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1.1 Background of the Study

Capital structure is essentially concerned with how the firm decides to divide its cash flows into
two board components, a fixed component that is earmarked to meet the obligations towards dept
capital and a residual component that belongs to equity shareholders. Assets structure the
proportion of various types of asset held by a firm as shown in the balance sheets . A recent
survey conducted by National planning commission has found that 42% of the people of Nepal
are under the poverty line, especially living in the rural areas people are deprived by poverty.
Therefore, in this condition economic development of the country is the first objective of our
nation, for the economic development of a country the capital playing a vital role. The shortage
of the capital is the basic handicap to the economic development of all underdeveloped countries
it is extremely hard for the poor nation to save the large parts of its income and thus the
possibilities of domestic capital formulation are very small" (Pant,1995 : P 13). This is the great
challenges to the nation to eliminate the poverty through Gradual economic development of the
total nation. The main problem of the all under developed countries like Nepal is capital
formulation and their proper mobilization.

To overcome the economic situation Government has to formulate and implement strategies
focusing overall industrialization of the nation and development of a sound banking system is
necessary for the rapid industrial development. A bank is a financial institution which plays a
significance role in the economic development of a country. The first Banking Institution of the
World was "The Bank of Venice" in 1157 AD in Italy. After that a large number of banks were
established in the different part of the country. There came a remarkable change in the process of
establishing the banking institution after the evolution of "the bank of England" in 1694AD.

Nepal bank limited is the first bank in Nepal which was established in 1937AD as a Semi
governmental financial institution. Nepal Rastra Bank (NRB) was set up in 1956 AD. Having felt
the need of the central Bank with the growth of diverse economic activities in the country other
commercial banks were felt necessary at the latter stage, as a result Rastria Banijya Bank set up
in 1966AD with full government ownership.

The two commercial Bank extended their operation and opened branch offices in many places
throughout the country. It was only after two decades since the establishment of RastriaBanijaya
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Bank by the Nepalese government economic liberation a large number of commercial banks
established. In the context of Nepalese the Nepal commercial act 2031 BS define" A commercial
bank is one which exchange money, deposits money, accepts deposit money, grants loans and
performs commercial function." (Commercial act, 2031) According to the American institution
of banking defines commercial bank as, "Commercial Bank is a corporation which accepts
demand deposits subject to check and makes short term loan to business enterprises regardless of
the scope of its other services".

The first new joint venture commercial bank namely Nepal Arab Bank Limited (NABL)
established in 1984 under the Banijya Bank act 1974 with the allocation of 50% of share of
Emirates Bank Limited Dubai, 20% share of Nepalese financial institution and 30% share of
General public. Since then other 16 joint venture Banks including Nepal.

1.2 Profile of the Bank

Nepal Bangladesh Bank (NBL) Ltd. has been in operation. This is a great opportunity for the
Nepalese people to establishment of commercial Banks. Through the speedy expansion of Banks,
Branches helped the access of banking services to the rural and remote areas. The rural sector
could not benefit much because of operational procedure of the commercial Banks.

Capital is the key factor of the economic development of a country, without capital there will not
be possible for the development of a country. The Banking system is the main sources of capital,
now a day's number of joint venture Banks are also increasing by day to day. They also provide
capital for the economic development of country. Joint venture Banks formulate sound capital
and assets structure management policies, which eventually contribute to the economic
development of country. The sound polices help commercial Bank maximize quality and
quantity of capital and assets and theft by achieve own objectives of profit maximization and
social welfare. JVBs such as Nepal Bangladesh Bank Ltd are helping to the business
communities and government in different ways since establishment. It has been playing a
significant role in the economic development of the Nepal. So this study measures the
contribution of NBL in the economic development of Nepal by using the capacity of Bank.
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1.3 Objectives of the Study

The Main objective of this study is to analyze examine and interpret the Capital and Assets
structure management of Nepal Bangladesh bank Ltd. The Specific objectives of this study have
been set out as follows:

 To analyze Bank assets, Bank liabilities and Banks income with respect to its, total
assets, long-term debt, liquidity.
 To analyze the financial performance of NBL in terms different kinds of ratio.

1.4 Rational of the Study

Lending is one of the main functions of commercial bank where the whole banking business is
rested upon NBBL Plays significant role in lending procedures. This study has proposed to
measure the efficiency of bank in its lending procedures. This study adds new idea and findings
about the concerned bank. This study no doubt will have importance to various groups but in
particular is directed to a certain groups of people/organizations. This study will provide
information to those who are planning to invest in Nepal Bangladesh bank Ltd. Important to the
government bodies or the policy makers such as the central bank.

 The study will help general public to know about the Capital Structure position of the in
Nepal Bangladesh bank Ltd.

Thus, this study helps to identify its hidden strength and weakness of bank as well as regarding
financial and credit condition.

1.5 Review of Literature

It deals with Literature Relevant to this study. It comprises reviews of journal, Annual reports,
and books, previous study received. This chapter relevant existing literature is discussed. Mainly
this sector aim to provide a brief introduction to bank development of banking system in Nepal,
Financial statement, Definition of term of Balance Sheet, Assets and Capital Structure of NBBL,
Network changes and Modernization of NBBL and Review of Previous Thesis.

Conceptual Review
Fundamental goals of financial system is to help transform the saving (income minus
consumption) of individuals, firms or government in to investments (The purchase of Assets to
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produce goods or services) by others. Financial institution, or financial intermediateries accepts

saving and in return the suppliers of funds acquire claim against the intermediates. Then the
intermediaries make loans or investment to the demands of funds. As a reward for entrusting
savings to a financial intermediary, the suppliers expect some return in the form of interest or
cash dividend"(Pinches, 1980:32). "Financial institution indicates all the organization established
for the purpose of financial assistance in agriculture, co-operate, industry or lending for other
specific function".

Review of Previous Studies

The previous researcher have found various studies regarding aspect of banking some of them as
are supposed to be relevant of for this study purposed are presented below.

Panta (1996), has conducted research on "A Case study on capital and Assets structure of
NIDC", which is based on the study of composition factors of capital and assets structure of the
corporation, which can be revealed only after the analysis of composition and trend of the
various components of its balance sheet. The capital and assets of the corporation is composed of
share capital reserve and surplus, loan/borrowing and capital liabilities. Among these
components loan/borrowings and share capital is the major portion. The total income of the
corporation was highly influenced by the interest earned and total expenditure by interest
payment. The increasing rate of income is less than the increasing rate of total expenditure.

The expenditure trend of the company is higher than the total income trend, whichwill be very
dangerous in business. So the corporation should pay the attention to the maintains of its
expenditure by reducing bonus and other official expenses .Again he has suggested that the total
income will occur if the business is in increasing trend and the corporation maintains its liquidity
rate and investment when all the components of the total assets and total liabilities are in
increasing trend except current asset, liabilities and investment.

In a study carried out byDevkota(1997) on "A case study of Capital &Assets Structure of
NBOC". The performance of NBOC in relation to theliquidity position is not to the mark. The
current ratio has followed a decreasing tried in succeeding year. Growth rate is also negative.
While grading the loan, the loan should be borne in mind that a large number of borrowing
customer may benefit from the bankers found. Negligence in administrating this asset could be
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main course of a bank failure profitability position shows that NBOC's profit position is not
satisfactory. Total income is

1.6 Research Methodology

Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the various
steps that are generally adopted by researcher in studying his research problem along with the
logic behind them. The various objectives of this chapter are to show the financial relations from
which liquidity, structure of working capital and utilization of working capital of the factory can
be measured.

The study about selected listed manufacturing companies in Nepal has been already streamlined
to some extent in earlier chapter regarding their growth, objective, statement of problem, relevant
literature of concerning manufacture in companies have been reviewed in second chapter. This
chapter, the focus has been made on research design, nature of data, population and sample,
source of data, data collection techniques and tools used for data analysis.

1.7 Limitation of the Study

As every research has its own limitation this study is not biased. This study will be conduct for
the partial fulfillment of the degree of bachelors of business studies. So it possesses some
limitations of its own kind. Due to various limitations the study cannot cover all dimensions of
the object. The limitations of this study are as follows.

 Much confidential information was not disclosed by respective personnel of the

department.
 This study will base on only secondary data.
 Since, this fieldwork is based on secondary data, the fact and information in this study
is directly influenced by those facts. So the accuracy and reliability of this fieldwork
study is limited to those fact and information.