A STUDY ON LOAN MANAGEMENT OF

SWABALAMBAN LAGHUBITTA BITTIYA

SANSTHA LIMITED

A Project Work Report

Submitted By:

Nabal Kishor Yadav

T.U Reg No: - 7-2-1008-59-2017

Symbol No:710080035

Submitted To:

Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Faculty of Management, Yagnyabhumi Multiple Collage
Dhanushadham-9, Dharapani (Dhanusha)

i
 DECLARATION

I hereby declare that the project work entitled “A study on Loan Management of
Swabalamban Laghubitta Bittiya Sanstha Limited” submitted to the Faculty of
Management, Tribhuvan University, Kathmandu is an original piece of work under the
supervision of Mr. Bhim Raut, faculty member, Yagnyabhumi Multiple Collage,
Yagnyabhumi, and is submitted in a partial fulfillment of the requirements for the award of
the degree of Bachelor of Business Studies (BBS). This project work report has not been
submitted to any other university or institution for the award of any degree or diploma.

……………….……….

Signature

NABAL KISHOR YADAV

Exam Roll No: 710080035

ii
 SUPERVISOR’S RECOMMENDATION

The project work report entitled “A STUDY ON LOAN MANAGEMENT OF

SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED” submitted by
Nabal Kishor Yadavv of YAGNYABHUMI MULTIPLE COLLAGE, YAGNYABHUMI,
is prepared under my supervision as per the procedure and format requirements laid by the
Faculty of Management, Tribhuvan University, as partial fulfillment of the requirements
for the award of the degree of Bachelor of Business Studies (BBS). I, therefore,
recommend the project work report for evaluation.

…………………….

Signature:

Bhim Raut

Yagnyabhumi Multiple Collage

iii
 ABSTRACT

The project report entitled “A study on Loan Management of Swabalamban

Laghubitta Bittiya Sanstha Limited” is prepared within the format requirements laid

down by the faculty Management, Tribhuvan University. The main objective of this report

is to analyses the loan management of Swabalamban Laghubitta Bittiya Sanstha Limited.

It is collected and analyzed the data to determine the Loan management of Swabalamban

Laghubitta Bittiya Sanstha Limited over the period of three years from 074/075,

076/077, 078/079.This project incorporates the secondary based on the annual reports of

Swabalamban Laghubitta Bittiya Sanstha Limited and various books and articles. The

data are analyzed and presented using Tables, Graphs. It helps to find out the current loan

recovery position of Swabalamban Laghubitta Bittiya Sanstha Limited. This report

summarizes the loan management, branches, profitability, and liquidity of the bank. The

conclusion is made on the basis of the findings of the study. This report includes all the

references that have served to the findings of the report. It has some weak aspects to which

the bank needs to reform to maintain the better financial position in future.

iv
 ACKNOWLEDGEMENT
Theoretical explanation of the Laghubitta Bittiya Sanstha working procedures in campus is
very much limited to the book and no extra practical knowledge is gained. The objective of
the Field Work is to gear up students regarding the Laghubitta Bittiya Sanstha
environment, its functions and works. These types of direct studies have made quite easy
for us to know the Laghubitta Bittiya Sanstha procedure and have widened the knowledge
about the specify activities that take place in the Laghubitta Bittiya Sanstha as well.

This is a report on project sector. This fieldwork has been undertaken to present report on
the practical operation of Laghubitta Bittiya Sanstha in Nepal in its proper perspective. In
this regard fieldwork has been conducted at SWABALAMBAN LAGHUBITTA BITTIYA
SANSTHA LIMITED.

This fieldwork has been influenced by a number of standard and popular texts. As far as
popular, they have been duly acknowledged at the appropriate places. It gives me immense
pleasure to extend my gratitude to Mr. Bhim Raut, Yagnyabhumi Multiple Collage, my
family and friends Mr. Netra bahadur magar and the staff members of
SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED, without whose
Guidance it would have been impossible to accomplish this

task. Thank You.

Nabal Kishor Yadav

BBS 4th Year

Yagnyabhumi Multiple Collage

Dhanushadha-9, Dharapani

v
 TABLE OF CONTENT

Title page i

Declaration ii

Supervisor’s Recommendation iii

Endorsement iv

Abstract v

Acknowledgement vi

Table of Content vii

List of Table viii

List of Figures ix

CHAPTER I: INTRODUCTION 1-5

1.1 Background 1

1.2 Statement of Problem 3

1.3 Objectives of Study 3

1.4 Significance of Study 3

1.5 Limitations of Study 4

vi
 1.6 Organization of Study 4
CHAPTER II: RELATED LITERATURE REVIEW 6-9
2.1 Conceptual Review 6

2.2 Review of Previous Works 7

2.3 Research Gap 9

CHAPTER III: METHODS 10-12

3.1 Types of Research 10

3.2 Population and Sample 10

3.3 Types of Data 11

3.4 Data Collection Procedure 11

3.5 Instrument 12

3.6 Techniques of Analysis 12

CHAPTER IV: RESULTS AND FINDINGS 13-20

4.1 Presentation of Data 13

4.2 Major Findings 19

CHAPTER V: DISCUSSION AND CONCLUSION 21-22

5.1 Discussion 21

5.2 Conclusion and Implication 21

vii
REFRENCES 23

APPENDICES

viii
 LIST OF TABLES

Table 1 Investment of loan in various sectors 13

Table 2 Interest receive in various years 15

Table 3 Recovery of loan in various years 16

ix
 LIST OF FIGURES

Figure 1 Bar diagram of Investment of Loan in various sector 14

Figure 2 Bar diagram of interest received in various years 15

Figure 3 Bar diagram of Recovery of loan in various years 16

Figure 4 Customers view 18

x
 CHAPTER -ONE

INTRODUCTION
1.1 Background of the study
Nepal has a long cultural tradition of informal community-based micro finance including
savings and credit associations popularly known as Dhikuti, and grain savings and labour
savings systems known as Parma and Dharma Bhakari. Similarly, Guthi provided a forum
to work together for smoothly running different socio-cultural practices. Many of these
traditional systems of cooperation are still functioning in the rural areas of Nepal.

The first Co-operative Act was enacted by the government in 1960, which was followed by
the Agricultural Co-operative Act (Sajha Sahakari). In 1963, the capital of savings and
credit co-operative societies was converted into a Co-operative Bank in 1963, and in 1968
it was also converted into the Agricultural Development Bank of Nepal (ADBN). After 5
years the ADBN returned management back to the government and in 1975 the Laghubitta
Bittiya Sanstha Act was amended again.

Beginning in the 1980s a new generation of community-based savings and credit groups
began to emerge in Nepal. The Co-operative Act was amended for the third time to give
the Government more control. By this time the Savings and Credit movement had spread
throughout the country and the need for an apex coordinating body was evident. In August
16, 1988, the Nepal Federation of Saving and Credit Co-operative Union (NEFSCUN) was
formed.

After the restoration, the democratic government enacted the Co-operative Act and the
Laghubitta Bittiya Sanstha Regulations. The new Co-operative Act permitted the
establishment of a three-tiered co-operative system, and provides a legal base both for the
establishment of Laghubitta Bittiya Sanstha societies/unions/federations and application of
co-operative values, norms and principles into practice. At present, the Department of
Micro finance is working under the Ministry of Agriculture and Co-operatives. Today, the

1
Interim Constitution of Nepal has considered the co-operative sector as one of the three
pillars for national development. The major types of co-operative societies operating in
Nepal are saving and Credit, Multipurpose, Dairy, Agriculture, Fruits and Vegetables, Bee
Keeping, Tea, Coffee, Consumers, Science and Technology, and Energy. There are total
26,501 Micro finance in Nepal which includes 4,647,549 members. Around 39,752 peoples
are employed by Co-operatives. The total share capital of Co-operative is NPR
27,095,151.00. The total Deposit in Co-operative is NPR 139,543,971.00 and the total
Loan disburses by Co-operative is NPR 134,033,495.00. (Source: Department of
Laghubitta Bittiya Sanstha s Fiscal Year 2073/74)

Introduction to Swabalamban Laghubitta Bittiya Sanstha Limited

Swabalamban Laghubitta Bittiya Sanstha Limited was registered in Sakhuwanankarkatti -

05, Maheswari Division Co-operative on Bhadra 2, 2072 BS. Its total share capital is
6818400 and its total transaction is 119309722 till now. (Source: Annual Report 2077,
Swabalamban Laghubitta Bittiya Sanstha Limited)

It redeposits in Nepal Investment Bank Ltd, Himalayan Bank Ltd, Nabil Bank Ltd. The
basic objectives of this co-operative are to encourage people for regular saving, provide
competitive interest rate on deposit amount, granting credit on various sector of human life
to make people independent and self-motivated and for social and economic development
of Rural Municipality Sakhuwanankarkatti.

Introduction of Loan procedure of “Swabalamban Laghubitta Bittiya Sanstha

Limited”

Swabalamban Laghubitta Bittiya Sanstha Limited provide loan facilities to people to

eliminate poverty. By its name “Garibi Niwaran” its objective is to eliminate poverty by
encouraging people for saving and providing them loan to uplift their living standard. The
various loan provided by Swabalamban Laghubitta Bittiya Sanstha Limited are:

- Micro Loan

2
 - Micro Business Loan
1. Agriculture Loan- Maximum amount is NPR. 200000 for 1 year with collateral
with interest rate 13%
2. Business Loan- Maximum amount is NPR. 500000 for 5 years with collateral with
interest rate 13%
3. House Loan- Maximum amount is NPR. 200000 for 5 years without collateral with
interest rate 13%

1.2 Statement of the Problems

Swabalamban Laghubitta Bittiya Sanstha Limited was established in 2053 B.S. with main
objective to provide sustainable microfinance services at the doorstep of the deprived
sector target societies. Still public are unknown about trend of loan process. Public don’t
know about financial strength and weakness of organization. Swabalamban Laghubitta
Bittiya Sanstha Limited has made certain criteria for lending loans to the needy groups
with or without collateral. In order to evaluate the following issues, the researcher is
motivated to prepare this report.

a) What is the situation of deposit and loan investment of Swabalamban Laghubitta

Bittiya Sanstha Limited?
b) What is the situation of ratio of interest income to total loan?
c) What is the situation of ratio of net profit to total loan?
d) What is the diversity of loan?

1.3 Objectives of the Study

a) To know the situation of investment of loan.
b) To examine trend of ratio of interest income to loan.
c) To find out the ratio of net profit to loan

3
1.4 Significance of the Study
The importance of this report writing is to introduce the Swabalamban Laghubitta Bittiya
Sanstha Limited, Maheswari which helps to increase saving and provide loan to promote
business, agriculture especially in Maheswari area. Significance of this report is to have
experience of actual work in real job of own cementation area for the students of BBS 4 th
year. For 4th year Diploma, this report writing is very fundamental part of our course.
Report is not beneficial to us only but also to the other sector of society mentioned as
below:
a) Easy for other cooperation to know their short coming for their future program.
b) Easy for general public to know about the condition of cooperation whether they're
gaining or bearing losses.
c) Reference for the forthcoming student while preparing reports in this subject.
d) Support for policy makers while changing their ambiguous policy.

1.5 Limitations of the Study

a) Among 26,501 micro-finance in Nepal, only Swabalamban Laghubitta Bittiya
Sanstha Limited of Maheswari is taken into consideration
b) In the study, an effort has been made to make the trend analysis of the data over
3 years from F.Y. 2075/076 to 2077/078
c) Since the data are collected and analyzed within short period of time, the report
does not contain deep detail analysis of concerned Microfinance.
d) Most of the data are taken from secondary sources such as audit report, booklets,
annual reports and another book.

1.6 Organization of the Study

This study will be divided into five chapters as follows:
Chapter One deals with the subject matter of the study. The outline of the research is
presented in the chapter. The whole research will be based on the introduction chapter. It
deals with general background of the study, statement of the problems, objectives of the

4
study, significance of the study, limitations of the study and organization of the study.
Chapter Two deals with the review of literature. It includes a discussion on the conceptual
framework on loan management. It also includes review of various studies (i.e. various
books, journals & articles, bachelor degree thesis etc.) related with loan management.
Chapter Three explains the Research methodology used to evaluate loan procedure of
micro-finance in Nepal. It consists of research design, source of data, population and
sample statistical tools and financial tools and it also includes limitation of the study.
Chapter Four is the main part of the study which fulfills the objective of the study by
presenting data and analyzing them with the help of various statistical tools as per
methodology. In this chapter, descriptive analysis of the gathered data and information
using statistical as well as financial tools is carried out. In this chapter, major findings of
the study have been conducted based on primary and secondary data.
Chapter Five includes the major findings and conclusion of the study. This chapter deals
with the summary and conclusion of the study and gives recommendations for
improvement in the loan management procedure of Cooperation.

5
 CHAPTER -TWO
RELATED LITERATURE REVIEW

2.1 Conceptual Review

This chapter is basically concerned with review of literature relevant to the topic “Loan
Management of Swabalamban Laghubitta Bittiya Sanstha Limited”. Every study is very
much based on past knowledge. The previous study cannot be ignored because they
provide base for the current study. There must be continuity in research. This continuity in
research is ensured by linking current study by past research studies. This chapter
highlights the literature that is available in concerned subjects as to my knowledge,
research work, and relevant study on this topic, review of journals and articles and thesis
work performed previously.

Loan Management

The term loan refers to the amount borrowed by one person from another person. Loan
may be regarded as credit where the money is disbursed and its recovery is made on the
later date. Loan may be for short term or long term based on borrower requirements.
Laghubitta Bittiya Sanstha s are established to provide some amount as a loan to the rural
people especially to the women and the unemployed people to uplift their economic
situation.

Loans are an innovative loans management system that offers the full range of capabilities
needed in a mortgage and/or loans operation. It provides the flexibility required in creating,
maintaining, and processing commercial, consumer, mortgage and equity line of credit
loans, and takes care of management with its comprehensive reporting facility.
Furthermore, since it is highly parameterized, the various control functions allow
management to design and immediately implement loan products to satisfy individual

6
client markets. At the same time, it is ensured that cost structures that are profitable and/or
competitive are maintained.

The Swabalamban Laghubitta Bittiya Sanstha Limited has provided loan on the various
productive as well as non-productive sectors such as Agriculture, Business and Household.
The various loan provided by Swabalamban Laghubitta Bittiya Sanstha Limited are:

1. Agriculture Loan- Maximum amount is NPR. 200000 for 1 year with collateral
with interest rate 13%
2. Business Loan- Maximum amount is NPR. 500000 for 5 years with collateral with
interest rate 13%
3. House Loan- Maximum amount is NPR. 200000 for 5 years without collateral with
interest rate 13%

2.2 Review of Previous work

Kurulkar (1983) in his published work on the topic of ‘Agricultural Finance in Backward
Region’ reported glaring defects in the set-up of co- 69 operative credit system. He pointed
that out of the ten sample owners who obtained long- term credit from the co-operative
banks, 30% could not secure short- term credit. Lack of short- term or production credit to
the farmers who availed long-term credit resulted in lower output per acre, thereby
resulting in over dues.

Anand (2001) in her book titled ‘Co-Operative Agricultural and Rural Development
Banks’ examined the role of the banks in meeting the long-term credit requirements of the
rural masses in the State of Kerala. It also examined the impact of lending, and the
utilization and recovery pattern of the loans advanced. The study made a brilliant
exposition of all these issues and highlighted the real problem prevailing at the beneficiary
level.

7
Murthy (2008), in his paper titled, “Rural Finance: A Remedial Measure for Rural Poor”
focused on the role of financial services as key to enhancing economic development and
reducing poverty in rural areas. Rural finance has often led the way in addressing social,
gender and ethnic equity issues which hold families in poverty. He, however, observed that
the access was limited for poor households and for micro, 41 small and medium
enterprises. Despite rapid economic development in India the number of people living
below the poverty line has decreased only slightly. While there was a numerically strong
infrastructure of formal financial institutions in rural India, they often lacked the capacity
to provide adequate demand-oriented services. He recommended that the major constraint
of such important rural finance agencies, i.e., lack of resources should be removed, by
facilitating them to mobilize resources from capital market and other newer sources

Jayaraman and Srinivasan (2009) in their study titled, “Relative Efficiency of Scheduled
Commercial Banks in India (2001-08): A DEA Approach” attempted to measure the scale
efficiency of scheduled commercial banks in India using Data Envelopment Analysis. The
study listed out the number of efficient banks on the basis of relative performances using
efficiency scores. It was found that the general performance of scheduled commercial
banks under study was relatively high during the study period 2001-08 and the average
efficiency score was ranging between 0.9195 and 1. More than 60 per cent of the scheduled
commercial banks under study were above the average efficiency score for each study
period except for the year 2006, where it was around 53 per cent. The results show that
ICICI Bank, IndusInd Bank, ABN Amro Bank, Calyon Bank and Citibank were efficient
for all years during study period. In addition to above banks, efficiency scores of State
Bank of Travancore, Vijaya Bank, Bank of Maharashtra, and Oriental Bank of Commerce,
Axis Bank, Federal Bank and Yes Bank were above the average efficiency scores for all
the years.

Shrestha, Rubika (2016) in her case study titled ‘A case study on loan providing system of
Gramin Bikash Bank Ltd’ include that in the modern age, the loan advancement is
increased rapidly. Loan is very important for forward of economy progress of Gramin

8
Bikash Bank Ltd. is very much within the reach of public. It is an easy procedure to fetch.
It provides different external facilities to the public as well. The strength and weakness of
any bank provides its situation in front of running market in society.

2.3 Research Gap

The above review of the literature from various books, journal and thesis related to the loan
management shows that the one of the major problems of loan management in Nepalese
organization is unhealthy and delay loan payment without use of application form for loan.
The literature review also shows lack of short- term or production credit to the farmers who
availed long-term credit. So, this study attempts to analyze the loan management in
Laghubitta Bittiya Sanstha by using the 5 years data to know the situation of total deposit
and loan investment, to examine trend of ratio of interest income to loan and to find out the
ratio of net profit to loan by using the different methodology discussed below.

9
 CHAPTER -THREE

RESEARCH METHODOLOGY
RESEARCH METHODS

Method is studying ways. This is important part in report writing. Researcher should be
adopting good methodology in research. It helps to analyze, explain and interpret various
aspect of fieldwork. The objective of this study is to see the relationship between the
figures of loan management. The analysis of trend of loan management follows certain
methodology of fieldwork. The methods used for the research are discussed as below.

3.1 Types of Research

Research design is the roadmap of the whole study that guides the researcher in
formulation, implementation and control the research work. Analysis with different tools
has been conducted to find out necessary result.

There are basically four types of research design: Exploratory research design, Descriptive
research design, Comparative research design and Interventional research design. Among
them this research is based on the descriptive research design.

Descriptive research design

A research design that is developed with the aim of studying the subject of research in
detail and explains the facts and characteristics related to research problem in known as
descriptive research design.

3.2 Population and Sample

The numbers of Laghubitta Bittiya Sanstha are increasing every year. In

Sakhuwanankarkatti Ward No.5 there are total 10 Laghubitta Bittiya Sanstha. So, the
population for this report is the total Laghubitta Bittiya Sanstha of Ward No.5. For the

10
sample, Swabalamban Laghubitta Bittiya Sanstha Limited working under the District
Saving and Credit Laghubitta Bittiya Sanstha Ltd. is taken.

3.3 Types of Data

There are two types of data such as Primary data and Secondary data.

Primary data are those data which are originally collected by the researcher as per the
objectives of the research. Primary data requires fieldwork for its generation so while
preparing report we meet with the related person and get the primary data by interacting
with them.

Secondary data are those data which are prepared by others in past for their purpose and
used by researcher in the present. We collect the secondary data through annual reports and
publication provided by the organization.

The data used for conducting the research are both primary as well as secondary data.

3.4 Data Collection procedure

It can be adopted different method to collect the data, while studying we have to depend on
nature and objective of relative’s subject. To identify the planning of the project, two types
of data are collected. They are:

Primary Data: Some available procedures for collecting the primary data are:

• Questionnaire
• Visiting with relevant relative person
• Observation
• Firm’s daily book

Secondary Data: The available procedure for collecting the secondary data is Annual
audit report.

11
3.5 Instruments/ Tools
Various financial as well as statistical tools to be us in the report for the collection and
analysis of data. There are two types of instruments:

 Financial tools: - It includes ratio analysis, trend analysis and comparative

financial statement
 Statistical tools: - It includes measure of central tendency, measure of
dispersion, graphs, charts, etc.

3.6 Technique of Analysis

The techniques used for the analysis of report are:

• Tabulation Method
• Statistical tools
∑x
• Mean (x)
̅ = N
√(𝑥−𝑥̅)2
• Standard deviation (∂) =
𝑁
∂
• Coefficient of Variance (C.V) =
x̅
• Questionnaire
• Graphical Presentation
• Pie chart
• Bar Diagram

12
 CHAPTER -FOUR

ANALYSIS AND FINDINGS

Presentation of Data in Tables and Figures and Their Analysis

4.1 Presentation of Data

For the presentation of data diagrams are more attractive, impressive and easy to
understand than the numerical data. So here are the data of previous 5 years of
SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED in tabular
form, ratio, statistical tools and pie and bar diagram.

4.1.1 A) Investment of Loan

The finding is collected from the customers of the SWABALAMBAN LAGHUBITTA

BITTIYA SANSTHA LIMITED who has invested in different sectors such as
Agriculture, Household and Business. Investment in the productive as well as non-
productive sector helps to create the employment opportunities, to provide the income
maintenance and also helps to uplift the economic standard of the rural people.

Table No. 1

Investment of Loan in various sectors

Rs in ‘000
S.N Fiscal year sector 074/075 075/076 076/077

1 Agriculture 4,030,861 3,845,494 5,803,337

2 Business 8,053,619 10,150,307 14,400,760

3 Household - - -

Total 12,084,480 13,995,801 20,204,097

(Sources: Annual audit report of SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED)

13
 Figure No. 1

Bar diagram of Investment of Loan in various sector (In Rs.’100,000)

16000000

14000000

12000000

10000000
Agriculture
8000000 Business
Household
6000000

4000000

2000000

0
2074/074 2075/075 2076/076

B) Interest Received by SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA

LIMITED

The loan is provided with some interest amount. Certain percentage is charged for the
investment in loan. Interest rate may be different for the different purpose. The interests
received from the investment in loan in different year are shown below:

Table No. 2

Interest received in various years

Rs in’000
Particular 074/075 075/076 076/077

Interest Received 1,457,300 1,656,626 2,103,952

(Sources: Annual audit report of SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED)

14
 Figure No. 2

Bar diagram of interest received in various years (In Rs.’00,000)

Iterest Received
2500000

2000000

1500000

Iterest Received
1000000

500000

0
2074/074 2075/075 2076/076

C) Recovery of Loan

The loan invested is to be recovered within the specific time.

Table No. 3

Recovery of loan in various years

Particulars 2074/075 2075/076 2076/077

Recovery of loan 7,21,866 8,32,970 11,32,637

(Sources: Annual audit report of SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED)

15
 Figure No. 3

Bar diagram of Recovery of Loan in various years

Recovery of Loan
1200000

1000000

800000

600000
Recovery of Loan
400000

200000

0
2074/074 2075/075 2076/076

4.1.2 Ratio Analysis

A. Interest Income to Loan Rs in ‘000

Fiscal Year Interest Income Loan Invested Ratio
074/075 1,457,300 8,053,619 18.1%

075/076 1,656,626 10,150,307 16%

076/077 2,103,952 14,400,760 14.61%

(Source: Appendices 3.1)

16
B. Net Profit to Loan Rs in ‘000
Fiscal Year Net Profit Loan Invested Ratio
2074/075 250,370 8,053,619 3.109%

2075/076 346,425 10,150,307 3.413%

2076/077 422,546 14,400,760 2.934%

(Source: Appendices 3.2)

4.1.3 Financial Analysis of Loan Investment

∑x
32604686
̅ = N =
Mean(x)
3
= Rs.10868228.67

√(𝒙−̅𝒙)𝟐 √𝟏𝟐𝟒𝟕𝟖𝟕𝟕𝟗𝟗𝟗𝟗𝟓𝟓𝟐𝟗𝟖𝟖𝟗
Standard Deviation (∂) = =
𝑵 𝟑

√415959333318
=
3

= Rs.6,449,49.01

∂
C.V = x̅
= 6,449,49.01*100 = 5.934%
(Source: Appendices 4)

17
4.1.4 Customers View

FIGURE:-04

18
4.2 Major Finding

1. A) Investment of loan
The amounts collected from the customers are invested in the various sectors by the
Laghubitta Bittiya Sanstha such as agriculture, business and household. By analyzing the
amount of investment of loan in various years, we can find out that the total investment
amount is increasing years by years. Comparing the various sectors, the investment of loan
has increased for FY 2073/074, FY 2074/075 and FY 2075/076. After that the investment
amount is decreasing. In the contrary, the loan for business is increased here in three fiscal
years.

B) Interest received on Loan

Interest earning rate is increasing each year. The interest received in FY 2075/076 is
higher. It shows the interest received has a great impact on the investment on loan, which
encourages the Laghubitta Bittiya Sanstha to increase their amount of investment on
various sector in coming fiscal years.
C) Recovery of Loan
It is clear that from the data that recovery of loan is also increasing in each year. The
increasing amount of recovery of loan from FY 2074/075 to FY 2075/076 shows the strong
position of the Laghubitta Bittiya Sanstha in the market.

2.Ratio Analysis

A. Interest Income to Loan

According to the ratio of interest income to loan in various years, the above calculation
shows the ratios in various years are fluctuated. The highest ratio was in FY 2075/076 and
the lowest ratio is in FY 2074/075. It shows even the interest income is increasing but the
ratio of obtaining the interest income from the loan is decreased this year.

19
B. Net Profit to Loan

According to the ratio of net profit to loan in various years, the above calculation shows the
ratios in various years are fluctuated because the net profits of the various years are also
fluctuated. The highest ratio was in FY 2075/076 and the lowest ratio was in FY 2074/075.
The net profit in FY 2075/076 is increased in comparison to the net profit of FY 2074/075,
but the ratio of net profit to loan is decreased due to increase in investment of loan. It
shows when the net profit and loan amount increase, the ratio between them also increase
and if the net profit decrease then the ratio will also decrease. So, we concluded that there
is positive relation between net income, loan invested and the ratio between net income and
loan invested.

3. Financial Analysis of Loan Investment

For the financial analysis of the loan investment, the different statistical tools can be used.
The above calculation shows there is decrease in the coefficient of variance (C.V) from the
FY 2074/075 to FY 2076/077. The coefficient of variance shows the relative risk, it means
the risk of the SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED has
decreased from FY 2074/075 to 2075/076. After that the coefficient of variance (C.V) has
increased from FY 2074/075 to 2075/076, which shows that the risk has increased.
Increase in risk leads to increase in profit, which shows SWABALAMBAN
LAGHUBITTA BITTIYA SANSTHA LIMITED has invested the loan in the proper way
in recent year.

20
 CHAPTER -FIVE

DISCUSSION AND CONCLUSION

5.1 Discussions

Laghubitta Bittiya Sanstha are trading in upward trend in recent years.

SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED has also
increased its transactions in recent years. So, I would like to provide the suggestion to
the Laghubitta Bittiya Sanstha to provide more loans to the rural people to meet their
requirements. Some suggestions for the improvement of Laghubitta Bittiya Sanstha
are:

• Appropriate Training should be given to employees and the other staff members
• Proper supervision on utilization of loan

• Provide loan to backward area

• There is a need to create ‘stabilization fund’ for Laghubitta Bittiya Sanstha to
overcome this short-term problem

5.2 Conclusion and Implications

From the above presentation and analysis of the data we conclude that the collected
funds are utilized properly. The invested money has been invested in the productive
sectors such as Agriculture and Business. The small amount is invested in the
nonproductive sector i.e. household. The increasing investment in business can
generate income and create employment opportunity in the society. Also, the invested
money is satisfactorily returned back and interest is earned.

From the above ratio analysis of the interest income to loan, we concluded that there is
positive relationship between interest income, loan and ratio. If the interest income and
loan increased then the ratio between interest income and loan will also increase and

21
vice versa. Also, if we look for the ratio analysis of the net profit to loan, we concluded
that there is positive relationship between net profit, loan and ratio. If the net profit and
loan increased then the ratio between net profit and loan will also increase and vice
versa.

22
 REFERENCE
• Anand (2001), ‘Co-Operative Agricultural and Rural Development Banks’
• Jayaraman and Srinivasan (2009), “Relative Efficiency of Scheduled
Commercial Banks in India (2001-08)

• Kurulkar (1983), ‘Agricultural Finance in Backward Region’

• Murthy (2008), “Rural Finance: A Remedial Measure for Rural Poor”,

Vinimaya

• Shrestha, Rubika (2072), ‘A case study on loan providing system of Gramin

Bikash Bank Ltd’
• https://opendocs.ids.ac.uk

23
 APPENDICES
1. SWABALAMBAN LAGHUBITTA BITTIYA SANSTHA LIMITED - Garibi
Saving and Credit Cooperation Society

2. Questionnaire

Loan application and processing:

Name:

Age:

Profession:

Phone no.:

1. Who initiates you to approach the Laghubitta Bittiya Sanstha for your first loan request?

a) Self b) Villager c) Staff

2. Have you met the loan provision service as your expectation?

a) Yes b) No

3. Is the interest rate on loan is adequate in current situation?

a) Yes b) No

4. Do the application requirements and procedures convenient and simple?

a) Yes b) No

5. Is the loan processing time short and convenient for you?

a) Yes b) No

24
6. For how long are you loan client of the Laghubitta Bittiya Sanstha?

a)1- 2 years b) 3 years c) 4 years d) 5 years

7. How do you evaluate your so far relationship with the Laghubitta Bittiya Sanstha as a
loan client?

a) Excellent b) very good c) good d) fair e) bad

8. In which part do you think the Laghubitta Bittiya Sanstha needs improvement? (Hint.
tick that Applies)

a) In accepting loan applicants c) In follow up & collection of loans

b) In collateral estimation. d) In processing & approving loans e) both b & d

9. Do you think the loan repayment duration convenient to your business?

a) Yes b) No

10. Do you think the amount of loan approved was enough for the intended
Purpose per your request?

a) Yes b) No

Thank you!

25
3. Ratio Analysis

3.1 Interest Income to Loan

Ratio = Interest Income*100 / Loan Invested

074/075 = 1,457,300*100 / 8,053,619= 18.1%

075/076 = 1,656,626*100 / 10,150,307= 16.32%

076/077 =2,103,952*100/ 14,400,760 = 14.61%

3.2Net Profit to Loan

Ratio = Net Profit*100 / Loan Invested

074/075 = 250,370*100 / 8,053,619=3.1%

075/076 = 346,425*100 / 10,150,307= 3.4%

076/077 =422,546*100 14,400,760= 2.93%

26
 4.Financial Analysis of Loan Investment
Fiscal Year Loan Amount (x-x̅ ) ^2
074/075 8,053,619 79,24,74,17,00,000

075/076 10,150,307 51,86,70,70,56,000

076/077 14,400,760 124,87,12,54,18,000

Total 32,604,686 255,98,62,41,90,000

Mean(x) = ∑x 32,604,686
̅ N = = Rs.108,68,228.66
3

√(𝒙−̅𝒙)𝟐
Standard Deviation (∂) = = √255,98,62,41,90,000 /3
𝑵

= √85, 32,87,48,40,000

= Rs29,20,394.638

C.V =
∂∗100
=
29,20,394.638
∗100
=26.87%
x̅
108,68,228.66

27
OOO,OOq
 s»asdamban Laghubitta Bittya Sanstha
Financial Slatements as of FY
Compinson of Unsuditgd ind Audittd 2075/76

IN Cetrrves ctid'Su Ins

I I fkbenture «nd Bond

¿¿#qqy 7,4Q0.4|2 (63) 0.0M

1.6
' t7

2.I t37,004 l43037 6,333 4.62'h I ds

Z.2 4H,937 452,025 (2,911) 0.096 !

2.3 t55,996 467,78t I 1,78?

2.4 14,400,760 14.397,892 (2,868) 0.02&

2.5
16
27

2,103,952 2. I 16,62 I 12,669 196 W

3.2 T,03B,291 1,03L566 (725) 0% â w sw g

3.3

3.4 288,772
3.5

3.6

3.7

3.8

3.9 0.004
3. I0 W, ')’ 0.00
2 66J,913
3.S+3.10 674.936 1},0 t.66G
3.11 Extraordirta Income/Ex enses (Net)

3.12 Provision For Stall Bonus

ñ. t3 Provision For Tax
G N•t Pmfii/Loo (F-