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A case study on

Deposit Analysis of NABIL Bank Ltd.


Submitted By: BASANTA DHAKAL T.U. Reg. No. Exam Roll No:

A Field Work Report

Submitted to: Shanker Dev Campus Faculty of management Tribhuvan University In the partial fulfillment of the requirements of the degree of Bachelor of Business studies.

Putalisadak, Kathmandu


This is certify that the field work assignment report Submitted By: BASANTA DHAKAL T.U.Reg No: Exam Roll No:


Deposit analysis of NABIL Bank Ltd.

Has been prepared by as approved as by this department This fieldwork assignment report is forwarded for examination Head of Department Shanker Dev College Putalisadak, Kathmandu

Date: March, 2010


I have great pleasure in placing this research report on the lap of respected teacher and really enjoying in expressing a deep sense of gratitude to seniors and juniors.

First of all, I wish to express my profound gratitude to respected teacher Pravin Raj Gautam for his invaluable guidance throughout the work. His constant inspiration and support has resulted in the completion of this work. I am equally grateful to the faculty members who enable me to get opportunity to write report as a part of the course.

Thanks are due to authors of books, journals and articles that were consulted in course of the study. I also offer my thanks to the staff of NABIL bank Kamaladi and constant help and co-operation.

The special thanks go to all of my friends for their regular motivation, support and help to make this report possible. Finally, I would be grateful to my family members for their valuable support.

I am responsible for errors in this report I would like to extend warm welcome to suggestions and comments if any. Thank you. Basanta Dhakal

List of Tables Table No. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 Headings Total deposit position of NABIL Current deposit of NABIL Saving deposit of NABIL Fixed deposit of NABIL Interest bearing deposit of NABIL Non-interest bearing deposit of NABIL Interest expenses on deposit Cost of deposit of NABIL Ratio of interest bearing deposit to total deposit Ratio of interest free deposit to total deposit Page No. 23 24 25 26 27 29 30 31 33 34

List of figures Figure No. 1 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Headings of figures Equity ownership structure Total deposit position of NABIL Current deposit position of NABIL Saving deposit position of NABIL Fixed deposit position of NABIL Interest bearing deposit of NABIL Noninterest bearing deposit of NABIL Interest expenses on deposit Ratio of interest bearing deposit to total deposit Ratio of interest free deposit to total deposit Page No. 6 23 24 25 27 28 29 30 33 34

Acronyms used

B.B.S= Bachelor of Business Studies

C.A. = Current Assets

C.L. = Current Liabilities

F.Y= Fiscal Year

M.S. = Marketable Securities

LTD = Limited.

NIDC = Nepal Industrial Development Corporation

NRB = Nepal Rastra Bank

Table of Contents

Recommendation Acknowledgement List of Tables List of Figures List of Acronyms Used Topics Chapter 1 1-22

1.1 Background of study 1.1.1 Origin of Bank 1.1.2 Meaning of Bank 1.1.3 History of Bank in Nepal 1.1.4 Introduction of NABIL Bank Limited 1.1.5 Branches of NABIL Bank Ltd 1.2 Introduction to Deposit 1.2.1 Types of Deposit 1.3 Account Opening Procedure 1.3.1 Procedure for Opening Saving And Current Account 1.3.2 Procedure for Opening Fixed Deposit Account 1.4 Introduction of Problems 1 1 3 4 6 8 10 14 15 17 18

1.5 Objective of the study 1.6 Importance of the study 1.7 Research Methodology 1.7.1 Research Design 1.7.2 Nature of Sources of Data 1.7.3 Data Processing Techniques 1.8 Limitation of the Study 1.9 Organization of Report Chapter 2 Data Presentation and Analysis

19 19 20 20 20 21 22 22 23-37

Chapter 3 Summary, Conclusion and Recommendation


3.1 Summary 3.2 Conclusion 3.3 Recommendation Bibliography

39 39 40

CHAPTER 1 Introduction
1.1 Background of the study 1.1.1 Origin of Bank
It is hard to collect the correct information of the bank. The word Bank has derived from the Italian word Banco which means accumulation of money of stock. It is believed that its origin is from the French word Benque which means beach for keeping, lending and exchanging of money or coin in the market place by money lenders or money changers. It is believed that the ancestors of modern banking system were merchants, goldsmiths and moneylenders. Money banking sowed its seed in the medieval Italy deposit strong Christian prohibitions against charging interest. The bank had started in Italy in 12th century as a public bank. The Bank of Venice that was established in 1158 A.D. was the first bank in the history of banking. Following its establishment various banks such as Bank of Barcelona, which was established in 1401 A.D was the second bank of the world. Similarly, Bank of Geneva (1407), Bank of Amsterdam (1609), Bank of Hindustan (1770) were established. The first central bank was the Bank of England which was established in 1844 AD.

1.1.2 Meaning of Bank

Bank is a financial institution, which is engaged in monitory transaction. Bank has always been the most importance and largest financial intermediates. Banks collect the scattered money from public providing those interests and services. This collection becomes the capital for the bank to invest. According to Banking Regulation Act 1949 of India Banking means the accepting of money for the view of lending or investment of deposit from the public repayable on demand or otherwise and withdraw able by cheque, draft or otherwise. World Bank says Banks or a financial institution that accepts funds in the forms of deposit repayable on demand or at short notice. Some important meanings of bank given by different scholars are as follows:

According to Walter leaf:"A bank is that institution or individual who is always ready to service money on deposit to be returned against the cheque of their depositor. According to Harace White:Bank is a manufactures of credit and machine for facilitating exchanges.

Therefore, the bank is a financial institution, which accepts deposits from the public and provides loans to different sectors at different interest rates. Bank plays the vital role in the economical condition. Banking has come to occupy a pivotal position in a nations economy. According to online encyclopedia (Wikipedia): Banking is a business which not only deals with borrowings, lending and remittance of funds, but also an important instrument for fostering economic growth. The essentials of banking are: (1) There should be acceptance of deposited. (2) Deposits should be from the public. (3) Deposits should be repayable on demand or expiry of a term or after a specified period. (4) The purpose of deposits should be lending or investment. Bank is an institution that deals with money and credit. It buys money from depositors and sells to the borrowers. It is body of persons whether incorporated or not who carry on the business of banking. A bank may define as a corporation or person which collects deposits from the public, repayable on demand and which supplies and facilitates all kinds of exchanges.

1.1.3 History of Bank in Nepal In the context of Nepal, like as in the other countries the goldsmith and landlords where the ancient banker. The Nepalese people were highly

exploited by Sahu Mahajan by charging higher interest rate, compound interest rate and even by manipulating the principal amount. The introducing of Tejarath Adda during the tenure of the Prime Minister Ranoddip Sing (1993B.S.) was the first step towards the institutional development of banking in Nepal. The first commercial bank Nepal Bank Limited was established on 30 Kartik

1994 B.S. and started to perform proper banking activities. With the realization of central bank to develop monetary policy as well as to have proper control over commercial banks and banking sectors. Nepal Rastra Bank was

established on 14th Baishak 2014B.S. under Nepal Rastra Bank Act 2012 B.S. Likewise, Rastriya Banijya Bank under the full ownership of government was established on Magh 2022 as per Rastriya Banijya Bank Act 2012 B.S.. The growths of the banks accelerated only after the adoption of liberal economic policy by Nepalese Government .This attracted many new investors and encourage opening many new modern banks with joint venture of foreign banks. Nepal Arab Bank was established on 29th Ashad 2041 B.S. as the first modern bank with the joint venture of Emirates Bank International Limited
(Dubai). Subsequently, Nepal Indo Suez Bank with joint venture of French

Benque Indosuez, Nepal Grinlands Bank with joint venture of British firm called Grindlays Bank England on 16th Marg 2043B.S., Himalayan Bank Ltd on 5th Marg 2049B.S. with joint venture of Habib Bank of Pakistan, Nepal SBI Bank Ltd. in 28th Ashadh 2050 B.S.with joint venture of State Bank of India, Nepal Bangladesh Bank Ltd. on 28th Jestha, 2050B.S. with joint venture of International Finance Investment and Commercial Bank, Everest Bank Ltd. on 1 Kartik 2051B.S. with joint venture of Punjab National Bank. Similarly, Bank

of Kathmandu on 28th Falgun 2051B.S. with joint venture of the Siam

Commercial Bank, Thailand. Likewise, DCBL established on 2001 February, NMB Bank on 2008, KIST Bank 2009.

1.1.4 Introduction of NABIL Bank Limited

NABIL Bank Limited commenced its operation on 12th July 1984 as the first joint venture bank in Nepal, Dubai Bank Limited. Dubai (Later acquired by Emirates Bank International Limited, Dubai) was the first joint venture partner of NABIL. Currently NB (international) limited Ireland is the foreign partner. NABIL Bank limited had the official name Nepal Arab Bank Limited till 3lst December 2001. NABIL is the pioneer in introducing maims innovative products and marketing concept in banking sector of Nepal with 37 branches and 2 counters in all major cities. It is the only bank having its presence at Tribhuvan International Airport of the country. Also, the number of outlets in the country is the highest among the joint venture and private banks operating in Nepal.

Success of NABIL is a milestone in the banking history of Nepal as it paved the way for the establishment of many commercial banks and financial institutions. NABIL provides a full range of commercial banking services through its outlets spread across the nation and reputed correspondent banks across the globe.

Moreover, NABIL has a good name in the market for its highly personalized services to the customers. At the time of commencement, it had Rs 1000 million as Authorized Capital. Now, the Authorized capital of the bank is Rs.

3044 million while the issued and paid up capital is Rs. 965 million.

The share holding of NABIL Bank Ltd. is as following:

Subscription N.B (international), ltd., Ireland General Public NIDC Rastriya Beema Sansthan Nepal Stock Exchange ltd. Promoters, others Total

Percent holding 50% 30% 6.15% 9.67% 0.33% 3.85% 100%

Figure 1

Ownership structure of NABIL

0.615 3 0.967 0.418 0.385 0.033 NB(International) General public NIDC Rastriys Beema Sansthan Nepal Stock Exchange Promoters, Others 5

1.1.5 Branches of NABIL Bank Ltd. S.N 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Branch Head Office Kantipath Branch Tripureshwore Branch New Road Branch Jorpati Branch Birgunj Branch Alau Branch Biratnagar Branch Lalitpur Branch Itahari Branch Butwal Branch Pokhara Branch Address Nabil House, Kamaladi, Kathmandu Kantipath, Kathmandu United World Trade Centre, Kathmandu New road, Kathmandu Jorpati, Kathmandu Adarsh Nagar, Birgunj Alau, Parsa Goswara Road, Biratnagar Kupondole, Lalitpur Main Road, Itahari Main Road, Butwal Chipledhunga, Pokhara

13. 14. 15. 16.

Bhairahawa Branch Nepalgunj Branch Lake Side Branch Exchange Counter

Narayanpath, Bhairahawa Dhamboji, Nepalgunj Lake Side, Pokhara Tribhuvan Kathmandu International Airport,

17. 18. 19. 20.

Dharan Branch Bhalwadi Branch Maharajganj Branch Birtamod Branch

Mahendra Chok, Dharan Bhalwadi, Rupendehi Maharajganj, Kathmandu Hicola Road, Anarmani - 3 Birtamod, Jhapa


Damak Branch






Damak, Jhapa 22. 23. 24. 25. 26. Hetauda Branch Narayangarh Branch Baglung Branch Tulsipur Branch Ghorahi Branch Bank Road, Hetauda- 4, Makwanpur Sahid Chok, Narayangarh, Chitwan Baglung- 3, Mahendrapath, Baglung Shitalpur Road, Tulsipur- 6,Tulsipur Ganesh Hall Road, Tribhuvannagar- 11, Ghorai, Dang 27. 28. 29. 30. 31. 32. 33. 34. Dhangadhi Branch Mahendranagar Branch New Baneshwor Branch Halchowk Branch Thamel Branch Kaushaltar Branch Chabhil Branch Maitidevi Branch Main Road, Dhangadhi Mahendranagar- 4, Kanchanpur New Baneshwor, Kathmandu Halchowk Swoyambhu, Kathmandu Thamel, Kathmandu Kaushaltar, Bhaktapur Chabhil, Kathmandu Maitidevi, Kathmandu

35. 36. 37.

Satdobato Branch Balaju Branch Kuleshwor Branch

Satdobato, Lalitpur Balaju, Kathmandu Kalimati, Kathmandu

The Board of Directors of NABIL Bank Ltd. Consists of: 1. Satyandra Pyara Shrestha, Chairman 2. Mr. Supriya Gupta, Director 3. Mr. Shambhu Prasad Poudyal, Director 4. Mr. Dayaram Gopal Agrawal, Director 5. Mr. Milan Bikram Shah, Director 6. Mr. Achyut Prasad Bajagain, Professional Director 7. Mr. Tabith Awal, Director 8. Mr. Mohiuddin Ahmed, Director

1.2. Introduction to Deposit Deposit collection is one of the main features of commercial bank. A commercial bank receives deposit in different accounts namely current, fixed and saving. These are the direct deposits. When a bank receives cash it grants a right to the depositors to withdraw it whenever they like Nepal Banijya Bank Act has regulated all the deposit 2031. The act specifies Deposit means amount deposited in current, fixed and saving deposit account of bank or financial institutions. Among many functions of a commercial bank the main function is deposit function, which all the commercial banks perform, in simple terms; deposit is a function of collecting surplus from savers. Bank accepts deposit from those that can save but cant utilize profitably. People know that by depositing in the bank they could avail with many more facilities.

By saving in the bank people have the opportunity of earning interest, useful contingencies; avoid risk such as theft lost accidents, the deposit of commercial banks is increasing because people know its importance. So banks accept money on current saving and fixed deposit accounts. Deposits are the main source of capital for the lending activities of the banks. Banks utilize efficiencies to attract more deposits to increase credit activities. Deposits are withdraw able according to the terms of contract with the depositors to attract the people. The bank maintains different types of deposit accounts.

Deposit is the major source of fund of commercial bank, which is generated by the hands of customers, government, corporate bodies, public enterprises, individuals and others and a surplus. Main features Purpose: saving, fixed or call (short term) With maturity or without maturity Interest bearing and non interest bearing Calculation of interest on monthly minimum balance, or average balance, or average balance Payment of interest quarterly or semi annually Special arrangement with any other deposit account Operative or non-operative If operative: Limitation on frequency and amount of withdrawal: yes or no Time liabilities or demand liabilities.

1.2.1 types of deposits

Deposits of commercial banks can he categorized into following two categories A. Interest bearing deposit B. Non- interest bearing deposit

A. Interest Bearing Deposit a. Saving Deposit The pose of saving deposit is to encourage the habit of saving among the common people and institutions. Saving deposits attract interest that is normal less than that of long-term deposit but more than that of short-term deposit. There is restriction in this account to withdraw any amount. The customer is restricted to withdraw his deposit to the maximum amount in each transaction by the bank regulation. In this way as the withdrawal is limited in such account, in each transaction, the bank is provided with more funds for the credit activities, interest is paid in this deposit account.

According to Commercial Bank Act, the saving account means an account of amounts deposited in a bank for savings purposes.

Saving Account are generally opened for the savings of customers (individuals, nonprofit organization, charitable trusts, clubs, associations and cooperative) who want to save for meeting future needs, Savings accounts is suitable for the customers who do not want to withdraw frequently or who do not want to keep certain amount for fixed long period The main features of such accounts are as follows: I. Interest bearing


Restriction or limitation in respect of the amount of withdrawal and frequency withdrawal.


Purpose and period of such deposit is for savings purpose for the individuals who do not want frequent withdrawals and who do not want to keep money for fixed long period.

b. Fixed Deposit or Term Deposit Another source of deposit is the fixed deposit account. Money in this account is deposited for a fixed period of time, which cannot be withdrawn before the maturity of time. The rate of interest on this account is higher than other accounts. It is also known as time deposit. Generally this is for three months to five years. According to Commercial Bank Act, fixed account means the account of amount deposit in a bank for a certain period of time.

The main features of such accounts are as follows: I. Specific period

Normally the bank is not bound to repay the amount until the maturity of the fixed deposit. However, on request of the depositor, a banker may liquidate the fixed deposit and repay the amount; interest will be paid at the discretion of the banker. I. Non operative

Fixed deposit account is non - operative i.e. depositing into or withdrawal from fixed deposit account as in case of savings and current deposit account is not allowed.

c. Call Deposit The banks may accept deposit for short period of time to meet the short fall and such deposits secured from money market and having element of overnight stay is called call deposits. The rates of interest of such funds are not fixed hut are dependent on demand and supply of funds in the money market. Such all deposits become payable on demand and hence such deposits become payable demand and hence such deposits are considered demand liabilities of the bank. I. II. III. IV. Non-operative Short term: overnight stay Interest rate not fixed Payable at demand

d. Other Deposit It is a scheme of special type of deposit where some specified amount of money for specific period is accepted as deposit against a certificate given

by the banker to a customer. A bank issues such certificates without mentioning name address and any other particulars of the customer. The bank receives the principal amount and will issue the will issue the certificate for such amount which will include the interest payable at maturity on the amount deposited. On maturity date any person presenting the certificate at the bank can encase the same. Such types of deposits are considered as time liabilities. The major features of such deposit are as follow s: I. II. III. IV. Negotiable with prepaid interest having fixed maturity. No particulars of the depositor contained in the certificate. Opening of account is not required. It could be discontented before maturity.

A. Non- interest Bearing Deposit a. Current Deposit Account. Current deposit is also known as demand deposit as the deposit is withdraw able on demand. Current deposits are withdraw able on the demand of the customers. Banks have to make themselves ready to pay the depositors at hand to pay according to the wish of the customer. If the bank cannot pay the customer according to the demand, the reputation of the bank may fall of the banking activities may tail. The business people, business institutions who have to withdraw at any time, normally open it. Since banks have to maintain high liquidity to meet customers demand, no interest is paid on such deposit. According to Commercial Bank Act, the current account means an account of amounts deposited in bank that may be drawn at any time on demand. I. No yield As the cost of providing the facilities of current account becomes considerable to the banks do not paid any interest on the balance of current account. II. Highly liquid and no limitation

There is no limitation on withdrawal and deposit of any amount within banking hours. Privileges Overdraft facilities are provided to current account holder only. The banks normally sanction the loans and advances through current accounts since they are not given in cash. 1.3 Account Opening Procedure

a) Application on the prescribed form

The customer who comes to bank with a desire to open an account in the bank should complete the application form designed in prescribed format. NABIL Bank also has its own standard format. The applicant is required to fill up the name, address, occupation, nationality etc. about the customer. The form is designed with a declaration that the applicant should accept that he should comply with the banks rule on force from time to time for the operation of the account.

b) Reference Introduction
The selection of the customer is regarded to be done by the customer very carefully. After being satisfied about the identity of the account opening individual or film, the banker should take further steps. It becomes essential to present bank from opening of the accounts in the name of the fictitious person incapable of making a valid contract. In such a case banker does not get any protection under Negotiable Instrument Act and is considered guilty of negligence.

c) Specimen Signature The bank has its own specimen signature card that is provided to the customer for putting one or more specimen signatures of him. These cards are indexed and placed in a visa desk in numerical order. These signature specimens are used by the bank bar issue and payment of cheques and for execution of instructions given by customers such as stop payment of cheques, bills purchase etc. These specimen signature cards require proper custody as to present them from filing into hands of unauthorized persons and also to exclude the chance of replacements of it by fraudulent card.

d) Account Opening Mandate The customer may authorize the third person to open account for which clear instruction for operation of the account shall he noted on both account opening form and specimen signature cards. The name and the signature of the mandated must provide the copy of his/her citizenship certificate and must also be presented in the bank. 1.3.1 Procedure for Opening Saving and Current Account. 1. The account opening form and specimen signature cards are required to be filled up and submitted. The details in the form shall he checked by the account opening official, signature in the specimen signature card shall he verified. The proposed account opener must be present at the time of opening account in case of individual account and proprietorship account and should put signature in specimen Signature in front of the account opening official. 2. After being satisfied with the document and account opening from it is placed before the manager for approval. The document required for current accounts are as follows. They should provide a copy of: i. For Proprietor business a. Registration certificate b. Income tax certificate c. Citizenship certificate of the proprietor. ii. For partnership business a. Registration certificate b. Income tax certificate c. Partnership deed

d. Citizenship certificate of the partners iii. Limited companies a. Registration certificate b. Income tax certificate c. Board resolution for operation of account. d. Memorandum and articles e. Citizenship certificates of the directors iv. NGOs and other associations a. Registration certification b. Board resolution c. Citizenship certification (Those customers who fall under VAT payer should also provided a copy of VAT Registration certificate) Note: Copy of citizenship certificate in case of individual saving (for opening saving account in the name of associations, cooperatives, non-profit organizations like NGOs, charitable trust all the documents are required are required as in point (iv) above in case of current account is required). 3. Then the account opening official should allot an account no from basic number register in both the form and specimen signature card. 4. Account is opened in the computer also. 5. The particulars of account opening form and the account number is entered in the respective account opened and register. 6. Against the request for cheques book as mentioned in account number is entered in the cheques leaves are printed, blinded at the end of business hour and provided to the customer along with letter of banks next day. The cheques book numbers shall be recorded in the cheque book issue register

and handed over to the part against his/her acknowledgement. 7. The signature is scanned from the specimen signature card and placed for final approval to the manager. 8. After the final approval the account opening form is filed in numerical order in the respective account type file.

1.3.2 Procedure for Opening Fixed Deposit Account 1. Separate account opening form for fixed deposit is designed. The customer wishing to open a fixed deposit account shall fill up such form and put the signature in the specimen card, which is same as in the case of saving and current account opening. 2. The form contains the rate of interest, period, amount and the nominee account for crediting the interest and two witnesses along with nominee form in the back. 3. The account opening official after being satisfied with the form allots a number from the basic number register and puts in the form. 4. The accounts opened in the computer and details are entered. 5. The details such as name, date of opening, rate of interest, maturity date and nominee a/c for interest should be recorded in fixed deposit register. 6. In case of fixed deposit being opened through the cheques, the official looking after the fixed account does the transaction. In case of fixed deposit account being opened through cash the customer is sent to the taller along with the credit voucher. The taller will affix cash received stamp on the voucher against the receipt of the cash and will sent it back to the account opening official. 7. Then the account opening official shall issue the fixed deposit receipt.

8. The account opening form, specimen signature card, fixed deposit receipt and the voucher are placed before the manager for the final approval and signature. 9. Upon completion of full formalities as above the fixed deposit receipt is handed over to the customer against his/her acknowledgement on the counterfoil of the fixed deposit receipt. 10. The account opening form is filed in the numerical order in a separate file. The specimen signature card is placed is placed in the visa desk in numerical order once its gats scanned and approved by the manager.

1.4. Introduction of Problem As we know that the main objective of any business organization e.g. Bank is profit maximization. Deposit mobilization is the key factor to attain this objective: therefore, if the bank fails to employ its funds suitably it is not possible to maximize profit. A bank has to make decisions with a framework of statutory requirements of credit regulation by center bank, as well as the national objectives that are determined in the matter of the provision of credit from time to time.

Through the banking system is making much progress, the progress has been set up with the problems and hindrances. Another pressing problem is under developed country, lack of banking habit in people. Many people are under the poverty line. Many people are not literate so people are not conscious about the banking system and do not know the importance of bank. Bank concentrates only in the city so that the villages have to take a loan from money Lander at a high rate of interest. Most of the people keep their saving idle or give it to

others to use it in greed of more interest.

1.5. Objective of the study The objective of this fieldwork is to analyses deposits collected in NABIL. The study intends to present a brief and clear picture of deposit and its utilization. The objective of the study includes. - To find out deposit trend of NABIL bank. - To find out the deposit mix. - To analyses the cost of deposit - To analyses whether the deposits are being properly utilized or not

1.6. Importance of the study Deposit collection is the major function of all commercial banks, which help to carry out almost all transaction of the bank. Mostly among the various deposit features provided by commercial banks, fixed and saving deposit are considered to be more important In the case of term deposit although the banker pay interest (longer the period higher the interest) the funds are committed for longer periods, which can safely be lent for long-term project. But in the case of current deposits although no interest is payable, these deposits are repayable at demand and therefore banker must be cautious in lending such deposits. Fixed and saving deposits are considered to be more suitable because this deposit can be invested in short term loans with higher rate of return (interest) and hence it helps to earn high profits. So the deposits in the commercial banks have a good contribution to the country economy. If deposits are well collected and sell mobilized the person as well as country can benefit from it. This study however intends to give

general information regarding banking, deposits and prospects of the deposit and its mobilization in the country, which may give the general idea about banking, and deposits 1.7 Research methodology 1.7.1 Research Design The research methodology is the process to the solution of the problems through planned and systematic dealing with collection, analysis and interpretation of facts and figures. The research entirely considers about the deposit analysis of NABIL bank. The main purpose of this study is to show deposit trend of NABIL bank and its financial position, collection and uses of funds, its position in context of Nepal as well as to recommended suggestions for its improvement. Those research methodologies have been used which proves helpful to analysis deposit of NABIL. For the purpose of achieving the objective, the following methodology is used. The data has been collected by acquiring various kinds of reports, bulletins and journals from the organization and internet. The study report is based mostly on secondary information of NABIL bank. In addition to this, reference has been made in library consult, class lectures, related books of banking. 1.7.2 Nature of sources of data For the preparation of this report different kinds of books are followed. In this report, all the data collected is secondary in nature. Almost all the data has been collected from published annul reports, brochures etc. Mostly all the data are collected from the concerned bank. The data related to the study are

collected from the following sources: Internal source Annual reports of NABIL bank ltd. Interim performance report External source Book publications Journals Articles from newspapers Annual reports of NRB 1.7.3 Data processing techniques The data collected from the above stated sources has been classified tabulated and interpreted for easier study. Classification and Tabulation of data The data collected are classified, tabulated and arranged in manner to make it easily understandable with the use of tables in chronological order. After classification the data is tabulated. Diagrammatic Representation of data Various diagrams are used to present the data more clearly. The diagrams used are follows: Bar Diagram

Pie Chart Line Graph Bar Graph

1.8. Limitation of the study The study does not present detailed analysis of deposit in NABIL bank due to lack of time relevant data and resources. This study is limited to the information that was available from the bank and other sources. The study includes only five years data from FY 2004/2005 to FY 2008/2009. The study has time and economy bound.

1.9 Organization of Report: The report consists of three chapters. The first chapter is the introduction chapter that contains the background of the study, information of Nabil Bank Ltd. introduction to deposit, statement of problems, significance of the study, objectives of the study, limitations of the study, methodology of research and finally organization of the report. The second chapter contains data presentation and analysis of the Nabil Bank Ltd. and third chapter is regarding the summary, conclusion and recommendation regarding the study.

Data Presentation and Analysis Table 2.1

Total Deposit Position of NABIL (Rs. In millions) Year Fixed Current Saving Others Call & short 2004/05 2078 2005/06 3449 2006/07 5435 2007/08 8464 2008/09 8310 2799 2910 3395 5284 5480 7026 8770 10187 12159 14620 341 365 362 443 498 2341 3851 3961 5563 8438 14586 19347 23342 31915 37348 Total Growth % 3.31 32.63 20.64 36.72 17.02

Source: NABIL Bank Ltd. Annual financial statement

Figure 2.1
16000 14000 12000 10000 8000 6000 4000 2000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Fixed Deposit Current Deposit Saving Deposit Others Call & Short

This table shows the total deposit mix of NABIL. Here total deposit on 2004/05 was 15586 million which is 3.31% greater than of previous year. Total deposit increases by 32.63% in 2005/06. The trend of deposit is

increases. In the year 2008/09 the deposit reached to 37348 million. From above analysis we have found the increasing trend total deposit. So, such trend should be managed by implementing proper policies.

Table 2.2 Current Deposit Position of NABIL (Rs. In millions) Year 2004/05 2005/06 2006/07 2007/08 2008/09 Current Deposit 2799 2910 3395 5284 5480 Growth % 4.12 3.96 16.67 55.64 3.70

Source: NABIL Bank Ltd., Annual financial statement Figure 2.2

6000 5000 4000 3000 2000 1000 0 2004/05 2005/06 2006/07 2799 2910 3395





Above table shows that the current deposit position of NABIL Bank Ltd. In the year 2004/05 was Rs. 2799 million, which was increased by 4.12% than the previous year. There had been great increased in current deposit during the

year 2007/08 by 55.64%. Now in the recent year 2008/09, the current deposit is increased by only 3.7% and has reached to Rs. 5480 million.

From the above table it is seen that current deposit has an increasing trend but the increment is not consistent. Sometimes it increases largely while it increases with a low rate. Table 2.3 Saving Deposit position of NABIL (Rs. In million) Year 2004/05 2005/06 2006/07 2007/08 2008/09 Saving deposit 7026 8770 10187 12159 14620 Growth % 17.21 24.82 16.15 19.35 20.24

Source: NABIL Bank Ltd. Annual financial statement Figure 2.3

Saving Deposit
20000 15000 10000 Saving Deposit 5000 0 2004/05 2005/06 2006/07 2007/08 2008/09

Here is the table of saving deposit of NABIL. In the year 2004/05 was Rs.7026 million, which was increased by 17.21% than in year 2003/04. In 2005/06 it

was increased by 24.82% and in the year 2006/07 it was increased by 16.15%. In the year 2007/08 it again increases by 19.35% and reaches to Rs. 12159 million, it continues to increases and reaches to Rs. 14620 million in 2008/09, which is increase by 20.24%

From the above figure, saving deposit trend is seemed to be increasing. Most of the people deposit their fund in saving deposit account. So NABIL should attract people towards saving deposit and manage its incremental trend. Table 2.4 Fixed Deposit Position of NABIL (Rs. In million) Year 2004/05 2005/06 2006/07 2007/08 2008/09 Fixed deposit 2078 3449 5435 8464 8310 Growth % -10.04 65.97 57.58 55.73 -1.81

Source: NABIL Bank Ltd. Annual financial statement

Figure 2.4

Fixed deposit
9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Fixed deposit

The table shows fixed deposit position of NABIL Bank Ltd. In year 2004/05, it was decreased by -10.04%. Similarly in the year 2005/06 it increased rapidly by 65.97%. The fixed deposit position of NABIL bank increases till 2007/08. But in 2008/09 it decreased by -1.81%. Above figure shows that the growths of fixed deposit it is rather fluctuating. Since the fund of fixed deposit can be utilized for long term investment, it should be made consistent. So such increase and drastic decrease affects hthe profitability of the company. Table 2.5 Interest Bearing Deposit Trend of NABIL (Rs. In million) Year 2004/05 2005/06 2006/07 2007/08 2008/09 Interest bearing deposit 11446 19347 23342 26187 31915 Growth 3.06 69.02 20.64 12.18 21.87

Source: NABIL Bank Ltd. Annual financial statements Figure 2.5

Interest bearing deposit

35000 30000 25000 20000 15000 10000 5000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Interest bearing deposit

Here table shows interest bearing deposit of NABIL. In the year 2004/05 NABIL has Rs. 11446 million. In year 2005/06 it was increased by 69.02%. in 2006/07 it was further increased and reached to Rs.23342 mllion. Similarly in 2007/08 it was increased by 12.18% and in 2008/09 it was increased by 21.87% and reached to 31915 million. From the above bar diagram we can say that the interest bearing deposit sometimes increases hugely and while sometimes increases low rate.

Table 2.6

Non Interest Bearing Deposit Trend of NABIL ( Rs. In million) Year Non deposit 2004/05 2005/06 2006/07 2007/08 2008/09 3140 3276 3758 5727 5978 4.24 4.33 14.71 52.39 4.38 Interest bearing Growth %

Source: NABIL Bank Ltd., Annual financial statement Figure 2.6

Non interest bearing deposit

7000 6000 5000 4000 3000 2000 1000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Non interest bearing deposit

The above figure shows that the non interesting bearing deposit of NABIL. In the year 2004/05 was Rs. 3140 million corresponding to 4.24 % increased in comparison to in the year 2003/04. Similarly during the year 2005/06 it was increased by 4.33%, in 2006/07 was 14.71%, in 2007/08 was 51.38%. Now in the recent year 2008/09, the non interest bearing deposit has increased by 4.38% and reached to 5978 million.

The non interest bearing deposit is in increasing trend but in recent year the increasing rate is decreasing. Table 2.7 Interest Expenses on Deposit (Rs. In million) Year 2004/05 2005/06 2006/07 2007/08 2008/09 Interest on deposit Total deposit Rs. 243 357 555 758 1153 14586 19347 23342 31915 37348 Ratio % 1.665 1.845 2.377 2.375 3.087

Source: NABIL Bank Ltd., Annual financial statement Figure 2.7

40000 35000 30000 25000 20000 15000 10000 5000 0 2004/05 2005/06 2006/07 2007/08 243 357 555 758 14586 19347 23342 31915


Interest on deposit Total deposit

1153 2008/09

Here, the interest expenses on deposit are presented. In year 2004/05 the interest expenses is Rs. 243 million which was 1.67% of total deposit collected in the year. In the year 2005/06 the total deposit collection is Rs. 19347 while interest on deposit was Rs. 357 million. In the year 2006/07 total deposit and interest expenses are Rs. 23342 and 555 million. In the year 2007/08 and

2008/09 the total deposit are 31915 and 37348 respectively while interest are 758 and 1153 million. From the above figure we can say that when deposit is increase interest expenses also increase. Table 2.8 Cost of Deposit of NABIL (Rs. In million) Year Total deposit Total deposit Interest expenses bearing deposit 2004/05 2005/06 2006/07 2007/08 2008/09 14586 19347 23342 31915 37348 243 357 555 758 1153 11446 19347 23342 26187 31915 Average Source: NABIL Bank Ltd., Annual financial statement 2.12 1.84 2.37 2.89 3.61 2.57 Cost deposit % of

Formula: Total deposit expenses Cost of Derposit= Interest bearing deposit

Here, cost of NABIL in the year 2004/05 was 2.12% of total interest bearing deposit. During the year 2005/06 the cost of deposit was Rs. 357 million, which is 1.84% of total interest bearing deposit. In year 2006/07 the cost of

deposit is Rs. 555 million which was 2.37% of interest bearing deposit. In 2007/08 and in 2008/09 the deposit cost is Rs. 758 and 1153 million respectively, which is 2.89% and 3.61% of total interest bearing deposit. The above analysis shows the cost of deposit if 100% of the deposit are utilized, the cost of deposit is reduced, the company can more profit. So by implementing good plans, company should reduce the cost of deposit.

Table 2.9 Ratio of Interest Bearing Deposit to Total Deposit (Rs. In millions) Year Interest deposit 2004/05 2005/06 2006/07 2007/08 2008/09 11446 16071 19584 26187 31915 14586 19347 23342 31915 37348 Average Source: NABIL Bank Ltd., Annual financial statement 78.47 83.06 83.90 82.05 85.45 82.58 bearing Total deposit Ratio %

Figure 2.8

40000 35000 30000 25000 20000 15000 10000 5000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Interest bearing deposit Total deposit

Formula: Interest bearing deposit Ratio of interest bearing deposit to total deposit= Total deposit In the above table ratio of interest bearing deposit to total deposits of NABIL, in year 2004/05 was 78.47% of total deposits. Similarly in 2005/06 the ratio is increases and reached to 83.06% and in 2006/07 was 83.90%. In 2007/08 the ratio decreases to 82.05% and finally in recent year 2008/09 it increases and reached to 85.45%. The above table shows that the interest bearing deposit of NABIL, contributes by an average of 82.58% of total deposit.

Table 2.10 Ratio of Interest Free Deposit to Total Deposit (Rs. In millions) Year Interest deposit 2004/05 2005/06 2006/07 2007/08 2008/09 3140 3276 3758 5727 5978 14586 19347 23342 31915 37348 Average 21.52 16.93 16.09 17.94 16 17.69 free Total deposit Ratio %

Figure 2.9

40000 35000 30000 25000 20000 15000 10000 5000 0 2004/05 2005/06 2006/07 2007/08 2008/09 Interest free deposit Total deposit

In the above table, ratio of interest free deposit to total deposits of NABIL, in the year 2004/05 the ratio is 21.52%. But in the year 2005/06 it was 16.93%. Similarly in the year 2006/07 interest free deposit shared 16.09% of total

deposit. In year 2007/08 interest free deposit shared 17.9%. Now in the recent year 2008/09, it shared 16% of total deposit. The above table show that the interest free deposit of NABIL, contributes by an average of 17.69% of total deposit. Therefore from the above calculation we can say that the total deposit collection of NABIL is in increasing trend. It is gradually increasing year by year.

SWOT Analysis None of the organizations is perfect in each and every way. Here are some weaknesses and threats, which affect the organizations performance. It may have lots of strength to be proud of but besides with some weakness and threats as well. And the organization does not remain same forever there will be lots of opportunities in order to expand the transactions. So NABIL has also its strength to be proud, some weakness to be recovered and threats to be faced patiently.

Strength NABIL has 250 correspondent relationships besides numerous drawing arrangements with 75 banks in 40 countries of the world. Nabil has also drawing arrangement with the exchange companies and bank besides many others like Habib Qatar International Exchange Limited, Doha, Qatar. To add its strength NABIL has vast network system in the nation thus helping customer to transact through bank from place to place. It has 37 branches nationwide which is the highest number of any joint venture

bank in Nepal. It is the only bank to operate inside international airport of arrival and departure lounges. NABIL is well known for providing highly personalized services to its customers. It provides different services like ATM, credit cards, Tele banking service, safe deposit locker etc. It has also introduced a number of attractive deposit skills. Human resources in NABIL are well trained and they are dedicated to the bank too. NABIL is providing high remuneration and other benefits as well to its staff. NABIL is well supplied with latest technology. Computer does most of banking services. Thus the services of the bank are prompt and accurate. The bank is capable to maintain the standard.

Weaknesses The Increase in the number of branches increases the cost operation. Administration expenses for personnel etc. are increased. The political instability in the country can he considered another weakness of the bank. Too much dependency in computers is not considered to be reliable. NABIL pays high interest rates on deposits. For this reason the bank also charges high interest rates on credit, which has bad impact in investment situation in nation. Staff is unwilling to give even required information. It seems that they dont want to co-operate with once who are not really its customers.


A lot of people deposit their fund in this bank due to its skill in attracting people by adopting attractive policies like high interest rate, prompt services, credit card service, ATM etc. Staff can perform their work more efficiently with the help of computers. The environment of the bank is sound which helps to enhance its better profitability. People in various sectors get employed through this bank, which has highest number of branches among joint venture banks in the nation. Citizens of underdeveloped country like Nepal get the favorable chance to show their inner skills and talent. The policies of the GoN and NRB rules and regulation always give confidence to the banking sector to uplift the economy of the nation.

Threats Banks must land and invest its fund to parties having good reputation. Otherwise the bank will have to regret later on. Excess government pressure may create irregular banking transaction, which leads to bad reputation of the bank. The economic condition of country is deteriorating. There is increasing number of competitions. Now there are 26 commercial banks. The bank should be discouraged to open account for the individuals or firms having bad reputation. It may be a threat, which can ruin the bank.

CHAPTER 3 Summary, Conclusion and Recommendation

3.1. Summary A bank is an institution, which deals in money. A bank is like a reserver. It draws surplus money from the people who save and lend them to the people who want to use it for productive purpose. In this process the bank earns commission. The rate of interest paid to the depositors is generally lower than the rate charged to the borrowers. The difference between these two rates of interest is the profit of the bank. Deposit collection is the main function of commercial bank.

The present study has been undertaken to examine and evaluate the financial performance of NABIL. The financial statements of five years that is from 2004/05 to 2008/09 has been examined for the purpose of the study. The study has resorted mainly to secondary data that has been first processed and analyzed comparatively. Individual interview with the management personnel has been taken whenever necessary. This study is exploratory as well as analytical sometimes.

NABIL was established in 12th July 1984, which was the first joint venture bank in Nepal. Among many joint venture banks, it is a leading one, which is always running in profit due to its proper management and good policies. Data that I have presented is all from the secondary sources, which are in the annual reports. A customer can be account holder when he opens account. There are

the numbers of rules and procedures regarding opening different types of accounts. The interest rates on different accounts are different. 3.2. Conclusion 1) The deposit of NABIL is in increasing trend. The share of fixed deposit is more than that of savings, current, margin and other deposits in the deposit mix of NABIL. 2) The trend of interest bearing deposit has been gradually increasing but there has been more fluctuation in interest free deposits, similarly, there is also more fluctuation in interest expenses on total deposits. 3) The trend analysis shows that the deposit of NABIL is in increasing trend. In addition to this, the bank is being able to satisfy its customers and in providing higher quality and newer services to them. 4) Interest expenses on deposit of NABIL during the year 2004 are also quite high but there has been a decreasing trend of interest expenses till the year 2009. 5) Similarly, the cost of deposit during the year 2004 is also quite high but there has been decreasing trend in the later year. So, it helps to increase the efficiency to bank. 6) Thus, the banks performance is effective in profitability and towards the customers and may attract more customers.

3.3. Recommendation 1) Although NABIL has a strong financial base and capital structure as well as good market status and reputation in order to attract new customers and increase deposit collection NABIL should introduce new schemes.

2) Customer services should be diversified and should further be accommodated. 3) Interest rate on deposit should be competitive with other commercial banks. 4) The bank should aim towards increasing its customers but it must also provide the quality services to the present customers. For this the bank must make plans and policies keeping customers in mind. 5) Bank should also pay attention towards the hydroelectricity sector and industrial sector for lending loans to develop the economic condition of the country. 6) Bank should provide more facilities to the staff, it has to provide job satisfaction, training and should encourage its staff.


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