A PROPOSAL ON LENDING POLICY OF

MUKTINATH BIKASH BANK LIMITED

By
Parbin Pokhrel

Sahid Narayan Pokharel Ramapur Campus

TU Regd.No: 7-2-0472-0056-2015

Submitted To
The Faculty of Management

Tribhuvan University

Kathmandu

In partial fulfilment of the requirements for the degree of

Bachelor of Business Studies (BBS)

 Sainamaina

Falgun, 2075

CHAPTER - I

INTRODUCTION
1.1 Background of the study

A loan is the lending of money by one or more individual, organization to other

individuals, organization in exchange for future repayment of the loan value amount,
along with interest. Since lenders are taking risk that borrowers may not repay the loan,
they have to offset that risk by charging a fee known as interest. Loan typically are
secured and unsecured. A secured loan involves pledging on assets (such as land,
building ) as collateral for the loan . If the borrowers default or doesn't payback the loan,
the lender takes possession of the assets. Under unsecured loan if borrowers doesn't
payback loan, lenders cannot take anything in return.

Most of the bank provides loan and take interest from borrowers. The main source
of earning to bank and financial institutions is its loan provided in different sectors. If
loan is provided without proper scanning of borrowers, then it may be main cause of
failure of bank. Loan investment can be provided in two sectors such as a productive and
non-productive sector. Example of productive loan: loan provided for purchasing E-
rickshaw, for farming, for Tractor purchase etc. Example of non-productive loan: loan for
purchasing, personal car, loan for marriage etc. Before providing loan we have to scan
5cs namely: character, capacity, capital, conditions and collateral. The title of this report
“Lending policy of Muktinath Bikash Bank Limited (MNBBL)” is selected in order to
find out lending policy of MNBBL in various sectors throughout the last 5 year.

1.2 Profile of the organization

Muktinath Bikas Bank Limited (MNBBL) is another renowned name in Nepalese

banking sector. Established on Poush 19, 2063 B.S., Muktinath Bikas Bank Limited has
obtained permission from Nepal Rastra Bank to operate as a “B” class national level
financial institution,

At present the Bank has been upgraded as National Level Development Bank from
regional level by way of acquisition to Dhading based development Bank Civic
Development Bank Limited.

The central office of the Bank is situated at Kamaladi -28, Kathmandu of Kathmandu
District. It has a special wing for Micro-Credit finance which is a model for micro
banking activities throughout the development banks in Nepal.

The Bank is committed for good corporate governance practices and banking activities
with prudent banking culture. It has been offering various products and services for its
customer with competitive rate in market. It has been able to provide diversified service
(Modern Banking, Limited Banking and Microfinance) backed by the latest technology.

At present MNBBL is one of the largest National Level Development Bank with Branch
Network of 113 modern banking branches, 1 extension counters and 93 microfinance
desks with depositor’s base of more than 4 lakhs customers. We are in the process of
opening more branches in this fiscal year. Muktinath team is always determined to
provide services which are supreme in the industry.
1.3 Objective of the study

The main objectives of this study is to analyze the lending policy MNB Bank ltd.
However, the specific objectives of this study are:

 To analyze various sector of loan investment

 To examine the relationship between loan investment and recovery of loan

1.4 Research methods

For preparing this report, field work research method will be primary used. It also
a touch the area of descriptive research because this report has been prepares on the basic
of annual report and other secondary source. The following methods will be adopted for
the analysis:-

1.4.1 Types of research

Research investigation can be divided into two broad types relative to their purpose;
Applied and Basic Research.

a) Basic research: - Basic research is also called pure or fundamental or

theoretical research. A research that is conducted to acquire depth knowledge on any
issue or for the development of theory is known as basic research.

b) Applied research: - This research is associated with a specific project

or problem. Applied research is carried out to find solution to a real life problem and is
problem oriented as well as action directed

1.4.2 Population and Sample

There are many development banks in Rupandehi district. But Muktinath Bikash Bank ltd
had taken the sample of study because it is one of the popular development Bank in
Rupandehi. Bankers, staffs, businessman, farmers and public of Rupandehi district are
the population of the study. Samples are collected judgmentally from the different sector.

1.4.3 Types of data

Data are building block of any research. In fact, research in itself is the quest for
credible data. There are basically two types of data collection. They are primary and
secondary data.

a) Primary Data: - Primary data is original data gathered by researcher to

solve the problem under consideration at that time. Such data had not been previously
collected.

b) Secondary Data: - Secondary data is in the form of raw data and published
materials. However, unpublished data such as the records, reports or statistics gather or
complied by other prior to the study is also secondary data.

1.4.4 Data Collection Procedure

In order to collect data both primary as well as secondary sources of data and
information were used as data were found generally, in secondary sources. In this case,
the secondary data concerning the actual financial position of the Cooperative was
collected from network the records, and the annual reports of the Cooperative as well as
balance sheet. Beside these sources information were collected from different kinds of
books, journals and newspaper. As such research programmed has been considered as
specific one.

1.4.5 Technique of the data analysis

 Various statistical tools were used after compilation. The data was
process, tabulated and graphed to analyze and achieve objective of the study. Hence, for
the analysis and evaluation of the report average, percentage, arithmetic mean, trend
analysis and correlation are used.

 Tables
 Bar diagrams
 Pie charts
 Average
 Percentage

1.5. Limitations

The criteria, which are not covered by this study, are as follows: -

 The study has been covered only the Rupandehi Branch.

 This study is mostly based in secondary data through annual report.
 The effectiveness of report depends upon the validity of the data provided by the
bank.
 Only simple statistical tools have been used to analyze the data.
 This study deals only with the total loan investment but not with the other area of
the bank

TIME ALLOTMENT

ACTIVITY DAYS

Topic Selection - 3 days

Proposal writing and submitting - 3 days

Literature review - 7 days

Data Collection - 6 days

Data Analysis - 5 days

Preparation of Report - 6 days

Proofing Reading - 3 days

Setting & Printing - 2 days

Total 35 days

Submitted
By
Parbin Pokhrel
BBS 4th
Year
SNPR College
Finance
Group