1

CHAPTER 1
INTRODUCTION

Background of the Study

Bank is a financial institution, which is engaged in monetary transactions which has
always been the most important and largest financial intermediaries. Banks collects
the scattered money from the public providing those interests and services. This
collection becomes the capital for the bank to invest. The bank operates its
performance after receiving deposits from the public. Banking services for customers
such as collection of deposits, distribution of credits and provision of financial
services are of particular importance. Various thinker and economists have forwarded
different ideas regarding the origin of banks.

According to Fama (1980) “Banks are financial intermediaries that issue deposits and
use the proceeds to purchase securities.”

"A Bank is an organization whose principal operations are concerned with the
accumulation of the temporarily idle money of the general public for the purpose of
advancing to other for expenditure” (Dahal, 2002).

In Nepal, the history of development of commercial bank is not very long as

compared to other developed countries. Nepal Bank Limited is first commercial bank
which was established in 1994 B.S.

Banks also involves a number of agency services like remitting and collection each
other on behalf of its client, opening bank draft and exchanging currencies. The bank
generates profits from the difference in interest rates charged and paid. The main
function of commercial bank is to receive deposits from the people and to lend it to
those who are in need of financial aid. Thus commercial banks are the institutions
which receive the saving from the people in different account by paying some rate of
interest. Therefore, commercial bank draws surplus money from the people who do
not use it at the time and lend it to those who are in the position to use it for
productive purposes. In other words bank are the creators of the money but they do
not have their own money.
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Commercial banks are the main institutions, which are meant for the collection and
utilizing of small scattered savings of the people. The commercial banks utilize the
collected resources by financing in productive, distributive the main function of the
banks is to accept money spread in the general public as deposit and utilize the
collected resources properly. General public deposits their savings for safety and they
also get interest in advancement.

Generally Bank is an institution, the essential operation of which is to make the

monetary transaction possible in a sound and effective way. Bank accepts deposits of
money from those who save and lend to those who need credit for some purpose.
Bank accumulates idle money from general public by offering attractive or sound
interest and lends it to the fund seekers in the economy. Investment in fixed assets
would be possible where by productivity could grow, employment could be generated
and finally national economy could be enhanced. Banks are also found to be involved
in a number of agency services of remitting and collecting cash on behalf of its clients
by opening bank drafts and letter of credit facility etc.

Besides, the main task of bank is to mobilize idle resources into productive sector by
collecting it from scattered sources and generating profit. Bank accepts deposit in
numerous forms depending upon the nature of savers and banks own product offering
strategy. Some of the common deposits are current, saving, fixed and call deposits etc.
The cost of deposits to the bank varied as central bank has freed up the commercial
bank to offer the interest rate on their own.

Commercial banks are typically concerned with managing withdrawals and receiving
deposits as well as supplying short term loans to individual and small businesses.
Consumers primarily use these banks for basic checking and savings accounts,
certificates of deposits, and home mortgages. Commercial banks can also refer to a
bank or a division of a bank that mostly deals with deposits and loans for corporations
or large businesses, as opposed to individual members of the public.

History of Bank in Nepal

In the concept 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
manipulating the
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principal amount. The introducing of ‘Tejarath Adda’ during the tenure of the prime
Minister Ranoddip Singh (1993 B.S.) was the first step towards the institutional
development of banking in Nepal.

The first commercial bank ‘Nepal Bank Limited’ was established on 30th 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 Baishakh 2014
B.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 has attracted
many new investors and encourage opening many new modern banks with joint
venture of Dubai Bank Ltd. U.A.E. subsequently following its established Nepal Indo
Suez Bank France, Nepal Grinlands Bank England on 16 th Marg 2043 B.S. with the
joint venture of Habib Bank of Pakistan, Nepal SBI Bank Ltd. in 28 th Ashad 2050
B.S. with joint venture of State Bank of India Nepal Bangladesh Bank ltd. on 28 th
Jestha, 2050 B.S. with the joint venture of International Finance Investment and
Commercial Bank, Everest Bank Ltd. on 1st Kartik 2051 B.S. with joint venture of
Punjab National Bank Ltd of Kathmandu on 28th Falgun 2051 B.S. with joint venture
of the Siam Commercial Bank, Thailand. Likewise, DCBL established on 2001
February, NMB Bank on 2008, KIST Bank 2009.

Commercial Bank

A commercial Bank is a financial institution which collects savings from many

persons and institutions and provides credit or loan facility to different industrial and
commercial businesses. Commercial banking business consists of changing cash into
bank deposit and bank deposit into cash, transferring bank deposit from one person or
institution to other, giving bank deposit in exchange for cheques, bills of exchange,
government securities etc.
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Nepal Bank Limited established in 1995 B.S. is the first commercial bank in Nepal.
Commercial banks perform various functions. Among them, accepting various types
of deposit is the main function of commercial banks.

Concept of Deposit

Deposit is the main source of commercial banks. A commercial bank receives deposit
in different accounts namely current, saving, fixed and call account which are also
known as direct deposit. Deposit are the main source of capital for the lending
activities of financial institutions. The existence of commercial banks basically
depends upon the mobilization of deposits. These banks cannot longer function in the
absence of adequate deposits. In other words, the strength and weakness of the bank
largely depends upon the ability to attract more people to deposit accounts of the bank
itself. Deposit analysis studies the behavior of non- maturity deposits over time and
provides institution- specific results needed to accurately estimate and manage interest
rate and liquidity risk.

In case of Prabhu Bank are mainly four types of deposits i.e. current deposit, saving
deposit, fixed deposit, and other deposits.

Deposit is the savings of people or even of industrialists, which is not required for
them in the very moment, which is accepted by banks and later they get interests. “In
the law of banking, a deposit is the sum of money or other personal property left by
the depositors with a bank and available to him in accordance with the terms of
deposit agreements. The deposit may be general or special, depending upon the
agreements between the depositors and the bank, if general if not otherwise agreed.

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.
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Profile of Prabhu Bank

Prabhu Bank limited (PBL), formerly known as Kist Bank incorporated in 2002 as a
Finance Company and upgraded to Class A Commercial bank in May 2009, was
renamed to its current name after the merger of four financial institutions on 15 th
September 2014. The institutions before the merger were Kist bank limited (Class B),
Gaurishankar Development Bank Limited (Class B) and Zenith Finance Limited
(Class C), PBL is the largest private sector commercial bank of Nepal in terms of
branch network. Shareholding pattern of the bank constitutes of the promoters holding
65% of the shares while 35% is floated for the public. Among the promoter’s holding,
13% shares are held by 4 institutional promoters and remaining 52% by 448
individual promoters. The registered office is in Babarmahal, Kathmandu which is
also the Head office of the bank.

The Bank has gone through the various phases of its growth trajectory over a short
period of its existence. Growth of Prabhu Bank was phenomenal, especially after
merger of Grand Bank Nepal Limited, Kist Bank Limited, Prabhu Bikash Bank Ltd,
Gaurishankar Development Bank Ltd and Zenith Finance Limited in 2016, attaining
the status of “A” class financial institutions licensed and regulated by the Central
Bank of Nepal, Nepal Rastra Bank.

The bank has completed years of journey since the inception and has accommodated
seven different financial institutions in its making. As the leading banking and
financial services group in Nepal, the bank will be there where growth is, connecting
customers to the opportunities, enabling business to thrive and economies to prosper
and ultimately helping people to fulfill hopes and realize their ambitions. The bank
offers the full range of banking and investment services for personal and corporate
customers, backed by the team of highly motivated, young and dynamic professionals.

One of the bank’s primary objectives is to reach out to the common people with a host
of helpful products and services that will assure their future prosperity. Over a very
short period of time, the bank has achieved a significant degrees of success in
executing this objective thereby creating a substantial base of loyal customers.
Personalized services, prompt transactions, wide networks, mobile banking and real-
time account credit are few of the core strength of the bank. It has been undertaking
activities such as variety of deposit schemes, loans and advances. Foreign exchanges
facilities, Trade
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financing, Inward/Outward remittances, market maker for government securities,

Non- fund based service like issuing guarantees, letter of credits etc. While ensuring
adequate finance is a vital part in the setting up and running of any business, it alone
does not guarantee success. Success depends on the other factors such as quality
consultation and counseling. So, the bank has given due priority in developing human
resources capable enough to understand the need of customer and meet their
requirements. The bank keeps its customer at the center of all it does. Prabhu Bank
believes that a bank is only successful when customers are successful.

Mission

To become the leading commercial bank in Nepal by providing the finest quality
financial products and services to our customer; enhance our shareholders’ value,
contribute to the economic prosperity of the country and to create continuous learning
and growth opportunities for our people.

Vision

To support individuals, families and businesses to attain financial independence and

improve their financial wellbeing.

Following types of account can be opened at any PRABHU branches upon

completion of simple documentary requirement. All the accounts can be opened in
various currencies.

 Savings Account
 Current Account
 Fixed Account
 Other Account

(Source: https://www.prabhubank.com)
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Types of Deposit

a) Current Deposit

Current deposit is also known as demand deposit as the deposit is with draw able
on demand. Current deposits are withdrawn able on the demand of the customers.
Bank 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 organization 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.

b) Saving Deposit

The saving deposits are mainly opened to encourage the habit of saving among the
common people and institutions. Saving deposits attracts interest which 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 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 bank for saving purposes.

Saving account are generally opened for the savings of customers (individuals,
non- profit organizations, charitable trusts, clubs, associations and cooperative)
who want to save for meeting future needs. Saving 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.
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c) Fixed Deposit

The fixed deposit is another source of deposit. The 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 of this account is higher than other accounts.
It is also known as time deposit. General this is for three months to five years.

According to Commercial Bank Act, the 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.

ii. 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.

d) Other Deposit

Other deposit accounts means those accounts with banks opened. It is a scheme of
special type of deposit where some specified amount of money for specific period
is accepted as deposit. This deposit is also one source of deposit. The other deposit
includes call deposits, recurring deposits, etc. Banks issue letters of credit Fixed
Deposit (L/C). Guarantee indemnity etc. on behalf of the customer for the specific
sum of money. Thus, banks are exposed to contingent liabilities. To reduce the
liabilities, banks, ask customer to deposit a certain amount (varies as per the credit
standings of the customer), as the margin of safety is also known as margin
deposit. JBBL has 100% cash margin. Banks opens a fictitious margin account in
the name of the borrower to put such amount and interest is not paid in such
deposit. This deposit is returned to the customer if the beneficiary does not lodge a
claim. In case of claim, the customer asked to cover the short fall, if necessary.
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As we know that the main objective of commercial bank is to maximize profit by the
mobilization of the resources they have. But if the bank fails to collect adequate
deposits then it losses profitable opportunities and hence fails to generate profit.

Objectives of the Study

The general objectives of this study is to analyze deposits collected in Prabhu Bank.
The study intends to present a brief and clear picture of deposit collection and its
utilization. The major objectives of the study includes,

 To analyze the deposit position of Prabhu Bank.

 To find out the deposit mix.
 To analyze different deposit ratios of Prabhu Bank during five years.

Rationale of the Study

Development of banking system plays an important role of the growth of any

economy. Deposit collection is one of the main problems of developing country like
Nepal. Due to various difficulties or even ignorance of the people of developing
countries such resources have not been utilized. The study helps to observe the trend
of the deposits.

Deposit collection is the major functions of all commercial banks, which help to carry
out almost all transactions 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 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 take benefit from it. This study however intends to give general
information
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regarding banking, deposits and prospects of the deposit and its mobilization in the
country, which may give the general idea about banking and deposits. It provides
information on the impact of deposit and interest rates by investigating and measuring
the possible relationship between deposit and interest rates. It can be significant for
those who are concerned with banking for their future study.

Review of Literature

This section discusses the key theoretical considerations from previous studies to
inform the general and specific objectives developed for this study that is deposit
analysis. Many studies are observed to be present concerning the deposit analysis
when reviewing the literature. And the review of literature includes the study of past
studies made on deposit related topics especially the studies related to the deposit
collection of commercial banks.

It is an essential and mandatory process in research works. It deals with a literature

survey of existing volumes of similar or related subjects. The emphasis is given in the
review of major relevant literature on the deposit analysis. Different definitions or
opinions expressed by experts in respect of deposit analysis are considered to be
relevant for this proposed study. The previous studies cannot be ignored because they
provide the foundation to the present study. In other words, there has to be continuity
in research. This continuity in research is ensured by linking the present study with
the past studies.

Conceptual Review

Deposit collection is the one of the main features of commercial banks. A commercial
bank receives deposits 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 the 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. Thus, Deposit is a function of collecting surplus from
savers.
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A commercial bank is a type of bank that provides services such as accepting

deposits, making business loans, and offering basic investment products.

A literature review is a summary and analysis of current knowledge about a popular

topic or areas of learning and understanding the concept of the related topic. It helps
to develop ideas, which later serve as a ground of comparing finding and finally
concluding the aims of the study.

Review from Previous Work

A commercial bank dealing with the general public, accepting deposit from and
making loans to large number of household and small firms. Such banks are known in
the UK as retail or high street banks. They also provide various services for
depositors, including provision of cash and credit cards, storage facilities for valuable
and documents, foreign exchange, stockbrocking, mortgage finance and executor
services. Commercial banks are contrasted with central banks, and with investment,
merchant and other specialist banks which deals little with the general public (Black,
2006).

“A theory based on the limited recall of retail depositors is proposed. The propensity
for integer rates increases with the level of wholesale interest rates and deposit market
concentration” (Charles M. Kahn, 1999).

Khadka, (2017) has conducted a study of deposit analysis of Prime Commercial Bank
Limited with objectives to analyze how the deposit lends by prime commercial bank,
to ascertain the contribution of interest bearings deposit and find out the relation
between total deposit and loan. Its deposit is in increasing trends. It represents the
consumers are confident in the bank.

Bajracharya, (2010) has concluded in the study named “Monetary policy and deposit
mobilization in Nepal” that mobilization of domestic saving is one of the prime
objectives of monetary policy in Nepal and commercial banks are the more active
financial intermediary for generating resources in the form of deposits of private
sector and providing credit to the investor in different sectors of the economy.

Tram Nguyen, (2018) This study examined whether there is a casual relationship
between bank loans and deposits in the Vietnamese banking system and the efficiency
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of the use of loans and deposits by Vietnamese banks. Their findings suggested that
bank deposits have a positive significant impact on bank loans, but the reverse is not
significant.

Ghosh, (2014) It executed a comparative analysis of deposit products in banking

industry and identified opportunities for Eastern Bank limited and concluded that
EBL should offer term deposit products as well as saving products with existing
products.

A project work prepared by Shrestha R. (2019) “Deposit Analysis of Everest Bank

Limited” the objectives of his research is to provide conceptual framework of
different deposit to provide suggestion and guidelines to improve problem regarding
deposit and to know whether different kind of deposits are increasing or decreasing
trends. The research study major findings are presented as previous work as
concluded that after analyzed data, come to know that the current position of Everest
Bank Limited is good. Everest Bank Limited has increasing deposit each year.

A deposit is a money held in a bank account or with another financial institution that
requires a transfer from one party to another. A deposit can also be the amount of
money used as security or collateral for delivery of goods or services. Deposit- taking
is an ancient business, dating back to early goldsmiths and money lenders. The term
“deposit- taking” has not always been defined. The concept of deposit needs to be
reviewed. This article looks at the history of deposit taking and the concept of a
deposit. This paper examines the legal concept of a deposit, its character and
implications (Bollen, 2006).

“Commercial Bank is a corporation which accepts demand deposits subject to check

and makes short term loans to business enterprises, regardless of the scope of its other
services. A Commercial bank is one, which exchanges money, deposits money,
accepts deposits, grants loan and performs. Commercial Banking functions which is
not a bank meant for co-operative, agriculture industries or for such specific purpose”
(Gordan, 2020).

Research Methodology

Research Methodology is a research method used to meet the specified objectives. It

is a systematic way to find out the probable solution. It refers to the various
sequential
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steps to be adopted in studying the problem with certain objectives in view. Thus the
research methods designed to achieve the objectives of this thesis contains research
design, population and sample, data collection procedure, tools for analysis and
methods of analysis and presentation.

This research methodology is the process of arriving to the solution of the problems
through planned and systematic dealing with the collection, analysis and
interpretation of facts and figures.

Research is a systematic method of finding right solutions for the problem where as
research methodology refers to the various sequential steps to be adopted by a
researcher in studying a problem with certain objectives in view. In other words,
research methodology refers to the various methods of practices applied by the
researcher in the entire aspect of the study.

The basic objectives of the study is to evaluate the deposit fund analysis of Prabhu
Bank Limited. The useful and meaningful points of this study recommend to the
concerned, so that they can achieve something from this study. To accomplish this
goal, the study follows the research methodology described in this chapter. Those
research methodologies have been used which proves helpful to deposit analysis.

Research Design

In this research, uses the information and concerned data of the study could be
collected. Only the useful information and data have been studied and analyzed
carefully. Unnecessary information and data have been omitted to make the report
simple and straightly concern with its objectives. This report is totally based on
descriptive and exploratory research design. Descriptive research includes surveys
and fact finding of different kinds.

It collects and present the facts and figures in certain situation. It is developed with
the aim of studying the subject of research detail and explain the facts and
characteristics related to research problem. The main purpose of the study is to show
the deposit collection analysis of Prabhu Bank.
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Some statistical and accounting tools have been also applied to examine facts and
descriptive techniques have been adopted to evaluate deposit collection analysis of
Prabhu Bank.

Sources of Data

The study is based on secondary data. Data are collected from published annual
reports of Prabhu Bank and also collected through the websites. Other important
information are collected from internet, journals, articles etc. In this study,
quantitative data are taken.

According to the needs and objectives, all the secondary data are compiled, processed
and tabulated in time series. The reliability of data provided by the annual reports of
the banks.

Similarly, various data and information are collected from the periodic economic
journals, managerial magazines and other published & unpublished reports &
documents from the various sources.

Population and Sample

The study is mainly incorporated with the annual reports of the banks. It uses
secondary sources of data collection procedures. In case of many commercial banks,
Prabhu Bank is the only sample used. It uses a sample of five years annual report of
the bank for the study.

Tools and Techniques of Analysis

The collected and observed data are tabulated after adjusting necessary amount of
each overheads; however for the analysis of data the following two tools are used:

 Financial Tools
 Current deposit to total deposit ratio: The current deposit to total deposit
ratio indicate to the amount of current deposit divided by the total deposit.

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐷𝑒𝑝𝑜𝑠𝑖𝑡
Current deposit to total deposit ratio =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡
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 Saving deposit to total deposit ratio: The saving deposit to total deposit ratio
indicate to the amount of saving deposit divided by the total deposit.
𝑆𝑎𝑣𝑖𝑛𝑔 𝐷𝑒𝑝𝑜𝑠𝑖𝑡
Saving deposit to total deposit ratio =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡

 Fixed deposit to total deposit ratio: The fixed deposit to total deposit ratio
indicate to the amount of the fixed deposit divided by the total deposit.
𝐹𝑖𝑥𝑒𝑑 𝐷𝑒𝑝𝑜𝑠𝑖𝑡
Fixed deposit to total deposit ratio =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡

 Other deposit to total deposit ratio: The other deposit to total deposit ratio
indicate to the amount of other deposit divided by total deposit.
Other deposit to total deposit ratio =𝑂𝑡ℎ𝑒𝑟 𝐷𝑒𝑝𝑜𝑠𝑖𝑡
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡

 Statistical Tools
 After collecting the numerical data for statistical enquiry, it has to be classified
and tabulated and as well as, other different types of statistical tools can be
used to examine the economic data of Prabhu Bank. Similarly simple tables,
bar- diagrams, pie-charts, graphs etc. was used to make the report more
effective.
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Limitations of the study

This study also has some limitations which are as follows:

 Prabhu bank do the different functions. The study is analyzing only the
collection of deposit.
 This study depends upon secondary data of concerned bank.
 This study analyzed the data of five year’s trend i.e. 2017/18 to 2021/22.
 Some qualitative factors are not included due to unavailability of facts and
their study.
 It only focus in commercial bank i.e. Prabhu Bank Limited.
 This report is based on the format provided by Tribhuvan University.
 Due to the wide range of data deficiencies, only simple techniques have been
used in analysis.
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CHAPTER 2
RESULT AND ANALYSIS

Presentation of Data

Data presentation includes the description of dataset disseminated with the main
variables covered, the classifications and breakdown used, the reference area, a
summary information on the time period covered and, if applicable, the base period
used. It provides immediate understandings of the data to the users. This chapter deals
with presentation of data, analyzing of data and findings of the calculated data. This
study primarily relies on the analysis of secondary data to drive the empirical findings
on the study. The presentation and analysis of data has been further presented.

In this chapter collected data are analyzed and interpreted as per the stated
methodology in the previous chapter. The main sources of data are secondary data. In
this chapter, it has analyzed and diagnosed deposit analysis in Prabhu Bank. This data
is collected from an annual report of Prabhu Bank. It calculated by using different
formula of analysis variables. The tool used for the purpose of analysis have been
discussed in detail in the research methodology. Financial tools in particulars have
been used to evaluate the financial position of Prabhu Bank. Under financial tools,
ratio analysis is used for trend analysis.

This chapter includes the presentation and analysis of these data. The data has been
presented in the form of tables and figures for proper analysis. This analysis is based
on the data of past five consecutive years. Presentation of data is dissemination of
statistic in dataset. This study presents the deposit condition and status of Prabhu
Bank Limited. It presents summary, correlation analysis and also concludes remarks.
The following table and figure present the percentage of deposits.

 Tables
 Bar diagram
 Trend Analysis
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Analysis of Data

The purpose of this chapter is to provide an overview of the various tasks that may be
involved in analyzing data gathered in a research study. The design of this study
varies according to focus, purpose and methods. The procedures for analyzing the
data cannot be standardized.

Some important financial tools are only calculated on point of view of Deposit
Analysis of Prabhu Bank. The descriptive statistics of major variables for each
variable on company basis for all the year under study and the company in each year
basis are analyzed and tabulated. The ratios are designed and calculated to highlight
the relationship between financial tools and figures. This research entirely considered
about the ‘Deposit Collection Analysis of Prabhu Bank’. The main purpose of this
study is to show deposits and its collection analysis.
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Total Deposit of Prabhu Bank

Table 1

Structure of Total Deposit of Prabhu Bank (In ‘000’)

Years Current Saving Fixed Others Total

Deposit Deposit Deposit Deposit Deposit
2016/17 5145366 38044763 36607202 915350 97259665
2017/18 4991280 38022845 36559675 1304535 92847904
2018/19 7143992 41003748 44574569 1295051 105488506
2019/20 12922338 49218810 55234615 1468725 128740771
2020/21 17463672 66209142 69045780 1618760 164850500
Mean 9533329.6 46499861.6 48404368.2 1320484.2 117837469
Note: Prabhu Bank, Annual report of fiscal year- 2016/17 to 2020/21

Structure of Total
350000000 Deposit
300000000
250000000
200000000
150000000
100000000
Ratio

50000000
0

2016/17 2017/18 2018/19 2019/20 2020/21

Fiscal Year

Current Deposit Saving Deposit Fixed Deposit

Others Deposit Total Deposit

Figure 1: Ratio of Current, Saving, Fixed, Other and Total Deposit

The above table and figure, shows that the different deposit types. The major types of
deposits are current deposit, fixed deposit, saving deposit, other deposit and total
deposit. The deposit of Prabhu Bank period between 2016/17 to 2020/21. The value
presented in RS. (000).

From the above table and figure 1, it is observed the mean value of current deposit is
Rs.95933329.6. The highest current deposit is Rs.17463672 followed by fiscal year
2020/21 with lowest value of Rs.4991280 followed by fiscal year 2017/18 during the
study periods. Similarly the mean value of saving deposit is Rs.46499861.6. Whereas
highest saving deposit is Rs.66209142 followed by fiscal year 2020/21 with lowest
 20

value of Rs.48404368.2 whereas highest value of fixed deposit is Rs.69045780

followed by fiscal year 2020/21 with the lowest value of Rs.36559675 in fiscal year
2017/18. In this way, total deposit and other deposit of the Prabhu Bank, is in
increasing trend during the entire period.

Current Deposit to Total Deposit

Table 2

Ratio of Current Deposit to total Deposit (In ‘000’)

Years Current Deposit Total Deposit Current Deposit to

Total Deposit
2016/17 5145366 97259665 5.29
2017/18 4991280 92847904 5.37
2018/19 7143992 105488506 6.77
2019/20 12922338 128740771 10.03
2020/21 17463672 164850500 10.59
Note: Prabhu Bank, Annual Report of fiscal year- 2016/17-2020/21
Current

Figure 2: Ratio of Current Deposit to Total Deposit

In the given table and figure, The current deposit ratios of Prabhu Bank of past five
years from fiscal year 2016/17 to fiscal year 2020/21 have been shown. It is clear that
current deposit ratio has increased continuously from 2017/18 to 2020/21. In fiscal
year 2016/17 current deposit ratio is 5.29%. Likewise, current deposit ratios are
5.37%, 6.77%, 10.03% and 10.59% in fiscal year 2017/18 to 2020/21 respectively.
 12 2016/17 2017/18 2018/19 2019/20
Fiscal Year
10 21
2020/21
8
Saving Deposit to Total Deposit
6
Table 3
4
Ratio of Saving Deposit to Total Deposit (In ‘000’)
2
Years Saving Deposit Total Deposit
Saving deposit to
0 total deposit
2016/17 38044763 97259665 39.12
2017/18 38022845 92847904 40.95
2018/19 41003748 105488506 38.87
2019/20 49218810 128740771 38.23
2020/21 66209142 164850500 40.16
Note: Prabhu Bank, Annual Report of fiscal year- 2016/17-2020/21

Saving Deposit to Total Deposit

41.5
41
40.5
40
39.5
39
Ratio

38.5
38
37.5
37
36.5

2016/17 2017/18 2018/19 2019/20 2020/21

Fiscal Year

Saving deposit to total deposit

Figure 3: Ratio of Saving Deposit to Total Deposit

In the above figure, saving deposit ratio on fiscal year 2016/17 is 39.12%, and it is
increase up to 40.95% in fiscal year 2017/18. Then the saving deposit has decreased
continuously to 38.87% in fiscal year 2018/19, 38.23% in fiscal year 2019/20 and also
increased in fiscal year 2020/21 to 40.16%.
 22

Fixed Deposit to Total Deposit

Table 4

Ratio of Fixed Deposit to Total Deposit (In ‘000’)

Years Fixed Deposit Total DepositSaving deposit to

total deposit
2016/17 36607202 97259665 37.64
2017/18 36559675 92847904 39.37
2018/19 44574569 105488506 42.25
2019/20 55234615 128740771 42.90
2020/21 69045780 164850500 41.88
Note: Prabhu Bank, Annual Report of Fiscal Year- 2016/17-2020/21

Fixed Deposit to Total Deposit

44
43
42
41
40
39
Ratio

38
37
36
35

2016/17 2017/18 2018/19 2019/20

Fiscal Year

Fixed Deposit to Total Deposit

Figure 4: Ratio of fixed deposit to total deposit

The above table and figure shows the fixed deposit ratio of Prabhu Bank is 37.64% in
2016/17 and it started to continuously increases up to fiscal year 2019/20. It shows the
stability position of the bank and it also strength the liquidity position of the bank. In
the bank, better to maximize the fixed deposit, higher the fixed deposit higher will be
the profit. And also it decreases in 2020/21.
 23

Other Deposit to Total Deposit

Table 5

Ratio of Other Deposit to Total Deposit (In ‘000’)

Years Others Deposit Total DepositOther deposit to

total deposit
2016/17 915350 97259665 0.94
2017/18 1304535 92847904 1.41
2018/19 1295051 105488506 1.23
2019/20 1468725 128740771 1.14
2020/21 1618760 164850500 0.98
Note: Prabhu Bank, Annual Report of Fiscal Year- 2016/17-2020/21

Other Deposit to Total Deposit

1.6
1.4
1.2
1
0.8
0.6
0.4
Ratio

0.2
0

2016/17 2017/18 2018/19 2019/20 2020/21

Fiscal Year

Other Deposit to Total Deposit

Figure 5: Ratio of other deposit to total deposit

The above table and figure shows the other deposit ratio on fiscal year 2016/17 is
0.94% and it is increase up to 1.41 in fiscal year 2017/18. Then the other deposit has
decreased continuously to 1.23% in fiscal year 2018/19, 1.14% in fiscal year 2019/20
and 0.98% in fiscal year 2020/21.
 24

Deposit Mix

Deposit Mix refers to the combination of various types of deposits and share in total
deposits. The distribution of total deposits under various types of deposit is known as
deposit mix. Deposit Mix plays a vital role in deciding the profitability of banks.

Table 6

Deposit Mix of Prabhu Bank (In‘000’)

Year Current Saving Fixed Other

Deposit Deposit Deposit Deposit
2016/17 5.29 39.12 37.64 0.94
2017/18 5.37 40.95 39.37 1.41
2018/19 6.77 38.87 42.25 1.23
2019/20 10.03 38.23 42.9 1.14
2020/21 10.59 40.16 41.88 0.98
Total 38.05 197.33 204.04 5.7
Note: Prabhu Bank, Annual Report of fiscal year 2016/17- 2020/21

Deposit Mix
100%
90%
80%
70%
60%
50%
40%
Ratio

30%
20%
10%
0%

2016/17 2017/18 2018/19 2019/20 2020/21

Fiscal Year

Current DepositSaving Deposit Fixed DepositOther Deposit

Figure 6: Deposit Mix of Prabhu Bank, 2016/17 – 2020/21

This table and figure clearly shows the deposit mix of Prabhu Bank of fiscal year
2016/17 to 2020/21. In the fiscal year 2016/17, it can be said the maximum portion of
deposit comes from saving deposit 39.12% of total deposit, 37.64% of that comes
from fixed deposit. Where current deposit and other deposit provides 5.29% and
17.95% respectively. In the fiscal year 2017/18, it can be said the maximum portion
of deposit
 25

comes from saving deposit 40.95% of total deposit, 39.37% of that comes from fixed
deposit. Where current deposit and other deposit provides 5.37% and 17.95%
respectively. In the fiscal year 2018/19, it can be said the maximum portion of deposit
comes from fixed deposit 42.25% of total deposit, 38.87% of that comes from saving
deposit. Where current deposit and other deposit provides 6.77% and 12.1%
respectively. In the fiscal year 2019/20, it can be said the maximum portion of deposit
comes from fixed deposit 42.9% of total deposit, 38.23% of that comes from saving
deposit. Where current deposit and other deposit provides 10.03% and 8.83%
respectively. In the fiscal year 2020/21, it can be said the maximum portion of deposit
comes from fixed deposit 41.88% of total deposit, 40.16% of that comes from saving
deposit. Where current deposit and other deposit provides 10.59% and 7.35%
respectively.

TABLE 7

Standard Deviation, Correlation between Interest and Deposits

Years CDR SDR FDR ODR

2016/17 5.29 39.12 37.64 0.94
2017/18 5.37 40.95 39.37 1.41
2018/19 6.77 38.87 42.25 1.23
2019/20 10.03 38.23 42.90 1.14
2020/21 10.59 40.16 41.88 0.98
Mean 7.61 39.47 40.81 1.14
SD 2.27 0.99 1.99 0.21
CV 29.60 2.51 4.88 18.42
Note: Prabhu Bank, Annual Report of fiscal year- 2016/17-2021/22

This includes the overall deposit ratios of Prabhu Bank, periods between 2016/17
to 2020/21. The table present the descriptive statistic mean, standard deviation,
correlation between different deposit ratio for the whole study periods of Prabhu
Bank.
In the above table, it shows the descriptive statistical value (mean, standard
deviation, coefficient variation) value of the ratios during the study period
between 2016/17 to 2020/21. The mean of current deposit to total deposit ratio is
7.61%. Likewise, mean of saving deposit to total deposit ratio, fixed deposit to
total deposit ratio and other deposit to total deposit ratios are 39.47%, 40.81%,
1.14%
 26

respectively. The standard deviation of current deposit to total deposit ratio,

saving deposit to total deposit ratio, fixed deposit to total deposit ratio and other
deposit to total deposit ratios are 2.27%, 0.99%, 1.99%, 0.21% respectively.
Similarly coefficient variation of current deposit to total deposit ratio, saving
deposit to total deposit ratio, fixed deposit to total deposit ratio and other deposit
to total deposit ratios are 29.60%, 2.51%, 4.88%, 18.42% respectively.

Findings

After completing the basis analysis for this study, the final and the most important
task is to enlist the findings. Deposit collection analysis is important in the financial
decision making for any financial institutions. This study is mainly based on deposit
collection analysis of Prabhu Bank, and for analysis various financial tools has been
used in above chapter. This analysis is of last five years of 2016/17 to 2020/21. Above
information are analyze with the help of secondary data of Prabhu Bank. The bank
has huge fluctuation on deposit. The ratio of current deposit to total deposit are
5.29%, 5.37%, 6.77%, 10.03% and 10.59%. Similarly, saving deposit to total
deposit are 39.12%,
40.95%, 38.87%, 38.23% and 40.16%. Likewise, fixed deposit to total deposit ratio are
37.64%, 39.37%, 42.25%, 42.90%, and 41.88%. And other deposit to total deposit ratio
are 0.94%, 1.41%, 1.23%, 1.14% and 0.98%. The major findings of the study which
covers a five year period 2016/17 to 2020/21 are as follows:

 More of the consumers are willing to deposit on fixed deposit as compare to

current, saving and other deposit. Because lack of investment opportunities.
 The mean value of current deposit, saving deposit, fixed deposit, other deposit
and total deposit are 9533329.6, 46499861.8, 48404368.2, 1320484.2, and
117837469 respectively.
 The mean of current deposit to total deposit ratio is 7.61%. Likewise, mean of
saving deposit to total deposit ratio, fixed deposit to total deposit ratio and
other deposit to total deposit ratio are 39.466%, 40.81% and1.14%
respectively.
 The standard deviation of current deposit to total deposit ratio, saving deposit
to total deposit ratio, fixed deposit to total deposit ratio and other deposit to
total deposit ratio are 2.27%, 0.99%, 1.99% and 0.21% respectively.
 27

 The coefficient variation of current deposit to total deposit ratio, saving

deposit to total deposit ratio, fixed deposit to total deposit ratio and other
deposit to total deposit ratio are 29.60%, 2.51%, 4.88% and 18.42%
respectively.
 28

CHAPTER 3

SUMMARY AND CONCLUSION

Summary

Prabhu Bank is one of pioneer banks in the country, with a history of years. The bank
licensed by NRB as an ‘A’ class commercial bank of the country. It was the highest
profit earning bank of fiscal year.

Deposit collection is an important tools for set a behavior of savings. A bank is a

financial institution that accepts deposit from public and creates credit. The present
study has been undertaken to examine and evaluate the deposit collection analysis of
Prabhu Bank by considering various variables like different type of deposit, current
deposit to total deposit ratio, saving deposit to total deposit ratio, fixed deposit to total
deposit ratio and other deposit to total deposit ratio. The study of five years from
2016/17 to 2020/21 has been taken into consideration for the purpose of the study.
The study has resorted mainly to secondary data that has been first processed and
analyzed comparatively. This study is explanatory as well as analytical sometimes.

This report is prepared with the objective of the finding out whether Prabhu Bank is
able to generate different type of deposit or not. It is conducted by using website and
secondary data. Arithmetic, financial and statistical tools have been used to present,
analyze and interpret the data on the aspect of deposit collection analysis.

Therefore, it is utterly important to find out whether or not the banks are serving an
important contribution to develop different sectors of the economy. Deposits occupies
major portion of banking income. It plays a vital role in updating the national
economy.

From the entire analysis it is summarized Prabhu Bank limited have not accurate data
in the annual report. The deposit of PRABHU is in increasing trend. The ratio of fixed
deposit is more than of savings, current and other deposits in the deposit mix of
PRABHU Bank. The trend analysis shows that the deposit of Prabhu Bank 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. By the analysis of deposit
landing we can conclude that the bank is able to utilize its deposits a greater extent.
 29

Thus, the bank’s performance is effective in profitability and towards the customers
and may attract more customers.

Conclusion

Under this research report various financial statistical tools were used to find out
deposit analysis of Prabhu Bank, it was concluded that the bank performing among
the people on the basis of financial transaction is satisfactory and the data analysis in
report shows the Prabhu Bank is growing positively.

Prabhu Bank has made remarkable progress, practically in every sphere of its
activities. This analysis shows the volume of deposit of Prabhu Bank is in increasing
trend. There is positive relationship between deposit and interest. So that the deposit
increases as the interest also increases and vice versa. The portion of fixed deposit is
more in comparison to current, saving, and other deposit. The accuracy of the research
findings can be increased by using the primary data of the bank for the purpose of
depth study of the deposit analysis of Prabhu Bank. Thus, Prabhu Bank has earned a
good reputation around Nepal.

In conclusion, it can be said that deposit analysis is one of the most important parts of
every financial institutions.
 30

Bibliography
Bajracharya, B. B. (2010). Monetary Policy and Deposit Mobilization in Nepal. 93-

97.

Black, J. (2006). Oxford Dictionary of Economics. New Delhi: First Indian Edition.

Bollen, R. (2006). Matters of deposit. e- law, 202- 210.

Charles M. Kahn, G. P. (1999). Bank deposit rate clustering: Theory and

Empirical evidence. The Journal of Finance, 2185- 2214.

Dahal, B. (2002). A handbook to banking. Kathmandu: Asmita Books and Stationery.

Fama, E. F. (1980). Banking in the theory of finance. Journal of Monetary

Economics, 39-57.

Ghosh, M. A. (2014). A Comparative Analysis of deposit products in banking

industry. Journal of investment and management, 7-20.

Gordan, J. (2020). American Institute of Banking. Chicago: The Business Professor.

Khadka, K. (2017). A field work report on deposit of prime commercial bank limited.

Kathmandu: Tribhuvan University.

Shrestha, R. (2019). A field work report on Deposit Analysis of Everest Bank Limited.

Kathmandu: (An unpublished Project Report).

Tram Nguyen, D. T. (2018). Operational efficiency of Bank loans and Deposits.

International Journal of Financial Studies, 1-13.

 31

APPENDIX –I

MEAN, SD and CV of current deposit to total deposit ratio

X X̅ ( X-X̅ )²
5.29 7.61` 5.3824
5.37 7.61 5.0176
6.77 7.61 0.7056
10.03 7.61 5.8564
10.59 7.61 8.8804
38.05 25.8424

Mean (X̅ ) = ∑X/N

= 38.05/5
=7.61%

SD (σ) = √ (X-X̅ ) / N
= √ 25.8424 / 5
= √ 2.27%

CV = σ/ X̅ * 100
= 2.27/7.67* 100
=29.60%
 32

APPENDIX – II

MEAN, SD and CV of saving deposit to total deposit ratio

X X̅ ( X-X ̅)²
39.12 39.466 0.12
40.95 39.466 2.20
38.87 39.466 0.36
38.23 39.466 1.53
40.16 39.466 0.70
197.33 4.91

Mean (X̅ ) = ∑X/N

= 197.33/5
=39.466%

SD (σ) = √ (X-X̅ ) / N
= √ 4.91 / 5
= 0.99%

CV = σ/ X̅ * 100
= 0.99/39.466* 100
=2.51%
 33

APPENDIX – III

MEAN, SD and CV of fixed deposit to total deposit ratio

X X̅ ( X-X ̅)²
37.64 40.81 10.05
39.37 40.81 2.07
42.25 40.81 2.07
42.90 40.81 4.37
41.88 40.81 1.15
204.04 19.71

Mean (X̅ ) = ∑X/N

= 204.04/5
=40.81%

SD (σ) = √ (X-X̅ )² / N
= √ 19.71 / 5
= 1.99%

CV = σ/ X̅ * 100
= 1.99/40.81* 100
=4.88%
 34

APPENDIX – IV

MEAN, SD and CV of other deposit to total deposit ratio

X X̅ ( X-X ̅)²
0.94 1.14 0.04
1.41 1.14 0.07
1.23 1.14 0.08
1.14 1.14 0
0.98 1.14 0.03
5.7 0.22

Mean (X̅ ) = ∑X/N

= 5.7/5
=1.14%

SD (σ) = √ (X-X̅ ) / N
= √ 0.22 / 5
= 0.21%

CV = σ/ X̅ * 100
= 0.21/1.14* 100
=18.42%