1

CREDIT ADMINISISTRATIVE DEPARTMENT

OF
NEPAL BANK LIMITED
(Head office)

Submitted By:

Biswas Timilsina

Atlantic International College

BBA 7th Semester

PU Registration number: 2016-2-03-1982

Exam Roll No: 17032273

AN INTERNSHIP REPORT ON

Submitted To:

Office of the controller of examinations

Pokhara University

Lkhnathkaski

In partial fulfillment of the requirements for the degree of

Bachelor in Business Administration (BBA)

Samakhusi, Kathmandu

March 2020
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RECOMMENDATION LETTER
 3

Completion letter
4
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DECLARATION

I would like to declare that this project entitled to “An internship report on Credit Administrative
Department (CAD)” of Nepal Bank Limited Head office is the result of my own study carried
out in the year 2076 and is for the sole purpose to submit to Faculty of Management, Pokhara
University is the work done in the form of partial fulfillment of the requirement of Bachelor’s in
Business Administration (BBA) under the supervision of Mr. Dhurba Subedi. I hereby declare
that this report has not been previously submitted to any other University or any other institution
for examination.

…………………..
Biswas Timilsina
th
7 semester
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ACKNOWLEDGEMENT

This project report is submitted in partial fulfillment of the requirement for the degree of
“Bachelors in Business Administration (BBA)” under “Faculty of Management (FOM)”,
Pokhara University.

I am highly indebted to the Atlantic International College and Pokhara University for providing
me with the opportunity to show the skills I have learned during these demanding college years.

It is a pleasure to convey my heartiest gratitude and greeting to honorable supervisors Salin

Shrestha and other staffs of Nepal Bank. Their closeness, fun nature, co-operation, kindness, and
helping nature always motivated me in learning something in different manner.

Finally, very special thanks go to my supervisor Mr.Dhurba Subedi who despite of his busy
schedule has provided me a lot of valuable suggestions and encouragement for the preparation of
this report. I would like to express my gratitude to my friends for their constant support and love.

Sincerely,

Biswas Timilsina
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TABLE OF CONTENT
Customer AD1OF............................................................................................................................1

NEPAL BANK LIMITED...............................................................................................................1

RECOMMENDATION LETTER...................................................................................................2

Completion letter.............................................................................................................................3

DECLARATION.............................................................................................................................4

ACKNOWLEDGEMENT...............................................................................................................5

TABLE OF CONTENT...................................................................................................................6

LIST OF ABBREVIATIONS..........................................................................................................9

LIST OF TABLE...........................................................................................................................10

LIST OF FIGURE.........................................................................................................................11

CHAPTER ONE............................................................................................................................12

INTRODUCTION.........................................................................................................................12

1.1 Background..........................................................................................................................12

1.2 Objectives of the Study........................................................................................................12

1.3 Methodology of the Study...................................................................................................13

1.3.1 Organization Selection..................................................................................................13

1.3.2 Duration of Internship...................................................................................................14

1.3.3 Placement......................................................................................................................14

1.3.4 Activities CAD.............................................................................................................14

1.3.5 Data collection..............................................................................................................15

1.4 Limitations of the Study......................................................................................................15

HAPTER TWO..............................................................................................................................17

INTRODUCTION TO BANKING INDUSTRY AND................................................................17

ORGANIZATION.........................................................................................................................17

2.1 Introduction of Bank............................................................................................................17

2.2 Origin of Bank.....................................................................................................................19

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2.3 Meaning of Commercial Bank.............................................................................................19

2.4 Function Provided by Modern Banking..............................................................................21

2.7 Background of NBL............................................................................................................24

2.7.1 Objectives of NBL........................................................................................................25

2.7.2 Network Overview........................................................................................................25

2.7.3 Current Situation of NBL.............................................................................................26

2.7.4 Major Market and Customers......................................................................................27

2.7.5 Products and Services of NBL......................................................................................28

CHAPTER III................................................................................................................................30

ANALYSIS OF ACTIVITIES DONE AND PROBLEMS SOLVED..........................................30

3.1 Background..........................................................................................................................30

3.2 Credit Administrative Department (CAD)..........................................................................30

CHAPTER FOUR.........................................................................................................................37

CONCLUSION AND LESSON LEARNT...................................................................................37

4.1 Major Findings.....................................................................................................................37

4.2 Lesson Learnt.......................................................................................................................37

REFERENCES..............................................................................................................................39

ANNEX-II.....................................................................................................................................40

ANNEX-II.....................................................................................................................................41
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LIST OF ABBREVIATIONS

ABBS Any Branch Banking Services

ATM Automated Teller Machine

BBA Bachelors in Business Administration

BOD Board Of Director

NBL Nepal Bank Limited

CSD Customer Service Department

SWIFT Society for Worldwide Interbank Financial Telecommunication

AD Anno Domini

RBB Rastriya Banijya Bank

NRB Nepal Rastra Bank

NEPSE Nepal Stock Exchange

SMS Short Message Service

SCT Smart Choice Technologies

TT Telegraphic Transfer

POS Point Of Sale

CAD Credit Administration Department

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LIST OF TABLE
Table 1 Time schedule placement within eight weeks....................................................................9

Table 2 List of Commercial Banks in Nepal.................................................................................16

Table 3 Number of Total Branches of NBL..................................................................................19

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LIST OF FIGURE
Figure 1 Major Products and Services of NBL............................................................................. 21

Figure 2 Credit Approval Process................................................................................................. 26

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CHAPTER ONE

INTRODUCTION

1.1 Background

The Bachelor of Business Administration (BBA) is a special program in semester the

management study, designed to develop socially responsive, creative, and result oriented
management professionals to fill up the middle level managerial positions in the rapidly growing
business sector in Nepal and abroad. It is a two years course with 8 semesters. The study is for the
partial fulfillment of BBA course of the Pokhara University but is a very knowledgeable to the
person who is interested in understanding in a way Commercial bank is operated. The internship
period is supposed to undertake for eight weeks, which targets to train and develop students for
various managerial functions, develop student’s interpersonal and communication skill by
encouraging them to interact with the people in organizations. It also provides the platform to
apply the theoretical knowledge into the practical real life situation.

Internship is an opportunity to observe, learn and understand the corporate culture, acquire
knowledge and skills in the respective fields, which helps the students in further career
development. As my topic is about the Operation and loan of Nepal Bank limited, head office
this project report is focused on the various services provided in Loan department and other
general activities, which were carried out during internship period.

The internship helped to acquire knowledge and skill of handling and communicating with
various customers and general staff of bank. The internship period helped to gain knowledge of
various operational activities, which were carried out by bank on daily basis.

1.2 Objectives of the Study

The primary objective of the internship program is to enable the students to transform the
academic knowledge into the practical real world environment. The main objective of the
internship was getting exposure to real business scenarios and situations and solving various
problems as well as development of communication, negotiation and technical skills. However
the specific objectives of the study were:

 To know about the various processes and working environment of a commercial bank.
 To present the understanding of banking organization and its working procedures.

 To observe and understand the general banking procedure and workflow of credit department
of NBL.
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 To develop the personal relation skills and communication skills.

 To identify various products and services to the customers which are offered by Nepal
Bank Limited
 To be familiar about the banking software used in bank's transactions.

1.3 Methodology of the Study

The report is prepared as prepared as per the experience of work while doing the internship. It is
also based on the information and data gathered from the primary and secondary sources as
mentioned below. This report tries to present an analysis of the organization (NBL) along with
the introduction of the banking industry, the bank itself and the activities performed in the bank
as an intern as well as the conclusions and recommendations to the bank. The report is prepared
on the basis of on the job experience and various activities, which were assigned and carried out
during the internship period.

In addition primary data as well as secondary data were used for the preparation of the report.
Primary data includes the information that is collected through job performance, observation as
well as personal dealing with customers and bank personnel. In addition, secondary data
includes the information that is collected from the annual report of NBL, old files and records
of NBL, brochures, websites and other published documents.

1.3.1 Organization Selection

As a specialization finance of BBA course for the seventh semester, the selection of the good
organization was very important. In addition, commercial banks are the appropriate
organization where I could implement my theoretical knowledge into practical implications. I
was looking for the bank where I can learn a lot about banking as well as financial activities. I
was placed as an intern in Head office of “Nepal Bank Limited”. I approached the bank and
after few days I was call to sign the contract letter and was asked to join the bank from Poush
th
6th 2076 to Falgun 02 , 2076.
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1.3.2 Duration of Internship

The duration of internship period was for eight weeks as defined by faculty of management,
th
Pokhara University. As an Intern, I started internship in the bank Poush 6th 2076 to Falgun 02 ,
2076. Working 7 hours a day.

1.3.3 Placement
Table 1 Time schedule placement within eight weeks

Departments Weeks of the working months

1 2 3 4 5 6 7 8
Credit
Administration √ √ √ √ √ √ √ √
Department
(CAD)

As per the requirement, the internship was carried out of 8 weeks in the Credit Administration
Department (CAD)of Nepal Bank Limited, (head office).

1.3.4 Activities CAD

During the internship period I worked in Credit Administrative Departments as assigned by the
HR manager. I worked in Loan department under the supervision and guldens of the supervision
of Mr. Salin Shrestha. Various banking process and terminologies were learned. Most of the
time, I was helping my seniors or the employee of the bank in their respective works and
activities. It was a great learning experience curve for me as it helped me to gain various
knowledge and skills.
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1.3.5 Data collection

The internee collected necessary and required data from the concerned department of Nepal
Bank Limited from concerned personnel of the respective department. Both the primary and
secondary data were used for the preparation of this report.

Primary Data

 Personal Interview
 Observation.
 Visited the bank to have an acquaintance with different aspects of the bank.
 Met with the banking people and had direct contact with them for relevant information.

Secondary Source

 Annual report of the bank

 Information from website of the bank
 Policy guidelines of the bank

1.4 Limitations of the Study

Although the internship provided by the bank was a great achievement in itself, which helped to
gain various knowledge and skills, there are some limitations of this internship report. Therefore,
it also has common limitations. The following are the major limitations of my study:
 Due to limited time period the detail study of each and every department was not
possible.
 Due to Privacy reason of the organization, this study could not obtain some valuable
information.
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 Most of the information is collected through personal experience and observation; the
overall information may not be presented.
 The Interns were also not allowed to use the system.
 As the bank staff was busy in their respective work they had little time to interact with
the intern.
 It does not give detail view of overall functioning of the bank
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HAPTER TWO
INTRODUCTION TO BANKING INDUSTRY AND
ORGANIZATION

2.1 Introduction of Bank

In any economy, the financial sector plays a major role in the mobilization and allocation of
savings. Financial institutions, instruments and markets that constitute the financial sector act as
a conduit for the transfer of financial resources from net savers to net borrowers. Is a complex
but well integrated set of sub systems of:

 Financial Institutions

 Markets

 Instruments &

 Services

A bank is a financial intermediary that accepts deposits and channels those deposits into lending
activities, either directly or through capital markets. A bank connects customers with capital
deficits to customers with capital surpluses. A bank is a financial institution that accepts deposits
from the public and creates credit. Lending activities can be performed either directly or
indirectly through capital markets. Due to their importance in the financial system and influence
on national economies, banks are highly regulated in most countries. Most nations have
institutionalized a system known as fractional reserve banking under which banks hold liquid
assets equal to only a portion of their current liabilities. In addition to other regulations intended
to ensure liquidity, banks are generally subject to minimum capital requirements based on an
international set of capital standards, known as the Basel Accords.

A bank is financial institutions, which is established under a certain act to perform monetary and
credit transactions. The bank accepts the deposits in the form of capital and collateral,
formulates, and implements monetary and foreign exchange policy to maintain price and balance
payment stability for a sustainable development of the country. It is one of the most important
and widely known financial institutions that act as financial intermediary between depositors and
borrowers and helps to mobilize and allocate the scarce resources. It provides necessary liquidity
for promoting the stability of the financial sectors. It also helps to develop a safe, sound, and
efficient payment system. Bank helps in making regulations, inspection, supervision, and
maintaining the sound development of the banking system.
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2.2 Origin of Bank

Bank is a financial intermediary accepting deposits and granting loans and offers the widest
menu of services of any financial institutions. Banking concept existed even in the ancient period
when goldsmiths and the rich people used to issue the common people against the promised of
safekeeping of their valuable items on the presentation of the receipt, the depositors would get
bank their gold and valuables of the paying a small amount for safekeeping and saving.

The word bank has been originated from the Latin word “bancus”; Italian word “Banca” and a
French word banque; which all refers to the Bach. Jews, the early bankers, in Lombardy, used to
transact their business at benches in the market place. In the history of origin of banking in the
world, “The Bank of Venice”, was the first, which was originated in Venice of Italy in the year
1157 A.D. In addition, the first central bank, which was established in 1844 A.D., was “The
Bank of England”.

2.3 Meaning of Commercial Bank

The commercial bank is the oldest form of the bank. In general, bank that performs all kinds of
banking business and generally finances trade and commerce is called commercial bank. It
occupies quite an important place in the framework of every economy. Commercial banks are
financial intermediaries that accepts deposits from the members of the public who o not have
intermediates use foe funds (savers) and lending such funds to those requiring funds for
investment (borrowers). It also transfers fund from one costumer to another and provides other
services such as offering advice on a wide range of matters relating to finance.

According to the commercial bank act 2031, section 2(a), “Commercial bank is a financial
institution that operates currency exchange, money transactions, accepts deposits, advances loans
and performs other commercial transactions which is not specifically established with the
objective of cooperative, agricultural, industrial or any other such kind of specified purpose.”

The commercial banks are those banks, which pool together the scattered savings of the
community and arrange for their productive use and generate profit. They accept deposits from
the public and use the money to help the community by making loans to individuals,
organizations, governments and business. Commercial banks, acquire funds from group of
surplus spending units and making these funds available to the deficit units facilitating the
effective mobilization of resources, which in return leads to sound economic growth of the
country.

The main aim of the commercial bank is to earn profit like any other business entity. It lends a
certain percentage of the cash lying in deposits on higher interest rate than it pays on such
deposits. The difference on interest on deposit received and loans advanced are the main source
of its income. Thus, commercial banks are merely a business firm engaged in financial
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intermediation as well as perform additional functions under strict supervision and control of the
central bank.

Bank can easily be defined as the custodian of deposits. The transactions in the financial market
heavily depend upon the Banking system of the country. Without Bank, it would be quite
impossible for the industrialist and entrepreneurs to go directly to public for getting their savings
for investment.

2.4 Function Provided by Modern Banking

(i) Credit Function

Bank provides various credit facilities to the customers such as hire purchase loan, real estate
loan, leasing of the fixed assets, working capital loan, Personal Term Loan, Hypothecation
loan, Personal Overdraft loan, Agriculture loans and other forms of loans as per the
requirements of customers. The interest rate charged to the loan amount and the interest
provided to the depositor’s difference leads to the profit of the bank.

(ii) Payment Function

The banks provide various payment instruments to the costumers to make the economy efficient
and effective. If the payment instruments where not developed it would be difficult for the
costumers to transfer the money from one place to another. Some of the payment instrument is as
cheques, bank overdraft, online various banks also provide payments.

(iii) Saving Function

The most important fund of the banks is deposits. Without deposits, it would be difficult for the
bank to invest high return sectors. The main objective of the bank is to collect deposits in as
lowest cost of fund possible. If the bank is able to collect deposits at the lowest cost, it leads the
bank to earn a huge amount of fortune.

(iv) Trust Function

The most important function of the modern bank is to maintain credibility towards the depositors
as well as towards investors. If the bank fails to maintain the credibility, it becomes difficult for
the bank to attract depositors as well as investors to purchase their security

(v) Investment Function

Bank uses the surplus amount of money at the profitable area where the return on investments is
high. Bank also invests a certain percentage of amounts of money in government securities and
bonds, as it is a 0% risk free investment.
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(vi) Cash Management Function

It is necessary for the bank to manage the cash collection and cash disbursement to retain its
position in the markets well as credibility. If the cash management leads to deficit rather than
surplus, it would be difficult for the bank to manage its environment effectively.
(vii) Insurance Function

Another important function the modern banks play is insurance function. Bank provides loans
and advances to various sectors as a result of the assets or the loan amount should be insured and
various collateral must been taken under bank’ eye. In case of providing loans to purchase a car,
it is necessary that the vehicle be insured so that the risk of not recovering the money is low.

(viii) Underwriting Function

It is necessary for each bank to issue public shares in the marketplace. Banks has the right to
under right the various securities such as common stock, preferred stock, or debentures. It is
necessary that legal bank be listed in the stock market so that the interested investors can invest a
huge amount of money in the bank by purchasing various securities.

(ix) Brokerage Function

A modern bank also plays an important role as a broker for the necessary clients. Banks earns a
non-operating income acting as a broker. As a broker banks helps the client to purchase and sale
various securities of the banks as well of different banks. Banks may charge some percentage of
commission or may even some amount of rupees with difference between the selling and
purchasing price.

2.5 History of Banking in Nepal

The history of modern commercial banking industry dates back to 1937 AD in which Nepal
Bank Limited was incorporated. The government owned 51 percent of the shares in the bank and
controlled its operations largely. It was headquartered in Kathmandu and had branches in other
parts of the country as well. In order to regulate the economy and the unregulated use of money
Nepal Rastra Bank was created in 1956 as the central bank. Its function was to supervise
commercial banks and to guide the basic monetary policy of the nation. Its major aims were to
regulate the issue of paper money; secure countrywide circulation of Nepalese currency and
achieve stability in its exchange rates; mobilize capital for economic development and for trade
and industry growth; develop the banking system in the country, thereby ensuring the existence
of banking facilities; and maintain the economic interests of the public. Nepal Rastra Bank also
was to oversee foreign exchange rates and foreign exchange reserves.

After almost 30 years another state owned commercial bank RastriyaBanijya Bank (RBB)
(National Commercial Bank, was established in 1966. The Land Reform Savings Corporation
was also established in the same year to deal with finances related to land reforms. During
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1967AD, the Agricultural Development Bank was also established. Almost 75 percent of the
bank was state-owned; 21 percent was owned by the Nepal Rastra Bank and 5 percent by
cooperatives and private individuals. Hence it is clear that since the 1960s; both commercial and
specialized banks have expanded. More businesses and households had better access to the credit
market although the credit market had not expanded.

However, the decade of 1980s can be considered as the landmark in the modern banking history
for Nepal. It was only in this decade government allowed the excess to foreign joint venture
banks to be the part of the Nepalese banking business. During this period, three foreign
commercial banks opened branches in Nepal. The first was Nepal Arab Bank established in 1984
AD. It was co-owned by the Emirates Bank International Limited (Dubai), the Nepalese
government, and the Nepalese public. After that in 1984 came Nepal Indosuez Bank (currently
Nepal Investment Bank) which was jointly owned by the Credit Agricole Indosuez,
RastriyaBanijya Bank, RastriyaBeemaSansthan (National Insurance Corporation), and the
Nepalese public. Then Nepal Grindlays Bank was the third foreign joint venture to be established
in Nepal, which was co-owned by a British firm called Grindlays Bank, local financial interests,
and the Nepalese public.

Today there are numbers of commercial and development banks operating all over Nepal.
Commercial banks has played important role in economic development of country with
numerous bank investing in various industrial sector. All the banks are controlled and monitored
by Nepal Rastra Bank, which is central bank of country. Each bank must comply with various
rules and regulation as set by Nepal Rastra Bank. The total number of BFIs stood at 195
including 29 commercial banks ("A" Class), 79 development banks ("B" Class), 50 finance
companies ("C" Class), and 36 microfinance institutions ("D" Class) in mid-June 2015.

2.6 Existing Scenario of Commercial Banks in Nepal

At present there are 28 commercial banks in Nepal as on 31 Ashad, 2076. Some are established
under the joint venture of foreign banks and rests are domestic banks. The commercial banks
exhibit the position of capital structure, assets and liabilities, etc.
List of commercial bank in Nepal are listed in Annex

2.7 Background of NBL

Nepal Bank ltd was inaugurated by His Majesty King Tribhuvan on Katik 30, 1994 Bs. This
marked the beginning of an era of formal banking in Nepal. Until then all monetary transactions
were carried out by private dealers and trading center. The bank’s main objective was to render
service to the people whether rich or poor and to contribute to the nation’s development.
 22

In that era, very few had idea or understanding and confidence in the concept of formal banking.
Raising equity shares were not easy and mobilization of deposits was even difficult. This was
evident when the bank floated equity shares worth Rs. 2,500,000 but was successful only in
raising Rs. 842,000. In the absence of any banking system in Nepal the economic progress of the
country was being hampered and causing inconvenience to the people and therefore with the
objective of fulfilling that need by providing service to the people and for the betterment of the
country, Nepal Bank ltd was established.

The total deposits for the first year were Rs. 1702025 where current deposit was about Rs.
1298787; fixed was about Rs.388964 and saving Rs. 14163. Loan outstanding at the end of first
year was Rs.1985000. From the very conception and its creation, Nepal Bank Ltd, was as joint
venture between the government and the private sector. Out of 2500 equity shares of Rs. 100
face value, 40% was subscribed by the government and the balanced i.e. 60% was offered for the
sale to private sector. There were only 10 shareholders when the bank first started. Mr.
RohitGambole was appointed as Chief banker.The vision of the bank is "Pioneer Bank with
complete banking solution". The mission of NBL is to be the leading Nepali bank, delivering
world-class service through the blending of the start-of-the-art of technology and visionary
management in partnership with competent and committed staff, to achieve sound financial
health with sustainable value addition to all our stakeholders. We are committed to do this
mission while ensuring the highest levels of ethical standards, professional integrity, corporate
governance and regulatory compliance.

2.7.1 Objectives of NBL

Nepal Bank Limited has the following objectives:

 Focus on building the positive net worth and meeting minimum capital requirement over the
coming five years.
 Focus on increasing the customer base and market share.

 Maximize the potential/efficiency of bank's staff

 Focus on minimizing the risk associated with the business.

 Focus on providing the world-class business solutions.
 Focus on increasing the sustainable profit.

2.7.2 Network Overview

The table shows the number of different branches of NBL located all over the country.

Table 2 Number of Total Branches of NBL

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Province Wise Branches No. of Branches

Province 1 30

Province 2 32

Province 3 48

Province 4 22

Province 5 29

Province 6 8

Province 7 7

Total Branches 176

2.7.3 Current Situation of NBL

Over the period there have been various changes in Nepal Bank limited. The Bank was under
serious financial crisis due to poor management and non-performing loans. The bank
performance was seriously hindered due to union disputes as well as poor management of human
resources. The bank was also suffering from overstaffing and failure to adapt to new technology.
All the banking activities were done manually which directly affected the efficiency and
effectiveness of banking operations. Then in year 2062 computer system was implemented by
the bank. Many staffs were offered golden handshake and many staffs were trained to newly
computerized banking system. The use of computerized in some way improved the efficiency of
bank. Basically two banking software was implemented i.e. Newton system and Pumori system.

Although the bank changed from manual system to computerized system the bank was still
suffering from poor investment and poor monitoring of loans and advances. Due to poor
financial condition it was direct control of Rastra Bank from year 2068 BS to 2076BS. As it is
the first bank of country Rastra Bank took the responsibility to improve its financial as well as
overall condition. The bank was managed by Mr. Maheshworlal Shrestha director of Rastra Bank
during that period. During the period of transition the performance of NBL was slowly and
steadily moving towards right direction. The percentage of nonperforming loan was slowly
decreasing and the profit of bank was also increasing.

Currently the financial condition of NBL is better and sound. Although the capital adequacy ratio
of bank is not as per the standard level as prescribed by Rastra Bank, it is increasing in every
quarter. The bank is also engaged in hiring young and motivated staffs, which has played
significant role in improving the performance of bank. Currently there are around 2245 staffs of
NBL all over the country. The total number of branches of NBL is 176 branches providing
 24

various banking products and services. The bank is also trying to implement various banking
technologies to compete with various other banks and financial institutions. The bank has
successfully implemented core-banking system in year 2072. All the branches currently use
Pumori system as banking software, which has brought uniformity as well as simplicity in
performing various banking transactions. Almost all the branches are earning profit except for
some branches all over the country. The bank was able to earn profit amounting to 2.61 billion in
fiscal year 2075/76 The bank has also implemented Performance based incentive program in
which financial incentive is provided to branch employee based upon the financial performance
of branches, which include NPV, Productivity, Profit, loan outstanding, Deposits, reporting,
government transactions, non-funded loans etc. This has increased the competition among
branches, which have positively influenced the overall performance of the bank.

2.7.4 Major Market and Customers

NBL provides banking services to a large number of clients including banks, insurance
companies, industry-trading houses, airlines, hotels and many other sectors in the economy. The
bank also provides financial services to the low-income population in rural areas, within the
framework of government programs, and seeks to promote economic development and the
improvement of living standards. Since then, the bank has developed and diversified its role to
provide various banking services to the community. It has been closely associated with
government programs targeting the priority and deprived sectors, while undertaking innovative
methodologies to finance self-help groups Thus NBL also has strong customer base in rural area
mainly consisting of farmers and small and medium entrepreneurs.

It has also been lending and investing in rural areas, targeting low-income people under the
deprived sector lending requirements. In doing so, it has participated in several government rural
credit initiatives including the Intensive Banking Program. NBL has adopted a methodology of
providing financial services through self-help groups with the Banking with the Poor program,
which focuses on combining its lending practices with the social mobilization of Self-Help
Groups (SHGs) undertaken by NGOs.
 25

As it is one of the government owned bank and oldest bank of country one of the major customer
groups of NBL is old aged people who seek out for various services from it. Various branches of
NBL have been providing pension services to retired civil servants as well as old age allowances
provided under government programs. As it is government owned bank it also carries out various
transactions of government including municipality and village development committee
Transactions. Currently the bank is also focused on younger customer groups by providing
various services and products suited to attract young customer groups.

2.7.5 Products and Services of NBL

NBL like all other commercial banks generate its revenue mainly from its credit creation ability
and finances its credit creation from deposits. Thus, mainly the products can be categorized into
two major heading deposits and loans. However, there are other various product/services of NBL
that has enabled it to retain its customer for more than seventy years. NBL is not just business,
it’s the facility for the citizen belonging to every corner of the country and in even in the entire
globe. Remittance, utility payment service, SMS banking, internet banking, ABBS all form an
array of consumer oriented service that are aiding for NBL corporate image and untrammeled
consumer loyalty.

NBL has been providing different kinds of products and services to meet its customer
requirements. It has been continuously improving and advancing its products and facilities to
compete in the marketplace. NBL provides various products and services in the forms of
deposits, remittances, loans and advances. Locker facilities, Bank guarantee, Letter of credit,
ATM cards, mobile banking, E- Banking and other banking facilities.
26
 27

CHAPTER III
ANALYSIS OF ACTIVITIES DONE AND PROBLEMS SOLVED

3.1 Background

The internship was completed from Nepal Bank limited, Head office. During the period of
internship, as an internee there are many banking activities that have been learned. Basically the
activities were focused credit department. The internship was a practical experience of banking
sector. Working as an internee in these both departments was challenging as well as full of
opportunity to exposure the theoretical that has been learned so far.

3.2 Credit Administrative Department (CAD)

The credit department or Loan department is concerned with investing the deposit amount in
various sectors by lending it to different business firms, government and non-government
organization individual borrower’s etc. lending should be done in careful manner by studying
client in systematically and effectively. The success of this department keeps a great influence
over the profit of a bank. Failure of this department may lead the bank to huge loss or even
bankruptcy. Hence, the bank places the extreme emphasis on its credit function. This department
provides different types of credit facilities as per the requirement of the customers (i.e. the
individual or corporate bodies). Management of all the credit facilities issued to customers is the
major responsibility of this department, which finds ways to attract new customers and retain the
existing ones ensuring minimum risk of default customers.

Credit department is mainly recognized for providing loan, renewal of loan and refunding of the
loan. However, there are lot more things this department is responsible for profit generation of
the bank from relationship building, credit control to risk assessment. Various risk associated
with customer must be analyzed effectively to know the credit worthiness of client before the
disbursement of loan. Five C’s scoring factor of client is also studied which includes character,
capacity, capital, condition and collateral. Various risks are also analyzed before the
disbursement of loan to the client, which includes:

 Market risk analysis

 Liquidity risk analysis

 Competitors risk analysis

 Default risk Analysis

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 Cash flow risks analysis

 Financial risk analysis

 Business risks analysis

Various tasks were carried out in credit department under the supervision and guideline of credit
department officer and staffs. Moreover the knowledge regarding lending and general credit
system was understood. Following task were done in credit department:

(i) The first and most important step in loan process is collection of various documents of client.
Various documents were collected before providing loan facility. The documents required to be
presented by the client are:

Proprietorship Firm

 Firm registration certificate (renewed) where purpose of incorporation of the firm should
be checked
 PAN.
 Tax clearance certificate.
 Citizenship certificate, 1 Passport size photo and bio data of proprietor and guarantor.
 Approval for commencement of business (Operating license where applicable).

 Family details/ tree of the proprietor’s family.

 In case any person is authorized to do transaction on behalf of the firm-Name, address,

relationship, citizenship certificate and decision for providing authority to that person.
 Current relationship status with major client along with further business plans.
 Audited report of last two years and Projected report for next one year

 YTD sales of the firm for hypothecation loan.

 For Hypothecation loan stock detail

Partnership Firm

 Valid registration certificate.

 Registered partnership deed where purpose of incorporation of the firm should be

checked.
 PAN.

 Tax clearance certificate.

 Citizenship certificate, 1 PP size photo and bio data of proprietor and guarantor.
 Approval for commencement of business (Operating license where applicable).
 29

 Personal net worth statement.

 Current relationship status with major client along with further business plans.

 Audited report of last two years.

 Projected report for next two years.

 Application for loan

Private Limited Company/ Limited Company

 Copy of registration certificate

 Letter from company registrar’s office confirming names of directors/ shareholders

 Certificate of commencement of business

 PAN

 Tax clearance certificate

 Copy of citizenship certificate and bio-data of promoters/directors

 Family detail/tree of the promoters/directors

 MOA( Memorandum of Association) and AOA (Article of Association) specifying the

following:
 Purpose of the company

 Whether there is any provision for availing credit facilities by

pledge/mortgage/hypothecation of the company’s properties
 Whether the is any provision for issuing or accepting corporate guarantee on behalf of
third parties
 Whether the board of directors is authorized to delegate its authority to any or only
specific person through board resolution or through AOA and MOA.
 Special AGM resolution or approval if loan seeking is above the paid up capital of
company and accumulated profits for a period of more than 6 months.
 Copy of resolution arrested by chairman himself and at least by one other director in case
of Pvt. Ltd. In addition, by company secretary in case of Ltd. Company.
 Decision to borrower from NBL in board resolution.

 Decision to open account in bank in board resolution.

Document Regarding the Proposed Collateral

 Land Ownership certificate

 Land Tax payment receipt of latest fiscal year

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 Approved construction plan/ Design of building

 Copy of land transfer deed

 Four boundary certificate

 Citizenship certificate of land owner in case of landowner is other than proprietor

 Letter of consent (Acceptance) of land owner to mortgage in favor of bank on behalf of

applicant as well as Family consent

Document Regarding Personal Income

 Fully filled up loan application of the bank.

 Copy of proposed borrower and co-borrower’s citizenship along with 2 copies of PP size
photo.
 Documents related to income source (salary certificate, rental agreement etc.

 If the income is salary: copy of PAN/VAT registration of respective organization.

 Original Salary Certificate not more than 10 days old

 Photocopy of contract agreement between applicant and his/her employer

(ii) After obtaining the documents from the client, it is then checked in systematic manner
checking it with the checklist as provided by bank.

(iii) Another important task is to open client loan account in Pumori IV system. The new client
code is created for new customer and all the information of customer are entered into the system.
If previously the client code is created in bank then there is no need to open new client code.

(iv) After opening the new client code the loan type, loan expiry date, loan limit, rate, nominee
and customer type are entered.

(iv) The loan schedule are also made for EMI based loan such as auto loan, PTL loan, flexi term
loan, Hire purchase loan and home loan where the amount of EMI are included.

(v) Another important task in loan department was to make phone call to loan client to inform
about EMI or to settle accrued interest and principal.

(vi) The next task, which was carried out, was management of customer file and documents as
well as filling the new customer documents.

(vii) Filling the spreadsheet of audited as well as projected financial report of the firm.
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(viii) The intern was also assigned with the task of filling out the loan voucher including the
interest amount of gold account.

(ix) The intern is also given with the task of mailing Credit information of potential as well as
existing client to Credit administration Department.

Credit Approval Process

Figure 1 Credit Approval Process

3.3 Problems Solved

The loan and credit department is the very important department of a bank. The money
mobilized from ultimate surplus units are allocated through the department to the ultimate deficit
unit (borrower). The success of this department keeps a great influence over the profit of a bank.
Failure of this department may lead the bank to huge loss or even bankruptcy. Hence, the bank
places the extreme emphasis on its credit function. This department provides different types of
credit facilities as per the requirement of the customers (i. e. the individual or corporate bodies).
Management of all the credit facilities issued to customers is the major responsibility of this
department, which finds ways to attract new customers and retain the existing ones ensuring
minimum risk of default customers.

Some of the problems that were solved by internee are:

 Prepared the documents required for the processing of the loan.

 Prepared checklist of original and other required documents while providing loans.
 Checked loan documents.
 Helped customers in the documentation.
 Visited credit customer for on- sight inspection.
 32

 Reviewed documents of clients who had been enjoying credit facility of the bank and
who were going to enjoy it.
 Filed and photocopied necessary document
33
 34

CHAPTER FOUR
CONCLUSION AND LESSON LEARNT

4.1 Major Findings

Nepal bank limited begins the history of formal banking in the country and has been contributing
its bit for the national development. During the 82 years of functioning NBL has gone through
various ups and downs, however, it has always contributed in the national growth with its
activities. NBL services reach the extreme of the county to facilitate its customer and build the
trust of individual and business houses for the commercial banking industry. NBL facilities and
product prove themselves to be commendable from the above analysis. The financial position
explained its profitability and market coverage, which is appreciable for a bank with the history
of some disastrous years. The recovery of the bank in terms of its financial position, its
adaptation to technological advancement and customer trust shows that the bank has enormous
opportunities and new heights to achievement.

The internship period was very fruitful which showed the face of real life job experience. It has
taught me how we can apply the theoretical knowledge in our practical life. During the internship
period various activities were carried out and learned. The on- the – job training was very
effective in the manner that it helped to apply the theoretical knowledge into practical scenarios.
Various interpersonal skill, communicational skills as well as technical skills were learned
during the internship period that has helped me to gain knowledge and skills. The interpersonal
skills helped us to effectively interact with the various types of customers and handle their
various problems. The negotiation skills also helped being more formal while communicating
with the people or clients. Various technical skills were also learnt such as operating Banking
software, photocopy machine, fax machine, scanner, printer, and many more. All these skills
were gained through internship has developed overall personality.

4.2 Lesson Learnt

The duration of internship lasted for around two months and during the course of the internship
there were various lessons that intern was able to learn. Some of the lessons learnt during this
time as an assistant trainee at NBL could be summarized as follows:
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Knowledge Based Learning

 Learnt the process of debit and credit posting, reimbursement in case of double
posting etc. while using PUMORI banking system.
 Learnt and experienced the risk associated with handling PUMORI system.

kill-Based Learning

 Learnt how to operate banking system, i.e. PUMORI

 Learnt the overall banking operation in Credit department.

 Learnt to use theoretical knowledge in practical working environment

Behavioral Based Learning.

 Learnt the importance of time management and developed interpersonal and

communication skills.
 Learnt the importance of correlation among the various banking operation for the
overall profitability of the banks.
 36

REFERENCES

Annual report of Nepal Bank Limited

Asmita Publication Nepal Bank Limited

https://www.academia.edu

https://www.nepalbank.com.np/

https://nepalbank.com.np/annual-reports.html
 37

ANNEX-II

Figure 2 Major Products and Services of NB

 38

ANNEX-II
Operation Date
S.N. Names of the bank Head Office
(A.D.)
1 Nepal Bank Limited 1957 Kathmandu
2 RastriyaBanijya Bank 1966 Kathmandu
3 NABIL Bank Limited 1984 Kathmandu
4 Nepal Investment Bank Limited 1986 Kathmandu
5 Standard Chartered Bank Limited. 1987 Kathmandu
6 Himalayan Bank Limited 1993 Kathmandu
7 Nepal SBI Bank Limited 1993 Kathmandu
8 Nepal Bangladesh Bank Limited 1993 Kathmandu
9 Everest Bank Limited 1994 Kathmandu
10 Bank of Kathmandu Limited 1995 Kathmandu
11 Nepal Credit and Commerce Bank Limited 1996 Kathmandu
12 Lumbini Bank Limited 1998 Kathmandu
13 Machhapuchhre Bank Limited 2000 Kathmandu
14 Kumari Bank Limited 2001 Kathmandu
15 Laxmi Bank Limited 2002 Kathmandu
16 Siddhartha Bank Limited 2002 Kathmandu
17 Global IME Bank Ltd. 2007 Kathmandu
18 Citizens Bank International Ltd. 2007 Kathmandu
19 Prime Commercial Bank Ltd 2007 Kathmandu
20 Sunrise Bank Ltd. 2009 Kathmandu
21 Bank of Asia Nepal Ltd. 2007 Kathmandu
22 NMB Bank Ltd. 2009 Kathmandu
23 Prabhu Bank Ltd. 2009 Kathmandu
24 Mega Bank Limited 2009 Kathmandu
25 Civil Bank Ltd. 2010 Kathmandu
26 Century Commercial Bank Ltd. 2011 Kathmandu
27 Sanima Bank Limited 2011 Kathmandu