CHAPTER ONE INTRODUCTION
1.1 Background of the study
Sharda University have set up Internship Program under which the students are required to involve in one of the business or any other organization as interns and prepare internship report through the experience and research working there. This report is a part of the postgraduate program under Sharda University School of Business Studies which offers management internship to the students pursuing MBA in the third semester. The internship is eight week program designed to provide students an opportunity for a meaningful career-related experience in a real organizational setting before they graduate. It gives the students an opportunity to practice and expand their skills and knowledge learned in the classroom in substantive work situation and face organization problems. In addition, it will help the students earn credit and increased marketability for the permanent job search while learning more about a specific field and applying classroom knowledge in a corporate environment. This internship program provides an opportunity to learn in the real work situation and an experience which can help the students to achieve their goals.
I have chosen Prabhu Bank Limited for my internship as being a management student, extensive knowledge of a financial intermediary is a must as it is the major mediator in the financial market who works to provide financial services and ensure global outreach.
1
An internship consists of an exchange of services for experience between the student and an organization. Students can also use an internship to determine if they have an interest in a particular career, create a network of contacts, or gain school credit. Some interns find permanent, paid employment with the organizations with which they interned. This can be a significant benefit to the employer as experienced interns often need little or no training when they begin regular employment. Unlike a trainee program, trainee program, however, employment at the completion of an internship is not guaranteed. This report is basically a Research internship (Post graduation) or dissertation internship, my purpose being the fulfillment of university participation criteria as well as the need of organizational exposure and acceptance. There is wider diversification in a commercial bank being a player of financial market and an intern will not remain confined to a particular subject. Therefore choosing a bank can be perceived as a wise decision as they can learn wider area under same roof. Prabhu Bank Limited is a financial intermediary who is primarily responsible for the transfer of monetary resources from the net savers to the net users. It has head office at Anamnagar, Kathmandu and corporate office at Teku, Kathmandu. This bank was chosen for the internship purpose because it was founded by the key economic players of Nepal and also it is one of the first class “A” commercial bank to have a successful merger with another class “A” commercial bank. I had a keen interest on knowing how it worked from the very beginning of its establishment. I wanted to learn how the different department worked and how the employees communicated with the customers.
2
An internship consists of an exchange of services for experience between the student and an organization. Students can also use an internship to determine if they have an interest in a particular career, create a network of contacts, or gain school credit. Some interns find permanent, paid employment with the organizations with which they interned. This can be a significant benefit to the employer as experienced interns often need little or no training when they begin regular employment. Unlike a trainee program, trainee program, however, employment at the completion of an internship is not guaranteed. This report is basically a Research internship (Post graduation) or dissertation internship, my purpose being the fulfillment of university participation criteria as well as the need of organizational exposure and acceptance. There is wider diversification in a commercial bank being a player of financial market and an intern will not remain confined to a particular subject. Therefore choosing a bank can be perceived as a wise decision as they can learn wider area under same roof. Prabhu Bank Limited is a financial intermediary who is primarily responsible for the transfer of monetary resources from the net savers to the net users. It has head office at Anamnagar, Kathmandu and corporate office at Teku, Kathmandu. This bank was chosen for the internship purpose because it was founded by the key economic players of Nepal and also it is one of the first class “A” commercial bank to have a successful merger with another class “A” commercial bank. I had a keen interest on knowing how it worked from the very beginning of its establishment. I wanted to learn how the different department worked and how the employees communicated with the customers.
2
1.1.1 Objectives of the study
The major objective of internship program is to acquire learning as well as working experience and gain practical exposure in the real-life working situation. The objective of the study is to gather practical knowledge regarding banking system and its operations. Theoretical classes of MBA provide us theories regarding different subjects whereas practical orientation gives us the chance to view those systems and their operations. More precisely precisel y we can identify the objectives of this report as follows: General objectives
In partial fulfillment of university participation criteria in internship program.
Specific Objectives
To be adapted to the real life working environment.
Develop interpersonal and communicative skills.
Develop appropriate skills and attitude.
To study, understand the functioning of the departments.
To get practical exposure.
1.1.2 Limitation of the Study
There have been some limitations from which these report suffers. The limitations are briefly pointed out below:
Time is the first limitation as the duration of the program was of two months only.
3
Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.
The data that seems insufficient may be suffering from lack of reliability to some extent.
Supply of more practical and contemporary data is another shortcoming.
1.2 Meaning of Bank
Bank is a financial institution which deals with the monetary transactions. The major function of the bank is to accept deposits and providing loans. The bank attract deposits from various investors by providing certain rate of interest, and investing the accumulated funds as loans to others who are in need of fund by charging slightly higher rate of interest than they provide to the depositors. Bank acts as an intermediary who bridges the gap between the savers of fund and the users of fund. Basically, banks are those financial organization that offer the widest range of financial services especially credit, saving and payment services and perform the widest range of financial functions of any business firm in the economy.
Different scholars have defined bank in different ways. Some definitions of bank are as follows:
According to Walter Leaf , “Bank is that institution or individual who is always ready to serve money on deposit to be returned against the check of their deposits (savers).
”
A bank generates a profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been 4
cyclical and dependent on the needs and strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on an array of deposit activities and ancillary services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). Lending activities, however, still provide the bulk of a commercial bank's income.
1.3 History of Bank The banking industry that we have today is the outcome of a series of stepwise development that have occurred in the process of its evolution. The banking sector went through the process of evolution due to the unceasing demand for the improvements in service delivery and the increasing need and expectations of customers as well the political reforms that have taken place over the decades.
The early bankers are the Lombard who was originally from the plains of Lombardy of Northern Italy. They introduced banking practice in England. These Lombard were eventually bankrupted because they lent money to kings who did not repay them.
After the Lombard, the goldsmiths practiced banking as a sideline to their normal activities in the bullion and jewelers fields. The early goldsmiths used to have large vaults, which were soundly built and heavily guarded. The person who deposited his surplus funds with the goldsmith became a 'depositor' and naturally paid for the privilege of having his money defended this way. These payments were called 'Bank Charge'. The depositors who needed funds to pay wages or debts, could call at the bank and collect such sums as required.
5
The very first banks were probably the religious temples of the ancient world where gold was stored. Their owners justly felt that temples were the safest places to store their gold as they were constantly attended, well built and were sacred, thus dissuading the would-be thieves. There are existing records of loans from the 18 th century BC in Babylon that were made by temple priests to merchants. Ancient Greece holds further evidence of banking. Greek temples as well as private and civic entities conducted financial transactions such as loans, deposits, currency exchange, and validation of coinage. Interestingly, there is evidence too of credit, whereby in return for a payment from a client, a money lender in one Greek port would write a credit note for the client who could “cash” the note in another city, saving the client the danger of carrying coinage with him on his journey.
Ancient Rome perfected the administrative aspect of banking and saw greater regulation of financial institution and financial practices. Charging interest on loans and paying interest on deposits became more highly developed and competitive. The bank of Venice, established in 1157A.D is supposed to be the ancient bank. Originally, it was not a bank in real sense being simply an office for the transfer of the public debt. Subsequently, Bank of Barcelona (1401) and Bank of Geneva (1407) were established. The ‘Bank of England’, first English Bank, was established in 1694 A.D. The ancestors of modern day banks have been attributed to the merchants, the goldsmiths and the moneylenders.
1.4 Development of banking industry in Nepal The history of banking in Nepal may be described as a component of gradual and ordinary evolution in the financial and economic sphere in the Nepalese life. Even now the financial system is still in the evolutionary phase. The establishment of
6
“Kauai Toshi Khana” as a banking agency during the time of King Prithvi Narayan Shah and “Tejarath Adda” can be regarded as the initial steps in the direction of start of banking development in Nepal. In the context of Nepal, the development of banks can be summarized in three phases: Phase I: The establishment of ‘Tejrath Adda’ during the Tenure of Prime Minister
Ranoddip Singh in 1933 B.S. (1876A.D) was the first step towards the institutional development of banking in Nepal. It was fully subscribed by the government in Kathmandu. Tejrath provided credit loans to the general public at 5% interest rate on securities i.e. gold, silver and other ornaments. Its objective was to provide credit or loans to the general public but it failed to accept deposits from them.
Phase II: The modern banking in Nepal was started with the establishment of Nepal
Bank Ltd. In 1994 B.S., having felt the need of development of banking sector and to help the government formulate monetary policies, Nepal Rastra Bank was set up in 2013 B. S. as the central bank of Nepal. In B.S. 2022, Government set up Rastriya Banijya Bank as a fully government owned commercial bank. The Agricultural Development Bank was established B.S. 2024. This bank was established with the objective of increasing the life prabhu of the people who are involved in agriculture.
Phase III: To operate all commercial banks uniformly under single act, “Commercial
Bank Act 2031” was enacted. In 2041 B.S , Nepal Government established five rural development banks under the control and supervision of Nepal Rastra Bank. These banks include:
Eastern Rural Development Bank
Central Rural Development Bank
7
Western Rural Development Bank
Mid-western Rural Development Bank
Far-western Rural Development Bank
1.5 Introduction of Prabhu Bank Prabhu Bank Limited operated with a goal of becoming the best bank operational excellence and superior financial performance. Prabhu Bank, a commercial bank formed through merger of Kist Bank, Prabhu Bikas Bank, Gaurishankar Development Bank and Zenith Finance, started its commercial operation from September 14, 2014. The four financial institutions started joint operation based on final merger approval extended by Nepal Rastra Bank (Central Bank of Nepal) in August.
It is public limited company incorporated under the Bank and Financial Institution Act, 2006 and Companies Act, 2006. It is licensed under NRB to undertake the commercial banking services and merchant banking activities in the country. The bank has a paid-up capital of Rupees 3.21 billion, is the sixth largest commercial bank in terms of capital. The bank’s capital base has gone up following the merger. Its hold deposits of around Rs 32 billion and maintains credit portfolio of Rs 23.78 billion. The shares of the bank are listed at Nepal Stock Exchange Limited (NEPSE), the only exchange in the country, as ‘A’ category share. It has 137 branch offices, 126 ATM kiosks, 850,000 clients and 1,435 staff members. It stands for customer’s convenience and support. It is driven by values of efficiency in operation, integrity and a strong focus on catering the needs of every customer by offering high quality and cost effective products and services. The professional management team along with dedicated employees is always looking forward to serve 8
the customers, understand their needs and design tailored products. The bank operates in highly automated environment in terms of information technologies and communication systems. Thus, enabling prompt quality services it has put substantial efforts and investments in acquiring the best technologies are available to build necessary banking infrastructures.
1.6 Mission/ Vision and Aims Mission statement
Prabhu bank mission is to become a leading bank by providing best quality financial products and services to our customers.
Enhancing shareholders value, contributing to the economic prosperity of the country and creating excellent growth opportunity for our employees.
Vision statement
Our vision is to become the best bank based on operational excellence and superior financial performance.
To deliver the comprehensive banking solution strengthening its extensive network.
Contributing for the development of agriculture sectors. To be Mass-based complete Bank serving from urban to Rural.
9
Aims
Prabhu Bank was incorporated with the following main aims and objectives:
Properly mobilizing the available talent, labor and capital for the establishment, development, expansion and diversification of productive and employment oriented business in the rural as well as cities and towns. Similarly, providing necessary financial resources, technical and management consultancy, technology and training for the same and thereby actively contributing towards the alleviation of poverty in the country are on its list.
Providing quality and reliable financial services to the general public by protecting the rights and interest of the depositors and shareholders is another objective it carries. Mobilizing the financial resources from company’s internal as well as from external sources from the establishment. Development, expansion and diversification of agriculture, industry, service, business and other commercially viable projects in the country and thereby helping the economical development of the country. Acting as financial resources spread all over the country and mobilizing the same for the economic development of the country through fair competition. It al so aims on providing technologically innovative services to its customers.
10
1.7 Organizational Structure An organization structure defines how activities such as task allocation, coordination and supervision are directed towards the achievement of an organizational aims. Organizational structure allows the expressed allocation of responsibilities to different entities such as branch, department, workgroup and individual. The head office of a bank is located at Babarmahal, Kathmandu, Nepal. Board of Directors is the apex body of the bank which formulates policies as well as strategies and provides guidance to the management. The executive power is vested in the Chief Executive Officer (CEO). The Bank has departments in its head office and five Regional Training Centre with residential facilities in five development regions.
11
1.8 Board of Directors The Board of Directors is the apex body of the bank. It formulates policies as well as strategies and provides guidance to the management. The Board comprises a total of nine members; four members representing Government of Nepal and four members representing individual shareholders. Besides, one member is nominated by the Board as per the BAFIA. The Board is supported by Audit Committee and Governance SubCommittee in the area of internal control and good governance respectively. The day by day operation of the bank is executed by the Chief Executive Officer. The Chief Executive Officer is closely assisted by four Deputy General Managers and 18 Division Chiefs. Moreover, Chief Executive Officer is supported by Assets and Liabilities Management Sub- Committee for various activities related to risk management. The Bank has three-tier organization structure consisting of Head office, Regional offices (ROs) and field offices. Field offices are under further categorized into three levels; main branch, branch and sub-branch depending particularly upon their volume of business. The head office is the policy making body at the top, field offices are implementing units at the bottom and ROs with monitoring and supervisory role in between.
12
Mr. Devi prakash Bhattachan (Director)
Mr. Pushpa Bahadur pradhan
Ms. Ambika Sharma lamichhine
(Director)
Mr.Ramesh singh khadka (Director )
(Director)
Mr. Dakshya poudyal (Director)
13
Mr. Shankar kalikota (Director)
1.9 Major services provided by Prabhu Bank Deposits Prabhu offers an array of deposit products which provides interest rates quite competitive among the finance company of its class. Equipped with several distribution channels like cards, largest Network of branches and ATMs and Extended banking hours, Prabhu offers its depositors the freedom of 24hours a day, 365 days a year access to their deposit account.
Besides, the regular deposits accounts like current, savings and fixed term deposits, Prabhu also offers many other special deposit schemes. Prabhu Khutruke Savings Scheme is introduced mainly for small children and housewives. This saving scheme is intended to make the young children be aware of saving from their early years. This saving scheme facilitates not only the children but also housewives and low income earning group since this account can be operated with minimal balance and regular small deposits. ATM Card
Prabhu is providing self service banking to its esteem customers through VISA Debit Card with collaboration with Smart Choice of Technologies. Customers can transact from the terminal on free of cost. VISA Debit Card can also be used for shopping and countries like India and Bhutan.
14
Mobile Wallet Service
Prabhu Mobile Wallet service is an easy and handy method of doing banking transaction from mobile phones without having to visit bank. Prabhu Bank customer needs to have Prabhu Mobile Wallet application software installed in their mobile phones. Using such application of their mobile phone, one can do various banking activities such as transaction, enquiry and request.
E-Banking Service
Prabhu E-Banking Services is an internet based Service offered by the Bank to its valued customers. Prabhu E-Banking, being an internet based service, is available anytime at customer’s fingertip with the flexibility to take care of many financial transactions as well as viewing account statements, requesting cheque books and many more.
Locker Facility
Prabhu also provides locker facility to its valued customers from its own Head office premises situated in Anamnagar. Prabhu bank has arranged an advance security system for the security of its customer’s valuables put on locker. Prabhu bank has also insured every locker.
15
Additional Services
For the Bank’s deposit relationships, there are other hosts of services available at Prabhu bank, like implementing Standing instructions on accounts, issuing Balance Certificates, certifying ‘Good for Payment’ on cheques. The online connectivity of all our outlets makes it possible to remit funds domestically to and from any of the branches located throughout the kingdom. Lending
Prabhu, through its wide range of flexible products like Demand Loan, Time Loan and Short Term Loan etc can accommodate all specific needs for the customers. Besides the regular lending scheme Prabhu Bank also offers many other special deposit schemes. Housing Loan
This loan makes the dream of owning a home a reality with attractive features available beyond market offerings at competitive interest rates and extended loan tenure, with flexible repayment and partial payment features. Hire Purchase Loan
Prabhu Bank Hire Purchase loan makes commuting easier and owning a two or four wheeler in reality at attractive interest rates, loan tenures and flexible repayment options with financing available for large variety of vehicles, with special facilities to draw cash by pledging a vehicle in the Bank’s name. Prabhu bank has designed a hire purchase loan scheme to finance the private car or motorcycle to the professionals, self employed, business executives, and business houses and the transport like trucks, buses, minibuses, pickup vehicles, microbuses, etc. to the operators, businessman, business houses, etc. 16
Education Loan
Prabhu’s education education loan scheme provides loan for those students who demonstrate ability, drive and ambition but do not have financial resources to achieve their goals. Term Loan for Project Financing
Based on the viability of the project, Prabhu Bank provides term loan for project financing. Before applying for loan the intended party must submit a proposal along with the feasibility study report of the project. Financing will be made available. Working Capital Loan
Based on the viability of the project and actual need of fund, Prabhu Bank provides working capital loan in the form of overdraft. The intended business house should submit the proposal for working capital loan. This loan will be granted based on the proposal and will take a form of overdraft. Consortium Loan
Due to the changing political situation and the expected peace in the country, we expect more economic activities in the country. This will attract the large investment opportunities in the different project. NRB has prescribed the maximum amount of funding to a single borrower to minimize the concentration of funding. Therefore, single financial institution is not able to finance the mega project alone. With our expertise, we are capable of arranging arr anging consortium finance for such large projects.
17
Agriculture Loan
Based on the viability of the agriculture project/ proposal, Prabhu Bank provides Agriculture Loan to finance the short/ long term financing need of client. This loan is also provided to purchase tractor, seeds, fertilizers, insecticides, etc. Loan against Shares and Securities
The recent political development in the country has revived the hope for the t he economic development and prosperity of the country. The NEPSE positively responded the recent development and more activities and an upward trend is seen in the stock market. Those investors not having fund in hand but wants to invest in stock market can apply for the loan against shares and securities.
1.10 Functions of Prabhu Bank Accepting Deposits
The most important function of Prabhu Bank is to accept deposits from the public. Various sections of society, according to their needs and economic condition, deposit their savings with the banks. Therefore, keeping the needs and interests of various sections of society, banks formulate various deposit schemes. Generally, there are three types of deposits which are as follows:
Current Deposits
The depositors of such deposits can withdraw and deposit money whenever they desire. Since banks have to keep the deposited amount of such accounts in cash always, they carry either no interest or very low rate of interest. These deposits are called as Demand Deposits because these can be demanded or 18
withdrawn by the depositors at any time they want. Such deposit accounts are highly useful for traders and big business firms because they have to make payments and accept payments many times in a day. day.
Fixed Deposit
These are the deposits which are deposited for a fixed period of time. This period is generally not less than one year and, therefore, these are called as long term deposits. These deposits cannot be withdrawn before the expiry of the stipulated time and, therefore, these are also called as time deposits. The interest rate on fixed deposits are generally high because banks can these deposits for fixed period without having the fear of being withdrawn. If, withdrawn before the maturity period bank charges certain amount.
Saving Deposit
In such deposits, money up to certain limit can be deposited and withdrawn. On such deposits, the interest rate is very low. The main objective of saving deposit is to mobilize small savings in the form of deposits. These deposits are generally done by salaried people and the people who have fixed and less income. Giving Loans
The second important function of commercial banks is to advance loans to its customers. Banks charge interest from the borrowers and this is the main source of their income. Banks advance loans not only on the basis of the deposits of the public rather they also advance loans on the basis of depositing the money in the borrowers.
19
In other words, they create loans out of deposits and deposits out of loans. This is known as credit creation by commercial banks. Modern banks give mostly secured loans for productive purposes. In other words, at the time of advancing loans, they demand proper security or collateral. Generally, the value of security or collateral is equal to the amount of loan. This is done mainly with a view to recover the loan money by selling the security in the event of nonrefundable of the loan. At times, banks give loan on the basis of personal security also. Therefore, such loans are called as unsecured loan. Banks generally give following types of loans and advances:
Cash Credit
In this type of scheme, banks advance loans to its customers on the basis of bonds, inventories and other approved securities. Under this scheme, banks enter into an agreement with its customers to which money can be withdrawn many times during a year. Under this set up banks open accounts of their customers and deposit the loan money. With this type of loan, credit is created.
Demand Loans
These are such loans that can be recalled on demand by the banks. The entire loan amount is paid in lump sum by crediting it to the loan account of the borrower, and thus entire loan becomes chargeable to interest with immediate effect.
20
Short Term loan
These loans may be given as personal loans, loans to finance working capital or as priority sector advances. These are made against some security and entire loan amount is transferred to the loan account of the borrower. Over Draft
Banks advance loans to its customers up to a certain amount through overdrafts, if there are no deposits in the current account. For this banks demands security from the customers in terms of minimum balance and charge very high interest r ate. Discounting of Bills of Exchange
This is the most prevalent and important method of advancing loans to the traders for short term purposes. Under this system, banks advance loans to the traders and business firms by discounting their bills. In this way, businessmen get loans on the basis of their bills of exchange before the maturity period. Investment of Funds
The banks invest their surplus funds in three types of securities- Government securities, other approved securities and other securities. Government securities include both, central and state governments, such as treasury bills, national savings certificate etc. Other securities include securities of state associated bodies like electricity boards, housing boards, debentures of Land Development Banks units of UTI, shares of Regional Rural Banks etc.
21
Agency Functions
Banks function in the form of agents and representatives of their customers. Customers give their consent for performing such functions. The important functions of these types are as follows: (i)
Banks collect cheques, drafts, bills of exchange and dividends of the shares for their customers.
(ii)
Banks make payment for their clients and times accept the bills of exchange of their customers for which payment is made at the fixed time.
(iii)
Banks pay insurance premium of their customers. Besides this, they also deposit loan installments, income tax, interest etc. as per requested by the customer.
(iv)
Banks purchase and sell securities, share and debentures on behalf of their customers.
Miscellaneous Function
Besides the functions mentioned above, banks perform many other functions of general utility which are as follows: (i)
Banks provide locker facility to their customers for the safe custody of valuable assets of their customers such as goal, silver, legal documents etc.
(ii)
Banks collect necessary and useful statistics relating to trade and industry.
(iii)
Banks give reference for their customers.
(iv)
For facilitating foreign trade, banks undertake to sell and purchase foreign exchange.
22
(v)
Banks advise their clients relating to investment decisions as specialist.
(vi)
Banks issue letters of credit.
(vii)
Bank does the under-writing of shares and debentures also.
(viii)
During natural calamities, banks are highly useful in mobilizing funds and donations.
(ix)
Banks provide loans for consumer durable like Car, Air-conditioner and Fridge etc.
1.11 Goals and Objectives of Internship My internship program was conducted as a partial fulfillment of the Master of Business Administration (MBA) course under Sharda University. The main objective of this program is to gain experience in the banking sector of Nepal. Some points to describe my individual objectives of the internship program are as follows:
To learn how day to day operations of the bank are conducted.
To understand the importance of all the departments in the accomplishment the ultimate goal of the organization.
To be able to relate the text book knowledge with the practical experience gained in the workplace.
To be able to develop all the personal and professional skills required in the workplace.
To apply theoretical knowledge in the real work environment.
I perceived this internship program as a great opportunity for a meaningful career related experience. I considered it as a way for preparing myself to enter into job environment after graduation. My primary goal of internship program was to able to 23
apply theoretical knowledge in the real world situation and to develop all the necessary skills to perform my job responsibly. To achieve the goals and objectives of the internship program, I dedicated a lot of time and effort in the learning new concepts and ideas from our mentors and supervisors.
1.12 Background of Internship Internship is a period during which an individual works for an organization or a company in order to get experience through direct involvement in daily activities of the organization. It gives a valuable experience and a chance to get exposed to the business environment. Interns are usually college or university students, but they can also be high school students or post graduate adults seeking skills for a new career. Student internships provide opportunities for students to gain experience in their field, determine if they have an interest in a particular career and create a network of contacts. It provides real world experience. It is a system by which the students get an opportunity to experience the real work environment through indulgence into the real task accomplishment where one learns by doing things.
This internship program is designed by Sharda University for the period of eight weeks for the partial fulfillment for the degree of MBA. Being the student of MBA program, and specializing in finance, it was preferable to choose internship in the banking sector to gain experience and practical knowledge about it.
I choose Prabhu Bank, Teku branch, to have a general idea about the banking activities. I got a chance to put my theoretical knowledge to a practical know-how and
24
internship program is all about gaining a practical knowledge about the subject matter.
1.13 Internship Activities Various roles/ jobs were assigned to me during the internship program. I completed my internship program at Prabhu Bank working in various departments. A brief description on the jobs performed by me in all these departments is as follows:
1.13.1 Customer Service Department
In the Customer Service Department. I was assi gned with the following tasks: Responsibilities at Customer Service Department Attending Customers
At the prabhu bank Ltd., when clients pay visit into the bank, they are first greeted by the front linestaff positioned at Customer Service Department and they are asked about their purpose of visit. Then Customer are guided or followed by the staff as per their requirement, after understanding their purpose. For example if they want to open an account, they will be systematically guided by the staff through the selling process. Explaining Products and Services to Clients
There are various functions about CSD; Selling function is one of the core functions of CSD, where any tangible products aren’t sold but bank’s intangible products that are the banks deposit accounts are explained to the customer. Prabhu bank limited has various products and service; each and every product is explained in general to the customer. If the Customer is convinced, and if they are able to align the product attributes with their requirement then they likely to open a bank account. 25
Managing Clients Information System
Another important functions carried out at CSD, is managing customer data base, from clients first account entry to clients account termination. Here at CSD, were had an opportunity to use Pumari 4 Banking Software, where I was assigned to process information of account application form into information system, that generate, clients information, including other crucial information such as customer’s account number to their funds deposited at the banks. This opportunity made me familiar with the banking software. Maintaining Customer Files
As operational duty, I had to work for CSD, where I was also assigned to manage the files and Documents relating to customer accounts, for further smooth and efficient functioning, which would benefit overall corresponding departments, for example Cash and gold loan department. After the clients information are kept into the information system of bank, the hard copy data such as signature specimen card and application forms should be efficiently managed, for future reference. At CSD I had to maintain documents including account application form, check requisition, check inventory, ATM issued registers, and statement registers. These documents where correctly managed with the objective to provide reference in future. Providing Checks and Receiving Checks Requisition
At CSD Check requisition form received, which are basically attached to the customer in the account opening form, and after opening an account, and check requisi tion form is processed to develop customer’s checks. After processing the check requisition, we provided them cheques within a day of receiving cheque requisition slip.
26
Balance inquiry
At CSD, provide information about customer account balance to the related customer by using pumari banking software. Open pumari-inquiry-put a/c n.-open Cheque print
Steps in cheque printing are open pumari -MICR-a/c put- s.n cheque- cheque no.make. On demand statement
Provide account statement to customer when they request by using pumari banking software. The process of account statement is are as follows: open pumari-on demand statement-put account n.- date- open- print. 1.13.2 Remittance Department
Prabhu Bank Limited, operating under the guidelines set by The Government of Nepal and Nepal Rastra Bank, offers one of the safest and the most secured means of money transfer to Nepal. Remitters can send money to Prabhu bank from any part of the globe through our correspondent banks, exchange houses and banks in the Middle East and using Himal Remit and Western Union, our in-house remittance software. 1.13.3 SWIFT Transfer
Prabhu Bank offers fast and reliable money transfer services through SWIFT. Your bank account with us can be credited with remittance from anywhere in the world. The remitter has to mention the Prabhu bank’s SWIFT Address and the beneficiary details to transfer money to Nepal through us. We cater the need of customers to remit fund from anywhere in the world, denominated in major currencies, through SWIFT. 27
1.14 SWOT Analysis SWOT Analysis identifies and analyses the main internal and external factors that will influence the future direction and success of a business. It comprises of strengths and weaknesses which are the internal factors and opportunities and threats which are the external factors that affect the organization. Such analysis helps managers in strategic planning. SWOT analysis of Prabhu Bank is as follows: Strengths
Good reputation in the budgeting industry.
Dedicated, experienced and well trained employees.
Up to date with the latest technology and information systems.
Diversified product and services provided to customers.
Proper links with the foreign banks.
High capital base compared to other banks.
Adequate number of branches all over Nepal.
Well qualified and professional management team.
Lower weighted average cost of deposit and higher interest rate of spread.
Weaknesses
Inadequate marketing of its products and services. Need of effective manpower planning.
Frequent problems in the ATM machines.
Lack of quick customer response.
The customer service department is not able to operate efficiently. 28
Opportunities
It can take advantage of its good reputation and further expand its customer base.
It can provide better training to their employees to be able to adapt themselves with the new technology.
Being technically ahead than the competitors can help Prabhu Bank to have an edge over other banks.
It can further increase its spread with the provision of new schemes.
It can establish links with the foreign banks to provide extra facilities.
It can take advantage of its high capital base and provide loan in productive sectors.
It can come up with new innovative products and services.
Reduction in the necessity of lending to the priority sectors.
The bank has an opportunity to invest various other areas of rural development and hydroelectricity.
Threats
Political problems ongoing in the country.
Lack of stable government.
Rapid increase in the number of commercial banks.
Lack of attractive and profitable investments.
International economic recession.
Various rules and regulations imposed by the government/NRB.
Unfavorable socio-economic condition of the country.
29
Highly informed customers pose a challenge for the bank to provide better service.
More competitive products being brought by other banks.
Lack of effective manpower planning.
30
CHAPTER TWO DATA PRESENTATION AND ANALYSIS
2.1 Research methodology
Selection of the Topic:
The topic was approved by my respective advisor and it was thoroughly discussed with her where madam provided her view so that a well-organized report can be prepared. Sources of Data:
Primary Sources
Secondary Sources
Primary Sources:
Face to face conversation with the respective officers
Direct Observation
Practical desk work
A survey is conducted to find out customer satisfaction level.
Secondary Sources:
Annual report of Prabhu Bank Limited
Prabhu Bank’s internal server and external websites
Different documents provided by the concerned officers of the organization 31
Relevant books, research paper and journals
Analysis, Interpretations and Presentation of Data: Some diagram and tables are used to analyze the collected data and gave flawless visible representation of the study. Findings of the Study: The collected data were analyzed methodically and pointed out in a synchronized way and finally shown as findings at the last portion of the report. Final Report Preparation: The final report is prepared with the valuable information, suggestion, and feedback of my supervisor, colleagues, and senior officers of Prabhu Bank Limited.
2.2 Problem Faced during Internship While carrying out the task assigned by the supervisor, the intern faced different types of problems. They are as follows:
Though the instruction and required documents are clearly explained in the account opening form, even then customers ask those for time to time and reasons for extra documents that are already stated in back side of the form. So, it is tough to give them each guideline on filling different types of form as well.
The accountholder’s asked for the balance and cheque book without bringing the letter of authority and citizenship with accountholder’s valid signature and account number.
Some the customer disagreed to accept the charges for account closing and make argument on this matter for long time. So, it becomes difficult to convince them about the bank’s charges. 32
Customers argue for updating Know Your Customer (KYC) from especially to show original citizenship.
After merger customers argued about not giving the information of the merger to them where the information was given to them about a month ago through notice, newspapers and media.
After merger it was also difficult to handle the customers and explain about the changes in the account number, banks policy, etc.
2.3 Problem Solved in Internship During the internship period intern faced problem because intern was new to the organization. The following are the problem solved during the internship period:
Whenever the customers come up with their problem in CSD, intern is unaware about the right and accurate information on the subject matter. So intern has to consult with their senior staff to give the information to customers.
Sometimes intern may give wrong information to the client due to lack of knowledge of that department in the beginning. At that time, staff immediately correct our mistake and give the right information.
33
2.4 Customer satisfaction level on Prabhu Bank Limited Customers are the life of any kind of business. Most of the business organizations in the modern world are customer driven, trying to meet the customer’s expectation in the best way. They always try to grab their most potential customers to increase their market share. When the products and services provided by the companies meet the expectations of the customer then the customer will be satisfied and will repurchase product and he will be loyal customer to that company. In the banking sector in Nepal customer satisfaction is also very important as because the competition in this sector has been increasing. To retain their most loyal and to attract potential customer banks should offer what the customer require and expectation. Prabhu Bank Limited is also customer concentrated and always committed to provide best service to its customer which is first priority of this bank.
As an intern of Prabhu bank limited I was assigned to resolve customer problem of general banking and observe the customer expectation and requirement. From this I got interest to find out the customer satisfaction level of Prabhu Bank Limited. Thus I decided that my project will be the customer satisfaction level of the Prabhu Bank Limited. Finding the customer satisfaction level is also important for a company to take proper and effective decision. This will indicate the customer repurchase intention, limitation on the service provided by the company, customers’ expectation, points to improve which will play a vital role to take important decision by the management. Customer service is an extremely important part of maintaining ongoing client relationships that are important to continuous revenue. For this reason, many companies have worked hard to increase their customer satisfaction level. Customer’s satisfaction basically depends on various factors. Customers will be satisfied with the
34
bank when they will get excellent and quality services from employees of bank on a continuous basis.
2.5 Method to find out Customer Satisfaction Level
Making Questionnaire
Survey
Analysis of survey data
Finding from the analysis
Result
To find out the customer satisfaction level of Prabhu bank limited firstly I have made a questionnaire of 15 questions which will be rated by the existing customer of Teku Branch of Prabhu Bank Limited by 1-5 which will represent poor to excellent. The survey will be conducted by response of 50 customers of this bank. The standard of the rating is given below-
35
1
Poor
2
Fair
3
Good
4
Very good
5
Excellent
After the survey I will analyze survey data and make a summary of the analyzed data which is finding from the analysis. Finally I will give the survey result based on the findings from analysis of survey data.
2.6 Analysis of survey data Questionnaire is made based on some variables that have directly or indirectly influence on the customer satisfaction level. For example office outlook, employee behavior with customer, quality of service, charge taken to provide services, modern and update technology, error free records, and prompt problem solving skills of employees and average time taken by the employee to give service to its customer. Analysis of survey data is given bellow-
36
Employee behavior with the customer :
Employee Behavior with customer 18 16 14 12 10 8 6 4 2 0
Poor
Fair
Good
Very good
Excellent
Chart 1: Employee behavior with the customer Behavior of the employee working in the bank is one of the important factors for the customer to be satisfied. In my survey there was a questionnaire about the behavior of employee of the Prabhu bank limited with the customer when providing banking service. From the survey, we can see that at most 25 customers which about 50% of the 50 customers said “Good”. It means that they are somewhat satisfied with the behavior of the employee of Prabhu Bank Limited.
37
Reasonable Service Charge:
Reasonable Service Charge 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 2: Reasonable Service Charge Service charge taken by the bank is always a considerable factor to the customer to be satisfied with. Customers were asked that Prabhu Bank Charges reasonably for the service they are providing to the customer. Among 50 customer s, 22 said “Very Good” and 17 said “Good” that means 22 customers which is 44% of the sample are satisfied with the service charge taken by the Prabhu bank. 17 customers which are 34% of the sample are somewhat satisfied with charge of service of the bank. This indicates that service charge taken by the Prabhu Bank is quite reasonable than other banks operating in the country.
38
Provide prompt and accurate service:
Provide prompt and accurate service 18 16 14 12 10 8 6 4 2 0
Poor
Fair
Good
Very good
Excellent
Chart 03: Provide prompt and accurate service Getting Prompt and accurate service is one of the most important factors of customer satisfaction. If one bank fails to provide prompt and accurate service then it will obviously lose its valuable customer and affect of this can be devastating for the prospect of the bank and it will be criticized. So it is very much important for both the bank to consider as a first priority to provide. Survey shows that 17 customers of 50 which are 34 % said “Very Good” meaning that they are satisfied with prompt and accurate service provided by the prabhu bank. Moreover, 17 of them are also said “Good” means that they are somewhat satisfied with this. From this, we can say that Prabhu bank provide prompt and accurate service to its customers.
39
Problem Solving Skills of the Employee:
Problem Solving Skills of the Employee 35 30 25 20 15 10 5 0
Poor
Fair
Good
Very good
Excellent
Chart 04: Problem Solving Skills of the Employee Problem solving skills of employee of the Prabhu Bank is a significant matter to think when we are trying to justify performance of a bank which resulted in satisfaction or dis-satisfaction of the customer of the bank. Customer often face different problem when making transaction, taking loan, depositing money and taking other service provided by the bank. It is important matter to think how much willingness or eagerness shown by employee and time taken to solve the problem. The biggest pillar of the chart shows that 33 customers which are 66% said ” Very Good” meaning that they are satisfied with problem solving skills of the employee.
40
Ensuring error free record:
Ensuring error free record 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 05: Ensuring error free record
Ensuring error free record of every transaction made by the customers and bank is basic element and fundamental requirement for the bank. Among 50 customers, 17 people said “good” 20 of them which are 40% of the sample said “Very Good” and 13 of them said “Excellent”. This stat tells that almost everyone believes that Prabhu Bank Limited ensure the error free record every transaction occur in the bank.
41
Facility of utility bill Payment:
Facilty of utility bill payement 35 30 25 20 15 10 5 0
Poor
Fair
Good
Very good
Excellent
Chart 6: facility of utility bill payment Utility bill payment on the bank is one of the criteria where customers are interested in. they want to pay bill to the nearest place of their home. If a bank provides this opportunity then it will make customer happy. Here we can s ee that 30 persons among 50 which 60% are not satisfied with this service provided by the bank. I tried to know why they don’t like this service of this bank, they said Prabhu bank accept electricity and WASA bill but not gas bill. People have to go for another bank to pay gas bill. This is one area where Prabhu Bank can improve. They need to know the customers’ requirement. It is irritating to pay electricity bill in one bank and pay gas bill to another bank. This indicates customer dissatisfaction on utility bill payment factor.
42
Using modern and updated technology:
Using modern and updated technology 30
25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 07: using modern and updated technology Technology is very important in the present world in any business. In the banking industry it is obvious. To record transaction the software they use and devices they use are also considerable to find the customer satisfaction level. If the bank uses latest and reliable software and devices then it will have an affect also on customer satisfaction. It will make easy for the bank to do day today general banking activity and others activity and this will have an impact on the customer. Here we can see that 26 or 52% customers said “Good” which means that they are somewh at satisfied and 15 customers or 30% of customers said “very good” meaning that they satisfied about the using of modern and updated technology by Prabhu Bank Limited.
43
Provide quality network for ATM service:
Provide quality network for ATM serviceries 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 08: Provide quality network for ATM service Network provided for ATM service by the bank is an element to justify a bank’s quality service. If the bank ensure quality network for ATM service then customer will be satisfied. If there is good network then there will be no problem to withdraw and deposit money from ATM machine. For Prabhu Bank limited, survey data shows no positive sign, 20 customers which are said “Fair” which means that network is not that satisfactory. However 12 customers said it is somewhat satisfactory.
44
Easy procedure of getting Loan:
Easy procedure of getting Loan 35 30 25 20 15 10 5 0
Poor
Fair
Good
Very good
Excellent
Chart 09: Easy procedure of getting Loan Different banks have different procedure or process to provide loan to their customer. Complexity or easiness of the process is also a considerable element which has impact on customer satisfaction. If the process of getting loan is easy, precise and applicable then customers will be happy and delighted by getting loan on easy condition. From the survey, we can see that 31 customers which are 62% of the sample said “Very Good” which mean that they are satisfied about the process, term and condition of getting loan from Prabhu bank Limited. It is also indicate the process of providing loan to the customer of Prabhu bank limited is eas y and implementable.
45
Customer feels safe by making transaction :
Customer feels safe by making transaction 30
25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 10: customer feels safe by making transaction
When the customer feels safe about their money transacted through the bank, we can say that customers are satisfied the service bank provided. It is important factor for customer satisfaction level of a company. The chart 10 shows that 24 customers out of 50 give their opinion as “Excellent” which is 48% of the sample. So that we can say that they are fully satisfied and feel safe about their money deposited or transacted through the bank.
46
Ensure good online banking service:
Ensure good online banking service 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 11: Ensure good online banking service Online banking is a new dimension for the modern banking system. This is one of the Value added service provide by different banks save time and cost for customer. With help of internet connection customer will be able deposit money and make payment by sitting at home. Prabhu Bank has offer online banking as well. Survey indicates that 23 which 46% said that Prabhu bank provide good online banking service.
47
Well organized office environment:
Well organized office environment 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 12: Well organized office environment Office environment influences the customer as well as the employee working in the bank. If the office is well organized and decorated with quality furniture the employee will feel fresh to work here and will have impact on their performance. Moreover the customers also feel soothing and comfortable by being in bank office to get service from the bank. It is also an important element of customer satisfaction. According to the survey data we can see that 23 customer said “good” to well organized office environment which means that they are somewhat satisfied with office environment of the Prabhu bank teku Branch.
48
Keeps promises:
keeps promises 40 35 30 25 20 15 10 5 0
Poor
Fair
Good
Very good
Excellent
Chart 13: keeps promises Keeping promise is also very important for a bank. If any does not keep promise which it made the effect would be worse. The customer can leave the bank by being deprived by the bank. Here we can see that 38 customer which about 76% are satisfied with the keeping promise by the Prabhu Bank. It indicates that prabhu bank keep promises what it made to its customer.
49
Waiting time to get service:
Waiting time to get service 25
20
15
10
5
0
Poor
Fair
Good
Very good
Excellent
Chart 14: Waiting time to get service Weighted average time of waiting to get a service from the bank is also important factor to be satisfied by the service from the bank. If the waiting time is longer, then customer will obviously dissatisfied by the performance of the employee of the bank. Here we can see that 22 customer out of 50 which is 44% saying that “Fair” indicate that waiting time to get a service is not that satisfactory. It also indicates that waiting tine is longer and performance of the employee is not t hat convincing.
50
Office Space:
Office Space 40 35 30 25 20 15 10 5 0
Poor
Fair
Good
Very good
Excellent
Chart 15: Office Space Office space is also important element of justifying of customer satisfaction. When the office is spacious the customer can stand comfortably on the queue for getting service from bank. When there is narrow space then customer feels irritating. Here we can see that, 37 out of 50 customers whish are 74% said “Good” means that they are somewhat satisfied with the Office space. It indicate that Prabhu bank Teku Branch has medium office space which quite okay.
51
2.7 Findings from analyzed data: Here I will divide the findings from analyzed data into t wo sections. These are
Positive findings
Negative findings
By comparing these two sections I can decide the level of satisfaction of the customer in Prabhu bank limited.
Positive findings:
50% of the customers are somewhat satisfied with the employee behavior.
44% customers are satisfied and 34% are somewhat satisfied with the service charge of Prabhu Bank.
34% of the customers are satisfied and 30% are somewhat satisfied with the Prompt and accurate service by Prabhu Bank.
66% of the customers are satisfied with the problem solving skills of the employee.
20% of the customers are satisfied with the, 26% fully satisfied and 34% are somewhat satisfied with the ensuring error free record done by Prabhu Bank.
52% of the customers are somewhat satisfied and 30% are fully satisfied about the modern and updated technology used by Prabhu Bank.
62% of the customers are satisfied with the Loan procedure of the prabhu Bank.
52
48% of the customers are fully satisfied and 32% are satisfied with the safety of banking transaction through Prabhu Bank.
46% of the customers are satisfied with the online banking service by Prabhu bank.
46% of the customers are somewhat satisfied with office environment of the bank
76% of the customers are satisfied about the keeping promise made by Prabhu bank.
74% of the customers are somewhat satisfied with the office space of this branch.
Negative findings:
60% of the customer are not satisfied with facility of utility bill payment offered by Prabhu bank limited
20% of the customers are not satisfied and 40% are not that satisfied with the quality of the network provided to ATM service.
22% of the customers are not satisfied and 44% of the customers are not that satisfied with waiting time to get service from the Prabhu Bank.
53
2.8 Result of the Survey: Comparison between positive findings and negative findings from the survey clearly suggest that positive findings are far more than the negative findings. So we can say that most of the customers are satisfied but not fully satisfied about the service and facility provided by the Prabhu Bank Limited Teku Branch. However Prabhu Bank has many areas where they can improve the quality of the service and atmosphere. Moreover, they need to think about the customer requirement, desire and expectation and should work according to this. They should build a strong relationship with the customer by offering best service they can. They need to set goal to make the customer fully satisfied by improving all the lacking they have. All the variables discussed before like employee behavior, service charge, network, utility service, accurate service, error free record, problem solving skills, and office atmosphere are very important elements for the bank, have direct or indirect impact on the customer satisfaction.
54
CHAPTER THREE SUMMARY CONCLUSIO AND RECOMMENDAION
3.1 Summary Nepal being and under privileged country and more than ninety percent of people being dependent upon agriculture, which sector is unable to provide full employment to the people. HMG has to activate people in the nation’s development through overall industrialization of nation. For which development of sound banking system is necessary. Modern commercial banks make the economy always alive and smart to run and maintain day to day commercial, economical and banking transactions. In short, banking transactions helps a country to develop its economy swiftly. At present commercial banks include joint venture banks are operating in Nepalese Banking Industries. It is remarkable fact that any country cannot have a developed economy in the absence of modern banking system. As any development, work needs a sufficient amount of capital and the lack of sufficient capital is also one of the main reasons as Nepal has been backward in developing its economy. Therefore, it is utterly important to find out whether or not the banks are serving an important contribution to develop different sectors of the economy. Cash and Bank Balance and Deposits occupies major portion of banking income. It plays a vital role in updating the national economy. There are too many banks and financial company in present market, which are trying to give more interest and facility to the consumer for collection on deposit. For the collection of more deposit Prabhu Bank should try to provide its scheme to other 55
account holders also. It should try to give other facility to the depositors for the collection of deposit like giving some gifts for the old sincere custome r.
The bank should give first priority to agriculture sector and industrial sector because agriculture and industrial sectors are main sources of livelihood. Its rules and regulation are not that strict. So, it should amend its rules and regulation according to situation and central bank direction.
3.2 Conclusion
Prabhu Bank Limited has earned a good reputation around Nepal. Prabhu bank has made remarkable progress, practically in every sphere of its activities. But they have their competitors who actively striving to take the advantages in every side. They should aware about this. They have reputation about online banking transaction. Customers are quite satisfied about the online banking. But the users of online banking are limited in regard to their total customers. It must be a concerning fact. They try to satisfy their customer through providing different service. So, they should improve their service quality to attract more customers. None the less, they have launched new technology to give fastest service to their customers. For sustainable growth, by implementing new technology and innovation they have to walk with the time. In this purpose, they have to identify their strength and need to recover their weak sides. Therefore, it is very important for the policymaker to adopt appropriate policy with calculation interest rate. Therefore, that large capital can be mustard at very low capital cost. It will encourage the industrial and commercial activities eventually lending to better economic condition growth, social economic development, and employment opportunities.
56
3.3 Recommendations
Some recommendations are being put forward on the basis of conclusion through study:
Now that the economic condition of the country deteriorating, there is a damages in slackening of the business and industrial activities. So, the bank should not be interested only in collecting huge amount of deposit by increasing interest rate only.
The banks mobilized capital should be made available for investment in productive enterprise whether the business is of small, medium or large sized. Thus, no bank should expand its credit to promote economic development more rapidly.
There is a service completion among joint venture bank, finance companies and insurance companies may go to losses. So, the bank should give emphasis on modern technologies, should be growth service oriented, train the staff, get up to date information about other bank and high services should be put forward to customers.
Employees should be associated whenever possible in discussion with customer and inspective and other business visit with the objective of developing communication and familiarization between them and customers. All employees should be provided with nameplates, which will give them identification and will help customer in knowing them by name.
The bank should grab more opportunities as soon as possible by adopting efficient and latest market strategies, traditional method should be left behind.
57
Government, NRB and commercial banks should take necessary steps to form and regulate banking habit of Nepalese people especiall y people of rural areas.
Other than shareholders annual report, the bank should publish and distributed booklets containing detail information about its activities and performances as well. This help to maintain harmonious relationship between bank and customers.
58
Bibliography of References Website:
www.prabhubank.com https://www.nrb.org.np Book:
Cooper, Donald R. and Schindler, P.S.(2003) Business research Methods( 8 th edition) New Delhi: Tata McGraw-Hill. Rachita Bista
Branch Manager, Teku Branch ph.n. +97701-4250806 Annual report 15th Annual Report of Prabhu Bank Ltd.
59
