PAYMENT SYSTEM IN COMMERCIAL BANKS

By
Sagar Khadka
TU Reg. No. :7-2-25-1280-2016
Symbol No.: 17054/16

A Summer Project Report Submitted to

Faculty of Management, Tribhuvan University
in partial fulfillment of the requirements for the degree of
Bachelor of Business Administration

At the
Nepal Commerce Campus
Tribhuvan University

New Baneshwor, Kathmandu

Jan 2021
LETTER OF APPROVAL

This summer project entitled "Payment System in Commercial Banks" has been
submitted by Sagar Khadka for the final examination to the faculty of management,
Tribhuvan University, in the fulfillment of the requirement for the degree of Bachelor
of Business Administration. The research committee of this campus has found this
summer project report satisfactory in scope and quality and has therefore forwarded
for examination.

______________________

Signature

Assoc. Prof. Chudamani Pandit

Chairman

BBA Research Committee

ii
 STUDENT DECLARATION

I hereby declare that I have completed the Summer Project entitled "Payment
System In Commercial Banks" under the guidance of Mr. Chudamani Pandit in
partial fulfillment of the requirements for the degree of Bachelor of Business
Administration at Faculty of Management, Tribhuvan University. This is my original
work and this has not been submitted earlier elsewhere.

Sagar Khadka
Jan, 2021

iii
 CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled "Payment System in Commercial
Banks" is an academic work done by "Sagar Khadka" submitted in the partial
fulfillment of the requirements for the degree of Bachelor of Business
Administration at Faculty of Management, Tribhuvan University under my guidance
and supervision. To the best of my knowledge, the information presented by him/her
in the summer project report has not been submitted earlier.

Signature of supervisor

Name: Mr.Chudamani Pandeya

Date:

iv
 ACKNOWLEDGEMENTS

First and foremost, I am very grateful towards our Tribhuvan University to provide
BBA students with this opportunity to conduct Summer Project Work based on
research. This type of experience is very much essential of every student and I believe
it has helped significantly to be acquainted with what research work actually is. I am
very thankful towards Chudamani Pandit as my supervisor. As my supervisor he has
always welcomed any queries and helped to solve them. Without all those guidance
from various lecturers and guest lecturers, it would have been a mess to conduct a fine
research. I would also like to thank our campus chief Prof. Dr. Jeevan Kumar Bhattrai
for providing us the platform to work.

Thank You.

v
 Contents
PAYMENT SYSTEM IN COMMERCIAL BANKS..........................................................................i
LETTER OF APPROVAL..........................................................................................ii
STUDENT DECLARATION.....................................................................................iii
CERTIFICATE FROM THE SUPERVISOR.........................................................iv
ACKNOWLEDGEMENTS.........................................................................................v
EXECUTIVE SUMMARY..........................................................................................x
CHAPTER I..................................................................................................................1
INTRODUCTION........................................................................................................1
1.1 Context Information.......................................................................................................1
1.2 Objective of the study.....................................................................................................2
1.3 Significance of study.......................................................................................................2
1.4 Literature review............................................................................................................3
1.5 Research method............................................................................................................6
1.6 Limitations of the study................................................................................................7
CHAPTER II................................................................................................................9
DATA PRESENTATION AND ANALYSIS.............................................................9
2.1Respondents' Profile........................................................................................................9
2.2 Descriptive Analysis......................................................................................................13
2.3 Major Findings and Discussion......................................................................................23
CHAPTER III.............................................................................................................26
CONCLUSION AND ACTION IMPLICATIONS.................................................26
3.1 Summary.......................................................................................................................26
3.2 Conclusion....................................................................................................................26
REFERENCES.............................................................................................................1
APPENDIX..................................................................................................................xi

vi
 LIST OF TABLES

Table 1: Respondents profile: Gender...........................................................................8

Table 2: Respondents profile: age group.......................................................................9
Table 3: Respondents profile: Education level............................................................10
Table 4: Respondents profile: Marital status...............................................................11
Table 5: Salary range of Respondents.........................................................................13
Table 6: Salary increment of Respondents..................................................................14
Table 7: Types of compensation..................................................................................15
Table 8: Payment method............................................................................................16
Table 9: Payment for overtime....................................................................................16
Table 10: Bases for reward..........................................................................................17
Table 11: Participation while setting remuneration.....................................................19
Table 12: Pay review policy........................................................................................20
Table 13: Degree of satisfaction..................................................................................20

vii
 LIST OF FIGURES
Figure 1: Respondent profile: Gender............................................................................9
Figure 2: Respondents' profile: age group...................................................................10
Figure 3: Respondents' profile: Education level..........................................................11
Figure 4: Respondents' profile: Marital status.............................................................12
Figure 5: Salary range of Respondents........................................................................13
Figure 6: Salary increment of Respondents.................................................................14
Figure 7: Types of compensation.................................................................................15
Figure 8: Payment method...........................................................................................16
Figure 9: Payment for overtime...................................................................................17
Figure 10: Bases for reward.........................................................................................18
Figure 11: Participation while setting remuneration....................................................19
Figure 12: Pay review policy.......................................................................................20
Figure 13: Employees satisfaction.............................................................................20.

viii
 EXECUTIVE SUMMARY

Payment system plays major role in the employees' satisfaction and performance. This
study is conducted to find out the basic pay system that the commercial banks are
adopting and to understand employees' satisfaction from commercial banks regarding
the pay system. To extract the necessary information questionnaire were distributed
among different respondents and the response rate of 100% is achieved. Using the
pie-charts and bar diagrams to analyze the data, the result showed that majority of
respondents are satisfied with the compensation received from commercial banks. The
reward system of the commercial bank is based on performance but still there are
many banks which are following seniority based reward system and we find very few
banks which are following effort& job based reward system.

ix
 CHAPTER I
INTRODUCTION

1.1 Context Information

Payment is the process of providing adequate, equitable &fair remuneration to the
employees. It is what employee receives in exchange for their contribution to the
organization. It is a comprehensive term which includes pay, incentive & benefit
offered to the employee. The concept of payment its origin in Germany, Great Britain
and the United states between the late 1800`s and early 1900`s.worker`s compensation
became common in the US in the 1930`s and 1940`s and it is becoming very popular
in today’s world. Nowadays all business organization are focusing more and more on
payment system because this is related with human resource, who are responsible for
overall resource mobilization.

Being a student of BBA our main specialization area is business and people often
relate BBA with banking sector, so we must understand about the payment practice
followed by different banks. In this study I’m going to focus on the payment practice,
currently following by different commercial banks in Kathmandu area. Besides this,
0the research is aimed to find out whether employees are satisfied with the payment
system or not? What are Bases for remuneration in Commercial banks? This study
may help to the student who wants to make carrier in banking sector by understanding
the above issue in different commercial banks. Even a base pay is different for the
same position between two bank this study will try to find out the reason for so.

Currently in Nepal we can find the issues like, issue of comparable worth, issue of
pay secrecy, issue of inflation & salary compression, issue of pay review, &issue of
employee participation in setting compensation. The study may provide opportunities
to support company mission& increased complexity, minimizing increase in fixed
cost, attract and engage top talent and ensures fair treatment

The issue of payment system in business is emerging issue of world including our
country Nepal. Though there are various study done in the field of payment system on
national and international level, there are only few research study done in banking

1
sector, especially in commercial bank regarding the comparative study of payment
practice, hence this research is conducted.

1.2 Objective of the study

Summer project is a part of sectorial course in the four year BBA program of
Tribhuvan University, based on the field research is prepared for the partial
fulfillment of the requirement for the degree of business administration. So I was
suggested to prepare about any project that can be counted. For this, I have chosen
payment system in banks and main purposes of study are:

 To find out the basic pay system that the commercial banks are adopting.
 To understand employees satisfaction from commercial bank regarding the
pay system.
 To understand the issue of employees participation and pay secrecy.

1.3 Significance of study

There has been extensive research on the issue of payment system (regarding gender
issue, pay secrecy, issue of inflation and salary compression, issue of impact of
payment practice in the motivation and performance of the employee, bases of
payment, role of payment system in employee job satisfaction .etc.). Many religion
and national-wide similar studies can be found in different business area. But few
explored on the above mention issue in the case of commercial bank of Nepal.

Therefore this study contributes to help concerned parties about the current payment
practice and issue of commercial Bank in Kathmandu area. The main aim of this
study is to help the students to select those banks which are providing comparatively
high payment package. On the other hand this study will help commercial bank to
know what/ how they are doing and what/how their competitors are doing regarding
payment system, what ought to do to improve employee satisfaction, performance,
motivation and retention of talent with the help of payment system& changing
expectation of employees.

1.4 Literature review

Chapagai(2011) attempts to examine the relationship between employee participation,
payment system and job satisfaction in Nepalese commercial banks for which four
Nepalese commercial banks — two each from government and private sectors— were

2
selected as the sample. Based on primary data the study adopted a questionnaire
survey on 200 employees from the assistant to manager levels of the sample
organizations and it received response from altogether 146 respondents (73 percent).
Based on explanatory research design, the study showed that that there is positive
relationship between employee participation, payment system and job satisfaction in
Nepalese banks. The findings reveal that employee participation is an important
determinant of job satisfaction. Increased employee participation in payment system
makes a positive effect on job satisfaction of Nepalese banking.

Sangwan S (2015) attempts to examines the impact of payment system in employee`s

performance in commercial bank. She found that performance of the employee
depends on the existing payment and performance management programs of an
individual company. Typically most employee respond to increase in pay & benefit
with positive and more productive attitude, however opposite is true as well.

Panduri&Saudikar (2011) in their study aims to provide employee perception on

payment system and benefit policy at commercial bank of Dessie Town, Ethiopia.
Total 12 licensed commercial banks were taken and it was observed that employees
perception towards current payment and benefit are unfair, not distributed between
supervisor and clerical employees. They also explored that employees are not
participating in payment and benefit decision & also the payment system not
communicated to employee.

Molyeax & Ngoyen (2014) in their study they make the research to find out the
relationship between executive payment, board independence and bank efficiency in
China. Their population area is 15 commercial banks of Shanghai city. It is found that
higher payment to executives reduces bank efficiency and this negative impact
becomes more severe during the financial crisis. In contrast, a higher number of
unpaid and non-executive directors in the boardroom improve the bank efficiency.

Yamoah (2013) in his study establishes the relationship between payment and
employees productivity. Study takes place in Ghana Commercial Bank in the Greater
Accra Region of Ghana. Data is analyzed by using descriptive statistics, Pearson Chi-
Square to test the significance of relationship between employee’s payment and
productivity. The result indicates significant relationship between payment and
productivity.

3
Aamir & Jehanzeb (2012) explored about the payment methods and employee
motivation on commercial bank of Riyadh, Saudi Arabia. The main purpose of their
work is to compare extrinsic and intrinsic rewards which are used as the factor of
motivation in the banking sector of Saudi Arabia. The result shows that the employees
of commercial bank of Saudi Arabia are motivated both by intrinsic and extrinsic, in
such way that extrinsic factors are more causing motivation.

Christopher (2013) in his study analyze the effect of payment towards job satisfaction
and job performance of outsourcing employees of Syariah banks in Malang
Indonesia. For Syrian Banks the result shows that employees financial and non-
financial payment received has been good, quite good and very good, encourages
outsourcing employee job satisfaction and employee performance and they also
suggest that other companies and Govt. needs to adopt the use of labor outsourcing.

Nourayi & Mintz (2008) also examined the association of CEO`s payment with tenure
and firm`s performance and size the research area is in 22 commercial banks in
Washington, united States. They reported that firm size is significant determinant of
Employees/CEO payment while market based and accounting based performance
measures were negatively correlated with employees/CEO pays.

Kanth P2011) in his study assessed the reward system and its impact on employee
motivation in commercial bank of Sri-Lanka in Jaffna District. He found that
organization should realize that they have to establish an equitable balance between
the employee contribution and payment system. He also highlights organizations that
follow a strategic to creating this balance focus on three main component of reward
system that include pay benefit and recognition.

Faisal & Hassan (2012) studied the governance structure and executive payment in
banking and non-banking industries. The paper analyzes the regulatory effect on the
governance mechanism in banking industry in addition to the board governance
mechanism using a sample of 37354 executives from banking and all other industry.
They found that executives in banking industry put significantly higher emphasis on
the fixed payment in terms of salary and bonuses and significantly lower emphasis on
the performance based par or options grants.

4
Talukdar & Hossian (2014) the study was conducted to explore the extent of payment
system usually practiced by five prominent commercial Banks of Bangladesh. The
survey activities were done by the combination of structured questionnaire,
unstructured interview and observation methods in order to examine the issues
involved in employee selection and recruitment, salaries and wages, job analysis
methods, performance evaluation, audit promotion scheme, Training & Development
programs. In this paper a five point likert scale is used to measure major problems of
payment in commercial Bank and also record the employees’ opinion on eight
indicators to measure their levels of job satisfactions.

Eshwar & priya (2014) made an investigative analysis on reward, motivation and job
satisfaction in commercial banks in India .employees’ opinion on eight indicators to
measure their levels of job satisfactions. They found that success of banks largely
depends on the intellectual development of the employees similarly the banking
industry should solve the payment related problem as soon as possible to minimize
employee turnover ratio and for maintaining long term profit. In the current
competitive business environment, the banking companies are facing a lot of
challenges and among these issues, getting the right employees and retaining them is
one of the most important ones. In addition, today, the benefit of human resource is
measured to be one of the most important advantages of any organization; and in
order to acquire the results with the highest efficiency and effectiveness from human
resource, motivation of employee is very essential.

1.5 Research method

Research methodology is the science of finding out and it is a subfield of
epistemology, which uses the science of knowledge indeed, utilizing an appropriate
methodology is not only the right path to the truth, but also the duty of every
researcher. The methodology covers issues that relate to the type of data collected the
way it was collected, and analyzed.

As per the research objective it required both qualitative and quantitative research
design to collect analyze and evaluate the data. Qualitative research design is used to
know about the banker’s perception about the payment system because it is
considered to be particularly suitable for gaining an in-depth understanding of
underlying reasons and motivations. It provides insights into the setting of a problem.

5
At the same time, it frequently generates ideas and hypotheses for later quantitative
research. Whereas quantitative research design is used along with some mathematical
analysis to process the response to reach to the conclusion of our finding because
qualitative research typically is exploratory and/or investigative in nature. Its findings
are often not conclusive and cannot automatically be used to make generalizations.
This research is purely based on primary field source of information. A semi-
structured questionnaire was used to collect data from respondents; random sampling
method has been used to collect the data. The methods of information gathering
further include formal and informal discussion & interviews.

1.5.1 Research design

As per the nature of research and research problem, researcher uses different types of
research design. Such design can be descriptive, explanatory or experimental etc.
Among the approaches, the appropriate approach for this study was collecting the
primary data from local people, survey with semi-structured questionnaires, interview
with key informants, formal and informal discussion with random sampling method.

1.5.2 Population and sample size

The total population for this research will be banks residing in New Baneshwor area.
This area is selected because majority of commercial banks are operating at New-
Baneshwor so there is ease for us to make the comparative study. We have taken 15
commercials bank as a sample in that area.

1.5.3 Sampling method

Sampling methods are used to select a sample from within a general population.
Proper sampling methods are important for eliminating bias in the selection process.
They can also allow for the reduction of cost or effort in gathering samples. For this
research we choose following sampling methods:

 Simple Random sampling.

1.5.4 Data collection instrument

The data will be collected from both primary and secondary data sources instrument
& they are:

a. Questionnaire
 Open ended questions.

6
 b. Survey

Likewise the secondary data will be collected from the booklets, websites, and annual
reports of banks.

1.5.5 Data analysis tool

After the data are properly collected and presented, data analysis will be conducted.
Simple statistical tool will be used are as:

 Descriptive statistical tools

1. Pie-chart
2. Bar –diagram
3. Frequency analysis.
1.6 Limitations of the study
The limitations of the study are:

 As the report contains data only from a few banks mostly it cannot be
generalized
 Due to time constrains only a limited no. of people are included in the report
so data may not completely be accurate

7
 CHAPTER II
DATA PRESENTATION AND ANALYSIS

This chapter presents the descriptive analysis of the study. This chapter composed of
descriptive results of key variables, which are presented in three main sections. The
first section deals with the demographic and socio-economic characteristics of the
survey household; second deals with the current remuneration pattern in commercial
banks and Third deals with the employee satisfaction in commercial banks.

2.1Respondents' Profile
Under the respondents profile demographic variables of respondents has been
gathered. In fact factors such as gender, age group, education, marital status, were
assessed to meet research aim and objectives. Analysis of aforementioned factors is as
follows:

Gender

Results show that 40% of the respondents are female and 60% of the respondents are
male. It is because Nepal is still a male dominated country. However no of female are
also in the increasing order but not as in the same proportion as male. It is presented
in the following table and pie chart:

Table 1: Respondents profile: Gender

Gender Number of Respondent

Male 24

Female 16

Gender

female
43%

male
58%
8
Figure 1: Respondent profile: Gender

As
The above table and pie chart shows that number of female respondents is less than
the number of male respondents. There are 24 male respondents and 16 female
respondents. It is because Nepal is still a male dominated country.

Age group

The highest age group of the respondents was 40-50 years and lowest age group of the
respondents was 17-30 years. It is presented in the following table and figure:

Table 2: Respondents profile: age group

Age group No of Respondents

17-30 10
30-40 25
40-50 5
50-60 -
More than 60 -

Figure 2: Respondents' profile: age group

9
 30

25

20

15
Column1

10

0
17-30 30-40 40-50 50-60 More than 60

It is shown that most of the employees’ age range working in a commercials bank lies
between 30-40 years. It is because bank today are searching for the candidate having
at least bachelor degree which is normally obtained at the age range between 18-30
years and then they join the bank for their career. I didn’t find any employee with the
age range of more than 60 years in the course of my interview.

Level of Education

Most of the respondent’s education level is master degree. It is also the highest
education degree of the respondents. And the lowest educational degree of the
respondents is higher secondary level. This can be presented in the following table
and figure:

Table 3: Respondents profile: Education level

Education level No of Respondent

Primary -
Lower Secondary -
Secondary -
Higher secondary 4
Bachelor degree 12
Master degree 24

10
 30

25

20

15

10 Column2

0
y ry ry ry ee ee
ar da da da gr gr
ir m n n n e e
P co co co rd r d
se Se se lo te
r r
ch
e as
we gh
e
Ba M
Lo Hi

Figure 3: Respondents' profile Education level

The employees in commercial bank mostly have the master degree, from the
management background basically. However it is found that most of them had joined
the bank after their bachelor degree and completed their master degree during the
course of their employment career.

Marital status

Most of the respondents in the study are married. The marital status of the
respondents under the study is presented in the following table and figure:

Table 4: Respondents profile: Marital status

Marital status No. of respondent

Married 34
Unmarried 6
Divorce -
Widowed -
Others -

11
 35

30

25

20
Column2
15

10

0
Married Unmarried Divorce Widowed Others

Employees in the commercial banks are mostly married because in the context of
Nepalese society people engaged in marriage in the age range between 18-30 years. It
is also found that most of the respondents are unmarried before joining the bank and
they got married during their banking career.

2.2 Descriptive Analysis

The data gathered from the primary source are analyzed by using excel and is
presented using Bar diagram and Pie chart for further interpretation of responses. The
result derived on the basis of major findings that are drawn by analysis of the data

Figure 4: Respondents' profile Marital status

collected
from structured questionnaire. The collected data are presented and analyzed on
following ways:

Current remuneration patterns in commercials banks

The current remuneration pattern of commercial banks is composed on different

factors like starting salary, pay review, salary increment and types of payment. These
factors are presented and analyzed as follows:

12
 Salary range of respondents

All commercials banks provide basic salary to its employees and the salary range is
above the minimum wage rate of Nepal and interestingly both male and female are
paid equally. They also provide incentives and benefit which ranges and depends
upon the working duration of the employees. Similarly the basic salary is being paid
in the monthly basis there is no any respondent who is not being paid basic
remuneration by the bank. The starting salary of the respondents is different because
of the position they are holding. The following table and figure support the finding of
my research.

Table 5: Salary range of Respondents

Salary range No. of respondents

Less than 10000 5
10000-20000 25
20000-30000 10
More than 30000 -
25

25

20
no of respondents

15
10

10
5

5
0
0
less than 10000 10000-20000 20000-30000 more than 30000
Salary range

The minimum starting salary of the respondent is below 10000, in average starting
Figure 5: Salary range of Respondents'
salary is in between 10000-20000 and maximum starting salary is in the range 20000-
30000.

13
Salary increment of respondents

Salary is increased and the increment is made basically along with the promotion of
the employee. Similarly there are some banks which increase employee’s salary after
a year and some bank has other bases to increase salary as per the performance and
effort of the employees. The salary increments of different respondents' banks are
presented by following table and figure:

Table 6: Salary increment of Respondents

Salary increment No of respondent

After a year 15
After promotion 20
Others 5

25

20

15

Column2
10

0
After a year After promotion Others

Figure 6: Salary increment of Respondents

As the table and figure shows that the salary increment is conducted after the
promotion of the employee. Most of banks are following this pattern of salary
increment. Whereas the some other banks are making the increment after a year.

Salary composition

The pay composition of commercial bank are as maximum almost 88% of the
employee in the commercials banks are receiving the pay package which includes
wages and salary, incentives & benefit as well. Similarly 7 % of the respondents are

14
getting wages and salary and 5% of the respondents are getting wages and salary plus
incentives but not benefit. It is because the fresh employee at first receives salary only
and other incentives and benefit are provided gradually as per the working duration.
Bonus is the key incentives that the most of the employees in the commercial banks
are receiving. The following table and figure shows the salary composition of the
respondents.

Table 7: Types of compensation

Types of compensation No. of respondent

Wages & salary 3
Salary & incentives 2
Salary & incentives & benefits 35

wages &salary
8%
salary+incentives
5%

salary+incentives+benefit
88%

Figure 7: Types of compensation

As the above figure and table shows that the numbers of respondents who are
receiving the salary, incentives and benefit are 35. Similarly the number of
respondents who are receiving the wages and salary are 3 and respondents receiving
the salary and incentives are 2.

Payment method

15
Almost all banks follow the fixed pay method for remuneration. However the
preference of the employee’s is quite different. Out of 40 respondents, 7 respondents
would prefer fixed payment method, 12 prefer variable pay method as they like to be
paid under the work they have performed in other word they support Performance
Based Pay (PBP) and finally majority of the respondent support Balance debt method
because they like to receive some amount of money as a fixed pay plus increase in
payment after that as per the work performed. It can be shown clearly in the following
table and figure:

Table 8:Payment method

Payment method No of respondent

Fixed payment 8
Variable payment 13
Balance debt payment 19

21
25
20 12
15 7
no of respondent

10
5
0
t

t
en

en

en
ym

m
ay

ay
pa

ep

tp
ed

eb
bl
fix

ria

d
ce
va

lan
Ba

payment method

Figure 8:Payment Method

Payment for overtime

Every employee in the bank is paid in time. It is also known that it pays its permanent
employee during the absenteeism if the absenteeism day is below the total leave s/he
can take per year. However contract based employees/non-permanent employees are
not being paid during their absenteeism. Almost all employees are provided overtime.

16
Talking about our respondent’s responses 36 of them is provided overtime and just 4
of they aren’t. Payment for overtime is provided to those employees who are not
holding any managerial position. In my research following result has been found.

Table 9:Payment for overtime

Payment for overtime No. of respondent

Provided 36
Not provided 4

100%
90% Figure
No of respondents

80% 9:Paymen
70%
60% 36 4 t for
50%
40% overtime
30%
20% Note that
10%
0% the no of
Provided not provided
employee
to whom
the payment of overtime is not made are of managerial level employees and to whom
it is provided are of non-managerial level employees. Payment of overtime is not
made to the managerial position because (i) they will receive sufficient amount of
bonus as per the success and profit made by the bank(ii) they are the key people who
committed to be in the organization anytime as per the organization need.

Bases for reward

The incentive plan provided to the employee is of individual level incentives plan.
Out of 40 respondents, 30 respondents are receiving individual level incentive plan, 6
of them are receiving group level/departmental incentive plan and just 4 respondents
are receiving both of the plan. It happens because of the different in managerial
strategy and operation. Talking about the bases of the reward system that the banks
are adopting is interesting one. Let’s have look over it in table and figure below:

Table 10: Bases for reward

17
 Bases for reward No of respondents
Performance 22
Effort 1
Seniority 16
Skill held -
Job difficulty 1

25
22

20
16
no of respondents

15

10

5
1 1
0
0
performance effort siniority skill held job difficulty
Bases for reward

Figure 10: Bases for reward

It shows that reward system of the commercials banks is based on the performance at
the first and then seniority at the second. We can see that seniority based reward
system in slowly being replaced by performance based. There is just few banks that
adopted the effort/skill/job difficulty based reward system. It is because bank is a
place which requires mental effort to perform the job not the manual. You should
show your skill and put your effort to increase the performance. The bank only look
for the performance how you are doing with the task you been assigned.

Trends in employees’ participation in setting remuneration and pay

secrecy

It’s very hard to find a commercials bank that participate employees while setting
their remuneration package and there was lacking of the job evaluation process. Just 7
respondents said that they are being participated while setting remuneration to the
employees and surprisingly all of them are of managerial position. That proves there
in no any participation of the non-managerial employees while setting remuneration.
The following table and figure is given to show the finding:

18
Table 11: Participation while setting remuneration

Participation while setting remuneration No of respondents

Yes 7
No 33

35 33

30

25
no of respondents

20

15

10
7
5

0
Yes No
participation
.

Figure 11: Participation while setting remuneration

Similarly we can clearly find the pay secrecy practice of commercial bank. Almost 90
% of the respondent accepted that they cannot look after the payment made to their
superior. Sometime not even the payment made to the colleagues working in the same
position for a long time. And respondent also don’t know the proper reason behind
this, and personally me too.

From the analysis we find that the majority of the commercial banks do not review
their pay policy. We can further say that there is lack of pay review in commercial
bank the data we find about this topic can be summarized in the following table and
figure:

Table 12:Pay review policy

How often No of respondents

Always 5
Sometimes 13

19
Rarely 21
Never 1

25
21
20
no of respondent

15 13

10

5
5
1
0
always sometimes rarely never
How often ?

Figure 12:Pay review policy

From the above figure we can say that commercial banks are not reviewing their pay
system regularly. The majority of the respondent show they are rarely doing the pay
review. But we cannot say that they are not doing any kind of pay review but is not
what is needed to be. We find some bank which always do pay review as per the
change in government policy, employees demand, and in each economic condition i.e.
in the time of inflation, deflation, recession and so on.

Employees satisfaction in commercial bank

Satisfaction and job are closely related with each other. People are never satisfied
because of the unlimited want they have. There are lots of bases for satisfaction to be
compared but in my research satisfaction is compared basically with the basic
payment package that is weather employee are satisfied with the basic pay, reward
and incentives. Employee’s satisfaction is measured in the following table and figure:

Table 13: Degree of satisfaction

Degree of satisfaction No of respondent

S. satisfied 3
Satisfied 29
Neutral 4

20
Dissatisfied 4
S. dissatisfied -
35

30 29

25
no of respondents

20

15

10

5 3 4 4
0
0
S.satisfied Satisfied Neutral Dissatisfied S.dissatisfied
degree of satisfaction

Figure 13: Employees satisfaction

It shows that employees in the commercials banks are satisfied in terms of basic
payment package. Out of 40 respondents 29 of them are satisfied, 3 of them are
strongly satisfied and remaining 8 are equally divided into neutral and dissatisfied.
However the satisfaction level is measured only for the basic payment. The data will
surely change if the satisfaction level has been measured in terms of pay secrecy,
employees’ participation in setting payment, working environment and condition,
other opportunities to the employees and so on.

2.3 Major Findings and Discussion

As per the research, the basic pay system of the commercials banks are satisfied
which includes basic wages and salary, incentives and benefit. We took 60% of the
male respondents and 40% of the female respondents while conducting our research
project. Majority of the respondents are fall under the age group of 30-40 years. We
also came to know that there is no single employee in a commercial bank who doesn’t
have formal education. Further saying, the minimum requirement to be a banker is at
least higher secondary education degree. The average family size of the respondents is
5 and more than 90% of them are married.

21
The research shows that the basic remuneration payment is made to all employees in a
commercial bank. The majority of the respondents had got the starting salary ranging
Rs. 10000-20000. The employee whose starting salary was below 10000 is those
employees who joined bank before 10 years in an average or the new employee based
on contract. We also found that all commercial banks remunerate its employee in time
and in monthly basis and salary increment is done by every bank. Interestingly male
and female are paid equally which indicates there is no any gender discrimination in
commercial bank regarding the remuneration. Permanent employees are paid also in
their leave if the leave they take is below the leave they can take per year, however
the employee who are working on a contract based receive salary by counting their
present day. The majority of the respondents (20 of them) answer that the increment is
based on the promotion and 14 of them answer as in seniority based. This shows that
increment is basically made after the promotion. Taking about the Overtime, we
found that it is provided to almost all employees however payment is made to the
employee not having any managerial position. Every employee is receiving the basic
package of the remuneration which includes wages and salary but other two as
incentives and benefit are provided as per the performance and working duration
gradually.

All commercial banks are adopting the fixed pay system whereas research shows that
employees are preferred to be paid from the balance debt method, which includes both
fixed and the variable payment. Talking about the reward system the bank’s reward to
its employees is based on the performance. However we also found that there is still
the trend of seniority based reward but not as much as performance based. Majority of
the employees are receiving individual level incentives plan from the banks

We also found that commercials bank does not participate its employees while setting
remuneration. Out of 40 respondents 33 answered that they are never participated in
such event and 7 respondents answered they have participated and surprisingly the
participated employees are of managerial position, which indicate that there is no any
employee’s participation while setting remuneration. Employee in commercials banks
cannot look after the payment to their superior including the top level executives
which indicates that commercial banks are following the pay secrecy, which is the
major payment system issue. The research also indicates that the trends of pay review
in commercial bank are still in the initial phase. The majority of the respondents

22
answered that the bank rarely does its pay review basically when the law and
economic policy changed and after the inflation/deflation/recession.

Besides all we came to know that employees are satisfied in average from the basic
remuneration system of the commercial bank. However the result might change if the
bases for satisfaction level are other that basic payment.

23
 CHAPTER III
CONCLUSION AND ACTION IMPLICATIONS

3.1 Summary
As per the research findings we can conclude that the pay system adopted by the
commercial banks in Nepal is of satisfying nature. Although the majority of the
employees are male in banking sector but the number of female bankers are also in
increasing order. The minimum educational qualification for a banker is High school
degree. All the commercial banks provide wages and basic remuneration on a
monthly basis. Pay rise generally occurs after promotion.

Although the commercial banks are following fixed payment method for
remuneration of its employees but majority of the employees want to be paid from
balance-debt-method (fixed + variable). So we suggest commercial banks to perform
further research over employee’s needs and demands while setting appropriate
payment method. The reward system of the commercial bank is based on performance
but still some banks are found to be following seniority based reward system. On one
hand we are happy to say that male and female are paid equally that means there is no
gender discrimination regarding basic payment but on the other hand all commercial
banks are following the pay secrecy and the trend of pay review is still in the initial
phase.

3.2 Conclusion
Compensation is the process of providing adequate, equitable &fair remuneration to
the employees. It is what employee receives in exchange for their contribution to the
organization. It is a comprehensive term which includes pay, incentive & benefit
offered to the employee. The research is aimed to find out whether employees are
satisfied with the payment practice or not? What are Bases for remuneration in
Commercial banks? This study will help the student who wants to make their carrier
in banking sector by understanding the above issue in different commercial banks.
Even a base pay is different for the same position between two bank this study tries to
find out the reason for so and it also find employees' satisfaction regarding the salary
ranges of different commercial banks. The study provided opportunities to support

24
company mission & increased complexity, minimizing increase in fixed cost, attract
and engage top talent and ensures fair treatment.

The issue of payment system in business is emerging issue of world including our
country Nepal. Though there are various study done in the field of compensation
management on national and international level, there are only few research study
done in banking sector, especially in commercial bank regarding the comparative
study of payment practice, hence this research helps the commercial banks while
setting the payment package to its employees.

The study contributes to help concerned parties about the current payment
management practice and issue of commercial Banks. This research will be helpful to
the students to select those banks which are providing comparatively high payment
package. On the other hand this research will help commercial bank to know what/
how they are doing and what/how their competitors are doing regarding payment
system, what ought to do to improve employee satisfaction, performance, motivation
and retention of talent with the help of payment system& changing expectation of
employees.

25
 REFERENCES

Adhikari, D. R., & Muller, M. (2001). Human resource management in Nepal.

Adhikari, D.R., (2008). Human Resource Management. Kathmandu: Buddha

Publication

Agrawal, G.R., (2009). Dynamics of Human Resource Management in Nepal.

Kathmandu: M.K. Publishers and Distributors.
Armstrong, M., (2005).A Handbook of Human Resource Management.(7th Ed.).
London: Kogan Page Ltd. Armstrong, M. (2006).Human Resource
Management Practice.(10th Ed.). London: Kogan Page Limited.

Armstrong, M., (2010).Strategic Human Resource Management.(1st Ed.).

London: Kogan Page Limited

Baniya, L. B., (2004). Human resource development practice in Nepalese business

organizations: a case study of manufacturing enterprises in Pokhara.
Journal of Nepalese Business Studies, 1(1), 58-68.

Budhwar P.S., & Debrah Y.A. (Eds.), Human Resource Management in

Developing Countries (pp. 91-101).
 APPENDIX

Survey Questionnaire

Hello Sir/Madam,
My name is Rupa Pandit. I am undergraduate student at Nepal Commerce
Campus, Tribhuvan University Nepal. At the present time, I am doing Research
Project work under the title “Payment System in commercial banks” The main
objective of this study is to identify how employees in commercials banks are being
paid. In order to meet this objective 40 respondents has been selected and you are one
of them. Your participation is completely voluntary. This information is being
collected for academic purposes only and any details related to your privacy will be
kept confidential.

Personal Information

Personal Information
S. N. Questions Answers

Q.1 Name of Respondent

Gender of the respondents 01 = male

Q.2
(tick the appropriate answer) 02 = female
01 = 18 to 30 years
02 = 30 to 40 years
Which age groups do you belong to?
Q.3 03 = 40 to 50 years
(tick the appropriate answer)
04 = 50 to 60 years
05 = 60 years and above
01 = Primary
02 = Lower Secondary
03 = Secondary
Please, mention the level of education you have 04 = Higher Secondary
Q.4
achieved. 05 = Bachelor Degree
06 = Master Degree
07 = Other (specify)
……..
 01 = Married
02 =Unmarried
Q.6 What is your marital status? 03 = Divorce
04 = Widowed
05 = Other (Specify) ……

Part C: Main Questions covering objective

…………………………
Q.7 Mention the name of the bank you work for? …………………………
…………..
01=less than 1 years
02=1-5years
Q.8 How long have you been working in this bank?
03=5-10 years
04=more than 10 years
01=wages & salary
02=incentives
03=benefit
Select the type/s of payment that your bank is
Q.9 04=pay for time not
providing
worked
05=other (specify)
…………….
01 = less than 10000
02=10000-20000
Q.10 What was your starting salary?
03=20000-30000
04=more than 50000
01= yes
Q.11 Does your company offer salary increment? 02=no
03= if yes go to Q.12
01=after a year
02 after 3 year
Q.12 After how long the increment is made? 03=after 5 year
04= other (specify)
………..
01=weekly
Q.13 Your banks remunerates you
02=monthly
 03=quarterly
04=other (specify)
01=fixed pay system
02=variable pay system
Q.14 Which type of payment system do you prefer? 03=balance debt method
04=other (specify)
………….
01=fixed pay system

Q.15 02=variable pay system

Which one is followed by your bank?
03=balance debt method
04=other (specify)

01=yes
Q.16 Does your bank offer you overtime?
02=no

01=performance
02=effort
03=seniority
Q.17 The reward system of your bank is based on
04=skill held
05=job difficulty
06=other (specify)……
01=individual level
02=group level
Q.18 Select the incentives plan that your bank offers?
03=organizational level
04=other (specify)……..
01=yes
Q.19 Does your bank participate employees while setting
02=no
payment?
03=if yes go to Q.no 20
01=always
Q.20 How often does your bank participate employees? 02=sometimes
03=rarely
01=strongly satisfied
02=satisfied
Q.21 Are you satisfied with your payment package? 03=neutral
04=dissatisfied
05=strongly dissatisfied
Q.22 Does your organization review on pay? 01=always
 02=sometimes
03=rarely
04=never
01=yes
Q.23 Does your bank pay you on time?
02=no
Does your bank pay you in absenteeism during 01=yes
Q.24
working days? 02=no
01=definitely
02=probably
Q.25 Would you advise a friend to apply for a job at this 03=not sure
bank? 04=probably not
05=definitely not