CHAPTER-I

INTRODUCTION

1.1 Background of the Study

A bank is an institution, which deals with money and credit. It accepts deposits
from the public, makes the funds available to those who need it and helps in the
remittance of money from one place to another. A bank is a commercial institution,
licensed to accept deposits and acts as a safe custodian of spendable funds of its
customers

The term bank is derived from the Latin Word 'bancus' and Italian word 'banca'
which means a bench for keeping, lending, and exchanging money or coins in the
market place.

According to Kent, "A bank is an organization whose principal operations are

concerned with the accumulation of the temporarily idle money of the general
public for the purpose of advancing to others for expenditure."

According to Commercial Bank Act 1974 section 2(a) Commercial bank means a
bank which conducts currency exchanges transactions, accepts deposits, supplies
credit and performs commercial dealing, other than a bank which has been
prescribed as (established) with cooperative, agricultural, industrial or any other
specific objectives.

1.1.1 Origin of Commercial Banks

The origin of commercial banking can be traced back to the early times of human
history. In the ancient Greece, Rome and Mesopotamia, the practice of storing
precious metals and coins at safe places and lending out money for public and
private purposes on interest was prevalent. In England banking and its origin as
with the London goldsmith who in the 17 th century began to accept deposits from
merchants and other for safe keeping money and other valuables. According to
Crowther, modern banking has three ancestors.

Merchants:- They were so popular and creditworthy that the letters issued by them
were treated as good as money. Trading activities were carried out based on these
1
letters and the outstanding amount was settled through actual coins on periodic
basis.

Goldsmiths: -Goldsmiths used to have safe to keep valuables. Fear of theft and
robbery led people keep their valuables (goods, silver and metallic coins etc) in the
custody of the goldsmiths. Goldsmiths used to charge commission for safekeeping
and used to return the valuables on demand.

Money Lenders: Money lenders used to give loan to the needy public out of their
own treasury. Later on, savers started depositing their savings/deposits with the
money lender.

As public enterprises, banking made its first appearance in 1157 A.D. in Venice,
Italy, which was Bank of Venice. Following its establishment, lots of banks were
established in different parts of the world. They are bank of Barcelona, Spain in
1401 A.D., Bank of Genoa, Switzerland in 1407 A.D., Bank of Amsterdam, Holland
in 1609 A.D., Bank of England, England in 1694 A.D. These modern banks
gradually replaced goldsmiths and moneylenders. Though Bank of England was
established in 1694 A.D., the growth of banks accelerated only after the
introduction of Banking Act 1833 A.D. in United Kingdom as it allowed opening of
joint stock banks. Hence there came remarkable changes in the process of
establishing the banking institution. The idea of commercial banks rapidly spread
all over the world only after the establishment of this bank.

The rapid and smooth economic development is possible only when competitive
banking services reaches to every nook and corner of the country. A bank is a
resource for the economic development that maintains self-confidence of various
segments of society by extending credit to people. Some of the common types of
banks which are found in the world are:
1. Central Bank
2. Commercial Bank
3. Development Bank
a) Agricultural Development Bank
b) Industrial Development Bank
c) Rural Development Bank
4. Saving Bank
2
 5. Exchange Bank
6. Cooperative Bank
7. Others
Labor Bank
Student Bank
Indigenous Bankers

1.2 Origin of the Bank in Nepal

The history of banking in Nepal is not so old. Like in other countries goldsmiths,
merchants and moneylenders were the ancient bankers of Nepal. Tejarath Adda,
established during the tenure of the then Prime Minister Ranoddip Singh in 1933
B.S. was the first step towards the institutional development of banking in Nepal.
However, banking in modern sense started with the inception of Nepal Bank
Limited in 30th Kartik 1994 B.S. Having felt the need of a Central Bank, Nepal
Rastra Bank (NRB) was established in 14th Baisakh 2013 B.S. Similarly, Rastriya
Banijya Bank was established in 10th Magh 2022 B.S. as a fully government owned
commercial Bank.

Commercial Banks are the heart of financial system. They hold the deposits of
many person, government establishments and business units. They make funds
available through their lending and investing activities to borrowers, business firms
and government establishments. By doing so, they assist both in the flow of goods
& services from the producers to customers and in the financial activities of the
government. They render a large portion of the medium of exchange service and
they are the medium through which monetary policy is affected. This fact shows
that the commercial banking system of a nation is important to the functioning of
the economy.

In a developing country like Nepal, banks play a very significant role with regard to
the country's economic soundness. The government permitted the establishment of
foreign joint venture banks. Following the governments permission, several joint
venture banks were established namely Nepal Arab Bank Limited (NABIL), Nepal
Grindlays Bank Limited (Renamed as Standard Chartered Bank Nepal Limited on

3
13th July, 2001) and Nepal Indosuez Bank Limited (Renamed as Nepal Investment
Bank Limited on 30th May, 2002).

"A joint venture bank is the joining of forces between two or more enterprises for
the purpose of carrying and a special operating."

1.3 Introduction of NABIL Bank

Nepal encourages foreign investment and joint venture operation with Nepalese
investors or in certain circumstances as fully owned subsidiary. Just because of
government's encouragement for joint venture operation, NABIL was established
on July 12th, 1984. NABIL is the Nepal's first and major joint-venture bank
commenced under the Technical Services Agreement with Emirates Bank Limited,
Dubai, which was later, merged with Emirates Bank (International) Limited, Dubai.
The bank is managed by a team of qualified and highly experienced professionals.

NABIL had a joint venture with Emirates International Bank Limited (EBIL) with
50% equity participation on both sides. Financial institutions had taken 20% equity
shares in which Nepal Industrial Development Corporation (NIDC) had taken 10%;
Rastriya Beema Sansthan had taken 9.67% and Nepal Stock Exchange had taken
0.33%. In May 1995 EBIL sold its entire shares to National Bank Ltd of
Bangladesh but the proportion of equity shares were same. Nabil Bank Limited had
the official name Nepal Arab Bank Limited till 31st December 2001.

1.4 Objectives of the study

The main objectives behind analyzing the deposit procedure of NABIL Bank Ltd
are as follows:
To find out the ratio of saving deposit out of total deposit , Investment out of
total deposit, total credit out of total deposit and Cash Reserve Ratio.
To analyze the trend of saving deposit in NABIL Bank.

To find the correlation between the saving deposit and total credit.
To give the suggestion and recommendations for the betterment of Nabil bank.

1.5 Significant of the study

4
This study is supposed to be helpful to the bank for formulating new plans and
policies as well as revising the existing ones based on the conclusions and
recommendations made. This study is also believed to assist the researchers who
want to know the depository position of NABIL Bank. Besides this study attempts
to provide information on saving deposit and procedures for opening the account in
the NABIL bank.

1.6 Research Design

The main purpose of this study is to show saving deposit and its utilization in
NABIL with its financial positions, collection and uses of funds as well as to
recommend suggestions for its improvement. The data has been collected by
acquiring various kinds of reports, bulletins and journals from the organization.
Similarly data has been acquired from NRB also.

1.7 Limitation of the Study

a. This study is concerned primarily with only one bank i.e., NABIL Bank.
b. This study is focused only on saving deposit.
c. The authenticity of the report depends on the authenticity of the data
provided and collected.
d. Unavailability of the sufficient data's references and resources also limit the
study.
e. This study includes the data of recent five years only.
f. Amounts are rounded nearly in millions.

5
 Contents
CHAPTER-I INTRODUCTION................................................................................1
1.1 Background of the Study.............................................................................1
1.1.1 Origin of Commercial Banks.....................................................................1
1.2 Origin of the Bank in Nepal.........................................................................3
1.3 Introduction of NABIL Bank.......................................................................4
1.4 Objectives of the study.................................................................................4
1.5 Significant of the study................................................................................4
1.6 Research Design...........................................................................................5
1.7 Limitation of the Study................................................................................5
Bibliography
 BIBLIOGRAPHY

Bajracharya, B.C (2055), BUSINESS STATISTICS AND MATHEMATICS, M.K.

Publishers and Distributors, Kathmandu.
Basu A.K. and Mukerjee A.K. FUNDAMENTAL OF BANKING THEORY AND
PRACTICES, New Delhi, Mac Millan India Ltd. 1990
COMMERCIAL BANK ACT 2031 B.S. Ministry of Law and Justice
Dahal Bhuvan and Dahal Sarita (2056), A HAND BOOK OF BANKING,
Kathmandu
Hart H.L. and Sayers R.S., PRINCIPLE OF BANKING, New York, Oxford
Publication, 1970
M.L Jhingan, MONEY, BANKING AND INTRODUCTION TO TRADE, 5 th
Revised and enlarged Edition.
Pandey, I.M (1998), FINANCIAL MANAGEMENT, Vikas Publishing House, New
Delhi
Pant, Prem Raj (1998), FIELDWORK ASSIGNMENT REPORT WRITING, Veena
Academic Enterprises Pvt. Ltd.
Vaidya, Shakespeare, BANKING AND INSURANCE MANAGEMENT, Third
edition
A CASE STUDY ON SAVING DEPOSIT
OF NABIL BANK LIMITED

Submitted By:
Apsara Bolakhe
T.U Regd. No.: 7-2-0548-0009-2013
Exam Symbol No.:

A Proposal on

Submitted to:
Gyankunj College
Faculty of Management
Tribhuvan University

In the partial fulfillment of the requirements for the

Degree of Bachelor of Business Studies (BBS)

Kathmandu, Nepal
December, 2016