CHAPTER- I 1.1. Introduction The The bank bank is an inst instit itut utio ion, n, whic which h coll collec ects ts savi saving ng of the the pu publ blic ic by prov providi iding ng the attitu attitude de of "Depo "Deposit siting ing for for tomo tomorro rrow" w" devel develop oped ed with with the the huma hu man n civi civili liza zati tion on and and it has has take taken n a prom promin inen entt form form of "Ban "Bank" k".. The The functions functions of commercial banks are highly diversified and enhanced. They are not restricted to depositing only but, still when we think of banks, deposit is the first thing to come into our mind. Banks have been the major source of funds mobilization in the economy since early times. Bank Bank is the most most power powerful ful instit institut utio ion n for the the surviv survival al of the natio national nal economy. In the early stage, the needs and wants of the person were limited. In that period everymen were "In self depended and they grew or made something for themselves. When they began to live together, their needs and wants went is out of their control. Then the barter system gave birth to the monetary system. Then men earned more and more money and wanted to keep in the safe place. They choose one money form that people who want their money safe and gave that people who need it. This way bank was introdu introduced. ced. A man was not able to keep keep all that money. money. Therefor Therefore e a real bank was introduced. Banks are those financial institutions that offer the widest widest range range of financia financiall services, services, especial especially ly credit, credit, saving saving and payment services and perform the widest range of financial functions of any business firm in the economy. It has great significance in the context of our modern economy. Bank tends not only to mobilize the money into priority sectors but it helps to boost trade and commerce in the national also. Banks function should not be misj misjud udge ged d only only in term terms s of depo deposi sitt and and inve invest stme ment nt bu butt also also shou should ld be considered as a major source of credit creation in the economy.
1
"Banking means the accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise, and withdrawal by cheques, draft or otherwise". : "Any institution offering deposits subject to withdrawal on demand and making loans of a commercial or business nature is a bank." Banking plays a very vital and significant role in the development of nati nation onal al econ econom omy. y. It is a fina financ ncia iall inst instit itut utio ion n that that prim primar aril ily y deal deals s in borr borrow owin ing g and and lend lendin ing. g. Here Here fina financ ncia iall inst instit itut utio ion n refe refers rs that that bu busi sine ness ss organization that is mainly confined to finance the development of the trade, commerce and industry. As the country like Nepal, economically poor, a good banking system can help country to develop economically and in any other sector.
1.2. Development of Bank Modern banks are not the effort of a single day months or year .It took many decades to come in this present form. There are different stages in the develop development ment of bank bank .In ancient ancient time, goldsmith, goldsmith, merchant merchant and money money lender used to perform the work of bank in every country so the ancestor who helped in the development of banks are as follows. The Merchant :- Merchants are the oldest ancestors of the modern bank. They used to exchange the gold silver and deposit valuable ornaments ornaments made of gold, silver, diamond, gem, pearl, ruby etc for the safety purpose. The merc mercha hant nt afte afterr acce accept ptin ing g depo deposi sitt issu issue e a rece receip ipt, t, whic which h is cons consid ider ered ed equivalent to the money or precious (valuable) ornaments. They were very popu popula larr at that that time time so peop people le believ believe e on the the merch merchant ant.. Peop People le did did not not hesitate to deal with the merchant so receipt given by the merchant is used as money. The merchant played a vital role in development of bank. The Moneylender: - The moneylender was second ancestor who helped in the development of modern bank. The main functions of the moneylender were to provide loan. In the beginning they provided loan from their own 2
"Banking means the accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise, and withdrawal by cheques, draft or otherwise". : "Any institution offering deposits subject to withdrawal on demand and making loans of a commercial or business nature is a bank." Banking plays a very vital and significant role in the development of nati nation onal al econ econom omy. y. It is a fina financ ncia iall inst instit itut utio ion n that that prim primar aril ily y deal deals s in borr borrow owin ing g and and lend lendin ing. g. Here Here fina financ ncia iall inst instit itut utio ion n refe refers rs that that bu busi sine ness ss organization that is mainly confined to finance the development of the trade, commerce and industry. As the country like Nepal, economically poor, a good banking system can help country to develop economically and in any other sector.
1.2. Development of Bank Modern banks are not the effort of a single day months or year .It took many decades to come in this present form. There are different stages in the develop development ment of bank bank .In ancient ancient time, goldsmith, goldsmith, merchant merchant and money money lender used to perform the work of bank in every country so the ancestor who helped in the development of banks are as follows. The Merchant :- Merchants are the oldest ancestors of the modern bank. They used to exchange the gold silver and deposit valuable ornaments ornaments made of gold, silver, diamond, gem, pearl, ruby etc for the safety purpose. The merc mercha hant nt afte afterr acce accept ptin ing g depo deposi sitt issu issue e a rece receip ipt, t, whic which h is cons consid ider ered ed equivalent to the money or precious (valuable) ornaments. They were very popu popula larr at that that time time so peop people le believ believe e on the the merch merchant ant.. Peop People le did did not not hesitate to deal with the merchant so receipt given by the merchant is used as money. The merchant played a vital role in development of bank. The Moneylender: - The moneylender was second ancestor who helped in the development of modern bank. The main functions of the moneylender were to provide loan. In the beginning they provided loan from their own 2
fund or saving. But latter they started to accept deposit from the people too. The rate of interest on deposit is lower than that that of rate of interest of loan. People deposited their money with money lender for earning interests & for safety and the needy borrow from the money lender paying interest so thwarted as bank and played a vital role in development of bank. Gold Smith mith:: - The goldsmi smiths ths were ere the thi third ancest cesto ors in the the devel develop opmen mentt of bank. bank. Econo Economis mist’s t’s Hartl Hartley ey wither withers s have have consid considere ered d the ancient goldsmith as the father of the modern bank before evolution of bank people deposit their precious metal & valuable ornaments with gold smith for safe safety ty.. In retu return rn gold goldsm smit ith h used used to give give a rece receip iptt whic which h is kn know own n as Goldsmith’s Note’ as an evidence of deposit. It was made payable to bearer and on demand. They were very popular at that time. People believe on them. So the receipts given by the gold smith were used as money. It gained circulation as currency on due course of time. These notes with the passage of time became payable to bore & on demand an enjoyed circulation. Hence goldsmith worked as a bank. In this way gold smith started to carry out creating the credit, issuing notes, lending money, transacting the bills of exchange & promissory notes etc. Later such banking function performed by goldsmith transferred to Joint Stick Company and established as a bank and operated the banking transaction.
1.3. Need of Bank Bank is the must in the present situation. We cannot even imagine the deve develo lopm pmen entt of any any coun countr try y econ econom omic ic acti activi viti ties es with withou outt bank bank and and the the develop development ment of banking banking is must for develop developmen mentt of econom economic ic activiti activities. es. Even in the ancient time the necessity of bank was realized. The need of bank can be pointed as follows: a. For the economi economic c develo developmen pmentt of a countr country. y. b. To provi provide de securit security y of valua valuable ble good goods s and proper property. ty. c. To tran transfe sferr funds funds from from one one place place to ano anothe ther. r. d. To dev devel elop op hab habit it of of savi saving ng.. 3
e. To develop develop agricult agriculture ure & backw backward ard areas. areas. f.
To exch exchang ange e and and contr control ol forei foreign gn cur curre renci ncies. es.
g. To provi provide de loan loan for for the needy needy people people at at lower lower rate. rate. h. To up upli lift ft poo poorr peo peopl ple. e. i. j. j.
To gene genera rate te hu huge ge capi capita tal. l. To deve develo lop p ind indus ustr try y & comm commer erce ce..
1.4. Types of Bank With the change in time, need of bank also changes. So, their function also changes. These are many functions of the bank, which a single type of bank bank canno cannott perfo perform. rm. The The indu industr strial ial,, commer commercia ciall & scien scientif tific ic revol revoluti ution on started which result the banking system to develop and extend. A single type of bank cannot perform all sorts of activities smoothly. So, different types of banks are formed according to their nature of work. Some of its types are as follows: i.
Central Central Bank Bank: - Central Bank is the supreme bank of any country. Nepal Rastra Bank is the central bank of Nepal, which is established in 2013 B.S. (1957 A.D.). It accepts credit of His Majesty Government, Commerci Commercial al Bank, Bank, Financi Financial al Instituti Institution on and Governm Government ent Office Office and gives loan to H.M.G., Commercial Bank, Financial Institution and Govt. office when needed. It keeps monetary system stable, develop banking system, issue coins & notes and control the credit money. At the same time, it works for the economic development of the country. It is also called as “BANK OF BANK”.
ii. Commercial Bank: - Commercial bank is established to improve the
econo economy my of the the peopl people e and to give give servic service e and other other facili facilitie ties. s. It provide loan to the agriculture, industry, & commerce and to offer bankin banking g servic service e to the the peop people le of the countr country. y. In Nepa Nepall there there are are 31 comm commer erci cial al bank banks s at pres presen ent. t. This This bank bank play plays s a grea greatt role role in the the economic development of a country. 4
The commercial banks of Nepal are as below: S. No.
Customer Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Bank of Asia Nepal Ltd. Bank of Kathmandu Ltd. Century Commerical Bank Ltd. Citizens Bank International Ltd. Civil Bank Ltd. Commerz and Trust Bank DCBL Bank Ltd. Everest Bank Ltd. Global Bank Ltd. Growmore Merchant Bank Ltd. Himalayan Bank Limited Janata Bank Limited Kist Merchant Bank Ltd. Kumari Bank Ltd. Laxmi Bank Ltd. Lumbini Bank Ltd. Machhapuchchhre Bank Ltd. Mega Bank Ltd. Nabil Bank Ltd. Nepal Bangladesh Bank Ltd. Nepal Bank Ltd. Nepal Credit and Commerce Bank Ltd. Nepal Investment Bank Ltd. Nepal Rastra Bank Nepal SBI Bank Ltd. NIC Bank Ltd. NMB Bank Ltd. Prime Commercial Bank Ltd. Rastriya Banijya Bank Ltd. Siddhartha Bank Limited Sunrise Bank Ltd.
22 23 24 25 26 27 28 29 30 31
iii. Agriculture Bank: - These types of bank are established with the
objective of developing agricultural sector of a country. In Nepal, Agriculture Development Bank (ADB) was established in 2024 B.S. under the ADB act 2024. Agriculture plays an important role in the economic development of any country. Especially in the developing country, farmer does not have enough capital to invest buying agricultural tools, fertilizers & other necessary equipments. So, ADB 5
provides agricultural production loan, agriculture facility, loan, small & cottage industry loan, agro- profession loan etc for the upliftment of agriculture in the country. iv. Industrial Bank : - Industrial bank are the bank, which provide loan to
establish and expand industry of a country. In Nepal industrial and expand industry of a country. In Nepal Industrial Development Corporation (NIDC) is considered as Industrial Bank. It provides loan for the development of industries. The function of this bank is to open new industry, to expand the present industry, to provide loan & technical assistance to small-scale industry. To encourage the investor to buy and sell the share etc. v. Saving Bank: - The bank established with the objective of managing
type amount of capital by collecting little amount of money saved by people is called Saving Bank. Such banks are established with the purpose of encouraging the saving of the people. Up to the recent time there is not a single bank established as Saving Bank in Nepal. ADB etc are performing the function of this bank. vi. Exchange Bank : - The banks, which exchange foreign currency, are
known as Exchange Bank. It exchange different currency and transfer funds to the foreign currency. It buys and sells the foreign bill of exchange. It provides facility to transfer money to foreign country. In Nepal, Nepal Rastra Bank & some other Commercial Bank perform the function of exchange bank. vii. Student Bank: - The bank, which accepts the deposit of student and
give loan to the needy student, is called Student Bank. This type of bank is not established in Nepal till now but this type of bank is found in other country including India. The student of university deposit money in the bank. Such bank is established in universities for the purpose of making saving habit of the students. This bank benefits to the student studying in the universities. 6
viii.Rural Development Bank: - The bank, which is established for the
upliftment of the living standard of the people living in rural area by encouraging them to start possible income generating occupation, is Rural Development Bank. It provide loan without security & provide necessary training and banking services to the people of rural areas. The bank have a goal to bring poor people of lower class to promote them at respectable level by giving them opportunity to increase income & bring out hidden & suppressed skills through different training. ix. Labour Bank : - Up to the recent date there is not a single bank
established in Nepal as labour bank. In many other countries we can find this type of bank. This type of bank is established by labour union with the objective of offering the banking services to labourers. It is called as labour bank. Due to limited income, the labour class has no possibility of saving. So this bank is opened with intention to increase the tendency of saving in labour class by saving a certain portion of their incomes to deposit with this bank. x.
Indigenous Bank: - The bank, which follows the banking profession, is traditional custom & culture are called indigenous bank. It provides loan at a fixed interest rate & accepts deposit. Examples of this type of bank are goldsmiths, landlords, and merchants. In Nepal, we can find this type of bank to great extent. So we cannot ignore their importance. Such types of bank are in large number in developing countries than in developed countries.
1.5. Introduction of Nabil Bank Ltd. Nabil Bank Limited was established on July 12, 1984 under the Nepal Commercial Bank act 2031, and Nepal Company Act 2053. It was the first foreign Joint Venture by the Joint Investment of Dubai Bank Limited, and the 7
Nepalese investor, which included local financial institution and general public owing 20% and 30% of the total capital respectively. The other half portion of total capital was owned by Dubai Bank Ltd., which was later acquired by Emirates Bank International Ltd, and then by National Bank Ltd. Bangladesh. The current partner that owns 50% share of Nabil Bank Limited is N.B. International Ltd. of Ireland. Nabil Bank Ltd. was previously known as Nepal Arab Bank Ltd. till December 31, 2001. Under the technical service agreement approved by Nepal Rastra Bank, Nabil Bank Ltd. has 45 braches and 2 counters within Nepal, which is the highest number of branches of any Joint Venture Bank in Nepal. It is the authorized bank to operate inside the Tribhuvan International Airport. It provides the insurance of bank guarantee, letter of credit, credit card and other banking service worldwide. This bank is making good profit and has provided employment to large numbers of people. It has been giving banking service through different branches by using extra modern technologies. It is a popular bank of Nepal. There are Nepalese and foreign investor investing in this bank. The shares holding of Nabil Bank Ltd are:
Table No.1: Share holding of Nabil Bank Ltd N.B (International) Limited, Ireland
50%
Nepalese Public
30%
Nepal Industrial Development Corporation
6.15%
Rastriya Beema Sansthan
9.67%
Others (Promoter Groups)
3.85%
Nepal Stock Exchange
0.33%
Total:
100% 8
(Source: www.nabilbankltd.com) Figure No.1:
Pie Chart Showing Share Holding of Nabil Bank Ltd. of Different Investors.
Share Holding of Nabil Bank Ltd Table No. 1 shows the share holding of Nabil bank by different investors. Share of N.B (International) Limited, Ireland is 50%, share of General Public is 30.%, share of Nepal Industrial Development Corporation is 6.15% , share of Rastriya Beema Sansthan is 9.67%, the promoters groups share is 3.58% and finally the share of Nepal Stock Exchange is 0.33%.
1.6 Organizational Setup of Nabil Bank LTD
9
Manager Head Manager Manager Manager In charge Card Senior Manager Chief Executive Officer Board of Director Office Operation Treasury Service Head Corporate Central Office Internal Control Audit Legal & Credit Operation &Personn el Banking Credit Control Marketing
10
Head Office. Management Team Mr. Anil Gyawali (Chief Executive Officer) Central Operations Mr. Kapil Sharma Chief Operating officer Ms Neelam Tuladhar Head - Branches and Distribution Network Mr. Jyoti K.C. Head - Central Trade Operations Mr. Roshan Koirala Head - Human Resources Finance & Planning Mr. Amrit Charan Shrestha Chief Financial Controller Mr. Krishna Dutta Bhattarai Chief Financial Officer Legal and Support Mr. Binay Regmi Head - legal & Support Mr. Rajesh UpadhyayaHead - Information Technology Mr. Basanta Dhakhwa Manager - IT support Mr. Dinesh Poudel Head - Administration Risk Units Mr. Anil Khanal Chief Risk Officer Mr. Krishna Gopal Head - Credit Administration and Support 11
Manandhar Mr. Rajendra Bahadur Malla Head - Operation Risk Ms. Neena Thapa Head- Credit Risk Management Mr. Iswar Man Shrestha Credit Analyst Mr. Babu Ratna Bajracharya Credit Analyst Mr. Kanhaiya Lal Manager - Compliance, Governance & Rajwant Strategic Planning Investment Management and International Banking Mr. Bhuvan Dahal Chief Investment Officer Mr. Mohan Subba Head - Global Markets Mr. Praveen Raman Parajuli Head - Merchant Banking Mr. Satish Sagar Dawadi Head- Bancassurance Corporate Banking & Project Financing Mr. Deepak Shrestha Head - Project Financing Mr. Dripu Dhoj Adhikari Head - Corporate Banking Ms. Namita Dixit Sr. Relationship Manager, Kathmandu Mr. Gyaneshwor Acharya Sr. Relationship Manager, Kathmandu Mr. Sanjay Nepal Sr. Relationship Manager, Kathmandu Mr. Binay Neupane Sr. Relationship Manager, Kathmandu Mr. Kabindra P. Shrestha Relationship Manager, Kathmandu Mr. Keshav Bdr. Nepali Relationship Manager, Kathmandu Mr. Nischal Pandey Relationship Manager, Kathmandu Mr. Pushkar Bhattarai Relationship Manager, Biratnagar Mr. Krishna Thapa Relationship Manager, Birgunj SME, Micro and Personal Lending Mr. Ramesh Lohani Head - Retail & SME Business Mr. Yagya P. Sharma Head - SME Mr. Suresh P Tripathee Head - PLU Deposit Relation Management & E - Channels Mr. Binay K. Regmi Head- Deposit Relation Management Mr. Saroj Pyakurel Sr. Relationship Manager Mr. Deepok Chhettri Sr. Relationship Manager Mr. Pradeep Mishra Head - Inward Sourcing Mr. Niraj Sharma Head Card Division & E-Channel 12
Internal Audit Mr. Binod K. Sharma
Head - Internal Audit
1.7. Branch Network Nabil Bank Ltd. has 45 branches, and two counters, which is the largest number of branches among Joint Venture Bank in Nepal.
Head Office Nabil Bank Ltd. Nabil House, Kamaladi, Kathmandu.
Branches & Counter 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27.
Teendhara Branch, Kathmandu Kantipath Branch, Kathmandu Tripureshwor Branch, Kathmandu Newroad Branch, Kathmandu Jorpati Branch, Kathmandu Adarsh Nagar Branch, Birgunj Power House Chowk, Birgunj, Parsa Goswara Road Biratnagar Branch, Biratnagar Kupondole Branch, Lalitpur Itahari Branch, Itahari Butwal Branch, Butwal Newroad Pokhara Branch, Pokhara Bhairahawa Branch, Bhairahawa Nepalgunj Branch, Nepalgunj Lakeside Branch, Pokhara Exchange Counter, TIA, Kathmandu Dharan Branch, Dharan Bhalwadi Branch, Rupandehi Maharajgunj Branch, Kathmandu Birtamode Branch, Jhapa Damak Branch, Jhapa Hetuada Branch, Makawanpur Narayangadh Branch, Chitwan Baglung Branch, Baglung Tulsipur Branch, Tulsipur Ghorahi Branch, Dang Dhangadi Branch, Dhangadi
13
28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48.
Mahendranagar Branch, Kanchanpur New Baneshwor Branch, Kathmandu Halchowk Branch, Swoyambhu , Kathmandu Thamel Branch, Kathmandu Kausaltar Branch, Bhaktapur Chabahil Branch, Kathmandu Maitidevi Branch, Kathmandu Satdobato Branch, Lalitpur Balaju Branch, Kathmandu Kuleshwor Branch, Kathmandu Khandbari Branch, Shankhuwashabha Charikot Branch, Dolakha Dhulikhel Branch, Kavre Gorkha Branch, Gorkha Besisahar Branch, Lamjung Chandragadhi Branch, Jhapa Dhapashi Branch, Kathmandu Anamanagar Branch, Kathmandu Sinamangal Branch, Kathmandu Gwarko Branch, Kathmandu Attarkhel Branch, Kathmandu
ATM Counters 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
Attariya, Baneshwor, Kathmandu Bhaktapur, Bhaktapur Bigbazar, Birgunj Pulchowk, Lalitpur Chipledhunga, Pokhara Foradurbar, Kathmandu Jhamsikhel, Lalitpur Kalimati, Kathmandu Kapan Gumba, Kathmandu Kathmandu Guest House, Thamel, Kathmandu Krishna Tower, New Baneshwor, Kathmandu Lakeside, Pokhara Hotel Ying Yang, Thamel, Kathmandu Newroad ATM Lobby, Newroad, Kathmandu Sanchayakosh, Thamel, Kathmandu Hotel Soaltee, Soaltee Mode, Kathmandu US Embassy, Chakrapath, Kathmandu
1.8. Products and Services Provided by Nabil Bank Ltd.
14
Nabil bank Ltd is one of the most popular banks of Nepal. It has provided many services to its customers. Due to which it is popular among the Nepalese people. The services and products provided by Nabil Bank Ltd are as below. 1. Deposit: - Nabil bank Ltd accepts the saving of people as deposit.
People deposit their savings in the bank for their future use. It gives interest to the depositor. Some types of Deposit of Nabil Bank are. a. Current Deposit b. Saving Deposit c. Fixed Deposit d. Call Deposit 2. Loan: - It provides loan to the needy people for different activities. It also provides loan for industrial & trading purpose. It provides loans on (mortgage) security & takes certain percent as interest. 3. Credit Card: - Nabil Bank Ltd is the first bank to introduce credit card in
Nepal. It commenced credit card facilities with the acceptance of master card, visa card, AMEX etc. due to the increasing number of tourist & visitors it has opened credit card counter at Thamel, Kathmandu & Lakeside, Pokhara. 4. Safe- Deposit Locker: Nabil Bank not only keeps its customers money
safe but also it keeps their valuable ornaments, jewelry & important documents safe. It charges a minimum reasonable amount for these services. It provides this facility in some of its branches only. 5. Fund Transfer: - with the help of worldwide network of its
correspondent bank it can transfer its customer fund to and from Nepal to anywhere in the world within minimum time. 6. Western Union Money Transfer: Nabil Bank Ltd has entered in to an
agreement with Western Union Financial Inc.USA, under which funds can be transferred to Nepal from more than 85000 locations in more 15
than 176 countries like; we can send money to these locations within few minutes. 7. SWIFT: - Nabil Bank has become a member of SWIFT (Society for
Worldwide Inter-bank Financial Telecommunication). Message & Fund Transfer is carried out through SWIFT with minimum time & Cost. 8. Automated Tellers Machines (ATM): - It the new step of financial process. This system is very useful and easy to do the financial transaction, which helps us as follows. •
The basic functions of Nabil ATM are dispensing cash, inquiring the balance in the customer account accepting requests for cheque books, printing of statement of accounts.
•
Nabil ATM card is called CASH CARD since it provides flexibility of cash withdrawal conveniently.
•
Nabil ATM never sleeps. It is at our service round the clock- 24 hours a day and 365 days a year.
•
Nabil provides additional CASH CARD (supplementary card) for your spouse who maintains a joint account with us, which is operated singly, subject to the other conditions mentioned above.
•
At the time of issue of CASH CARD we will be given a sealed envelope, which contains 4 digits number randomly generated by a computer. This number is known as Personal Identification Number (PIN), which is known only to the cardholder. Whenever we desire to do a transaction at the ATM, we should insert the PIN. This is the ATM's way of knowing the authenticity of the cardholder. The ATM screen will guide us step by step through all the transactions with a series of help messages. Detailed instructions on operating the ATM are also given on the reverse.
•
We have to inform immediately- by telephone, if possible followed by a letter- the nearest branch of Nabil Bank about the loss of our card. The 16
Bank will take steps to prevent its misuse. The Card will be logged hot card to prevent any further transaction. •
We can withdraw up to RS 35,000 per day subject to the balance in your account. We have to insert our CASH CARD by holding the plain side upward
(magnetic strip downward). We have to enter our secret 4 digits Personal Identification Number (PIN) on the keypad. To maintain secrecy, the PIN entered by you will be displayed on the screen as xxxx. The ATM will then display the Main Menu as given below with available services. Then we can choose our option and proceed with Non-Stop Banking. The customer will have eight service options available to us four on each side of monitor as mentioned below: •
FAST CASH
•
WITHDRAWAL
•
PIN CHANGE
•
ENQUIRY
•
PLEASE SELECT TYPE OF SERVICE
•
FAST CASH
•
ATM LOCATIONS
1.9 Fixed Deposit A/C Fixed Deposit Account means an amount deposit in a bank for a certain fixed period of time. The customer opening such deposits their money in this account for a fixed period of time. He/She cannot withdraw his or her money before the expiry of its time and the amount deposited interest is returned to the depositor after the expiry of the date. The customer can renew the fixed deposit a/c after the expiry fixed time. Depositors receive more interest than in other account. 17
1.10. Features of Fixed Deposit a. The amount is deposit for a fixed period. b. The amount cannot be withdrawn by cheque before the expiry of time.
c. Interest is higher than in saving, Current or other a/c. d. Usually, the interest is awarded every 3 month in this deposit e. Fixed deposit a/c can be rewarded after expiry of time. f.
Bank can invest such deposit in other sector.
g. Customer can deposit for fixed time from 7 days to 5 years & more. h. Both Customer & Bank get benefited from this deposit. Interest Rate Given by Nabil Bank Ltd for fixed deposit Period
Rates
Upto 1
7 % to 8 %
month 3 months
8% to 9 %
6 months
9 % to 10 %
1 year or
10% to
above
10.5 %
(Effective Date June 2011)
1.11. Procedure of Opening Fixed Deposit: To open the fixed deposit a/c we should first of all fill a form, which is available in Nabil bank. We can get form from any branch & deposit it in the same bank, which is near, & easy for us to deal we should fill our name, surname, age, address, & citizenship of the applicant & other necessary 18
things should be filled up in firm. We also should include the name of a willed person. Willed person is the person to whom the deposited money will be transfer in case of the death of the depositor. After filling the form the employee of Nabil bank, check the application form. After checking the form if we found everything right than we can deposit money in the bank. Then the bank provides a receipt as an evidence of (proof) to show that the fixed deposit a/c is opened. After depositing the money we will get interest from the bank.
1.12. Procedure of Closing Fixed Deposit Fixed deposit account is not like current &saving deposit, which goes continuously for long time. In the fixed deposit, costumer deposits amount for a fixed period so after the expiry of the fixed period the relation between the bank & customer comes to an end automatically and if the customer doesn’t renew the account. If the customer renews the as then it goes on continuously for the fixed period after the expiry of the fixed period the customer with the receipt if fixed deposit visit the bank and withdraw his money back he get the total amount of capital the interest for the deposit. But if the customer wants to continue then he can renew it. The deposit will end if the a/c holder dies. The deposit will be transferred to the willed person on the death of the a/c holder. And is the willed person wants to continue the a/c he can continue the account.
1.13 Objectives of the Study. The main objectives of the study are to analyze the trend of saving deposit and total deposit of Nabil bank. And other objectives of the study are as follows. ➢
To analyze the total mix of deposit in Nabil.
➢
To analyze the share of fixed deposit out of total deposit on Nabil.
➢
To analyze the trend of fixed deposit in Nabil.
➢
To analyze various facilities only provided in Nabil
➢
To evaluate the importance and utilization of fixed deposit account. 19
1.14 Limitation of the Study . This study gives general information about the Nabil bank and its function. It also gives the basic ideas of deposit collection and trend specially fixed deposit. I tried to get as much as information about Nabil and also want to analyze them appropriately, but there are some limitations, which could not be crossed. ➢
Due to time constraints, this study was done only within one organization.
➢
The study concerns only a period of 5 years from year 2004 to 2008 and hence the conclusion only the above period.
➢
The studies focus on fixed deposit account.
➢
It can’t compare fixed deposit of other commercial banks.
➢
Only secondary data are used. So, the reliability of data is not checked.
CHAPTER II 2.1. Literature Review A bank is the custodian of the deposit of depositors. In modern Bank is one of the important financial institutions dealing with the money, credit and financial asset. In fact, the term bank has been derived from the Greek word called "BANCA" which meaning is lending and borrowing of money sitting on bench. On this basis, banking is defined as an institution dealing with money, credit and other financial asset. A bank is government registered institution which involved in monitoring transaction, it purchase and sales money and credit. Banks are the most important financial institution in the economy. It plays a vital role in the development of a country . 20
"Ordinary banking business consists of changing for bank deposits and bank deposits for cash". "Any institutions opening deposits subject to which drawl on demand and making loans of commercial or business nature is bank" "Banking means the accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdraw able by cheque, draft or otherwise” “A bank is dealer in capital or more probably a dealer in money; he is an intermediate party between the borrowers and the lenders"
" A bank means a commercial institution government or non-government which financially functioned as collecting /accepting deposit of money by allowing interest repaying it on demand or lending , transaction in give and take of cash, gold, silver and other valuables etc." "Therefore it shows that “NABIL” has a good and sound reputation among its customers. The economy is going through recession these few years and interest rate provided by all banks including “NABIL” to its deposit are directly decreasing even that fixed deposit trend of “NABIL” doesn’t seem to be affected by this. It indicates that the customers have faith that their deposit will be handled carefully by “NABIL”. The deposit isn’t completely governed by returns on it only 23.94% of total deposit is one of the major sources of funds for “NABIL BANK LTD.” “Maximum deposit isn’t good economic policy for development of the country. If deposits are invested in any kinds of productive sector, it moves the country to economic development. Many people directly or indirectly engaged on employment and it also increased the national productively. In 21
this way we can say that “Deposit is a kind of economic seeds” for countries but all deposits should not be seed for us. If all crops are used for seeds, we will hungry when it doesn’t give product. That is why we can say that a suitable deposit is most important equipment for the development of study deposit collection policy of every kind of banking and financial institutions. Profitability position of NABIL Bank is comparatively better than the other ratios. So I recommend the bank to use its resources for generating more profit margins. If the resources are held idle, the bank may face high costs and causes the low profit margin.”
CHAPTER III 3.1 Research Methodology Before collecting information from bank the action plan was made according to the instruction given by the subject teacher. Initially, Kamaladi , Head Office of Nabil bank is visited and some aspects of issue have been interviewed and have been discussed with them also. From the co-operation and help of the concerned staff, annual report and information regarding deposits especially fixed deposit have been
22
collected. Apart from that other information and primary data are collected from the some publishes and annual report of Nabil what they provided us. Available literature and document have been reviewed. Then after, collected information and data have analyzed and synthesized.
3.2. Types of Methodology in Research Collection of data means the methods that are used for getting the necessary information from the units under investigation. The method of collecting the data depends upon the nature, object & the scope of the inquiry. There are two types of data: (a) (b)
Primary Data Secondary Data According to Selltiz, Wrightsman and Cook as quoted by Ritchie (1989)
the purpose of various data collection techniques are to produce truth worthy evident that is relevant to the research question being asked. (a)
Primary Data:
The first hand data, which is collected by the researcher himself, is primary data. The data is thus originated in character. These types of data are obtained in the survey and inquire conducted by Government, some individual institutions & research bodies. It has not been collected primary data for this study. This fieldwork is based, to some extent, on the primary data collected from the concern sample group of officers working in NABIL. (b)
Secondary Data: Any data, which is already published in other sources, like book,
newspaper, websites, etc. is secondary data. For this purpose of this fieldwork, I have collected the secondary data from the following sources: 1. 2006/07, 2007/08, 2008/09, 2009/10Annual Report of NABIL. 2. Field work report of previous BBA 5TH Semester 3. Other related Manuals & Bulletins statement published by NABIL
23
4. NABIL Bank website (www.nabilbank.com)
3.3. Data processing Technique The data collected from the above stated sources has been classified, tabulated and interpreted for easier study. Classification and tabulation of data
The data collected are classified tabulated and arranged in a manner to make it easily understand with the use of table in a chronological order. After classification, the data is tabulated.
3.4. Diagrammatic Representation of Data Various diagrams are used to present the data more clearly. The diagrams used are as follows. ➢ Bar Diagram ➢ Pie-chart ➢ Trend Line
3.5. Statistical Tools Statistical Tools is to be used as follows: ➢
Mean
➢
Standard Deviation and C.V
➢
Ratio
➢
Percentage
➢
Co-relation and Regression
CHAPTER –IV 4. Presentation and analysis of data Various statistical techniques used for the analysis of data. Data are analyzed according to the figures in the table extracted from the annual general meeting repost of the bank and mentioning the reasons of increasing and decreasing trend data. The main purpose of this case study is to show the fixed deposit trend of Nabil Bank Ltd., its customer’s interest and Nabil’s policy so far as well as recommend suggestions for its improvement through this study. During the fieldwork at Nabil Bank Ltd., Kamaladi, board aspects o 24
fixed deposit, the following phenomena about F.D. in Nabil Bank has been observed. Table no. 2: The Financial Highlights of Nabil Bank Ltd., Of The Year 2009/ 2010 (NRs. In Million )
Particulars
2009/10
Total Capital Fund
2008/09 3,834.8
46,410.7
37,348.3
33,031
27,999
Interest Income
4,047.7
2,798.5
Interest Expenditure
1,960.1
1,153.3
Deposit Loan advance & Overdrafts
2,087.6
Net Interest Income
2
Total operating income Total Operating Expenses Profit Before Prov. For Possible Loss.
1,645.20
2,764.1
2,220.9
701.7
604.9
2062.4
Bonus & Tax
1616
Provision For Possible Losses
355.82
45.72
Provision For Staff Bonus
162.51
147.86
Provision For Tax
485.91
447.61
1,138
Net Profit
.57 (Source:
3,130.2
1,031.05
Nabil Bank Ltd. Report 2009/10)
Above table shows the financial highlights of Nabil bank. It shows over all performance of Nabil bank is good. Bank earns net profit of Rs 1,031.05 million in 2008 and earns net profit of Rs. 1,138.57 million in 2010.
4.1. Deposit Mix:
25
Deposit Mix is the composition of different types of deposits of the bank. The deposits mix of Nabil Bank Ltd. is given in the table below. Table No.3 Deposit mix of Nabil Bank (Rs in million)
Years Current Saving Fixed Call Margin Others Total
2009/10
2008/09
7,904.67 5,480.53 13,783.58 14,620.41 14,711.16 8,310.71 9,295.06 8,438.27 629.86 463.01 864.21 353.20 47,188.54 37,666.13
Change NRs. 2424.14 (836.83) 6400.45 856.79 166.85 511.01 9522.41
% 44 (6) 77 10 36 145 25
Figure No.2: Pie Chart of Deposit mix of Nabil Bank in 2009/10
Figure No.3: Pie Chart of Deposit Mix of Nabil Bank of Year 2008/09
Table no.3 Indicates that the overall deposit of Nabil Bank is increasing. Total deposit is increased by 25% this fiscal year (2009/10) in comparison to the previous fiscal year (2008/09). Current deposit is increased by 44% this fiscal year compared to previous year. Saving deposit has decreased by 6%, fixed deposit is increased by 77%. Call deposit is increased by 10%, and Margin is increased by 36% whereas other deposits have increased by 145% this fiscal year as compared to the previous year.
4.2. Fixed Deposits Fixed deposits are the deposit, which are deposited for a certain period. It is one of the major deposits of any bank. The fixed deposits of Nabil Bank are in the table below. 26
Table No. 4: Fixed Deposit of Nabil Bank (Rs. In Million) Yea Fixed %
r 200 6 200 7 200 8 200 9 201 0
Deposit
Change
3450.2
-
5435.2
58%
8464.09
56%
8310.70
-2%
14711.16
77%
In the above table we can see the fixed deposit of five year. The fixed deposit is increased by 58% in 2007 than previous year. The fixed deposit on 2008 and 2009 is increased by 56% and decreased by 2% respectively in comparison to previous year. And the fixed deposit in 2008 is increased by 77% than previous year. This is also shown by following figure. Figure No.4: Fixed Deposit of Nabil Bank
4.3. Total Deposit Total deposit is the sum of current, fixed, margin, saving, call & other deposit. While studying the fixed deposit we should also study the total deposit of Nabil Bank Ltd. Table No. 5: Total Deposit of Nabil Bank
(Rs. In Million) Year
Total
%
200
Deposit 19348.4
Change -
6 200
23342.3
20.6
27
7 200
31915.05
36.73
8 200
37348.25
17
9 201
46410.70
24
0 In the above table, we have given the total deposit of Nabil Bank from the year 2004 to 2008. We can see that the total deposit is increased by 3.5% in the year 2005.
And there after the total deposit is increased by
32.6%, 20.6% and 36.73% in the year 2006, 2007 and 2008 respectively in comparison to the previous year. Figure No.5: Total Deposit of Nabil Bank
4.4. Fixed Deposit to Total Deposit Ratio Following table and figures shows the fixed deposit to total deposit ratio of Nabil bank. Formula used here is fixed deposit to total deposit ratio = FD
TD
×100%
Table No. 6: Fixed deposit to total deposit ratio
(Rs. In Million) Year
Fixed Deposit
Total Deposit
Ratio %
2006 2007 2008 2009 2010
3450.2 5435.2 8464.09 8310.70 14711.16
19348.4 23342.3 31915.05 37348.25 46410.70
17.8 % 23.3 % 26.52% 22.01% 31.82%
Above table no. 6 shows fixed deposit to total deposit ratio. Fixed deposit to total deposit ratio was 17.8% in 2006 which increased to 23.3% in 2007. 28
There after this ratio shows increasing trend. It reaches to 26.52% in 2008 and decreases by 4.51% and reaches 22.01% in 2009. In 2010 the ratio increases to 31.82%. This trend is also shown in following figures. Figure No. 6: Fixed deposit and Total deposit
Figure No. 6.1: Fixed deposit to total deposit ratio
4.5. Investment to F.D. Ratio Formulae Used: Investment to F.D. Ratio = investment/fixed deposit*100% Table No 7: Invest to fixed deposit ratio (Rs. in million ) Year Investment
2006 2007 2008 2009 2010
6178.53 8945.31 9939.77 10826.37 13600.91
Fixed Deposit
3450.2 5435.2 8464.09 8310.70 14711.16
Ratio %
179.08 164.58 117.43 130.27 92.45
Average ratio 136.77
Above table no: 7 shows the decreasing trend of investment to fixed deposit ratio. In year 2006 investment was Rs. 6178.53 million and fixed deposit was Rs. 3450.2 million and the ratio was 179.08 %. The ratio was 164.58%, 117.43%, 130.27%, and 92.45% in the year 2007, 2008, 2009 and 2010 respectively. The Invest to fixed deposit rate has increased in the year 2009 reaching 130.27%. The average investment rate of Nabil bank is 136.77% of fixed deposit over the five years study period . This ratio is also shown by following figures. Figure No. 7: Invest and fixed deposit 29
Figure No. 7.1: Invest to fixed deposit ratio
4.6. Cash Reserve Ratio Nepal Rastra Bank controls the money supply & credit in the country in order to stabilize the price and to meet different economic economics condition of the country. Every commercial bank operating in Nepal should maintain cash reserve as per the directive to NRB. The recent cash reserve ratio provided by Nabil Bank are: 1. 4.5% of Fixed deposit 2. 7% of Demand Deposit 3. 3% of Total Deposit that must be cash in hand Formula Used Cash Reserve Ratio = (Cash & Bank Balance / Total Deposit) * 100% Table No. 8: Cash reserve ratio
(Rs. In Million) Year
Cash
&
Bank Total Deposit
CRR%
Balance 2006 2007 2008 2009 2010
630.24 1399.8 2671.14 3372.51 1400.09
19348.4 23342.4 31915.05 37348.25 46410.70
3.26% 6% 8.37% 9.02% 3.01%
The
above
table shows that the ratio of CRR of Nabil Bank in the year 2006, 2007, 2008, 30
2009 and 2010 is 3.26%, 6%, 8.37%, 9.02% and 3.01% respectively. CRR is increasing & decreasing in the different year. The main reason of fluctuation of CRR in different year is due to the increasing & decreasing of Cash & Bank Balance and Total Deposit & it is also affected by NRB Figure No. 8: Cash reserve ratio
Figure No. 8.1: Cash reserve ratio
4.7 Interest Paid to different deposits Interest paid by Nabil bank to the different deposits in 2009 and 2010 are shown in the following table. Table No. 9: Interest Paid to different deposits
(Rs in Million) 20
2010
Fixed Deposit Saving
09 460.03 298.45
833.54 526.60
Deposit Call Deposit
303.18
499.40
Interest paid on fixed deposit, saving deposit and call deposit were Rs. 460.03 million, Rs. 298.45 million and Rs. 303.18 million in 2009 which reached to Rs. 833.54 million, Rs. 526.60 million and Rs. 499.40 million in 2010 respectively. Interests paid on deposits were increased in 2010 in comparison to previous year. This interest expenditure is also shown in following figure. Figure No. 9: Interest Paid to different deposits 31
4.8. Statistical Analysis Calculation of mean S.D., C.V. and Karl Pearson’s Correlation Coefficient between Fixed Deposit & Total Deposit
Table No. 10: Statistical Analysis _
X=(
x )( . D F
)
y=Y-
3450.2
2007 2008 2009 2010 Total
( X − X ) 2
-897.54
805578.1
5435.2
23342.4
1087.46
8464.09
31915.05
4116.35
1182569. 3 16944337 .3
8310.70
37348.25
236.43
55899.14
46410.70
6636.89
44048308 .87
( Y )
6 40371. 35
( x
158364. 8
7260473 1.13
1309.7 4 2684.2 6 11256. 91 5675.2 9 14737. 74
1715418. 9
1175544
7205251. 7 12671802 2.7 32208916 .58 21720098 0.3
2919025.4
4707614 70
17907592 8.50
46337381. 5 1341808.8 1 97812759. 23
4.8.1 Mean Mean is the sum of all the observation or values divided by number of observation or values. Mean is the arithmetic average of total observations or values. Average F.D.
=40371.35/5 = Rs. 8074.27 −
( X ) =
∑ X n
Average T.D.
=158364.8/5 = Rs. 31672.96 −
(Y ) =
_
− x) (Y − Y )
_
19348.4 T . D.
14711.1
_
Y
X − X 2006 Yea
(Y − Y )2
∑Y n
32
Therefore, the average (mean) of fixed deposit of Nabil Bank Ltd., for last five year is Rs. 8074.27 million & the average (mean) of total deposit of Nabil Bank Ltd. is Rs. 31672.96 million.
4.8.2 Standard Deviation S.D. is defined as the positive square root of the mean of the square of the deviations taken from the arithmetic mean. It measures the relative majors of dispersions i.e. the value disperses from the respective mean. It is denoted by . σ
F.D. =√ { σ
}= −
2 ∑ ( X − X ) / n
= = T.D. =√ { σ
√ (72604731.13/5)
} −
∑ (Y − Y )
2
√14520946.23
Rs 3810.63 =
√ (470761470/5)
/n
= =
√94152294 Rs. 9703.21
Therefore the standard deviation of fixed deposit of Nabil Bank Ltd. for the last five years is Rs. 2376.2 and the standard deviation of total deposit of Nabil Bank Ltd. is Rs. 6565.6
4.8.3. Coefficient of Variance. The coefficient of dispersion based on standard deviation multiplied by 100 is known as the coefficient of variance (C.V). It is independent unit. 33
C.V. F.D.
= −
∴
(σ F . D. / X ) × 100%
= 3810.63 8074.27
=
×100%
47.19%
C.V. T.D. = −
∴
(σ T . D. / Y ) × 100%
= 9703.21 ×100 % 31672.96
=
30.63%
The Coefficient of Variance measures variability of the observation. Which reference to above calculation there is uniformity in the changes of total deposit as compared to fixed deposit because C.V. of total deposit is less than the C.V. of fixed deposit.
4.8.4 Karl Pearson’s Correlation Coefficient between Fixed Deposit and Total Deposit One of the widely used mathematical methods of calculating the correlation coefficient between two or more variables is Karl Pearson’s Correlation Coefficient. It is also known as Pearson’s Correlation Coefficient. It is denoted by
or simply Y is defined by. Y XY
Y = ∑ xy
34
√
×
∑ x
2
√
∑ y
2
Value always has between
and −1
.
Denotes the perfect
+1 + 1
positive correlation between the two variables &
denotes negative −1
correlation between the two namable Y
=
∑ xy 2 2 ∑ x × ∑ y = 179075928.50 72604731.13 × 470761470
= 179075928. 50 8520 .84 × 21690 .12
= 179075928. 50 184818042 .1
=
0.96
The value of correlation shows the degree of relationship between two or more and two variables. The positive correlation coefficient show the positive relationship. Since, the correlation coffecient between F.D and T.D is nearly 1, there is nearly perfect correlation between F.D. & T.D. of Nabil Bank Ltd. This value implies if T.D. increases, F.D. also increases and vice versa .
4.8.5. Probable Error. It’s the measure of testing the reliability of the calculated value if ‘Y’. = 0.6745 × ρ .ε (1 − r 2 / n
35
If Y
it is in significant. Therefore, perhaps there is no evidence of < 6 ρ .ε .,
correlation. If Y
it is significant in other case nothing can be > 6 ρ .ε .,
concluded. =
0.6745
(1 − r
ρ .ε
2
=
0.6745
/ n
×
(1 − (0.96) =
0.6745
)
2
/ 5
(1 − (0.96 / 2.24) =
0.6745
×
(1 − 0.42 ) = =
0.6745 0.391
0.58
6 . = 6 X 0.391 = 2.34 ∴ ρ .ε Since Y is < 6 . i.e. 0.99< 2.34, the value of “Y” is insignificant. ρ .ε
4.8.6. Trend Analysis The movement of the data over a long period is called trend. Trend Analysis helps us to study the changes in the value of different variable with the passage of time. This analysis is one of the important tools of financial statement analysis in which the trend of any item contained in the financial statement can be shown over the different period.
Least Square Method: A widely & commonly used method to describe the trend is the method of least square. Under this method, a trend line is fitted to the data satisfying the following two conditions 36
i.
&
∑ ( y − yc ) = 0 ii.
is least where ‘y’ is the actual value & ‘yc’ the
∑ ( y − yc)
2
computed value of ‘y’. As
is least, hence the
∑ ( y − yc)
2
name method of least square. The line obtained by this method is known as the line of best fit. Let the trend line between the dependent variable ‘y’ and the independent variable ‘x’ (i.e. time) be represented by y = a + bx …………….(i) Then for any given value of independent variable ‘X’, the estimate value of ‘Y’ is denoted by Yc given by above equation is yc = a + bx, Where, a = y intercept or value of y when x = 0 b = slope of the trend line or amount of change that comes in ‘y’ for a unit change in ‘x’ Table No.11: Calculation of trend Value of Fixed Deposit . Year (X)
x =X-2006
x2
xy
2006
3450.2
0
0
0
2007
5435.2
1
1
5435.2
2008
8464.1
2
4
16928.2
2009
8310.70
1
1
8310.70
2010
14711.16 ∑y = 40371.36
2
4
29422.32
N=5
Here,
Fixed Deposit (y)
a=
∑x = 0
10 2
x =
=
∑ y / n
∑
= 40371.36 5
37
∑xy =25397.42
8074.27
b=
=
∑ xy / ∑x
2
=
2539.74
25397 .42 10
Substituting the value at a & b in eq n yc = a+bx yc= 8074.27+2539.74x For trend values When x =-2,
yc = 8074.27+2539.74 (-2)
=
yc = 8074.27+2539.74 (-1)
=
yc = 8074.27+2539.74 × 0
=
yc = 8074.27+2539.74 (1)
=
yc = 8074.27+2539.74 (2)
=
2994.79 When x = -1, 5507.53 When x = 0, 8074.27 When x= 1, 10613.94 When x = 2, 13153.68
Figure No. 10: Trend Value of Fixed Deposit
The above figure shows that the trend of fixed deposit is increasing every year. Predicted Value of fixed deposit in year 2011 ∴
38
yc
=
a + bx
=
8074.27+2539.74 (3)
=
NRs. 15693.49 million
39
CHAPTER –V SUMMARY, CONCLUSION & RECOMMONDATION 5.1 SUMMARY: Bank is an institution, which provides a financial services o the general people. Simply bank is media to collect deposits from the general people and provides them loans by charging a certain rate of interest “bank is a manufacture of credit machine for fascinating exchange”. Today, bank plays a vital role in the financial market top increase the volume of finance the transactions in the financial market directly depended upon the banking systems of the country. So the government must always careful in making of banking policies. A fieldwork report has been under take to make a through study and analysis on the performance of Nabil. This was established in 1984 A.D., which was the first commercial joint venture public bank in Nepal by issuing 30% share to general public shareholders. Later on it was collaborated with Nabil bank international Ireland. The study is mainly based on the balance sheet prepared by Nabil at the end of the fiscal year and necessary has been under take with concentration area of the study is only on fixed deposit. Every commercial bank is compulsory required to maintain at least a certain CRR of its total deposit to meet inactivated demand of cash from the clients as per rules and regulation of NRB. Nabil has maintained 3.26% CRR of its total deposit in average on the year 2006 which is increased to 9.02% in year 2009. The CRR has dropped to 3.01% in year 2010. As per regulation of NRB, there is a legal provision for a commercial bank to maintain its balance with NRB at least 10% in average out of its total deposit. The percentage of fixed deposit out of total deposit in the beginning year is satisfactory which indicated the back inability to attract the general public towards saving out of total deposit. This is due to inability of Nabil to create 40
confidence among general public on its performance. However the ratio of fixed deposit to total deposit is decreasing year by year which shows the success of Nabil to attract more people towards fixed deposit and to create a reputed image among general public in satisfactory. But at the year 2009 and 2010, the ratio of F.D and T.D decreases in the year 2009 reaching 22.01 from 26.52 in which again shows inability of Nabil to attract general public towards fixed deposit out of total deposit. But again in 2010 the ration of F.D and T.D increases to 31.82% resulting in attiring general public towards fixed deposit by offering new schemes. This upward slope of trend line of fixed deposit from the left to the right indicated that more people are attracting in fixed deposit. Nabil bank gives 10.5% interest on fixed deposit for depositing 1 year and above. The data for this study analysis is taken from the annual publications report of Nabil and some data from personnel interview with bank officials and some personal view of Nabil were also referred to whenever required. According to data presented in above chapter the picture became clear. It shows that the fixed deposit is decreased only in the year 2009 and is increased in rest year.
5.2 CONCLUSION From the presentation and analysis of data relating to fixed deposit of Nabil a clear picture emerges. The trend of general public to open fixed deposit account with “NABIL” has been increasing in every years. Therefore it shows that “NABIL” has a good and sound reputation among its customers. The economy is going through recession these few years and interest rate provided by all banks including “NABIL” to its deposit are directly decreasing even that fixed deposit trend of “NABIL” doesn’t seem to be affected by this. It indicates that the customers have faith that their deposit will be handled carefully by “NABIL”. The deposit isn’t completely 41
governed by returns on it only 23.3% of total deposit is one of the major sources of funds for “NABIL BANK LTD.” The analysis of data in previous chapter shows gradually increasing trend of total deposit in passes of time, which is good sign of bank for its future. Fixed deposit to total deposit ratio was increases gradually in year 2006, 2007 and 2008 then decreases in year 2009 which again increases in year 2010. From previous chapter we know C.V. of Fixed deposit is higher than C.V. which shows less uniformity of fixed deposit in comparision to total deposit. The trend analysis of F.D is favorable. From the data interpretations, fixed deposit facility of “NABIL” is doing reasonably good and the return regarding it is also reasonable. The bank is likely to increase its profit by increasing total deposit. From the deposit trend of “NABIL” it shows that the customers are loyal to the bank. So, “NABIL” is doing a good job regarding fixed deposit. Maximum deposit isn’t good economic policy for development of the country. If deposits are invested in any kinds of productive sector, it moves the country to economic development. Many people directly or indirectly engaged on employment and it also increased the national productively. In this way we can say that “Deposit is a kind of economic seeds” for countries but all deposits should not be seed for us. If all crops are used for seeds, we will hungry when it doesn’t give product. In 2010 Nabil bank invested 92.45 % of its fixed deposit. In average of 5 years it invested 136.79%of its fixed deposit. That is why we can say that a suitable deposit is most important equipment for the development of study deposit collection policy of every kind of banking and financial institutions.
5.3 RECOMMENDATIONS From the analysis done, it can be concluded that the bank was well managed in the previous years. However, by learning from inefficiencies and weakness, that the bank has managed to gain a position in the banking sector 42
of the Nepal. Even though the bank is providing a handsome return today, some recommendation might be helpful for the further enhancement of profitability of the bank. So the bank may be suggested which can be pointed as: a) Since the liquidity ratios of the bank are fluctuating and not satisfactory so the bank is suggested to keep the reasonable amount of liquidity. The bank should maintain their short-term solvency position. b) Profitability position of NABIL Bank is comparatively better than the other ratios. So I recommend the bank to use its resources for generating more profit margins. If the resources are held idle, the bank may face high costs and causes the low profit margin. c) The investment to total deposit ratio of this bank is poor which shows that the bank is utilizing its resources at a low level. So I recommend the bank to increase its investment in productive areas. d) NABIL Bank should extend its contacts with different institutions to increase its
business transactions.
e) Reports of NABIL Bank show that it is not involved in social activities to much. Therefore, I suggest that NABIL Bank should involve itself or contribute for such social programs to maintain favorable public image.
BIBLIOGRAPHY 1.
Amrit Kmar Maharjan , Report writing 2005
2. Annual Bulletin of Nepal Rastra Bank. 3. Website of Nabil Bank Ltd. 4. Bajracharya, B.C. “Business Statistics and Mathematics”, (2058) 1st
edition, M.L. Publishers & Distributors, Kathmandu. 5. Bhandari, Dilli Raj, “ Principle and Practice of Banking and Insurance”,
(2056) 1st edition, Asia Publication, Bagbazar, Kathmandu. 6. Eighteenth Annual Report Of Nabil Bank 43
