CHAPTER – I

INTRODUCTION

1.1 Background of the study

A bank is a commercial or state institution that provides financial service, .including issuing
money in various forms, receiving deposits of money, lending money and process transaction
and the creating of credit . A bank is a financial intuitions which deals with the money (i.e.
collect the money surplus unit and lend to defect unit. mainly bank is a financial intuitions that
deals with the transactions of money ( i.e. deposit and withdraw of money) to their clients there
are different types intuitions which are working for different types of deposit and lending policy
for their customers .Among these financial intuition bank is one of them.

Bank is a financial institution licensed as a receiver of deposits. There are two types of banks:
commercial/retail banks and investment banks. In most countries, banks are regulated by the
national government or central bank. Banks represent the largest group of depository institution
measured by asset size. They perform function similar to those of saving institutions and credit
unions- they accept deposits and make loans. Commercial banks are distinguishable from saving
institution and credit unions, however in the size and composition in their loans and deposits.

Commercial banks are mainly concerned with managing withdrawals and deposits as well as
supplying short-term loans to individuals and small businesses. Banks are also permitted by law
to mobilize the deposits collected from the general public into income generating
investments.Consumers primarily use these banks for basic checking and savings accounts,
certificates of deposit and sometimes for home mortgages. Investment banks focus on providing
services such as underwriting and corporate reorganization to institutional clients.

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1.1.1 Banking in context of Nepal

it is said that development of banking system in Nepal was started in the reign of “Ranodip
Singh” in the year 1933 B.S. He had established an office name “Tejarath Adda” in Kathmandu.
It used to provide loans to the government officials and people against deposit of gold and silver.
It has also extended its branches outside Kathmandu valley but this office has no right to accept
deposit of public and it had no characteristics of modern bank.

The modern banking system in Nepal was started after the establishment of Nepal bank limited
on 30th Kartik 1994 B.S. This step in banking sector is another major steps of development of
banking system in Nepal. It was established under Nepal Bank Act 1994. It is first bank
established in Nepal. However, this bank was established but maximum use of Indian currencies
was not stopped in Nepal. This bank was given authority and responsibility of central bank of
that time but within the change in time, of needed a separate central bank was seen. So, under
Nepal Rastra Bank act 2012, Nepal Rastra Bank was established as central bank in Nepal on
14th Baishakh 2013. This bank was established with many objectives but mainly to stop
maximum use of Indian currencies in Nepal and to increase the uses of Nepalese notes.
Therefore, it first issued Nepali notes on 7th Falgun 2016. Its other functions were to stop dual
monetary system, to keep stability in exchange rate of Nepalese currencies to encourage national
industry by mobilizing the capital for development and to develop the all banking system in
Nepal. This is the bank of government and bank of all other banks. In the course of time,
according to recommendation of the Nepal Rastra bank, another commercial bank Rastriya
Baniya Bank was established in the year 2022 under Banijya Bank Act 2021. In the same way,
under the agriculture development bank act 2024, the agricultural development bank was
established on 7th Magh 2024. This bank was established with the objective of increasing the life
standard of the people who are involved in agriculture. The development of banking system was
not satisfactory up to year 2040 B.S. No new bank was established during this period except the
extension of branches of already established bank inside the country.

Nepal Arab Bank Limited was as first joint venture bank in the year 2041 B.S. under commercial
bank act 2031 and company act 2021. This is another major phase of development of banking
system in Nepal. Today this bank is popular by the name Nabil Bank limited. The second joint

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venture bank to be established in Nepal was Nepal Indosuez Bank in 2041. Today this bank is
Nepal Investment bank limited. Similarly, in the year 2043, the Grind lays Bank limited was
established as next bank and it is known today s standard charted bank Nepal limited. In this
phase, several other banks were established as Himalayan Bank limited in 2049 B.S. Nepal SBI
bank limited in 2050, Nepal Bangladesh Bank in 2051 and Everest Bank Limited, Bank of
Kathmandu limited in the same year. Now a days there banks are known as leading financial
institutions in Nepal. Today, there are four kinds of financial institutions established in
categorized as “A’, “B”, “C” and “D”. Commercial Banks come on under Class “A” category,
development banks come on under class “B” category. Similarly, finance companies come in
class “C” category and micro finance development banks comes under class “D” category. There
are many financial institutions established under different category and it is in the process of
increasing. A part from these financial institutions there are rural development banks established
in Nepal. In recent year Nepal Rastra Bank had opted merger, acquisition policy and financial
institutions have merged and become one from two, and even one from three and many of
financial institutions are in pipeline of merging.

Although, banks and financial institutions occupies more than 60% in Nepalese economy but the
development of banking sector in Nepal is not said as satisfactory because these financial sector
have target cities and populated areas only and not in rural areas. This is how modern banking
system is running in Nepal.

1.1.2 Introduction of Development Bank

Development banks are 'B' type Financial Institution. On the basis of geographical coverage and
activity level, the development banks are three types and these are a) 1- 3 districts type b) 4- 10
districts type and c) national type .

As per th NRB rules the new paid up capital requirement for these development banks are
respectively NRs.500 million, 1.2 billion and 2.5 billion  and it was previously NRs.100, 200 and
640 millions respectively.

As a result of changed requirement to increase paid up capital , many of then operating

development banks have merged or restructured the organization to establish a stronger financial
institution. In the process, some development banks acquirred finance companies and improved

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their positions and some merged with other stronger finance company or development bank or
with the commercial bank.At present there are 37 development banks. 

Following are the main characteristic features of development banks:

 It is a specialized financial institution, provides medium and long-term finance to

business units.
 Unlike commercial banks, it does not accept deposits from the public, It is not
just a term-lending institution. It’s a multi-purpose financial institution.
 It is essentially a development-oriented bank. Its primary objective is to promote
economic development by promoting investment and entrepreneurial activity in a
developing economy. It encourages new and small entrepreneurs and seeks
balanced regional growth.
 They provide financial assistance not only to the private sector but also to the
public sector undertakings, It aims at promoting the saving and investment habit
in the community.
 It does not compete with the normal channels of finance, i.e., finance already
made available by the banks and other conventional financial institutions. Its
major role is of a gap-filler, i.e., to fill up the deficiencies of the existing financial
facilities.
 Its motive is to serve the public interest rather than to make profits. It works in
the general interest of the nation.

1.1.3 Functions of Development Bank

 To promote and develop small-scale industries (SSI).

 To finance the development of the housing sector.
 To facilitate the development of large-scale industries (LSI).
 To help the development of agricultural sector and rural Nepal.
 To enhance the foreign trade of Nepal.
 To help to review (cure) sick industrial units.

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  To encourage the development of Nepalese entrepreneurs.
 To promote economic activities in backward regions of the country.
 To contribute in the growth of capital markets.
 Cash credit
 Issuing letter of Credit, cheque, circular notes etc.
 Transfer of deposit or amount from one place to another.

1.1.4 Introduction of Kamana Sewa Bikash Bank

Kamana sewa Bikash bank Limited is "B" class bank declared by Nepal Rastra Bank having Rs.
2.5 billion paid up capital. It perform the activities as other development bank perform like
deposit collection, granting loan etc. Kamana Sewa Bikash Bank Limited is a National level
development bank promoted by highly prominent business personalities & groups and reputed
individuals of the region who have excelled in their field of business & profession with very
good integrity and social standings. Under the guidance of reputed Board of Directors and
professional and dynamic management team having extensive experience with proven track-
record in the banking industry, Kamana Sewa Bank is committed to offer a wide range of
banking products and services tailored with the state-of-the-art technology to meet the unique
requirements of all the customer/clients and thereby delight them by exceeding their
expectations.

With a shared vision of "Your Partner For Progress" ,Kamana Sewa Bank Team is committed to
providing the quality products and services to its valued customers with utmost courtesy and
care. We at Kamana Sewa believe that delivery of quality products & services designed &
customized to best suit the customer need through continuous research & development and
innovation is the foundation to build-up the trust and enhance the level of confidence between
the customer and the bank. Hence, Kamana Sewa Bank Team pledges its commitment to always
endeavor for delivery of innovative products & services to all the customers to best suit their
requirements thereby ensuring the optimum benefit and value addition to the customer as well as
to all other stake holders.

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1.1.5 Mission Vision and objectives of organization
Mission

The Kamana Sewa Bank’s mission is to provide one stop solution to all the banking needs for the
customer through a highly motivated professional and efficient human resource pool. Promoting
sustainable business growth by providing high quality customer service, customer care and
ensuring efficient use of information technology in a cost efficient manner. Meeting the
expectations of all stakeholders through transparent, true and fair disclosures and responsive
management, practices and principles. Strive to fulfill corporate social responsibility in Nepal
with emphasis to growth in business and financial sector.

Vision

Kamana Sewa Bikas Bank Limited conceives a vision to be a leading bank, state of the art,
customer centric, values driven and professionally managed bank; committed to high standards
of good corporate governance practices; perpetual enhancement of the wealth of all stakeholders
and the society and consequently to provide the attractive and substantial returns to the
stakeholders of the bank.

Over the 11 years, we have grown larger and stronger - in terms of business and services. This
has been achieved by relying on the fundamentals of customer service of top order. Our
achievements have come through quality, consistency and transparency of capital base, sound
liquidity, a robust risk management framework coupled with the practice of good corporate
governance and above all, the tireless focus on customer satisfaction.

Objectives

All bank have objectives which will be achieved in future. There was a need for reconstructing
economics at a faster speed. The existing machinery for developmental activities was not
sufficient to the requirements of industry. There was a need to set up such institutions which

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would take up promotional activities besides financing. So tha this bank set some objectives to
achieve success in future. Some objectives are as follows..

1. Lay Foundations for Industrialization

2. Meet Capital Needs

3.  Need for Promotional Activities

4.  Help Small and Medium Sectors

5. To encourage modernization and improvement in technology,

6. To promote more self employment projects,

7. To revive sick units,

8. To improve the management of large industries by providing training .

1.1.6 Capital structure

It is important to have a capital structure to satisfy the customer needs of kamana sewa bikash
bank. The capital structure of kamana sewa bikash bank is as follows..

Authorized capital :- Rs. 3,000,000,000

Issued capital :- Rs. 2,502,000,000

Paid up capital :- Rs. 2,502,000,000

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Table 1: Board of director

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Shareholding pattern

1st Qtr
2nd Qtr 49%
51%

Fig. 1. Shareholding pattern of Kamana Sewa Bikash Bank Limited

1.1.7 Organizational design and structure

Typically hierarchical is the arrangement of line of authority, right and duties of an
organization. Organizational structure determines how the roles, power and responsibility
are assigned, controlled and coordinate and how information flows between the different
levels of management. A structure depends on the organization's objective and strategy. In a
centralized structure, the top layer of management has most of the decision making power
and has control over departments and division. In the decentralized structure, the decision
making power is distribute and the department and divisional mar have different degrees of
independence. The structure can be shown as:

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 Figure:2 Organizational Structure of kamana sewa bikash Bank Limited
(Mahendranagar Branch)

1.1.1 Product and Services

As a pioneer in introducing many innovative products and marketing concepts in the domestic
banking sector it represents a milestone in the banking history of Nepal with customer
satisfaction considered as focus objective while doing business.

Saving policy:

1. current account :- in current account customer can deposit money and withdraw money
anytime and without any interest .

2.call account:-in call account interest rate can be defined with negotiation of customer and
bank.

3.Saving account:-in saving account customer can get three types of services or facilities which
are as follows:

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  Normal saving :- in normal saving customer can open account at zero balance
and can get 5% interest after deposit money.

 General saving :-in general saving customer can open account at Rs.500
minimum balance and can get 5% interest after deposit money.

 Subharamv saving :-In this saving customer have to pay Rs 1000 at first time of
account opening and can get 7% interest per year after depositing money and
can get different services freely like ATM , mobile banking e.t.c.

4.fixed deposit money can put in account at fixed time period in this account and can get
10.75% maximum interest rate to the customers.

Table 1 :Details of kamana sewa fixed deposit

Fixed deposit Quarterly On maturity

3 months - 9.50 % p.a
6 months - 9.75 % p.a.
9 months - 10% p.a
1 year 10.25 % p.a. 10.50 % p.a.
1 year to 5 year 9.75 % p.a. 10% p.a
Megha FD 1 year (min. 5 10.50% p.a.  10.75% p.a.
lakhs) (Monthly/Quarterly)               
Mahila sammat FD 1 year 9.00 % p.a. (Monthly Interest)
Jestha nagarik sammat FD 1 9.00 % p.a. (Monthly Interest)
year
Retirement FD 1 year 10.50% p.a. (Monthly Interest)
Above 5 year FD Negotiable

 Table 2:Interest Rate on Saving Accounts

Saving deposit Interest rate Minimum balance

Normal Saving 6.5 % p.a. Zero Balance
Pensioner Saving 6.5% p.a. Rs. 1,000.00
Child Saving 6.5 % p.a. Rs. 1,000.00
Sabal Nari Saving 6.5 % p.a. Rs. 500.00
Salary Saving 6.5 % p.a. Zero Balance
Shareholder Saving 6.5 % p.a. Rs. 1,000.00
Farmer Saving 6.5 % p.a. Rs. 100.00

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 Student Saving 6.5 % p.a. Rs. 100.00
Subharambha Saving 6.5 % p.a. Rs. 1,000.00
Samajik Surakshya Saving 6.5 % p.a Zero Balance
Corporate Call Account up to 6.5 % p.a. Rs. 1,000.00
Interbank Call Account up to 6.5 % p.a. Rs. 10,000.00
Personal Call Account up to 6.5% p.a. Rs. 50,000.00

Credit policy

Lending policy in this bank is different types for different sectors. And base rate for providing
loan to their customers is 12.58% in this bank. There are different types lending policy for
different sectors as follows.

 Overdraft loan:- this loan includes

 Business overdraft loan

 SME loan revolving

 Easy loan revolving

 Share loan revolving

 Real state loan revolving

 Term loan includes

 Working capital loan

 Real state loan

Figure 4:- Rates on loan

Types of Loan Rate in % P.A.

Overdraft BR +Up to 5.00

Working Capital; BR +Up to 5.00

Business Term Loan BR +Up to 5.00

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SME Loan Installment BR +Up to 5.00

SME Loan Revolving BR +Up to 5.00

Real Estate Loan BR +Up to 5.00

Tourism/Hotel Loan BR +Up to 5.00

Agriculture Enterprises Loan BR +Up to 5.00

Housing Loan BR +Up to 5.00

Hire Purchase Loan  

         Private Use BR +Up to 5.00

         Business /Commercial Use BR +Up to 5.00

Foreign Employment Loan BR +Up to 5.00

Education Loan BR +Up to 5.00

Loan Against Marketable Securities BR +Up to 5.00

Professional Loan BR +Up to 5.00

+2% on Coupan Rate or Base Rate

Loan Against Fixed Deposit
which ever is higher

 Consortium Loan As per consortium decision

Deprived Sector Loan   Base Rate + upto 7%

Easy Loan Revolving BR +Up to 5.00

Easy Loan Installment BR +Up to 5.00

Gold & Silver Loan BR +Up to 5.00

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Base Rate (BR) as on Ashad End 2076        11.59%
Base Rate (BR) as on Chaitra End 2075       11.65%
Base Rate (BR) as on Paush End 2075        11.59%
Base Rate (BR) as on Ashwin End 2075      11.83%
Base Rate (BR) as on Ashad End 2075        12.58%
Base Rate (BR) as on Chaitra End 2074      12.17%
Base Rate (BR) as on Paush End 2074        11.80%
Base Rate (BR) as on Ashwin End 2074      11.92%
Base Rate (BR) as on Ashad End 2074        11.71%

Services of kamana Sewa Bikash Bank limited

Kamana sewa bikash bank is one of the "B" levels bank permission given by Nepal Rastra bank
ltd. Branch bank available in our city mahendranagar which main head office is at Kathmandu 30
ganeshwor. In this bank employee or staffs can give fast and better services to their customer and
gives more other services which are as follows.

 free ATM service

 free mobile banking

 free ABBS

 Interest payable at monthly, quarterly, semiannually and annually to their

customers.

 e.sewa

 receiving remittance freely

Major Service Offered by kamana sewa bikash Bank limited are as follows
A. Debit Card and credit card
Kamana Sewa Bikas Bank is a member of National Payment Network (NPN), belongs to
Nepal Investment Bank Limited which has a large number of member bank's ATM and POS
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 terminals inside and outside the valley. KSBBL National ATM Debit Card can also be used
in other NPN member bank's terminals as well as in ATM machine of Visa Associated
Member's Bank of NIBL. Similarly, Sewa National Debit card can be used to make payment
in stores, restaurants and any other POS terminal which accepts the NPN VISA/ Visa
Electron card.

Services of cards are:

Cash Withdrawal
Fast Cash
Mini Statement
Balance Inquiry
Pin Change
Charges on other banks ATM

Rs. 20 for Cash Withdrawal

Rs. 5 for Balance Inquiry
Rs. 5 for Mini Statement

No. of transaction per day 10 times

Limit of transaction per day Rs. 1, 00,000 per day

Limit of amount per transaction Rs.25, 000

POS transaction will be free of cost.

B. E-Banking

Kamana sewa bikash Bank offers internet banking service to its valued customers. Now you can
enjoy the absolute freedom of banking anytime, anywhere. Why to stand in a queue? Enjoy 24*7
kamana sewa bikash-Banking from any part of the world, any time. The feel the Luxury of
complete internet banking from kamana sewa bikash I-banking gives you immediate online
access to your accounts. Banking online is easy, convenient and secure.

Here are just some of the features:

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  Access your accounts, 24, hours a day, 7 days a week
 Save money and time- no more stamps or writing cheques
 Transfer funds within a group
 Utility bill payments
 Online shopping

C. SMS Banking
SMS Banking is one of the service that kamana sewa bikash Bank offers to its customers. It's a
new 24 hours banking convenience which help customer to stay on the top of any recent change
made in the bank account or a loan account through mobile phone. Service offered under SMS
Banking is as follows:
 Balance Enquiry
 Transaction notification
 Account statement Request
 Cheque Book Request

D. Inward Remittance
Remittance is one of the major incomes generating service of banks. Remittance service of the
bank is beneficial both to the business and personal customers as it make transfer of money
easier .It covers large percentage of its national income. It facilitates the sending and receiving
funds to / from various places. It can also promote access to financial service for the sender and
recipient increasing financial and social inclusion. Kamana sewa bikash Bank offers number of
remittance product to cater the customer need for transferring their money in and out of the
country through:
 Western Union Money Transfer
 Prabhu Money Transfer
 Himal Remit
 City Express Money Transfer

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  IME

E. Any Branch Banking Services (ABBS)

Kamana sewa bikash Bank has any Branch Banking system to facilitate its customers to have
easy transaction. As well , for the solution of endless long procedure, risk of carrying hung sum
of money to the bank, wanted to take out money from your account but found out that the bank
was convenient service is introduce. The customer can withdraw or deposit cash, receive
information about the balance in their account or obtain a statement of account is convenient
from any branch. The network is online and one can have access to his/her account from any of
the branches of the bank.

1.2 Statement of Problem

The need of deposit mobilization for economic development of a country is no more to question.
But we are facing an acute problem of resources mobilization. We have 39 development banks in
Nepal which are very much considered to be vital financial institutions to mobilize domestic
resources. Under the prevalence if these situations the study has try to deal with following
problems.

2 What is the relationship between deposit and loans and advances of KSBBL?
3 What is the effectiveness of deposit mobilization of development banks?
4 What is the increasing or decreasing trend of deposit mobilization of KABBL?
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1.3Objective of the study

KSBBL Bank Ltd. becomes the focal point of this present study so the specific objective of this

study so the specific objective of this study is to see its performance in the course of deposit

distribution. Following subsidiary objectives have been formed to assist the basic objectives:-

 To understand the general procedure of deposit distribution of KSBBL Bank Ltd.

 To know the general operation of KSBBL Bank Ltd. in terms of deposit distribution.

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  To understand the position of deposit of KSBBL Bank Ltd.
 To evaluate the utilization of deposit.
 To point out the problem relating to deposit.
 To point management & recommend the bank to solve the problem.

1.4significance of the study

Banks and other financial institutions play important role to increase economic standard for the
development of the country. Economic development becomes slow if there are incomplete and
unfair banking facilities. Especially development banks provide different economic and technical
facilities to the people who involve in business activities. development banks plays major role in
collection of scared small savings form depositors and transfer these funds into productive
sectors for the economic development.

As the research done in any field there are several key factors that cannot be avoided, in which
significance of study also occurs. Mainly this study covers the deposit and credit position of
development banks, so it helps to reveal the financial position of banks and study, so it helps to
reveal the financial position of banks and study occupies an important role in the series of the
studies on development banks. The significance of the study are:

2 Important to know how well the banks in utilizing its deposits.

3 Important to the management party of selected banks for the evaluation of the performance of
their banks.
4 This study has been equally important to the others who are interested to know about the
area. It may encourage to researcher to research further.
1.5Limitation of the study

There are some limitations of the study. They are stated as follows:-

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  Firstly the relevant data is being taken of KSBBL Bank Ltd. only ignoring the same of
other same organization.
 This study focuses deposit distribution & collection only ignoring other functions.
 The data is limited to a period of five years.
 The time allowed for the study limits the study work.
 This study is totally depends on secondary data.
 Lack of recent data of KSBBL.

1.6 Review of Literature

A literature review can be just a simple summary of the sources, but it usually has an
organizational pattern and combines both summary and synthesis. A summary is a recap of the
important information of the source, but a synthesis is a re-organization, or a reshuffling, of that
information. It might give a new interpretation of old material or combine new with old
interpretations. Or it might trace the intellectual progression of the field, including major debates.
And depending on the situation, the literature review may evaluate the sources and advise the
reader on the most pertinent or relevant.

1.6.1 Theoretical Framework

This study deals with the theoretical aspects of the saving deposit and credit policy of Kamana
Sewa Bikash Bank Limited in more detail and descriptive way. For these study different
journals, project reports, books have been reviewed to research about this report. This study has
referred book related with this topic published. Some of the prior report by students of BBA and
MBA regarding this topic has also been reviewed.

1.6.2 conceptual framework

Credit/Advances

Advances are the sources of finance for the banks or other financial institutions, which provided
by the banks to the company to meet short term financial requirement. It is the credit facility for
the citizens of the country which should repaid within one year or more or less as per the terms

19
and condition issued by Nepal Rastra Bank of Nepal for lending and also by the schemes of the
concerned bank. They are granted against securities which are as under:

1. Primary Security : hypothecation of debtors, stock pro- notes, etc.

2. Collateral Security : Mortgage of land and buildings, machinery, etc.

3. Guarantees : guarantees given by partners, directors or promoters etc.

The following are the forms of bank advances:

1. Demand deposit : In a demand loan account, the entire amount is paid to the debtor at
one time, either in cash or by transfer to his savings bank or current account. No
subsequent debit is ordinarily allowed except by way of interest, incidental charges,
insurance premiums, expenses incurred for the protection of the security etc.
2. Term loan : When a loan is granted for a fixed period exceeding three years and is
repayable according to the schedule of repayment, it is known as a term loan. The period
of term loan may extend up to 10 years and in some cases up to 20 years. A term loan is
generally granted for fixed capital requirements, e.g. investment in plant and equipment,
land and building etc.
3. Overdraft : An overdraft is a fluctuating account wherein the balance sometimes may be
in credit and at other times in debit. Overdraft facilities are allowed in current accounts
only. Opening of an overdraft account requires that a current account will have to be
formally opened, and the usual account opening form completed. Whereas in a current
account cheques are honored if the balance is in credit, the overdraft arrangement enables
a customer to draw over and above his own balance up to the extent of the limit
stipulated.
4. Cash Credit : A facility granted by the bank in which the customer can advance money

up to a certain limit against the asset pledged.

5. Bill Repurchase : An advance facility provided by the bank against the security of bills.

DEPOSIT
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Deposit is the most element element for any bank and financial institution without deposit
bank cannot run. The main object of bank is to collect deposit from public and invest that
amount to the productive sectors. Deposits are the collected amount from the general public,
which are used in different productive areas and should be returned if it is demanded by the
depositors. But, it depends upon the type of deposit invested by the people according to their
wish. Growth of deposit is most important part for the proper existence of the development
banks. So, the efficiency of the banks depends upon its ability to attract the amount of
deposit. The deposit, creating power of development banks, forces to raise the assets along
with the liabilities of bank balance sheet. Interest rates, offered, security to the deposits etc.
are the several key factors in attracting deposits. On the basis of ownership, security and the
availability of the funds, deposits are classifies as public deposit, private deposit , interbank
deposit secured deposit, unsecured deposit and time deposit.

Mainly Kamana Sewa Bikash Bank provides such types of deposits as follows

1. current account :- in current account customer can deposit money and withdraw
money anytime and without any interest .

2. call account:-in call account interest rate can be defined with negotiation of customer
and bank.

3. Saving account:-in saving account customer can get three types of services or
facilities which are as follows:

 Normal saving :- in normal saving customer can open account at zero balance
and can get 5% interest after deposit money.

 General saving :-in general saving customer can open account at Rs.500
minimum balance and can get 5% interest after deposit money.

 Subharamv saving :-In this saving customer have to pay Rs 1000 at first time of
account opening and can get 7% interest per year after depositing money and
can get different services freely like ATM , mobile banking e.t.c.

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 4. Fixed deposit :- fixed deposit money can put in account at fixed time period in this
account and can get 10.75% maximum interest rate to the customers.

CHAPTER – II

RESEARCH METHODOLOGY

The study about the bank, KSBBL Bank and its deposit collection & distribution has been done. The
sources of data used in this study are basically secondary in nature & to some extent primary information
are also used. All the necessary data for the project is collected from booklets, Bulletins, Reports,
Financial statement & Annual report of KSBBL Bank Ltd. In this report, I have used statistical tools like
bar diagram, trend line, percentage change, correlation, regression to analysis the data.

2.1 Research Design

A research design is the set of methods and procedures used in collecting and analyzing
measures of the variables specified in the problem research. The analysis of this study based
on certain research design. This study mainly follows explanatory research design. For the
analytical purpose the data were collected from different sources and published on different
year.

2.2 Data Collection

There are generally two types of data one is primary data which is not used in the past and
another is secondary data which is used in the past or collected by another person in the past.
This study is mainly based on secondary data. Secondary data refers to the data already used
by another in past. For the secondary data, NRB Act and annual report of KSBBL 2067 to

22
 2075 has been studied. Furthermore, these data were collected from banks audit report like
profit& loss account, Balance sheet and other printed materials like published literature,
annual report, survey report, articles etc.

2.3 Methods of Data Analysis

There are different types of tools which are used to analyze the data. But in this report
financial and statistical tools were used to analyze the data. Ratio analysis was used in this
study. Besides, panel regression have been estimated to look the relationship among
dependent and independent variables. Results are tabulated, listed under various headings.
The results were compared with the corresponding result of the past in order to interpret them
in a meaningful way. A brief description of tool is given below.

 Financial Tools

Financial analysis tools are one of the most efficient ways that can be used for ensuring good
profit from your investments. These financial analysis tools are highly helpful in evaluating the
market and investing in a way so as to maximize the profit from the investments made. These
financial analysis tools are useful for deciphering both internal and external information related
to a specific business organization. in this field work study, mainly following ratio analysis tools
are used to measure the efficiency of KSBBL.

Saving Deposit to Total Deposit Ratio

This ratio measures the percentage of saving deposit out of total deposit. This is calculated by
dividing saving deposit by total deposit.

% of saving deposit to total deposit = (saving deposit ÷Total deposit)×100

 Statistical tools
Statistical methods are the mathematical techniques used to facilitate the analysis and
interpretation of numerical data secured from groups of individuals or groups of
observation from a single individual. The figures provide detail descriptions and tabulate
as well as analyze data without subjectivity but only objectivity.

Trend line

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 All economists and businessman used trend line of growth in future. It predicted the future
behavior of data analysis was taken as a tool to evaluate the future financial position of the bank.
Out of various methods least square method of trend analysis was used. The equation used to
obtain the trend values are: Y=a+bX

Where,

Y=Dependent Variable a= Y intercept

X=Independent Variable b= slope of the trend

CHAPTER – III

ANALYSIS AND PRESENTATION OF DATA

This chapter is the main body of the study. It includes the collected data of deposit and loans and
their analyses are done. Different tables, charts and diagrams have been used to make simple and
easy readings. The main purpose of data presentation and analysis is to study, evaluate, analyze
and compare the major financial performance of KSBBL. The first step of studying is the
collection of necessary information and data from related field that is the collection of data from
KSBBL. This task will be fulfilled by the collection of secondary data from various published
information. To present and analyze the collected data from financial tools are used, calculated,
analyzed and compared by using the statistical tools like average, bar diagram, tables etc.

4.1DEPOSIT POSITION OF KSBBL

Deposit is those kind of collection in which bank offers interest rate on the deposit of their
account. In deposit, a customer is required to keep some money in a bank for a period of time
generally by those who want to save for a period. This provision is also applied in KSBBL Bank.
The bank pays higher interest rate for a long term deposit & lower interest rate for short term. In
the time of emergency, customers are allowed to borrow money for the security of their deposit.
Since the bank is aware of the repayment date, the bank is free to invest. Deposit must carry a
minimum maturity of seven days & can be withdrawn in any time. Deposit position of KSBBL
Bank with respect to all deposit can be illustrated by the table below:

24
investigators, researchers himself from various other sources like annual report, internet, news
paper, magazines etc. It is low in cost and time saving but it may not be fit as per requirement of
research. The investigators get them from other sources. This study is conducted on the basis
secondary data only. The data related to the study are collected from the following sources.

 Annual report of KSBBL Bank and Various Booklet of KSBBL Bank.

 From the official Websites of Nepal KSBBL Bank and www.kamanasewabank.com

Table 5: Total Deposits of KSBBL

Rs. in million
Fiscal Current Saving Fixed Call Margin Total
Year deposit deposit deposit deposit deposit deposit
2009/10 3218 20061 6377 4359 666 34681
2010/11 3745 16294 11328 5295 946 37608
2011/12 3694 15994 13507 7 1219 40919
2012/13 4584 21915 11866 8393 971 47729
2013/14 5844 26484 13964 5858 920 53070
2014/15 6407 32843 13589 10591 1242 64672
Source: Annual Report of kamana sewa bikash Bank Ltd

Figure :3 Deposit Position

25
 70000

60000

50000

40000
2009/10
30000 2010/11
2011/12
20000
2012/13
10000 2013/14
2014/15
0
it it it it it it
p os pos p os p os pos pos
e e de e de e
ntd ngd ed all d in tald
e i C g
rr Sa
v Fix ar To
Cu M

The above table and figure show the details about the deposit of five year from 2009 to
2005. According to the above table in the year 2069/10 current deposit is Rs. 3218 million and it
is increasing every year except in 2011/12 as it is decreasing. Likewise saving deposit is
increasing as well as decreasing.. According to above table saving deposit in the year 2009/10 is
Rs. 20061 million as the year moves forward it stars fluctuates. Similarly, in the year 2009/10
fixed deposit is Rs. 6377 million and also fluctuating as previous deposits. Call deposit in the
year 2009/10 is Rs. 4359 million and it starts increasing up to Rs. 10591 million. Margin deposit
is Rs. 666 million in the year 2009/10 which increase to Rs. 946 million in the year 2010/71 and
Rs. 1219 million in the year 2011/12. But it decreases in the year 2012/13 and 2013/14 and
reached to Rs. 920 million. And then it reached to Rs.1242 million in the last year 2014/15.
From the beginning total deposit is increased but in percentage sometime it is increasing and
sometime decreasing.

3.2 ANNUAL INCREASE RATE OF TOTAL DEPOSITS

Table 6: Annual Increase Rate of Total Deposits

Fiscal year Total Deposit Change in Deposit

2009/10 34681 -

26
2010/11 37608 2927

2011/12 40919 3311

2012/13 47729 6810

2013/14 53070 5341

2014/15 64672 11602

Source: Annual Report of Kamana Sewa Bikash Bank Ltd

Figure 4: Total Deposit

27
 70000

60000

50000

40000 Total Deposit 34681

30000 Change in Deposit -

20000

10000

0
2010/11 2011/12 2012/13 2013/14 2014/15

Above diagram indicates the amount of total deposit of Himalayan Bank

3.3 POSITION OF TOTAL DEPOSIT MOBILIZATION

Table 7 :Deposit Mobilization(Rs, In Millions)

Fiscal Year Total Deposit Loan and Advance

2019/10 34681 25519

2010/11 37608 29123

2011/12 40919 32968

2012/13 47729 35968

2013/14 53070 41057

2014/15 64672 46449

Source: Annual report of Kamana sewa Bikash Bank Ltd.

Figure 4:Total Deposit and Loan & Advance

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 70000

60000

50000

40000
Total Deposit
30000 Loan and Advance

20000

10000

0
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Kamana Sewa Bikash Bank Ltd. is playing an important role on the deposit mobilization for the
economic development of the country since it started to operate in the year 2009 to 2014. Deposit
mobilization is one of the most important functions of the development bank. Without deposit all
the function of the bank is worth less, so the deposit is necessary to operate financial transaction.
The above trend line shows that there is increment in the deposit year by year which indicates that
there is a development of the banking habit in Nepal as well as economic development of bank.

3.4 TOTAL DEPOSIT AND INVESTMENT POSITION

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 Table 8: Total Deposit and Investment Position

Rs. in million

Fiscal Year Total Deposit Investment

2019/10 34681 8710

2010/11 37608 8444
2011/12 40919 8769
2012/13 47729 10031
2013/14 53070 12992
2014/15 64672 19842
Source: Annual report of Kamana Bikash Bank Ltd.

Figure 5 :Total Deposit and Investment

70000

60000

50000

40000
Rs. in million
30000 Total Deposit
Rs. in million
20000 Investment

10000

0
0 1 2 3 4 5
9 /1 0 /1 1 /1 2 /1 3 /1 4 /1
0 1 1 1 1 1
20 20 20 20 20 20

The above figure shows the position of total investment and total deposit of the previous five years. Total
deposit has been increasing in each year but the investment increased except in the year 2010/11. The
total investment was Rs 8710 million in 2009/10 which has decreased and reached to Rs 8444 million in
the year 2010/11 while the investment was Rs 8769 million in 2011/12 which increase and reached to Rs
10031 million in 2012/13 which has again increased to Rs. 12992 million in the year 2013/14and then
again increased to Rs.19842 million in the last year 2010/11.

3.4 TOTAL DEPOSIT TO INVESTMENT RATIO

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It is the percentage of the investment made by the bank from the amount raised from the total deposit. It is

calculated as below:

= *100%

Table 9:-Total Deposit to Investment Ratio

Fiscal Year Investment Total Deposit % of Investment on Total Deposit

2009/10 8710 34681 25.11
2010/11 8444 37608 22.45
2011/12 8769 40919 21.43
2012/13 10031 47729 21.02
2013/14 12992 53070 24.48
2014/15 19842 64672 30.68
Source: Annual report of Kamana Sewa Bikash Bank Ltd.

The above table shows the ratio of investment and total deposit. This ratio has increased in 1009/010 but
after that ratios has decreased up to three years. In 2013/14 and 2014/15 the investment percentage has
increased from 24.48% to 30.68%. The total deposit is increasing in every year but the investment is
increasing and decreasing from the year 2009/10 to 2014/15, so the ratio is fluctuating.

3.6 LOAN & ADVANCE TO TOTAL DEPOSIT RATIO

It shows the percentage of loan & advance in total deposit. It is calculated as below:

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 Table 10:-Loan & Advance to Total Deposit Ratio

Fiscal Year Loan & Advance Total Deposit Ratio (%)

2009/10 25519 34681 73.58

2010/11 29123 37608 77.44

2011/12 32968 40919 80.57

2012/13 35968 47729 75.36

2013/14 41057 53070 77.36

2014/15 46449 64672 71.82

Source: Annual report of Kamana Sewa Bikash Bank Ltd.

The above table shows the ratio of loan & advance to total deposit. This ratio has been increasing in the
previous three years. It is due to the high increment of loan & advance than the total deposit but after third
year it is fluctuating. It was 73058% in the year 2009/10 which has increased year by year and decrease to
75.35% in 2012/13 then again it starts to increases but again it decreases in final year 2014/15.

3.7 CASH BALANCE TO TOTAL DEPOSIT

It is the percentage of cash balance from total deposit. It is the amount kept in the bank. It is calculated as
below:

*100%

Table 10:- Cash Balance of Total Deposit

Fiscal Year Investment Total Deposit % of Investment on Total Deposit

2009/10 8710 34681 25.11
2010/11 8444 37608 22.45
2011/12 8769 40919 21.43
2012/13 10031 47729 21.02
2013/14 12992 53070 24.48
2014/15 19842 64672 30.68
Source: Annual report of Kamana Sewa Bikash Bank Ltd.

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The above table shows the ratio of investment and total deposit. This ratio has increased in 1009/010 but
after that ratios has decreased up to three years. In 2013/14 and 2014/15 the investment percentage has
increased from 24.48% to 30.68%. The total deposit is increasing in every year but the investment is
increasing and decreasing from the year 2009/10 to 2014/15, so the ratio is fluctuating.

STATISTICAL ANALYSIS
Under statistical analysis I have done calculation of the Karl Pearson’s correlation coefficient
between Investment and Total Deposit.

Karl Pearson’s Correlation Coefficient Calculation Table

Table 11:-Karl Pearson’s Correlation Coefficient Calculation Table

Investment (X) Total Deposit (Y) x=X-8769 y=Y-40919

8710 34681 -59 -5813

8444 37608 -325 -3311

8769 40919 0 0

10031 47729 1262 6810

12992 53070 4223 12151

19842 64672 11073 23753

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 ΣX 65223 ΣY 188795
= =
Here X = n 6 =10870.5 Y = n 6 = 31465.83

Σ xy
Now, r= √ Σx2 √ Σy2
-342049305
= √ 118167770 √ 990098458
= 1.0000
Hence the coefficient of correlation r = 1.0000

From the computation of coefficient of correlation between Investment and Total deposit is r=
1.0000 which shows positive correlation between the Investment and Total Deposit.

CHAPTER - IV

SUMMARY, CONCLUSION AND RECOMMENDATION

4.1 SUMMARY

In modern days, the role of development bank is very significant as it helps to boost the trade &
commerce of the country. In the context of Nepal, development banks are playing vital role in developing
economic growth for the country. All the economic conditions are based on financial institution & the
banks in different activities in the country. Being the major financial institution of the country, the role of
development banking in the economy is obviously a prime reusable in the formulation of banking policy.

34
This report tries to confide KSBBL Bank’s remarkable performance in collecting deposits from the
various sources & contributing for the economic development of the country. KSBBL Bank Limited was
able to collect maximum amount in the recent fiscal year. The outstanding total deposit was Rs. 34681
millions at that time. Though the country is in transitional period after announcing the country Nepal as
democratic country, there is political instability, strikes & economic depression, the deposit position of
KSBBL Bank Limited is in increasing trend. KSBBL Bank Limited collect more deposit in fiscal year
2009/10 than other past years. But it is facing problem to mobilize the money in the productive & fruitful
activities of the nation due to unstable government of Nepal, poor security condition, policy of
government and other factors.

4.2 CONCLUSION

Nepal has realized that the desire growth rate of the country can be achieved only when the idle money of
people can be attracted to be woven as a single whole and mobilized in the productive and fruitful
activities of the nation. Deposit helps the bank to earn profit.

KSBBL Bank is playing this intermediary function of resources collection & utilization thus carrying the
economic health of the country. This report shows that KSBBL Bank has been efficiently collecting the
deposit through its branches around country. The deposit position of KSBBL has fluctuated during the
observed period. The bank in its first year of operation under the Nepalese management team has proved
capable of running professionally & efficiently as evidenced by KSBBL Bank exceptionally high growth
rate in profit, deposit & lending as compared to national average.

4.3 RECOMMENDATION

KSBBL has been operating well from its establishment. But presently it is facing leading competition due
to the increased number of Banks. So it is obvious that it is facing various problems regarding the
financial performances. This study attempts to evaluate the liquidity flow in concern with the financial
performance of the bank. Even though the capital fund of bank is increasing it could not increase its
investment in the same rate. Moreover investment is also increasing in compare to previous year, which is
one of the important & successful parts of KSBBL Bank.

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On the basis of the analysis made above and other observations, the following recommendations are
made:

 KSBBL Bank should give continuity to its growth trend of deposits.

 KSBBL Bank should attract more depositors by providing quality & prompt services to its
customer.
 KSBBL Bank should extend its credits in the genuine project & utilize its resources fully and
efficiently.
 KSBBL should expand availability of banking services branch expansion policy should be
continued. Branch expansion also in rural areas should not be neglected.
 Bank should provide more attention towards the priority sector and industrial scheme to contribute
to the national economic development.
 The bank should carry out the research and development activities for the market promotion
further.

BIBLIOGRAPHY

 BOOKS

Bajracharya, B.C (2061 BS); Business Statistics and Mathematics, Kathamandu :

MK Publishers and distributors.

Basu, A.K. (1996); Fundamentals of Banking Theory and Practice, Calcutta: A.K.
Mukerjee Publications.

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Erich, S.P. and Narang, K.L. Financial and Management Accountancy (2nd
edition). Kalayani publisher.

Jibi Thapa(2076/77) Rastriya Banijya Bank preparation Book, goodwill

publication.

 Official Publication and Relevant Studies

Annual report, Kamana Sewa Bank Limited

Microsoft Encarta (2007); Reference Library Encyclopedia

URL: www.kamanasewabank.com

http://www.nrb.org.np/

https://www.wikipedia.org/

http://www.investopedia.com/

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