A study on loan provision of sanima Bank limited

A Project Work Proposal

By: ………………………….

Samiksha Pokharel

Exam Symbol Number:

Tu Registration Number:

Garmin Adarsha Multiple Campus

Nepaltar ,Kathmandu

Submitted to :

The Faculty Of Management

Tribhuvan University (TU)

In partial fulfillment of the requirements for the degree of

Bachelor Of Business Studies BBS

November 31,2022

Table of Contents

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1.1 Background of the study 1
1.2 Profile of the organization …………………………………………………… 2
1.3 Statement of problem ………………………………………………………….. 2
1.4 Objective of the study………………………………………………………………… 3
1.5 Rationale of the study ……………………………………………………………… 3
1.6 Review of literature ……………………………………………………………… 4
1.7 Method of the study ……..………………………………………………………... 4
1.8 Limitations of the study ……………………………………………………………… 6
1.9 Report of structure ………………………………………………………………..7
Reference

1.1 Background of the study

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Origin of bank

It is very hard to collect the correct information of the origin of the bank
. The world Bank is derived from the Italian word “ Banco”, which means accumulation of
money of stock. The word “banco” is origin and evaluation of bank. The Bunco means
“Bench” So it can also be said that bank is to stay in chair one place and do money the
business and banking play significant role in the development of country, the bank of Venice
that was established in 1158 AD was the first bank in the history of banking . The bank of
Barcelona Spain which was establish in 1401 AD was the second bank in the world. The first
center bank was the bank of England whit was established in 1844 AD.

Meaning of bank

Bank is a financial intuition, which is engaged in monitory transaction.

Bank has always been the most importance and largest financial intermediates. Bank
collect-scattered money from public providing those interest and services. This collection
becomes the capital for bank to invest. So the place where time money transactions are
done is called Bank. Hence money of the bank is better to be precise and clear.

Importance meanings are as follows

“According to Bob Hope “

Bank is a place that will lend you money if you can prove that you don’t need
it.

“According to Jean-Jacques Rousseau”

Happiness : a good bank account , a good cook and a good digestion.

Therefore the bank is an institution that deals in money and its substitutes and provide
other money-related services.

History of Bank in Nepal

The modern banking in Nepal started with the establishment of Nepal

Bank Limited. His majesty king Tribhuvan Bir Bikram shah Dev. inaugurated Nepal
Bank Limited on Karthik 30 1194 B.S Nepal Bank is the first bank of Nepal and was
formed as joint venture between government and private sector. The bank was the
only financial institution of the country until the formation of Nepal Rastra Bank in
2013.

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 Established in 1994, Nepal Bank has authorized capital of
Rs . 1 crores during its inception. Likewise , it had Rs 25 lakh as the issued capital and
8.42 Lakh as the paid up capital. The bank floted equity shares worth Rs 25 lakh, but
was successful only in raising Rs 842000. There was only 10 shareholder when the
bank first started. The government of Nepal has 51 percent ownership of bank.
Whereas, the general public process 49 percent share in Nepal bank.
Nepal Rastra Bank as the Central Bank of Nepal was
established in 2013 BS of baisakha to perform the function of central bank in Nepal.
Rastriya Bank ltd was established with the joint venture of habib bank of Pakistan.
Nepal SBI Bank followed Himalayan Bank Ltd, in the year 2051 BS. Nepal Bangladesh
bank ltd Everest Bank ltd and Bank of Kathmandu ltd were established in 2051 BS.
Now in Nepal so many commercials banks are established run smoothly.

Banking History
Central bank of Nepal : Nepal Rastra Bank
Nepal’s first bank: Nepal Bank Limited
First Development Bank: Nepal Industrial Development bank
Nepal First rural development bank:

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1.2 Profile of the organization
A bank is a financial institution that is licensed to
accept checking and savings deposits and make loans. There are 26 commercial
bank in Nepal out of that sanima bank limited is one of the leading financial
institution in Nepalese market. Sanima Bank commenced its operation in 2004
as national level development bank. Sanima received its operating license from
Nepal Rastra Bank to function as an “A Class Commercial Bank in 2012. Sanima
has 102 full-fledged branches and 28 extension counter within and outside the
Kathmandu valley with further plans to expand its reach into various other part
of the country. Its main head quarter is situated at ‘Alakapuri’ ‘Nakxal’,
Kathmandu.
Sanima recognize that in the capacity of a commercial
bank ,it is an inevitable part of the society’s economic organ and it draws on societal
resources for day to functioning the bank is a trustee of public money in addition to
being a corporate body. Therefore, apart from its core objectives to contributes, the
bank has certain obligations to contribute to society as a whole , Sanima believes in
creating societal impact through replicable, sustainable and scalable CSR
programmes.

Capital Structure NPR

Authorized capital 9,000,000,000
Issued Capital 8,801,380,984
Paid up Capital 8,801,380,984

Vision
To be a leading bank of Nepal

Mission
We will continuously be innovative and embrace the change to delight
investors ,staff members ,customers, regulators and the community we serve

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1.3 Statement of Problems

Basically bank in Nepal have been facing the problems in credit

and investment sector and the present possibility for bank to diversify into wide ranges of
service and products provides good opportunity for banking entrepreneurs and managers.
But this diversification advantage is a once in a life time opportunity that should be utilized
with some caution and sound management as this involves a great deal of risk. There is one
saying that the higher you go ,the colder life becomes. Banking industries is high risk
business but it is not necessary to be high profit industry In Nepal most of the commercial
banks are focusing on consumer loan , vehicle loan ,real state education loan etc. However
on other part growth of industrial loan has not been encouraging in recent years. Lack of
sound knowledge and various risk associated with loans leads to unsecured loan and
investment that might bring bank towards liquidity and bankruptcy. Leading policies are not
systematic and co clear cut vision of policy is available on leading aspect. In Nepal it has
been found that approval and leading decisions are made in favor of those persons who
have personal network. So a new customer finds that loan providing process being very
complicated and sometimes the documents submitted the loan sanctioning being fraudulent
and for formally purpose only.

a. What is the situation of deposit and loan investment of Sanima Bank

limited in Nepalese market ?
b. What is the situation of ratio of interest income to total loan ?
c. What is the diversity of loan ?

1.4 Objective of the study

The main objective of the study is the study of loan management of

sanima bank limited. In order to achieve the basic objective ,the following other objective
are as follows:

 To find out the overall activities of loan management system

 To assets the section of loan management
 To analyze the trend of loan mobilization
 To evaluation the relationship of deposit and loan mobilization

1.5 Rationale of the study

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 Credit Management is the main product of commercial bank. It
play the significance impact on performance on commercial bank. However, the ,most worry
factor in banking industry is the total management of loan. Due to the excessive amount of
nonperforming loan and loan loss provision in commercial banks, there is the wide spread
suspicion on the performance on the commercial bank. It assist the sanima bank ltd to
identify the focus on loan management variables and situation impact of LLP on deposit ,
net profit , loan and advance, nonperforming loan. There are in very few numbers this type
of research. Most of the researches done on the older and joint venture Commercial bank
are targeted in performance appraisal. This study is to be significant. The main significances
of the study are presented as follows:

 It helps shareholders , banking professionals, loan seekers and investor to know

about lending and recovery practices through the analysis of data.
 Student and teacher are also benefited by the study
 It helps the policy makers of the bank to take good decision through the
recommendation of the study
 This study assist government to frame national policy considering such
determinants. This study will also bridge the literature gap as it will be used by
upcoming researchers.

1.6 Review of Literature

This report is mainly focuses on the credit operation practice and

procedure Sanima bank limited. Hence , it is a rational to state these articles and report
those may make clear concept to understand the said topic. “Bank and financial intuitions
are the vehicles through which deposits are mobilized in various development activity i.e.
agricultural , industry, Trade, commercial intuitions like commercial banks, development
bank, financial companies and various micro financing , intuitions with different
model.”( Johnson, 1940: 130).

Credit administrations involves the creations and management

of risk assets. The process of lending takes into considerations about the people and system
required for the evaluation and approval of loan request, negotiation of terms,
documentations, disbursement, administration of outstanding loans and workouts,
knowledge of the process and awareness of its strength and weakness are important in
settings objectives and goals for leading activities and for allocating available funds to
various leading functions such as commercial , installment and mortgage portfolios
( Johnson , 1940: 132). The investors or whether banks ,financial intuitions , individuals ,
private , or government sector , must not take the proposal by making decisions , without
having adequate judgment because sometimes they perform out of norms, related studies,
policies and techniques. A project appraisal will best viable only if it has accessed through
conscious analysis as well as through thoroughly investment decisions to make its macro
and micro level viability effective.” ( NRB, 2058 : Portfolio management helps to minimize

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or manage the credit risk by spreading over the risk to various portfolios. This method of
managing credit risk is guided by the saying do not pull the eggs in a single basket ( Bhandari
, 2004: 300).

1.7 Method of study

Research methodology refers to the various sequential steps to adopt by a

researchers in studying a problems with certain objectives in view. Research methodology is
a way to systematically solve the researchers problem. In this chapter research
methodology is presented for achieving the predetermined objectives. Research
methodology includes a philosophically coherent collection of theories , concepts or idea as
they relate to a particular discipline or field of inquiry. This chapter includes research design
population and sample nature and source of data.

Research Design

Research design is the specification of methods and products for acquiring

the information needed. Descriptive and analytical research design is used in this whole
research. A research design is a plan for the collection and analysis of data. The study is
designed to the study on loan management of sanima bank limited.

Population and sample

There are 27 commercial bank in Nepal. Among them, this study

has selected Sanima Bank limited for the purpose of research. Here 27 commercial banks
represent the population and Sanima bank limited represents the sample.

Nature of source of data

For the presentation of this report different kinds of page and

websites are followed. In this report proposal , all the data is collected by sercondary data in
nature. All most all the data has been collected from concerned bank. The data related to
the study are collected from the following sources :

 Annual report of sanima bank Ltd

 Interim performance report
 Annual report of NRB
 Website

Data collection and Procedure

In this presentation of project work report proposal

mainly I have used the data about commercial banks in Nepal and sanima bank ltd. The

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annual report of sanima bank limited has used along with the information taken from
various book ,articles, and research paper for reference

Techniques of data analysis

Analysis of data is an important part of the study. In

another word ,analysis of data is almost a study itself. All the result of the study is obtained
from the analysis part. In this study analysis of data is interpretation , evaluation and
measurement of performance of subject and banks via financial data is available by them in
annual reports. Following tools shall analyze the data presented in the study.

The focus of financial

analysis is on key figure in the financial statement and the relationship that exist between
them. The ratio used for assessing credit are categorized into part :

Total loan to deposit = Advance and Loan Total

Deposit Total

Interest Income to loan and Advance = Total Interest income

Total Loan and advance

Loan and advance to Total Assets Ratio = Advance and Loan Tota

Assets Total

Interest Income to Total Income Ratio = Interest Income

Income Total

Net Interest income to Net profit Ratio = Net Interest Income

Net Profit

1.8 Limitation of the study

Regarding this study helps to find out the various

condition of data, where the investors and researcher or people or reader get full

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knowledge that covers the targeted address about the project. The study has following
limitations:

 The field work report is prepared In partial fulfillment of the requirements

for the degree of Bachelor Of Business Studies Of Tribhuvan University
 The relevant information and data obtained from the concern for the study
are presumed to be accurate
 The study depends heavily on secondary data and is not free from its
limitations
 Simple techniques has been used in Analysis
 The study is mainly based on fiscal year

1.9 Report of the structure

The report proposal is divided into three chapters. They are as follows:

Chapter I

The chapter I deal with Introduction of study which include the back ground ,
Profile of the organization, Objectives of study , rationale of study , Review of literature ,
Method of study and limitation of the study

Chapter two

The chapter II Deals with the data presentation and analysis of ……… find out major
part of study

Chapter III

The chapter III deal with the summary and conclusion of the report

REFERENCE

Johnson,1940: 130

Johnson,1940: 132

NRB 2058: 125

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Bhandari , 2003: 170

Www.google.com

www. wikipedia.com

www.nrb.gov.np

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