Civil Bank Limited

CHAPTER I
INTRODUCTION
1.1 Background
As per the curriculum of Bachelor in Business Administration (BBA), it is the great opportunity
for a student is the part of the internship program, which has helped in acquiring the practical
knowledge of general banking transactions. This has helped intern to know about the banking
industry that has worked as a building block for career development in this financial service
sector.
The general purpose of the internship program is to fulfill the requirement of the BBA program
designed by the Tribhuvan University. This internship supposed to undertake for eight weeks
targets to train and prepare students for managerial functions, develop student’s interpersonal
and communication skills by encouraging interacting with the people in organizations. It also
provides the platform to apply the theoretical knowledge that was learnt in the last four years by
exposing own self in real working environments.
1.2 Objective of the Study

The internship program is undertaken for the partial fulfillment of the requirements for the
degree of Bachelors in Business Administration. The general objective of this program is to
make students familiar with the working environment and gain the practical experience in the
related field. This further helps the students to expose themselves to the real world of the
external environment about different aspects of management where they can apply their
theoretical knowledge. The main task of the internship program is to make a study on the
banking operations process, understand the services provided to its customers, and have
complete knowledge and functioning of the related departments.
However the specific objectives of the study were:

• To understand how theoretical concepts are implemented practically in the working
procedures of financial institutions
• To understand the banking organization, its structure, culture, norms, working procedures and
risk associated with it.
• To understand how the Letter of Credit (LC) activities is carried out in the bank.
1.3 Methodology
1.3.1 Selection of the organization:

Selection of a good organization is a very crucial and an important step in the internship
program. It is a very important to know the details about the bank, its popularity and position in
the market. After knowing the detail about the bank, interne has selected Civil Bank Limited for
internship among different banks as it has the best offerings to the fresher.
Firstly, Interne dropped the college recommendation letter with resume in Civil Bank Ltd since it
is the newly established bank and has got high prospects for fresher. Further, the regular follow–
up was done with the human resource department of CBL.
Finally, interne got a call from HR Department after a week and was placed at New Road Branch
for my internship.
1.3.2 Placement and Duration:

Throughout the internship period, the interne was placed at New Road Branch for 8 weeks. The
time period of the internship was from 4th June 2012 to 30th July 2012. During this period, the
interne got an opportunity to work at various departments like customer service department,
remittance & clearing department, Trade Finance department and credit department. The task
was assigned as per the requirement of the different department under the supervision of
respective department head.
Table: 1.1 Work plan chart with time schedule
Working weeks 1 2 3 4 5 6 7 8
Departments
Customer Service
Remittance and Clearing
Credit
Marketing
Trade Finance Department
1.3.3 Activities Performed in the Organization

As the branch where interne was placed was small, the interne was placed in various departments
and performed various activities related with each department. The activities that were
performed during internship period on the basis of the departments are as follows:
1. Business Desk

The major work in this department includes responding the inquiries or the complaints directly
from the customers. The major activities performed in this department are as follows:
• To respond to the customer queries.
• To providing forms and assist in filling them:

 Account Opening form (Individual Accounts, Saving Accounts, Fixed Deposits Accounts)
 Account Closing forms
• Debit card distribution after proper verification of customers.

• To accept requisition of cheque books.
• Printing, Binding, Recording, Sorting and Distribution of cheque books.
• To distribute the debit cards after their verification to the customers.
• Filing the document after completion of account opening procedures.
2. Remittance and Clearing Department

The remittance department is concerned with the transfer of funds. The clearing department deals
with the processing of checks so that the funds are deducted from the payer’s account and put
into the payee’s account. Followings are the major functions that were performed in this
department:
• To provide the related forms to customers for remittance purpose. For the e.g. form of the net
fox, bijulee remit, reliance remit, western union etc.
• To assist in record keeping and filing documents related to remittance.
• Use the cheque writer for quoting the amount.
• Endorsing the cheque.
• Keeping the record of clearing cheques as well as returned cheques.
• Forward inter-bank cheques to center collection bank i.e. Main branch, kamaladi.
3. Trade Finance Department

This department looks after Letter of Credit (Import and Export), Telex Transfer (T.T) and Bank
Guarantee. Followings are the major functions that were performed in this department:
• To receive the application related to LC and authenticate the same.

• Assign LC reference number in LC register.
• To prepare SWIFT message related to International banking and forward them to the SWIFT
department.
• To receive the SWIFT messages and generate the necessary copies for filing purpose.
• To receive import documents and check whether they are as per the LC terms of not.
• To check for the discrepancy in the documents presented for the negotiation.
• To receive the application for Bank Guarantee and authenticate them.
• To prepare Guarantee instrument.
• To ensure the proper filing of each and every document.
• To assist in maintaining each and every file at their proper location.
4. Credit Department

This department provides different types of credit facilities as per the requirement of customers.
Management of credit is also the main responsibility under this department. This department also
holds the responsibility of finding ways to improve its product and services related to credit in
order to attract new customers as well as retain the existing customers. The major works
performed in this department were as follows:
• Conducted stock visit at different places with the respected department head.
• Performed various activities like lodging of the missing documents in the system, checking
the property details (plot no, the area of land, property owner, kitta no.) etc.
• Helped in proper documentation and filing of all related documents.
In addition to above related activities, interns at this branch were also engaged in marketing
activities related to bank products, services, and features. Similarly, our main focus was on
making aware the people about the Small and medium enterprise loan (SME), which is the
currently proposed product of the bank.
1.4 Limitations of the study

The main limitations of the study are:
• Two months’ time period is too short to learn about an overall work procedure.
• This report cannot be generalized to the entire banking industry.
• Interns are not allowed to use the system. So it’s difficult to learn everything just by seeing.
• Most of the information is collected through personal experience and observation; the overall
information may not be presented.
• The bank’s staffs were highly occupied by their work so they had very little time for the
interns.
• The source of data collection is restrictive so every data has not been collected.
CHAPTER II
INTRODUCTION TO BANKING INDUSTRY
2.1 Meaning of Bank

Bank can be defined as a financial institution which provides financial services that may be in
the form of accepting deposits, accepting the loan, providing technical advice, dealing over
foreign currencies, remitting funds, etc. It collects deposits from the general public, corporate
bodies and private organizations by providing them a certain percent of interest, mobilizes the
fund to productive sectors and distributes the accumulated fund to others, who are in need of
money by charging a certain percent of interest. Bank is, therefore; known as a dealer of money
that bridges the gap between the savers of fund and users of the fund.
Some definitions of banks are:

“Bank is a financial institution, which provides financial services that may be in the form of
accepting deposits, advancing loans, providing necessary technical advice, dealing over foreign
currencies, remitting funds, etc.”
- (Nepal Rastra Bank Act 2002)
Banks are financial institutions that fund in the form of deposits, repayable on demand or in short
notice.
-World Bank
From the above definitions, it is clear that a bank is a financial institution, which accepts deposits
from the public in different accounts and grant loans to individuals and corporations against their
certain securities. In these days, it performs a wide variety of functions. It does lot more than
deposit and credit such as remitting money, letter of credit, guarantee, etc, for the service and
benefits of individuals, corporations and general public .i.e. it is an agent of its clients, which
remits money, provides services like LC, guarantee etc. and collects incomes, commissions and
pays expenses on behalf of them.
2.2 History and Origin of Bank

The banking concept is as old as authentic history. The word ‘bank’ is derived from the Latin
word ‘bancus’ which means bench. In the ancient time, the Italian goldsmith used to sit on the
benches when they were in work of exchanging of money, and trading of gold and silver. The
word bench means ‘Banck’ in German, ‘Benca’ in Italian and ‘Banquee’ in French, from which
it is used as ‘BANK’ in The English Language.
The history of modern banks starts from the establishment of the bank of Venice, established in
Venice, Italy in 1157 AD. Subsequently, Bank of Barcelona (1401) and Bank of Geneva (1407),
Bank of Amsterdam (1607) and the bank of Hamburg (1619) were established. The ‘Bank of
England’, first English bank, was established in 1964 A.D. The bank of Hindustan established in
1770 A.D. is regarded as the first bank in India. But these banks were not established according
to the law. In 1833 A.D., Banking Act-1833 was introduced in the United Kingdom which
allowed opening Joint stock company banks. With the expansion of the commercial activities in
the northern Europe, there sprang a number of private banking houses in Europe and slowly
spread throughout the world.
In 1838 A.D., New York adopted the Free banking Act, which allowed anyone to engage in
banking business as long as they met certain legal specifications. As free banking quickly spread
to other states, the problem associated with the system soon became apparent. The bank
incorporated under these laws had the right to issue their own bank notes. This led multiplicity of
notes many of which proved to be worthless in the event of bank failure. Then the Federally
Chartered system of banks came in legislation which allowed national banks to issue notes and
placed a tax on state issued notes. The national bank came into Federal guarantee, which
protected the note holder if the bank failed. The new legislation also brought all the banks under
federal supervision. In essence, it laid the foundation of present day system. By this time, all the
countries have their own banks and the system of operating them.
2.3 Development of banking system in Nepal
Through the study of the historical evidence, it is found that the existence of banking practices
started in the eight century. The banking history in Nepal is relatively new even though the
numbers of banks can be found operating in Nepal. In the Nepalese context, it is very difficult to
trace the correct chronological history of the traditional banking system due to lack of historical
records of banking. In respect of formulation of the financial institution in Nepal, simple
lending and borrowing functions existed during “The Lichhabi Period” King Gunakamdav in 780
B.S. during the tenure of Rana Prime Minister Randeep Singh was the first step towards
institutional development banking of Nepal. But their functions were limited only to granting the
loan. “Sainik Dravya Kash” was established in 1993 B.S. specially established for the future
welfare government staffs and Sainik only once since 2019 B.S. Karmachari Shanchaya Kosh
has been performing more functions than Sainik Dravya Kosh to give facilities not only to the
staff of the government but also to the staff corporations.
In Nepal, Banking in the true sense of term started with the inception of Nepal Bank Limited.
His Majesty king Tribhuvan inaugurated Nepal Bank Limited on Kartik 30, 1994 B.S. This
marked the beginning of an era of formal banking in Nepal. Until then all monetary transactions
were carried out by private dealers, private moneylenders, and trading center. It function was to
meet the need for the development of banking sector and also to formulate monetary policies.
Nepal Rastra Bank (NRB) was established on 14th Baisakh 2031 B.S. under NRB act 2012 since
then it has been functioning as Government’s bank. The government established Rastra Banijya
Bank (RBB) in 2022 B.S. as fully government owned commercial bank. As the name suggests
commercial banks had to carry out commercial transactions. But commercial banks had to carry
out the functions of all types of financial institutions. Here industrial development corporation
(IDC) was set up in 2013 BS. The agriculture development bank (ADB) was established to
provide finance for agricultural producers so that introducing modern agricultural productivity.
Then there were the introduction of joint venture bank in Nepal in 2014 BS with the established
on Nepal Arab Bank Limited. It has provided a milestone in the history of banking in Nepal.
2.4 Concept of Commercial Bank

A commercial bank is regarded as the eldest financial institution in the history of baking.
Commercial banking is also known as business banking. The major objective of the commercial
bank is to earn the profit. The term commercial bank refers to those who pull together the saving
of the community and arrange their productive use and supply the financial needs of modern
business by various means. It is a bank that provides checking accounts, savings accounts, and
money market accounts and that accepts time deposits. A commercial bank is a financial
intermediary which collects credit from lenders in the form of deposits and lends in the form of
loans.
According to Commercial Bank Act 2031 B.S.: “ A commercial bank refers to such type of bank
which operates currency exchange transaction, accepts deposits, advances loans, performs
dealing relating to commerce except the banks which been specified for the cooperative,
agriculture, industry of the similar other specific objectives.”
A commercial bank holds deposits for individuals and businesses in the form of checking and
savings accounts and certificates of deposit of varying maturities while a commercial bank issues
loans in the form of personal and business loans as well as mortgages. The term commercial
bank came about as a way to distinguish it from an “investment bank”. The primary difference
between a commercial bank and its counterpart is that a commercial bank earns revenue by
issuing primary loans from its pool of deposits while an investment bank brings debt and equity
offerings to market for a fee. Among its assets, including loans, a commercial bank holds a
portfolio of other securities to generate proprietary income.
Till today, there are many commercial banks as well as development banks that have been in
operation in Nepal. The licensed commercial banks according to the central bank of Nepal i.e.
NRB are 32 and they are listed in annex 1.
CHAPTER III
INTRODUCTION OF CIVIL BANK L.T.D
3.1 Background
Civil Bank Limited (CBL) has established itself as the 30th commercial bank of Nepal. It is
founded by promoters with the strong background in real estate, financial institutions, business,
trade, and industry. The Bank envisions in becoming a dominant player in the Nepalese banking
industry.
The Bank firmly believes in contributing to the nation's economic growth by rendering services
and empowerment to all classes and sectors of the society. Recently this bank has been running
with its 13 branches located at different parts of Nepal and has targeted to reach 20 with the end
of this fiscal year.

The Bank has been using T24 software to provide fast and efficient services to its customers.
Similarly, the bank is providing its debit card facilities through Smart Choice Technology (SCT)/
National Payment Network (NPN) and is planning to introduce VISA card in the bank. The
customers are provided the debit card free with zero charges. Recently, the bank has introduced
internet banking to make its services more easy and convenient.
3.1.1 Vision of CBL

To become the most trusted bank by providing dedicated service and support to customers
through thick or thin.
3.1.2 Mission of CBL

To become every Nepali's banking partner by extending all types of banking services.
3.1.3 Goal of CBL

To contribute directly/indirectly in the economic growth of the country by being a prominent
player associated with all classes and sectors of society.
3.1.4 Objectives of CBL

• Prudent expansion
• Innovation
• Dedicated customer service
• Competitive human resource
• Vigilance
With the two major slogans, one bank 20 million aspirations and thinking forward moving
forward, CBL has been moving forward to make its own different and renowned status in the
banking industry. Similarly, the bank bases itself on a set of superior values and moral principles.
It aims to succeed and reach higher grounds by maintaining and adhering to its corporate values
as below:
• Maintain the highest standards in all relationships with customers, suppliers, environment,
and community.
• Foster a climate which encourages innovation and diligence amongst staff and reward
accordingly.
• Function with the principle of "Thinking Forward Moving Forward".
3.2 Equity Structure of CBL
The capital structure of CBL is presented in the table below:
Table 3.1: Capital structure of CBL
Capital Amount (in Rs.)

Authorized Capital 4,00,00,00,000
Issued Capital 2,00,00,00,000
Paid up Capital 1,20,00,00,000
Source: CBL Annual Report 2067/68
The above equity structure of CBL is presented in the following diagram:
Fig 3.1: Bar diagram showing equity structure of CBL (Rs. In billion)
CBL being a newly established bank in Nepalese banking industry has been able to earn some
profit through its business operations. The banking activities of CBL in its first fiscal year are
shown in the table below:
Table: 3.2 Position of banking activities in 1st fiscal year
S.N Particulars Amount (Rs in 1000)

1. Deposits 4,23,75,25
2. Loans 4,08,22,07
3. Investments 30,09,59
4. Operational Profit 98,97
CBL has not yet issued its share to the general public. The shares are held by the local promoters.
CBL is planning to issue public shares of Rs 80 crores in coming Mangsir 2069.
See annex 2 for the balance sheet of CBL as on the end of fiscal year 2067/68.
3.3 Commercial and Business Relations of CBL

CBL, within the short period of business operation, has been able to establish business relation
with various national as well as international banks and financial institutions. The major
international banks having business relation with CBL is listed below:
3.4 Board of Directors
The Board of directors of CBL consists of five members who have been elected for the proper
execution of banking activities and services. The name and designation of B.O.D are presented
in annex 3.
3.5 Management Committee

The management committee of CBL consists of highly professional and dedicated members for
the success of the overall organization. The committee consists of 20 members which are listed
with their designation in annex 4.

3.6 Branch network
Civil Bank Ltd is trying to reach maximum numbers customer by establishing new well-
equipped branches in different areas of Nepal. The Head Office of CBL is located at Kamaladi,
Classic Complex, and Kathmandu.
It has 13 branches all over the country, 4 branches inside valley and 9 branches outside the
valley. The details about the branches are listed in annex 5.
3.7 Product and services

Civil Bank delivers various products and services through its ABBS services. The major of them
are as follows:
3.7.1 Deposits
The major deposit schemes offered by CBL are listed below:
• Saving accounts
1. Mero Bachat Khata

Civil Bank Mero Bachat Khata is an interest bearing normal savings account. This account
intends to develop a saving habit for the future in order to facilitate the accumulation of funds
over a period of time.
Criteria:
Minimum Balance: (No minimum balance required)
Rate of Interest: 6.50% per annum (On Daily Balance)
Withdrawals and Deposits: Unrestricted
2. Aama Buwa Bachat Khata

Civil Bank Ama Buwa Bachat Khata is a special savings product designed for senior citizens.
This product not just yields high returns on the hard-earned income but also provides them with
convenience and easy accessibility to their savings account.
Criteria:
Minimum Balance: NPR 10,000
Interest Posting: Monthly
Qualifying Age: 58 and above
3. Kishore Bachat Khata
Civil Bank Kishor Bachat Khata is designed to instill a savings habit amongst parents so that can
save and amass the significant amount of funds to build a secure future for their children.
Criteria:
Rate of Interest: 7% per annum (On Daily Balance)
Qualifying Age: 16 and below
4. Nari Bachat Khata

Civil Bank Nari Bachat Khata is a product especially for the ladies (housewives, professionals,
and others). This product is tailor-made to suit the requirements of its target audience. This
savings account offers exclusive value-added services.
Criteria:
Qualifying Gender: Females
5. Gold Savings Account

Civil Bank Gold Savings Account is savings scheme which offers an attractive rate of interest
and is for those individuals who are self-employed or professionals working in various
organizations. This scheme also gives the account holder the added flexibility of unrestricted
withdrawal.
Criteria:
6. Silver Savings Account

Civil Bank Silver Savings Account is savings scheme which offers a competitive rate of interest
to the account holder and is for those individuals who are self-employed or professionals
working in various organizations. Besides offering an attractive interest rate, the product is also
flexible in that the customer can withdraw and deposit funds as per their convenience while
retaining the required minimum balance in the account.
Criteria:
• Civil Bank Loyalty Call Account

Civil Bank Loyalty Call Account is meant for individuals and corporate houses who seek to earn
interest on their deposits on a daily balance as well as experience the flexibility which the market
today demands. Account holders are paid interest on the daily balance in their call account.
Criteria:
Minimum Balance: NPR 1,000,000
Account Type: - Loyalty Current Account
Loyalty Call Account
Interest Rate Calculation: Daily Basis
3.7.2 Loans
The different loan schemes offered by CBL are listed below:
1. Personal Mortgage Loan

Civil Bank Personal Mortgage Loan is one such product to cater to the various financing
requirement of individuals. The minimum limit of CiPML is NPR. 100,000 and the maximum
limit of CiPML are NPR. 50,000,000.The applicant for the loan must provide unencumbered
fixed assets collateral (land and building) fully covering the requested loan exposure.
2. Home Loan
Civil Bank Home Loan is established as a retail lending product to cater to the prevailing market
demands. CBL 'Home Loan' limit shall be fixed for minimum and maximum range of NPR
100,000 and NPR 50,000,000 respectively for all types of schemes. Any Nepalese individual of
at least 18 years of age is eligible for Home Loan facility subject to stable, reliable source of
income. Furthermore, the disposable income should be sufficient to serve the loan installment
and due interest. Civil Bank 'Home Loan' limit shall be fixed for minimum and maximum range
of NPR 100,000 and NPR 50,000,000 respectively for all types of schemes.
3. Hire Purchase Loan

Civil Bank Hire Purchase Loan (CiHPL) as a retail lending product to cater to the prevailing
market demands. Hire Purchase Loan will be applicable to private automobiles (cars, jeeps),
commercial vehicles (trucks, buses), heavy equipment (excavators, cranes, dozers) and other
equipment (hospital equipment, heavy kitchen types of equipment). CBL ‘Hire Purchase Loan'
limit will be fixed for a minimum and maximum range of NPR 500,000 and 50,000,000
respectively for all types of schemes.
4. Loan against Fixed Deposit Receipt

The Loan against Fixed Deposit is an added feature in the Fixed Deposit product and enables the
depositor/account holder to withdraw a certain percentage of the deposit amount as a loan to
cater to his/her various immediate needs.
Normally, the Bank will finance up to 90% of the value of the FD, if the same is issued by itself.
In the case of loan against FDR issued by other Banks/financial institutions, the Bank may not
finance more than 80% of the face value.
5. Loan against Government Bond/ Securities

Loan against Government Bond/Securities enables an individual or firm to avail a loan against
the value of the securities and bonds in their possession.
Generally, Credit against Govt. / NRB Instrument will be extended up to 90% of the value of the
instrument. However, in exceptional cases, the credit may be extended up to the face value of the
instrument upon approval from a competent authority.
3.7.3 Remittance
Remittance means sending income in terms of money or goods in a home by the migrants or
workers who have their earnings outside their home country.
Civil Bank Ltd is providing the remittance services through the Western Union, International
Money Express (IME), Money gram, reliable remit, NET fox and Prabhu Money Transfer.
3.7.4 Letter of Credit (LC)

Letter of credit is an undertaking issued by a bank in favor of a beneficiary by which the bank
substitutes its own creditworthiness for that of the applicant by promising to honor (pay) if the
documents specified in the letter of credit are timely presented.
CBL is delivering this service to its customers through Trade Finance Department.
3.7.5 Others
The other services provided by CBL include the “Bank Assurance” which is the recent product
of the bank. The bank is providing insurance facilities to its customers through the collaboration
of Prime Life Insurance Company.
3.8 SWOT Analysis of CBL The strengths, weaknesses, opportunities’ and threats of CBL is
shown in the figure below:
SWOT Analysis
Figure 3.2: SWOT Analysis of CBL
CHAPTER IV
ANALYSIS OF ACTIVITIES DONE AND PROBLEM SOLVED
4.1 Introduction to letter of credit (L.C)

Letter of credit is used primarily in international trade for large transactions between the supplier
in one country and customer in another. Letter of credit is an undertaking by a bank, (Issuing
Bank) to the seller of goods (the beneficiary) in accordance with the instruction of the buyer
(Applicant) to effect payment up to a prescribed amount at sight or at any future determinable
time(Tenure) provided the beneficiary presents stipulated documents within stipulated time
frame.
A letter of credit is basically a document issued by a bank guaranteeing a client's ability to pay
for goods or services. A bank or finance company issues a letter of credit on behalf of a buyer,
authorizing the seller to obtain payment within a specified time frame once the terms and
conditions outlined in the letter of credit are met. The letter of credit acts like an insurance
contract for both the buyer and seller and practically eliminates the credit risk for both parties
while at the same time reducing payment delays. A letter of credit provides the seller with the
greatest degree of safety when extending credit. It is useful when the buyer is not well known
and when exchange restrictions exist or are possible.
4.1.1 Benefits of Opening LC

1. Benefits To Buyer
• Buyer is assured that the Bank will make payment if stipulated documents will be received
• If the seller agrees to extend loans, LC can be opened.
• Terms and conditions can be accommodated to ensure accurate shipment.
• There is the benefit of finance under trust receipt loan arrangement.
2. Benefits to Seller

• The seller can rely on the credit worthiness of banks rather than of customer.
• Non-payment or late payment can be avoided.
• Can take financing, can negotiate
4.1.2 Risk Involved In Letter Of Credit
1. Risks to the Applicant

• Non-delivery of Goods
• Short Shipment
• Inferior Quality
• Early /Late Shipment
• Damaged in transit
• Foreign exchange
• Failure of Bank viz issuing bank / Collecting Bank
2. Risks to the Beneficiary

• Failure to Comply with Credit Conditions
• Failure of, or Delays in Payment from, the Issuing Bank
4.2 Customary Practices for Letter Of Credit
1. The Uniform Customs and Practice for Documentary Credits (UCPDC)
The UCPDC is concerned with documentary credits, commonly referred to as “letters of credit.”
The UCP is focused on “commercial” letters of credit, the traditional letters of credit that are
used as a vehicle for payment in international trade, but the UCP is also used in the realm of
standby letters of credit and bank guarantees. In short, we can know about UCPDC in following
points:
• Issued by the International Chamber of Commerce in Paris.
• UCP are a set of internationally accepted rules and definitions which cover the liabilities and
duties of all parties to documentary credits.
• Periodically revised
• In effect since 1933
• The edition “UCPDC 600” came out in 2007 and was effective from July 01, 2007.
2. International Commercial Terms (INCOTERMS)

INCOTERMS is a set of uniform rules for the interpretation of international commercial terms
defining the costs, risks and obligations of buyers and sellers in international transactions. Some
of the examples are:
EXW= Ex Work
FOB= Free On Board
CFR= Cost and Freight
FCA= Free Carrier
4.3 Parties to LC
1. Applicant (Buyer/Opener)

The applicant is the buyer / importer of the goods who asks his bank, the Issuing Bank, to issue
an LC. In almost all cases, the applicant maintains an account relationship with the issuing bank.
2. Beneficiary (Seller)

The beneficiary is the seller/exporter in whose favor the documentary credit will be opened /
issued.
3. Issuing Bank

The applicant is the customer of the issuing bank, and it is the issuing bank which gives the
written undertaking in the form of a documentary credit in favor of the exporter.
4. Advising Bank

This is the bank, usually domiciled in the beneficiary’s country, which is requested by the
issuing bank to advise the beneficiary of the terms and conditions of the credit.
There is no liability on the part of the advising bank to honor the credit in any way. The main
function of the advising bank is to prove to the beneficiary that the credit is genuine since the
advising bank has to satisfy itself that the credit is properly authenticated by the issuing bank.
5. Confirming Bank

The confirming bank is the bank which, at the request of, or with the permission of the issuing
bank, adds its own undertaking to honor the documentary credit.
6. Nominated Bank (Presenting bank)

A bank named in or otherwise permitted by the terms and conditions of the LC to receive a
presentation of documents. The nominated bank can either send the documents received from the
beneficiary to the issuing bank without giving value to the draft or if it wishes can give value to
the drafts.
7. Negotiating Bank

A bank which under a documentary credit purchases bills of exchange drawn by the exporter
payable at another bank, thus making available the funds to the beneficiary before the documents
are made available to the issuing bank.
As negotiated documents can ultimately be refused by the applicant if they are not exactly as per
the terms of the credit, the Negotiating bank should take extreme care while examining the
documents.
4.3 Types of Letter of credit

1. Revocable LC
In this type of credit buyer and the bank which has established the LC, are able to manipulate the
letter of credits or make any kinds of corrections without informing the seller and getting
permissions from him. This type of LC is not a commonly used instrument.
2. Irrevocable LC
In this type of LC, any kinds of change and manipulations from the buyer part and the
established bank require the permission and satisfaction of seller part. According to the last rules
of the international business room, return ability or none return ability; the credit will be none
returnable.
3. Confirmed LC
They are the guarantees that buyer will be given so that, the buyer will give the guarantee from
his own bank to any other valid bank that the seller will desire it.
4. Unconfirmed LC
This type of letter of credit does not acquire the other bank's confirmation.
5. Transferable LC
It is a type of credit that the seller can give a part or parts of credit (Completely) to the person or
persons he decides. This type of credit is a benefit for the seller.
6. Nontransferable LC
It is said to the credit that seller cannot give a part or completely right of assigned credit to
somebody or to the persons he wants. In international commerce, it is required that the credit will
be nontransferable.
7. Usance LC
It is kind of credit that won't be paid and assigned immediately after checking the valid
documents but paying and assigning it requires an indicated duration which is accepted by both
of the buyer and sellers. In reality, the buyer will give an opportunity to the seller to pay the
required money after taking the related goods and selling them.
8. Sight LC
It is a kind of credit that the announcer bank after observing the carriage documents from the
seller and checking all the documents immediately pays the required money.
9. Red Clause LC

In this kind of credit assignment seller before sending the products can take the pre-paid and
parts of the money from the bank. The first part of the credit is to attract the attention acceptor
bank. It allows the beneficiary of a documentary credit to receive funds for the purchase of goods
described in the credit. These letters are commonly used by beneficiaries who act as purchasing
agents for buyers in another country. It carries a provision that is written or typed in red ink
which allows a seller to draw up to a fixed sum from the advising or paying-bank, in advance of
the shipment or before presenting the prescribed documents.
10. Back to Back LC

This type of LC consists of two separated and different types of LC. First one is established in
the benefit of the seller that is not able to provide the corresponding goods for any reasons.
Because of that reason according to the credit which is opened for him, neither credit will be
opened for another seller to provide the desired goods and sends it.
4.5 Important terms used in LC
1. Pro-forma Invoice (P.I)

An invoice is a commercial document issued by a seller to the buyer, indicating the products,
quantities, and agreed prices for products or services the seller has provided the buyer. An
invoice indicates the sale transaction only. Payment terms are independent of the invoice and are
negotiated by the buyer and the seller.
As, per NRB, Performa Invoice should mention:

• Name of item
• Model / Brand
• Quantity, Purchase Price Unit, Total Price
• 8 digit harmonic code
• Should not contain clauses like “All discrepancies acceptable)
• Country of Origin
2. Bill Of Lading (B/L)

A bill of lading is a type of document that is used to acknowledge the receipt of a shipment of
goods. A transportation company or carrier issues this document to a shipper. In addition to
acknowledging the receipt of goods, a bill of lading indicates the particular vessel on which the
goods have been placed, their intended destination, and the terms for transporting the shipment to
its final destination.
3. Bills Of Exchange
Bills of exchange is an unconditional order in writing, addressed by the drawer to the drawee,
requiring the drawee to pay a sum of money on demand or at a specified future time to the payee
(who might be the drawer or another party) or to the bearer. Bill of exchange under an LC is
issued as per the terms of the LC.
4. Airway Bill

Airway bill is issued by the transporting airlines as a receipt of the merchandise for delivery up
to the specified point. The airline industry has adopted a standard format for air waybill which is
used throughout the world for both domestic and international traffic. Unlike a bill of lading, air
waybill is a non-negotiable instrument, does not specify on which flight the shipment will be
sent, or when it will reach its destination.
5. Insurance Policy

Insurance Certificate states that a specified party will be reimbursed an amount in the event
merchandise is damaged or destroyed. An Insurance Policy generally covers accidental losses
and covers voluntary losses when a cargo must be sacrificed to save a ship. The exporter should
be able to produce Insurance Policy document in case the goods are shipped under CIF and C&I
arrangement.
4.6 LC Opening, Amendment and Cancellation Procedures in CBL
4.6.1 Opening Procedures of LC in CBL
The LC opening procedures of every commercial bank is as per the NRB directives. However the
common LC opening procedures is explained in brief in the points given below:
1. There is a negotiation between buyer and seller and thus finalization of deal & buyer
approach its bank to open import LC.
2. Issuing bank issues the LC through its advising bank & advising bank informs and advises
the LC to the exporter.
3. Exporter prepares the goods and makes the shipment through the carrier
4. Exporter prepares the documents demanded in the credit and furnishes to its negotiating
bank.
5. Negotiating bank forwards the documents to issuing bank for payment.
6. The issuing bank obtains payment from the importer and provides the documents.
7. Importer obtains the goods shipped by exporter through the carrier (or its agent).
8. Issuing bank releases the payment to negotiating bank through the reimbursing bank.
9. Exporter receives payment through negotiating bank.
The above-explained process of opening LC can be generalized in the following figure which
makes clearer in understanding the procedure.
Fig: 4.1: Procedures of LC

4.6.2 Charges for LC in CBL
The charges for establishing LC with Civil Bank Ltd has been categorized into prime customers
and other customers. Prime customers are those who are a regular customer of the bank and are
loyal towards the bank. Other customers are generally one-time customer of the bank.
The charges are shown in the table below:
Table: 4.1 Charges for LC
S.N PARTICULARS PRIME CUSTOMERS OTHER CUSTOMERS

1. LC establishment Min:1000 NPR OR  Min:1500 NPR OR 0.25%of
in convertible  0.125% of LC (Industry) LC(Industry)
foreign currency 0.25% of LC (Trading)  Min:1500 NPR OR 0.375%of
 025% of LC (Case to Case). LC(Trading)
 Min:2000 NPR OR 0.375%
of LC(Case to Case)
2.  MIN:1000 NPR OR
LC establishment  Min:1500 NPR OR 0.375%
in INR and local
 0.25% of LC(Industry) of LC(Industry)
currency  0.375% of LC(Trading)  Min:1500 NPR OR 0.50% of
LC(Trading)
 Min:2000 NPR OR 0.50% of
LC(Case to Case)
LC
establishment in convertible foreign currency

• Min: 1000 NPR OR
• 0.125% of LC (Industry)
• 0.25% of LC (Trading)
• 025% of LC (Case to Case).
• Min: 1500 NPR OR 0.25%of LC (Industry)
• Min: 1500 NPR OR 0.375%of LC (Trading)
• Min: 2000 NPR OR 0.375% of LC (Case to Case)
2. LC establishment in INR and local currency

• MIN:1000 NPR OR
• 0.25% of LC(Industry)
• 0.375% of LC(Trading
• Min:1500 NPR OR 0.375% of LC(Industry)
• Min:1500 NPR OR 0.50% of LC(Trading)
• Min:2000 NPR OR 0.50% of LC(Case to Case)
Other additional charges:

• Document charge: NPR 500
• BCI: NPR 500(Only for sight LC)
• Swift Charges: For foreign currency(NPR 2000)
For Indian currency (NPR 1200)
For Nepalese currency (NPR 500)
4.6.3 Amendment procedures of LC in CBL
The amendment is required if the client finds a need of change in the LC. For this, the client has
to request for amendment and the letter should be signed by the authorized person. The issuing
bank is approached by the Applicant for the amendment along with the LC amendment form and
Bi. Bi. Ni. 3. Mechanism to be followed is almost similar to opening a new LC.
Issuing Bank, Advising / Confirming Bank or Beneficiary have the right to refuse any
amendment if they feel it can create additional involvement, unwanted liability.
Normally, amendments are not refused if they are essential such as the extension of the validity
and / or latest shipment date or adding essentials such as a document or instruction or conditions
mentioned in the contract of sale but omitted in the original credit.
Partial acceptance of amendments contained in one and the same advice is not allowed without
the agreement of all the named parties.
The amendment charges in CBL are shown in the table below:
Table: 4.2 Amendment Charges
S.N For value and validity Other than value and

validity
1.  As per the issuance commision  500 NPR
(Prime customers)
 1000 NPR(Other
customers)
4.6.4 Cancellation of LC in CBL
Since the LC opened in CBL basically are Irrevocable in nature the LC cannot be canceled
through just one party, for the cancellation of LC the consent of both parties is required. The
buyer can cancel the LC before the goods have been shipped by the seller, but if the seller has
shipped the goods then he would not agree to cancel the LC. There can be various personal as
well as the business problem which lead him to cancel and LC.
The cancellation charges in CBL are as follows:
Cancellation charges NPR 500 plus SWIFT charge NPR 500
4.7 Problem Solved

• Provided general information to the customers who visited LC department regarding their
queries on LC procedures.
• Assisted the customers in filling up the LC form if they were in confusion.
• Helped the respected department head by proper filing and documentation of each and every
file.
• Helped in preparing SWIFT copy whenever required to assist the department head.
• Checked all the missing documents in the file and informed the respective person.
CHAPTER V:
CONCLUSION AND LESSON LEARNT
5.1 Conclusion

The banking industry has become highly competitive and it’s essential to establish good
corporate governance policies with systematic transaction and operation and operational
procedure.
Civil Bank Ltd is one of the pioneering commercial banks in Nepal established with the motto of
fulfilling all the customers’ aspirations through its advanced banking facilities. Due to
globalization and rapid development of international trade, the customer’s attraction towards LC
is growing day by day and this facility is provided through Trade Finance Center (TFC)
department in CBL.
This report is prepared on the basis of internship done in the New Road Branch of CBL, for two
months. It is, therefore, focused on the activities learned in Letter of Credit department among
the different departments of CBL. The internship done at CBL was a great experience to learn
various aspects of banking and finance. However, my focal point of the study was the Letter of
the Credit department.
TFC department in CBL deals with issuance of Letter Of Credit (LC), Telex Transfer (T.T) and
Bank Guarantee. However, the main concern of this report is on LC as the interne was more
concentrated in LC.
During my stay in the letter of credit department of CBL, I found that trade finance center
renders proper services to the customers along with generating suitable proceeds for the bank.
But, I found the problem of delay in services as the trade operation of CBL were centralized and
also found the problem of lack of space. Overall I had a great experience while doing the
internship in CBL with cooperative staffs and other intern friends.
5.2 Lesson Learnt

The main focus of preparing this report is management oriented in order to know the internal
system of the banking industry and grasp the opportunities and face challenges in the competitive
banking environment in Nepal. So its main objective is to explore the managerial skills and gain
experience from the internship that are helpful to analyze the overall activities of each
department to tackle real life situation arising in the organization.
The interne conducted an internship in Civil Bank Limited, New Road for a period of eight
weeks. The interne was able to gain knowledge about the work environment and also learnt a lot
about responsibility, work pressure and the importance of time management.
The interne was placed in various departments so that the interne can get insight knowledge in
overall procedures and system. However, the most of the time was spent on Trade Finance
Department along with Customer Service Department, Remittance and Clearing Department, and
Credit Department. Similarly, interne work day to day activities as per instruction and
supervision and learnt operational procedure. However the major lesson learnt from the 8 weeks
internship program can be summarized in the following points:
• Learned about the banking norms, rules and regulations by working under the strict discipline
of the bank.
• Learned briefly about all banking departments, their working procedures, documentation, and
practices.
• Learned how to deal with customers, solving their queries and solving their problems in need.
• More precisely learned about the LC procedures and documentation as it was the subject of
keen interest for the interne.
• Learned to prepare B.B.Ni forms and LC messages which are the most requirements in Trade
Finance Department.
• The things learnt theoretically were found different from the banking procedure and working
system.
Finally concluding the report, working as an intern in CBL was of the great experience of
practical banking scenario. Interne felt that the charm of banking industry outside the work field
is very high, but it is as difficult to work inside with strong discipline and dedication.

CHAPTER I
INTRODUCTION
1.1 Background
As per the curriculum of Bachelor in Business Administration (BBA), it is the great opportunity
for a student is the part of the internship program, which has helped in acquiring the practical
knowledge of general banking transactions. This has helped intern to know about the banking
industry that has worked as a building block for career development in this financial service
sector.
The general purpose of the internship program is to fulfill the requirement of the BBA program
designed by the Tribhuvan University. This internship supposed to undertake for eight weeks
targets to train and prepare students for managerial functions, develop student’s interpersonal
and communication skills by encouraging interacting with the people in organizations. It also
provides the platform to apply the theoretical knowledge that was learnt in the last four years by
exposing own self in real working environments.
1.2 Objective of the Study

The internship program is undertaken for the partial fulfillment of the requirements for the
degree of Bachelors in Business Administration. The general objective of this program is to
make students familiar with the working environment and gain the practical experience in the
related field. This further helps the students to expose themselves to the real world of the
external environment about different aspects of management where they can apply their
theoretical knowledge. The main task of the internship program is to make a study on the
banking operations process, understand the services provided to its customers, and have
complete knowledge and functioning of the related departments.
However the specific objectives of the study were:

• To understand how theoretical concepts are implemented practically in the working
procedures of financial institutions
• To understand the banking organization, its structure, culture, norms, working procedures and
risk associated with it.
• To understand how the Letter of Credit (LC) activities is carried out in the bank.
1.3 Methodology
1.3.1 Selection of the organization:
Selection of a good organization is a very crucial and an important step in the internship
program. It is a very important to know the details about the bank, its popularity and position in
the market. After knowing the detail about the bank, interne has selected Civil Bank Limited for
internship among different banks as it has the best offerings to the fresher.
Firstly, Interne dropped the college recommendation letter with resume in Civil Bank Ltd since it
is the newly established bank and has got high prospects for fresher. Further, the regular follow–
up was done with the human resource department of CBL.
Finally, interne got a call from HR Department after a week and was placed at New Road Branch
for my internship.
1.3.2 Placement and Duration:

Throughout the internship period, the interne was placed at New Road Branch for 8 weeks. The
time period of the internship was from 4th June 2012 to 30th July 2012. During this period, the
interne got an opportunity to work at various departments like customer service department,
remittance & clearing department, Trade Finance department and credit department. The task
was assigned as per the requirement of the different department under the supervision of
respective department head.
Table: 1.1 Work plan chart with time schedule
1.3.3 Activities Performed in the Organization

As the branch where interne was placed was small, the interne was placed in various departments
and performed various activities related with each department. The activities that were
performed during internship period on the basis of the departments are as follows:
1. Business Desk
The major work in this department includes responding the inquiries or the complaints directly
from the customers. The major activities performed in this department are as follows:
• To respond to the customer queries.

• To providing forms and assist in filling them:
 Account Opening form (Individual Accounts, Saving Accounts, Fixed Deposits Accounts)
 Account Closing forms
• Debit card distribution after proper verification of customers.
• To accept requisition of cheque books.
• Printing, Binding, Recording, Sorting and Distribution of cheque books.
• To distribute the debit cards after their verification to the customers.
• Filing the document after completion of account opening procedures.
2. Remittance and Clearing Department

The remittance department is concerned with the transfer of funds. The clearing department deals
with the processing of checks so that the funds are deducted from the payer’s account and put
into the payee’s account. Followings are the major functions that were performed in this
department:
• To provide the related forms to customers for remittance purpose. For the e.g. form of the net
fox, bijulee remit, reliance remit, western union etc.
• To assist in record keeping and filing documents related to remittance.
• Use the cheque writer for quoting the amount.
• Endorsing the cheque.
• Keeping the record of clearing cheques as well as returned cheques.
• Forward inter-bank cheques to center collection bank i.e. Main branch, kamaladi.
3. Trade Finance Department

This department looks after Letter of Credit (Import and Export), Telex Transfer (T.T) and Bank
Guarantee. Followings are the major functions that were performed in this department:
• To receive the application related to LC and authenticate the same.

• Assign LC reference number in LC register.
• To prepare SWIFT message related to International banking and forward them to the SWIFT
department.
• To receive the SWIFT messages and generate the necessary copies for filing purpose.
• To receive import documents and check whether they are as per the LC terms of not.
• To check for the discrepancy in the documents presented for the negotiation.
• To receive the application for Bank Guarantee and authenticate them.
• To prepare Guarantee instrument.
• To ensure the proper filing of each and every document.
• To assist in maintaining each and every file at their proper location.
4. Credit Department
This department provides different types of credit facilities as per the requirement of customers.
Management of credit is also the main responsibility under this department. This department also
holds the responsibility of finding ways to improve its product and services related to credit in
order to attract new customers as well as retain the existing customers. The major works
performed in this department were as follows:
• Conducted stock visit at different places with the respected department head.
• Performed various activities like lodging of the missing documents in the system, checking
the property details (plot no, the area of land, property owner, kitta no.) etc.
• Helped in proper documentation and filing of all related documents.
In addition to above related activities, interns at this branch were also engaged in marketing
activities related to bank products, services, and features. Similarly, our main focus was on
making aware the people about the Small and medium enterprise loan (SME), which is the
currently proposed product of the bank.
1.4 Limitations of the study

The main limitations of the study are:
• Two months’ time period is too short to learn about an overall work procedure.
• This report cannot be generalized to the entire banking industry.
• Interns are not allowed to use the system. So it’s difficult to learn everything just by seeing.
• Most of the information is collected through personal experience and observation; the overall
information may not be presented.
• The bank’s staffs were highly occupied by their work so they had very little time for the
interns.
• The source of data collection is restrictive so every data has not been collected.
CHAPTER II
INTRODUCTION TO BANKING INDUSTRY
2.1 Meaning of Bank

Bank can be defined as a financial institution which provides financial services that may be in
the form of accepting deposits, accepting the loan, providing technical advice, dealing over
foreign currencies, remitting funds, etc. It collects deposits from the general public, corporate
bodies and private organizations by providing them a certain percent of interest, mobilizes the
fund to productive sectors and distributes the accumulated fund to others, who are in need of
money by charging a certain percent of interest. Bank is, therefore; known as a dealer of money
that bridges the gap between the savers of fund and users of the fund.
Some definitions of banks are:

“Bank is a financial institution, which provides financial services that may be in the form of
accepting deposits, advancing loans, providing necessary technical advice, dealing over foreign
currencies, remitting funds, etc.”
- (Nepal Rastra Bank Act 2002)
Banks are financial institutions that fund in the form of deposits, repayable on demand or in short
notice.
-World Bank
From the above definitions, it is clear that a bank is a financial institution, which accepts deposits
from the public in different accounts and grant loans to individuals and corporations against their
certain securities. In these days, it performs a wide variety of functions. It does lot more than
deposit and credit such as remitting money, letter of credit, guarantee, etc, for the service and
benefits of individuals, corporations and general public .i.e. it is an agent of its clients, which
remits money, provides services like LC, guarantee etc. and collects incomes, commissions and
pays expenses on behalf of them.
2.2 History and Origin of Bank

The banking concept is as old as authentic history. The word ‘bank’ is derived from the Latin
word ‘bancus’ which means bench. In the ancient time, the Italian goldsmith used to sit on the
benches when they were in work of exchanging of money, and trading of gold and silver. The
word bench means ‘Banck’ in German, ‘Benca’ in Italian and ‘Banquee’ in French, from which
it is used as ‘BANK’ in The English Language.
The history of modern banks starts from the establishment of the bank of Venice, established in
Venice, Italy in 1157 AD. Subsequently, Bank of Barcelona (1401) and Bank of Geneva (1407),
Bank of Amsterdam (1607) and the bank of Hamburg (1619) were established. The ‘Bank of
England’, first English bank, was established in 1964 A.D. The bank of Hindustan established in
1770 A.D. is regarded as the first bank in India. But these banks were not established according
to the law. In 1833 A.D., Banking Act-1833 was introduced in the United Kingdom which
allowed opening Joint stock company banks. With the expansion of the commercial activities in
the northern Europe, there sprang a number of private banking houses in Europe and slowly
spread throughout the world.
In 1838 A.D., New York adopted the Free banking Act, which allowed anyone to engage in
banking business as long as they met certain legal specifications. As free banking quickly spread
to other states, the problem associated with the system soon became apparent. The bank
incorporated under these laws had the right to issue their own bank notes. This led multiplicity of
notes many of which proved to be worthless in the event of bank failure. Then the Federally
Chartered system of banks came in legislation which allowed national banks to issue notes and
placed a tax on state issued notes. The national bank came into Federal guarantee, which
protected the note holder if the bank failed. The new legislation also brought all the banks under
federal supervision. In essence, it laid the foundation of present day system. By this time, all the
countries have their own banks and the system of operating them.
2.3 Development of banking system in Nepal
Through the study of the historical evidence, it is found that the existence of banking practices
started in the eight century. The banking history in Nepal is relatively new even though the
numbers of banks can be found operating in Nepal. In the Nepalese context, it is very difficult to
trace the correct chronological history of the traditional banking system due to lack of historical
records of banking. In respect of formulation of the financial institution in Nepal, simple
lending and borrowing functions existed during “The Lichhabi Period” King Gunakamdav in 780
B.S. during the tenure of Rana Prime Minister Randeep Singh was the first step towards
institutional development banking of Nepal. But their functions were limited only to granting the
loan. “Sainik Dravya Kash” was established in 1993 B.S. specially established for the future
welfare government staffs and Sainik only once since 2019 B.S. Karmachari Shanchaya Kosh
has been performing more functions than Sainik Dravya Kosh to give facilities not only to the
staff of the government but also to the staff corporations.
In Nepal, Banking in the true sense of term started with the inception of Nepal Bank Limited.
His Majesty king Tribhuvan inaugurated Nepal Bank Limited on Kartik 30, 1994 B.S. This
marked the beginning of an era of formal banking in Nepal. Until then all monetary transactions
were carried out by private dealers, private moneylenders, and trading center. It function was to
meet the need for the development of banking sector and also to formulate monetary policies.
Nepal Rastra Bank (NRB) was established on 14th Baisakh 2031 B.S. under NRB act 2012 since
then it has been functioning as Government’s bank. The government established Rastra Banijya
Bank (RBB) in 2022 B.S. as fully government owned commercial bank. As the name suggests
commercial banks had to carry out commercial transactions. But commercial banks had to carry
out the functions of all types of financial institutions. Here industrial development corporation
(IDC) was set up in 2013 BS. The agriculture development bank (ADB) was established to
provide finance for agricultural producers so that introducing modern agricultural productivity.
Then there were the introduction of joint venture bank in Nepal in 2014 BS with the established
on Nepal Arab Bank Limited. It has provided a milestone in the history of banking in Nepal.
2.4 Concept of Commercial Bank

A commercial bank is regarded as the eldest financial institution in the history of baking.
Commercial banking is also known as business banking. The major objective of the commercial
bank is to earn the profit. The term commercial bank refers to those who pull together the saving
of the community and arrange their productive use and supply the financial needs of modern
business by various means. It is a bank that provides checking accounts, savings accounts, and
money market accounts and that accepts time deposits. A commercial bank is a financial
intermediary which collects credit from lenders in the form of deposits and lends in the form of
loans.
According to Commercial Bank Act 2031 B.S.: “ A commercial bank refers to such type of bank
which operates currency exchange transaction, accepts deposits, advances loans, performs
dealing relating to commerce except the banks which been specified for the cooperative,
agriculture, industry of the similar other specific objectives.”
A commercial bank holds deposits for individuals and businesses in the form of checking and
savings accounts and certificates of deposit of varying maturities while a commercial bank issues
loans in the form of personal and business loans as well as mortgages. The term commercial
bank came about as a way to distinguish it from an “investment bank”. The primary difference
between a commercial bank and its counterpart is that a commercial bank earns revenue by
issuing primary loans from its pool of deposits while an investment bank brings debt and equity
offerings to market for a fee. Among its assets, including loans, a commercial bank holds a
portfolio of other securities to generate proprietary income.
Till today, there are many commercial banks as well as development banks that have been in
operation in Nepal. The licensed commercial banks according to the central bank of Nepal i.e.
NRB are 32 and they are listed in annex 1.
CHAPTER III
INTRODUCTION OF CIVIL BANK L.T.D
3.1 Background
Civil Bank Limited (CBL) has established itself as the 30th commercial bank of Nepal. It is
founded by promoters with the strong background in real estate, financial institutions, business,
trade, and industry. The Bank envisions in becoming a dominant player in the Nepalese banking
industry.
The Bank firmly believes in contributing to the nation's economic growth by rendering services
and empowerment to all classes and sectors of the society. Recently this bank has been running
with its 13 branches located at different parts of Nepal and has targeted to reach 20 with the end
of this fiscal year.

The Bank has been using T24 software to provide fast and efficient services to its customers.
Similarly, the bank is providing its debit card facilities through Smart Choice Technology (SCT)/
National Payment Network (NPN) and is planning to introduce VISA card in the bank. The
customers are provided the debit card free with zero charges. Recently, the bank has introduced
internet banking to make its services more easy and convenient.
3.1.1 Vision of CBL

To become the most trusted bank by providing dedicated service and support to customers
through thick or thin.
3.1.2 Mission of CBL

To become every Nepali's banking partner by extending all types of banking services.
3.1.3 Goal of CBL

To contribute directly/indirectly in the economic growth of the country by being a prominent
player associated with all classes and sectors of society.
3.1.4 Objectives of CBL
• Prudent expansion
• Innovation
• Dedicated customer service
• Competitive human resource
• Vigilance
With the two major slogans, one bank 20 million aspirations and thinking forward moving
forward, CBL has been moving forward to make its own different and renowned status in the
banking industry. Similarly, the bank bases itself on a set of superior values and moral principles.
It aims to succeed and reach higher grounds by maintaining and adhering to its corporate values
as below:
• Maintain the highest standards in all relationships with customers, suppliers, environment,
and community.
• Foster a climate which encourages innovation and diligence amongst staff and reward
accordingly.
• Function with the principle of "Thinking Forward Moving Forward".
3.2 Equity Structure of CBL

The capital structure of CBL is presented in the table below:
Table 3.1: Capital structure of CBL
The above equity structure of CBL is presented in the following diagram:
Fig 3.1: Bar diagram showing equity structure of CBL (Rs. In billion)
CBL being a newly established bank in Nepalese banking industry has been able to earn some
profit through its business operations. The banking activities of CBL in its first fiscal year are
shown in the table below:
Table: 3.2 Position of banking activities in 1st fiscal year

CBL has not yet issued its share to the general public. The shares are held by the local promoters.
CBL is planning to issue public shares of Rs 80 crores in coming Mangsir 2069.
See annex 2 for the balance sheet of CBL as on the end of fiscal year 2067/68.
3.3 Commercial and Business Relations of CBL

CBL, within the short period of business operation, has been able to establish business relation
with various national as well as international banks and financial institutions. The major
international banks having business relation with CBL is listed below:
3.4 Board of Directors

The Board of directors of CBL consists of five members who have been elected for the proper
execution of banking activities and services. The name and designation of B.O.D are presented
in annex 3.
3.5 Management Committee

The management committee of CBL consists of highly professional and dedicated members for
the success of the overall organization. The committee consists of 20 members which are listed
with their designation in annex 4.

3.6 Branch network
Civil Bank Ltd is trying to reach maximum numbers customer by establishing new well-
equipped branches in different areas of Nepal. The Head Office of CBL is located at Kamaladi,
Classic Complex, and Kathmandu.
It has 13 branches all over the country, 4 branches inside valley and 9 branches outside the
valley. The details about the branches are listed in annex 5.
3.7 Product and services

Civil Bank delivers various products and services through its ABBS services. The major of them
are as follows:
3.7.1 Deposits
The major deposit schemes offered by CBL are listed below:
• Saving accounts
1. Mero Bachat Khata

Civil Bank Mero Bachat Khata is an interest bearing normal savings account. This account
intends to develop a saving habit for the future in order to facilitate the accumulation of funds
over a period of time.
Criteria:
Minimum Balance: (No minimum balance required)
2. Aama Buwa Bachat Khata

Civil Bank Ama Buwa Bachat Khata is a special savings product designed for senior citizens.
This product not just yields high returns on the hard-earned income but also provides them with
convenience and easy accessibility to their savings account.
Criteria:
Interest Posting: Monthly
Qualifying Age: 58 and above
3. Kishore Bachat Khata

Civil Bank Kishor Bachat Khata is designed to instill a savings habit amongst parents so that can
save and amass the significant amount of funds to build a secure future for their children.
Criteria:
Qualifying Age: 16 and below
4. Nari Bachat Khata

Civil Bank Nari Bachat Khata is a product especially for the ladies (housewives, professionals,
and others). This product is tailor-made to suit the requirements of its target audience. This
savings account offers exclusive value-added services.
Criteria:
Qualifying Gender: Females
5. Gold Savings Account

Civil Bank Gold Savings Account is savings scheme which offers an attractive rate of interest
and is for those individuals who are self-employed or professionals working in various
organizations. This scheme also gives the account holder the added flexibility of unrestricted
withdrawal.
Criteria:
6. Silver Savings Account

Civil Bank Silver Savings Account is savings scheme which offers a competitive rate of interest
to the account holder and is for those individuals who are self-employed or professionals
working in various organizations. Besides offering an attractive interest rate, the product is also
flexible in that the customer can withdraw and deposit funds as per their convenience while
retaining the required minimum balance in the account.
Criteria:
• Civil Bank Loyalty Call Account

Civil Bank Loyalty Call Account is meant for individuals and corporate houses who seek to earn
interest on their deposits on a daily balance as well as experience the flexibility which the market
today demands. Account holders are paid interest on the daily balance in their call account.
Criteria:
Minimum Balance: NPR 1,000,000
Account Type: - Loyalty Current Account
Loyalty Call Account
Interest Rate Calculation: Daily Basis
3.7.2 Loans
The different loan schemes offered by CBL are listed below:
1. Personal Mortgage Loan

Civil Bank Personal Mortgage Loan is one such product to cater to the various financing
requirement of individuals. The minimum limit of CiPML is NPR. 100,000 and the maximum
limit of CiPML are NPR. 50,000,000.The applicant for the loan must provide unencumbered
fixed assets collateral (land and building) fully covering the requested loan exposure.
2. Home Loan
Civil Bank Home Loan is established as a retail lending product to cater to the prevailing market
demands. CBL 'Home Loan' limit shall be fixed for minimum and maximum range of NPR
100,000 and NPR 50,000,000 respectively for all types of schemes. Any Nepalese individual of
at least 18 years of age is eligible for Home Loan facility subject to stable, reliable source of
income. Furthermore, the disposable income should be sufficient to serve the loan installment
and due interest. Civil Bank 'Home Loan' limit shall be fixed for minimum and maximum range
of NPR 100,000 and NPR 50,000,000 respectively for all types of schemes.
3. Hire Purchase Loan

Civil Bank Hire Purchase Loan (CiHPL) as a retail lending product to cater to the prevailing
market demands. Hire Purchase Loan will be applicable to private automobiles (cars, jeeps),
commercial vehicles (trucks, buses), heavy equipment (excavators, cranes, dozers) and other
equipment (hospital equipment, heavy kitchen types of equipment). CBL ‘Hire Purchase Loan'
limit will be fixed for a minimum and maximum range of NPR 500,000 and 50,000,000
respectively for all types of schemes.
4. Loan against Fixed Deposit Receipt

The Loan against Fixed Deposit is an added feature in the Fixed Deposit product and enables the
depositor/account holder to withdraw a certain percentage of the deposit amount as a loan to
cater to his/her various immediate needs.
Normally, the Bank will finance up to 90% of the value of the FD, if the same is issued by itself.
In the case of loan against FDR issued by other Banks/financial institutions, the Bank may not
finance more than 80% of the face value.
5. Loan against Government Bond/ Securities

Loan against Government Bond/Securities enables an individual or firm to avail a loan against
the value of the securities and bonds in their possession.
Generally, Credit against Govt. / NRB Instrument will be extended up to 90% of the value of the
instrument. However, in exceptional cases, the credit may be extended up to the face value of the
instrument upon approval from a competent authority.
3.7.3 Remittance
Remittance means sending income in terms of money or goods in a home by the migrants or
workers who have their earnings outside their home country.
Civil Bank Ltd is providing the remittance services through the Western Union, International
Money Express (IME), Money gram, reliable remit, NET fox and Prabhu Money Transfer.
3.7.4 Letter of Credit (LC)

Letter of credit is an undertaking issued by a bank in favor of a beneficiary by which the bank
substitutes its own creditworthiness for that of the applicant by promising to honor (pay) if the
documents specified in the letter of credit are timely presented.
CBL is delivering this service to its customers through Trade Finance Department.
3.7.5 Others
The other services provided by CBL include the “Bank Assurance” which is the recent product
of the bank. The bank is providing insurance facilities to its customers through the collaboration
of Prime Life Insurance Company.
3.8 SWOT Analysis of CBL The strengths, weaknesses, opportunities’ and threats of CBL is
shown in the figure below:
SWOT Analysis
Figure 3.2: SWOT Analysis of CBL
CHAPTER IV:
ANALYSIS OF ACTIVITIES DONE AND PROBLEM SOLVED
4.1 Introduction to letter of credit (L.C)

Letter of credit is used primarily in international trade for large transactions between the supplier
in one country and customer in another. Letter of credit is an undertaking by a bank, (Issuing
Bank) to the seller of goods (the beneficiary) in accordance with the instruction of the buyer
(Applicant) to effect payment up to a prescribed amount at sight or at any future determinable
time(Tenure) provided the beneficiary presents stipulated documents within stipulated
timeframe.
A letter of credit is basically a document issued by a bank guaranteeing a client's ability to pay
for goods or services. A bank or finance company issues a letter of credit on behalf of a buyer,
authorizing the seller to obtain payment within a specified timeframe once the terms and
conditions outlined in the letter of credit are met. The letter of credit acts like an insurance
contract for both the buyer and seller and practically eliminates the credit risk for both parties
while at the same time reducing payment delays. A letter of credit provides the seller with the
greatest degree of safety when extending credit. It is useful when the buyer is not well known
and when exchange restrictions exist or are possible.
4.1.1 Benefits of Opening LC

1. Benefits To Buyer
• Buyer is assured that the Bank will make payment if stipulated documents will be received
• If the seller agrees to extend loans, usance LC can be opened.
• Terms and conditions can be accommodated to ensure accurate shipment.
• There is the benefit of finance under trust receipt loan arrangement.
2. Benefits to Seller

• The seller can rely on the credit worthiness of banks rather than of customer.
• Non-payment or late payment can be avoided.
• Can take financing, can negotiate
4.1.2 Risk Involved In Letter Of Credit

1. Risks to the Applicant
• Non-delivery of Goods
• Short Shipment
• Inferior Quality
• Early /Late Shipment
• Damaged in transit
• Foreign exchange
• Failure of Bank viz issuing bank / Collecting Bank
2. Risks to the Beneficiary

• Failure to Comply with Credit Conditions
• Failure of, or Delays in Payment from, the Issuing Bank
4.2 Customary Practices for Letter Of Credit
1. The Uniform Customs and Practice for Documentary Credits (UCPDC)
The UCPDC is concerned with documentary credits, commonly referred to as “letters of credit.”
The UCP is focused on “commercial” letters of credit, the traditional letters of credit that are
used as a vehicle for payment in international trade, but the UCP is also used in the realm of
standby letters of credit and bank guarantees. In short, we can know about UCPDC in following
points:
• Issued by the International Chamber of Commerce in Paris.
• UCP are a set of internationally accepted rules and definitions which cover the liabilities and
duties of all parties to documentary credits.
• Periodically revised
• In effect since 1933
• The edition “UCPDC 600” came out in 2007 and was effective from July 01, 2007.
2. International Commercial Terms (INCOTERMS)
INCOTERMS is a set of uniform rules for the interpretation of international commercial terms
defining the costs, risks and obligations of buyers and sellers in international transactions. Some
of the examples are:
EXW= Ex Work
FOB= Free On Board
CFR= Cost and Freight
FCA= Free Carrier
4.3 Parties to LC
1. Applicant (Buyer/Opener)

The applicant is the buyer / importer of the goods who asks his bank, the Issuing Bank, to issue
an LC. In almost all cases, the applicant maintains an account relationship with the issuing bank.
2. Beneficiary (Seller)

The beneficiary is the seller/exporter in whose favor the documentary credit will be opened /
issued.
3. Issuing Bank

The applicant is the customer of the issuing bank, and it is the issuing bank which gives the
written undertaking in the form of a documentary credit in favor of the exporter.
4. Advising Bank

This is the bank, usually domiciled in the beneficiary’s country, which is requested by the
issuing bank to advise the beneficiary of the terms and conditions of the credit.
There is no liability on the part of the advising bank to honor the credit in any way. The main
function of the advising bank is to prove to the beneficiary that the credit is genuine since the
advising bank has to satisfy itself that the credit is properly authenticated by the issuing bank.
5. Confirming Bank

The confirming bank is the bank which, at the request of, or with the permission of the issuing
bank, adds its own undertaking to honor the documentary credit.
6. Nominated Bank (Presenting bank)

A bank named in or otherwise permitted by the terms and conditions of the LC to receive a
presentation of documents. The nominated bank can either send the documents received from the
beneficiary to the issuing bank without giving value to the draft or if it wishes can give value to
the drafts.
7. Negotiating Bank

A bank which under a documentary credit purchases bills of exchange drawn by the exporter
payable at another bank, thus making available the funds to the beneficiary before the documents
are made available to the issuing bank.
As negotiated documents can ultimately be refused by the applicant if they are not exactly as per
the terms of the credit, the Negotiating bank should take extreme care while examining the
documents.
4.3 Types of Letter of credit

1. Revocable LC
In this type of credit buyer and the bank which has established the LC, are able to manipulate the
letter of credits or make any kinds of corrections without informing the seller and getting
permissions from him. This type of LC is not a commonly used instrument.
2. Irrevocable LC
In this type of LC, any kinds of change and manipulations from the buyer part and the
established bank require the permission and satisfaction of seller part. According to the last rules
of the international business room, return ability or none return ability; the credit will be none
returnable.
3. Confirmed LC
They are the guarantees that buyer will be given so that, the buyer will give the guarantee from
his own bank to any other valid bank that the seller will desire it.
4. Unconfirmed LC
This type of letter of credit does not acquire the other bank's confirmation.
5. Transferable LC
It is a type of credit that the seller can give a part or parts of credit (Completely) to the person or
persons he decides. This type of credit is a benefit for the seller.
6. Untransferable LC
It is said to the credit that seller cannot give a part or completely right of assigned credit to
somebody or to the persons he wants. In international commerce, it is required that the credit will
be untransferable.
7. Usance LC
It is kind of credit that won't be paid and assigned immediately after checking the valid
documents but paying and assigning it requires an indicated duration which is accepted by both
of the buyer and sellers. In reality, the buyer will give an opportunity to the seller to pay the
required money after taking the related goods and selling them.
8. Sight LC
It is a kind of credit that the announcer bank after observing the carriage documents from the
seller and checking all the documents immediately pays the required money.
9. Red Clause LC
In this kind of credit assignment seller before sending the products can take the pre-paid and
parts of the money from the bank. The first part of the credit is to attract the attention acceptor
bank. It allows the beneficiary of a documentary credit to receive funds for the purchase of goods
described in the credit. These letters are commonly used by beneficiaries who act as purchasing
agents for buyers in another country. It carries a provision that is written or typed in red ink
which allows a seller to draw up to a fixed sum from the advising or paying-bank, in advance of
the shipment or before presenting the prescribed documents.
10. Back to Back LC

This type of LC consists of two separated and different types of LC. First one is established in
the benefit of the seller that is not able to provide the corresponding goods for any reasons.
Because of that reason according to the credit which is opened for him, neither credit will be
opened for another seller to provide the desired goods and sends it.
4.5 Important terms used in LC

1. Pro-forma Invoice (P.I)
An invoice is a commercial document issued by a seller to the buyer, indicating the products,
quantities, and agreed prices for products or services the seller has provided the buyer. An
invoice indicates the sale transaction only. Payment terms are independent of the invoice and are
negotiated by the buyer and the seller.
As, per NRB, Performa Invoice should mention:
• Name of item
• Model / Brand
• Quantity, Purchase Price Unit, Total Price
• 8 digit harmonic code
• Should not contain clauses like “All discrepancies acceptable)
• Country of Origin
2. Bill Of Lading (B/L)

A bill of lading is a type of document that is used to acknowledge the receipt of a shipment of
goods. A transportation company or carrier issues this document to a shipper. In addition to
acknowledging the receipt of goods, a bill of lading indicates the particular vessel on which the
goods have been placed, their intended destination, and the terms for transporting the shipment to
its final destination.
3. Bills Of Exchange

Bills of exchange is an unconditional order in writing, addressed by the drawer to the drawee,
requiring the drawee to pay a sum of money on demand or at a specified future time to the payee
(who might be the drawer or another party) or to the bearer. Bill of exchange under an LC is
issued as per the terms of the LC.
4. Airway Bill

Airway bill is issued by the transporting airlines as a receipt of the merchandise for delivery up
to the specified point. The airline industry has adopted a standard format for air waybill which is
used throughout the world for both domestic and international traffic. Unlike a bill of lading, air
waybill is a non-negotiable instrument, does not specify on which flight the shipment will be
sent, or when it will reach its destination.
5. Insurance Policy
Insurance Certificate states that a specified party will be reimbursed an amount in the event
merchandise is damaged or destroyed. An Insurance Policy generally covers accidental losses
and covers voluntary losses when a cargo must be sacrificed to save a ship. The exporter should
be able to produce Insurance Policy document in case the goods are shipped under CIF and C&I
arrangement.
4.6 LC Opening, Amendment and Cancellation Procedures in CBL
4.6.1 Opening Procedures of LC in CBL

The LC opening procedures of every commercial bank is as per the NRB directives. However the
common LC opening procedures is explained in brief in the points given below:
1. There is a negotiation between buyer and seller and thus finalization of deal & buyer
approach its bank to open import LC.
2. Issuing bank issues the LC through its advising bank & advising bank informs and advises
the LC to the exporter.
3. Exporter prepares the goods and makes the shipment through the carrier
4. Exporter prepares the documents demanded in the credit and furnishes to its negotiating
bank.
5. Negotiating bank forwards the documents to issuing bank for payment.
6. The issuing bank obtains payment from the importer and provides the documents.
7. Importer obtains the goods shipped by exporter through the carrier (or its agent).
8. Issuing bank releases the payment to negotiating bank through the reimbursing bank.
9. Exporter receives payment through negotiating bank.
The above-explained process of opening LC can be generalized in the following figure which
makes clearer in understanding the procedure.
Fig: 4.1: Procedures of LC
4.6.2 Charges for LC in CBL

The charges for establishing LC with Civil Bank Ltd has been categorized into prime customers
and other customers. Prime customers are those who are a regular customer of the bank and are
loyal towards the bank. Other customers are generally one-time customer of the bank.
The charges are shown in the table below:
Table: 4.1 Charges for LC
LC establishment in convertible foreign currency

• Min: 1000 NPR OR
• 0.125% of LC (Industry)
• 0.25% of LC (Trading)
• 025% of LC (Case to Case).
• Min: 1500 NPR OR 0.25%of LC (Industry)
• Min: 1500 NPR OR 0.375%of LC (Trading)
• Min: 2000 NPR OR 0.375% of LC (Case to Case)
2. LC establishment in INR and local currency

• MIN:1000 NPR OR
• 0.25% of LC(Industry)
• 0.375% of LC(Trading
• Min:1500 NPR OR 0.375% of LC(Industry)
• Min:1500 NPR OR 0.50% of LC(Trading)
• Min:2000 NPR OR 0.50% of LC(Case to Case)
Other additional charges:

• Document charge: NPR 500
• BCI: NPR 500(Only for sight LC)
• Swift Charges: For foreign currency(NPR 2000)
For Indian currency (NPR 1200)
For Nepalese currency (NPR 500)
4.6.3 Amendment procedures of LC in CBL

The amendment is required if the client finds a need of change in the LC. For this, the client has
to request for amendment and the letter should be signed by the authorized person. The issuing
bank is approached by the Applicant for the amendment along with the LC amendment form and
Bi. Bi. Ni. 3. Mechanism to be followed is almost similar to opening a new LC.
Issuing Bank, Advising / Confirming Bank or Beneficiary have the right to refuse any
amendment if they feel it can create additional involvement, unwanted liability.
Normally, amendments are not refused if they are essential such as the extension of the validity
and / or latest shipment date or adding essentials such as a document or instruction or conditions
mentioned in the contract of sale but omitted in the original credit.
Partial acceptance of amendments contained in one and the same advice is not allowed without
the agreement of all the named parties.
The amendment charges in CBL are shown in the table below:
Table: 4.2 Amendment Charges
4.6.4 Cancellation of LC in CBL

Since the LCs opened in CBL basically are Irrevocable in nature the LC cannot be canceled
through just one party, for the cancelation of LC the consent of both parties is required. The
buyer can cancel the LC before the goods have been shipped by the seller, but if the seller has
shipped the goods then he would not agree to cancel the LC. There can be various personal as
well as the business problem which lead him to cancel and LC.
The cancelation charges in CBL are as follows:
Cancelation charges NPR 500 plus SWIFT charge NPR 500
4.7 Problem Solved

• Provided general information to the customers who visited LC department regarding their
queries on LC procedures.
• Assisted the customers in filling up the LC form if they were in confusion.
• Helped the respected department head by proper filing and documentation of each and every
file.
• Helped in preparing SWIFT copy whenever required to assist the department head.
• Checked all the missing documents in the file and informed the respective person.
CHAPTER V:
CONCLUSION AND LESSON LEARNT
5.1 Conclusion

The banking industry has become highly competitive and it’s essential to establish good
corporate governance policies with systematic transaction and operation and operational
procedure.
Civil Bank Ltd is one of the pioneering commercial banks in Nepal established with the motto of
fulfilling all the customers’ aspirations through its advanced banking facilities. Due to
globalization and rapid development of international trade, the customer’s attraction towards LC
is growing day by day and this facility is provided through Trade Finance Center (TFC)
department in CBL.
This report is prepared on the basis of internship done in the New Road Branch of CBL, for two
months. It is, therefore, focused on the activities learned in Letter of Credit department among
the different departments of CBL. The internship done at CBL was a great experience to learn
various aspects of banking and finance. However, my focal point of the study was the Letter of
the Credit department.
TFC department in CBL deals with issuance of Letter Of Credit (LC), Telex Transfer (T.T) and
Bank Guarantee. However, the main concern of this report is on LC as the interne was more
concentrated in LC.
During my stay in the letter of credit department of CBL, I found that trade finance center
renders proper services to the customers along with generating suitable proceeds for the bank.
But, I found the problem of delay in services as the trade operation of CBL were centralized and
also found the problem of lack of space. Overall I had a great experience while doing the
internship in CBL with cooperative staffs and other intern friends.
5.2 Lesson Learnt

The main focus of preparing this report is management oriented in order to know the internal
system of the banking industry and grasp the opportunities and face challenges in the competitive
banking environment in Nepal. So its main objective is to explore the managerial skills and gain
experience from the internship that are helpful to analyze the overall activities of each
department to tackle real life situation arising in the organization.
The interne conducted an internship in Civil Bank Limited, New Road for a period of eight
weeks. The interne was able to gain knowledge about the work environment and also learnt a lot
about responsibility, work pressure and the importance of time management.
The interne was placed in various departments so that the interne can get insight knowledge in
overall procedures and system. However, the most of the time was spent on Trade Finance
Department along with Customer Service Department, Remittance and Clearing Department, and
Credit Department. Similarly, interne work day to day activities as per instruction and
supervision and learnt operational procedure. However the major lesson learnt from the 8 weeks
internship program can be summarized in the following points:
• Learned about the banking norms, rules and regulations by working under the strict discipline
of the bank.
• Learned briefly about all banking departments, their working procedures, documentation, and
practices.
• Learned how to deal with customers, solving their queries and solving their problems in need.
• More precisely learned about the LC procedures and documentation as it was the subject of
keen interest for the interne.
• Learned to prepare B.B.Ni forms and LC messages which are the most requirements in Trade
Finance Department.
• The things learnt theoretically were found different from the banking procedure and working
system.
Finally concluding the report, working as an intern in CBL was of the great experience of
practical banking scenario. Interne felt that the charm of banking industry outside the work field
is very high, but it is as difficult to work inside with strong discipline and dedication.

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CHAPTER I

1.2 Objective of the Study

However the specific objectives of the study were:

1.3.1 Selection of the organization:

1.3.2 Placement and Duration:

Table: 1.1 Work plan chart with time schedule

1.3.3 Activities Performed in the Organization

1. Business Desk

• To respond to the customer queries.

• To providing forms and assist in filling them:

• Debit card distribution after proper verification of customers.

2. Remittance and Clearing Department

3. Trade Finance Department

• To receive the application related to LC and authenticate the same.

4. Credit Department

1.4 Limitations of the study

INTRODUCTION TO BANKING INDUSTRY

2.1 Meaning of Bank

Some definitions of banks are:

2.2 History and Origin of Bank

2.3 Development of banking system in Nepal

2.4 Concept of Commercial Bank

INTRODUCTION OF CIVIL BANK L.T.D

3.1.1 Vision of CBL

3.1.2 Mission of CBL

3.1.3 Goal of CBL

3.1.4 Objectives of CBL

3.2 Equity Structure of CBL

The capital structure of CBL is presented in the table below:

Table 3.1: Capital structure of CBL

Capital Amount (in Rs.)

Source: CBL Annual Report 2067/68

The above equity structure of CBL is presented in the following diagram:

Table: 3.2 Position of banking activities in 1st fiscal year

S.N Particulars Amount (Rs in 1000)

3.3 Commercial and Business Relations of CBL

3.5 Management Committee

3.7 Product and services

1. Mero Bachat Khata

2. Aama Buwa Bachat Khata

4. Nari Bachat Khata

5. Gold Savings Account

6. Silver Savings Account

• Civil Bank Loyalty Call Account

1. Personal Mortgage Loan

3. Hire Purchase Loan

4. Loan against Fixed Deposit Receipt

5. Loan against Government Bond/ Securities

3.7.4 Letter of Credit (LC)

ANALYSIS OF ACTIVITIES DONE AND PROBLEM SOLVED

4.1 Introduction to letter of credit (L.C)

4.1.1 Benefits of Opening LC

2. Benefits to Seller

4.1.2 Risk Involved In Letter Of Credit

1. Risks to the Applicant

2. Risks to the Beneficiary

4.2 Customary Practices for Letter Of Credit

2. International Commercial Terms (INCOTERMS)

1. Applicant (Buyer/Opener)

2. Beneficiary (Seller)

3. Issuing Bank

4. Advising Bank

5. Confirming Bank

6. Nominated Bank (Presenting bank)