or not.



Stamped with for clearance and authorized aut horized sign in slip and check both.



Entry made in the register consisting clearing number, name of a/c holder, a/c number, check number, bank¶s name, and relative amount.



Provided the cutting slip with clearing number to the customer.



The check then entered in the computer s/w for an entry report according to the respective bank is done fulfilling the required fields.



Prepared H.O. 10 voucher for check to send for clearing that comes through OBC of various other NBL branches, similar entries made in the ledger and computer as of above mentioned.



The checks that were of currencies like dollar, and IC were also posted accordingly.



Printed the entry report of checks after 3 p.m. and presented to the senior Sir/Madam for cross check.



If any wrong entries were made they were corrected and edited accordingly.



After all checking, final report is printed consisting of each bank having three copies. One for clearing, one for attachment to bank, and one for NRB.

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Overview of Banking Depts of NBL 

Dinesh Gautam

Detached all the checks and slips and re-attached the respective checks with their copy of final report.

Clearance Desk at Bank [3 p.m. onwards] 

Checks that were printed as final report are again entered in the excel sheet debiting the respective bank and crediting the Rastra bank for inward clearing and for outward clearing vice-versa. vice-versa.



Entered the check no, check a mount in the column of individual bank as required.



After entry the balance of total and final print of entry report is matched.



Gave for cross checking to the t he senior sir/madam.



Final print after cross checking showing the debit amount of inward clearing is

made and readied for the next day¶s clearance to t o NRB. Clearance at Central Bank [NRB at 11 a.m.] 

Stamped signed with µclearance¶ in front of all checks of NBL that were came for clearing from other banks.



Returned the earlier day¶s checks similar to ours¶ for clearing to other banks as per checks indication.



Returned dishonored checks were cancelled and the relative amount is deducted from NRB¶s advice report.



Took the advice of NRs and dollar $ from NRB and matched the debited amount of respective banks with the credit amount of NRB.



Detached NBL checks and differentiated them according to KBO chec ks and NBL branch checks.



Advice of the respective bank (as was 3 copies) detached two to NBL branch bank, and one for KBO branch with attachment of checks. One copy submitted to NRB representing NBL name and date of clearance.

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Dinesh Gautam

After 3 p.m. 

Collected the dishonored checks and returned.

Clearance desk in Bank after Returning from Central Bank [at 12:30-3 p.m.] 

All the checks that were cleared either of other branches or KBO were returned to respective branch representatives.



Debited the NBL checks amount from respective a/c holder¶s name, and account number and credited the central bank. Similar entries were made by crediting other bank¶s check amount after clearance and debited central ba nk.



If any inward checks were dishonored, they were entered in excel sheet and returned to respective branch or person.

Learning Bills Desk 5

The procedures of depositing the checks by customer for clearance.

5

Procedures of entering in registers and computer software for future reference and print of entry report.

5

Editing of entries that were mistaken.

5

Preparing vouchers and journals for OBC checks to se nd them through web, fax or draft.

Clearance 5

Debit and credit process of NRB

5

Clearing process of checks of outward and inward.

5

How rectification of errors is identified through the entry in excel-sheet, and cross checks.

5

How dishonored dishonored checks are retreated for clearance with charges.

5

How debit and credit of bank is matched in.

June 2010

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Dinesh Gautam

4.1.5 DEPARTMENT-5: LOAN AGAINST GOLD/SILVER, CASH INVENTORY AND MANAGEMENT [9-14 May] Contributions Gold/Silver Loan Desk 

Prepared letter of demand for the payment of loan and or interest of the customers whose date of loan/interest loa n/interest payment is about to expire.



Telephoned the customers informing their action towards loan agreement and contact the bank as soon as possible.



Calculated interest of the customers¶ loan against gold/silver on three months installment basis.



Posted interest in their respective acc ount.



Weighed gold/silver to calculate their valuation and amount of loan they will get.



Recorded new loan holder¶s name in daily register and filed their contract agreement accordingly.



Helped in finding the loan agreement paper of those customers who have come to either renew or repay t heir loan amount.



Provided the terms and conditions to the customers who came for the information regarding loan and also gave them the form and contract paper for fulfillment.

ATM Management Desk 

Provided the ATM card to those customers whose card has been captured in AT AT M machine due to either late emission, or wrong pin by fulfilling a slip and authorized signature.



Helped in keeping cash management in AT M machine on daily basis in an average of NRs.1 million that contained the notes of 500 and 1000.



Separated the old, tore, and new, fair notes from the bundles of notes to insert in ATM machine.

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Overview of Banking Depts of NBL 

Dinesh Gautam

Checked the rolls of AT M receipts recording number of transaction each day.

Cash Management Desk 

Counted bundles of notes (500 and 1000) with hand and machine both, approximately NRs.5 million.



Recorded the amount that was provided to other departments like remittance, deposit, withdrawal.



Bundled the counted note in terms of 100 notes each and covered with a slip and punched it.



Checked the IC notes and NC notes with Note Detection Machine for note¶s originality verification.

Learning 5

The process of applying a pplying loan from collateral of gold/silver.

5

Process of valuation of gold/silver on the basis of weightage of market rate and bank rate.

5

How to calculate the actual actua l amount a loan holder will receive from after deducting margin, insurance and cut off rates.

5

How gold is weighed in the weighing machine and how probable weight is determined.

5

How notes are counted using hand and finger as well as machine.

5

How fake notes are checked using note detection machine.

5

How cash is kept in AT M, how captured card is protected from lost, how cash is arranged in AT M boxes and so on.

5

How ATM generally works.

5

How gold is inventoried in vault.

5

How contract is made between bank and the loan holder.

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Dinesh Gautam

4.1.6 DEPARTMENT-6: CUSTOMER CARE [16-28 April] Contributions 

Print out the bank statement of the customers who brought their statement form or check book or authorized sign on a slip generally for three months. The statement of organization like HIMAL REMIT, IME, HULAS were very long and so printed cautiously.



Checked balance of those customers who wanted to know their amount in their account, usually to check the t he deposit of remit amount.



Received the slip for requirement of new check.



Verified the sign, a/c number, a/c name of the customer before providing a new check.



Entries made in NEWTON for the issuance of new checks, and command it for check print. The checks of current and saving a/c were different so they need to be changed in printer.



Entered the name, a/c number, check number (range) and date of issuance in the register.



Binding and wrote the name, a/c number, and date of issuance in the slip of new check and in cover of check.



Presented to senior sir/madam for verification and signature.



Helped old aged customers in fulfilling the new forms, or closing the account.



Informed customers about the documents required for new account, new interest rates, and new schemes.



Distributed ATM cards to the customers whose AT M was available after verification and entry in the register.



Entry made in computer of new customers, AT M holders, and closing of account as per required in fields.

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Dinesh Gautam

Learning 

Procedures for form¶s fulfillment of new account, closing a/c and or for AT M card.



About the requirements of documents needed for opening, closing and applying for AT M card.



Knew how balance of customers is checked and how balance statement is printed.



Knew how a/c verification from old a/c number is done and how printing of checks is done.



To use scanner for scanning a/c holders photo, a/c number, phone number and authorized signature.



In developing good interpersonal skill, patience, requirement of displayed emotion, and harmonious har monious relationship with customers.



June 2010

Build up confidence in dealing with the customers effici ently.

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Dinesh Gautam

CHAPTER FIVE-5 CONCLUSIONS AND RECOMMENDATIONS 5.1 Conclusions

After analyzing and interning in NBL, conclusions can be made on various grounds. Commercial banks are the pillars for the development of any country. In Nepal the first stone of the pillar was put when NBL was established on November 13, 1937.However, due to its old management practices and internal inefficiency the bank was declared technically bankrupt on 2000. Then NRB took over the control of the bank and was handed over to Bank of Scotland (Ireland), ICC Consulting group on July, 2002 and remained until July 2007.The new management changed the face NBL. Once declared bankrupt, NBL earned a net profit of 239,214,010 during the year 2007-08. The management changed the overall structure of the bank, downsized it from 214 branched to 108 branches. Computerized the bank, hired efficient staffs and laid off the inefficient under different schemes. Currently it employs around 2200 people. During the period the most considerable thing foreign management did was the recovery of NPA of NBL. It was because of the aggressive NPA recovery recovery that NBL was able to take itself into profit. The NPA level declined from 56.3% in 2002 to just 14.8% in 2007. It is just around 11% in April 2009. NPA of NBL is handled by R MD consisting of four division viz., cash

recovery,

and

priority

sector,

legal

and

administrative,

and

consortium/corporate/restructuring. These divisions of R MD handled different NPA as per the directives of NRB. While R MD handles the NPA whole credit department and different branches are equally working on preventing loan from becoming NPA by following a well defined credit procedure and a nd the requirements as per NRB directions. Similarly, NBL has recently increased its interest rates on various deposit deposit schemes. It has also als o come up with various promotional and advertisement strategies. Launch of AT M card, web remit, branches in every district of Nepal is also its strength point. Every department consists of both young and old aged people, among which dissatisfaction is still exists. The weakness of banking performance is the existence of various political groups that only seek their own welfare in spite of banks future prospects. On the other side, NBL is providing various motivational schemes to its employees both young and old aged like distribution of bonuses, bringing Voluntary Retirement Scheme (VRS) and so s o on.

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Dinesh Gautam

5.2 Recommendations

NBL is a good success story in the Nepalese banking history being first bank and also being able to revive itself once again into profitability from the state of bankruptcy. However, NBL have a long way to go. After my study and stay in the bank for 6 weeks as an intern I have found that NBL can consider following things for further i mprovement: i.

Similar size of bank like Nepal Banijya Bank employs only 2000 no of people and is able to perform well. So 2200 is still a huge number for NBL and it is overstaffed.

ii.

NBL is lagging behind in training tra ining its manpower. Many employees due to the lack of proper training are not able to perform their job efficiently especially the old staffs.

iii.

Political unions in the form of unionization must be discouraged by management. This hampers the working of bank and decreases the moral of employees. But still in NBL there exist about five polit ical unions.

iv.

NBL is recovering its NPA at a faster pace but in order to reduce the number of NPAs in future proper recording and documentation of each and every loan account must be done. It has been seen that important documents related to many NPAs are missing. So, proper documentation must be done.

v.

NBL must look into boosting up the moral of its employees as in few cases employees too are responsible for an asset to turn into NPA. So NBL must focus on motivational techniques as well.

vi.

NBL must be efficient enough to identify early signs of non-performance of asset and must be able to take quick decisions.

vii.

In such type of old organization due to the organizational structure itself is a common problem. So decision making must be fast. For that delegation of certain authority can also be done with modification of hierarchical structure.

viii.

As every department is very crucial department for the organization, some special facility (monetary and non-monetary) must be provided to the staffs of the department.

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Overview of Banking Depts of NBL ix.

Dinesh Gautam

When we look into the figures we find that KBO has the highest percentage of NPA among other branches. So, assets of KBO must be handled more efficiently. Efficient staffs must be placed in credit department of that branch.

x.

Small sizes of loans are seen to occupy the largest percentage share of NPA so proper care must be taken care regarding such assets. Waiver facility could be given to facilitate payment.

xi.

The software and equipments used in KBO are very older and is not compatible with other changes that may arise in future. So they must be checked properly and should be maintained in good condition.

xii.

Efficient and effective IT management is also lacks in KBO. It has become integral part in operation of activities. Thus, IT department must focus on such loops and holes.

June 2010

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helpful for management students for preparing internship report

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