Chapter – 1
INTRODUCTION
1.1 Origin and Evaluation of Banks
A bank is a financial institution, which accepts the demand and time deposit from
business, institution, individual and engages in both business and consumer lending. It is
therefore essentially a dealer in money. Bank in present context is not only confined to
accepting deposit and disbursing loan, its scope of work has no limit. A bank plays key
role in the industrialization and development of economy of a country.
As per banking regulation Act of India - "Banking means the accepting for the
purpose of landing or investment of deposit of money from the public repayable on
demand or otherwise and withdraw by cheque, draft or otherwise."
The commercial Bank Act 2031 defines a commercial bank as a "Bank which
deals in exchanging currency accepting deposit, giving loans and doing commercial
transitions."
Little is known about the banking before the twelfth century, there was not any
banking institution. There were three pioneers of Modern Bank.
1. Merchants
2. Money Lenders
3. Goldsmiths
The term "bank' is derived from the Italian word 'Banco' which refers to the bench
or which the banker would keep its money for lending and exchanging. The first bank
called the 'Bank of Venice was established in Venice, Italy in 1157 A.D. to finance the
'Bank of Genoa7 was established in 1401 and 1408 respectively. After that the "Bank of
Amsterdam, was established in 1609 A.D.
When "The Bank of England" was established in 1940 it played the vital role for
the development of modern banking system. After its establishment, banks spread all
over the world.
Big joint venture banks are established in every country. There are so many big
banks, which play a role to develop the undeveloped country to provide
Them financial assistance and loan like World Bank, Asian Development Bank etc.
1.1.1 Origin and Evaluation of Bank in Nepal
The history of modern banking business in Nepal is very short and is only 6
decade. If we try to see the history of banking transaction in depth, evidence of money
lending function are found in practice before 8th century. In 780 B.S. Gunakama Dev the
ruler of Kathmandu reconstructed Kathmandu town by collecting funds from people. In
14th century 'Tanka Dhari' system had been running. In the period of Ranodip Sing in
Kathmandu established an office called 'Teja Rath Adda' From this office the government
distributed salary to their employees and it provided loans to government employees 5%
of interest against the security of gold, silver etc.
1
Because of the development of economic activities in Nepal, the above institution
could not fulfill the needs of people so m Kartik 30, 1994 B.S. Nepal Bank Limited was
established as one of the semi government commercial bank, which had 10 million
authorized capital and 842000 paid up capital. It lias done the pioneering functions in
spreading the banking habits among the people.
Having felt a need of a central bank to control and direct the commercial bank and
help the government for making monetary policies, Nepal Rastra Bank was set up in l4
Baishakh 2013B.S. To fulfill the growing, credit requirements of the country the
Commercial bank 'Rastriya Banijaya Bank' was established in 10 Bhadra 2022 B.S.
Rastriya Banijaya Bank is also to provide facilities for the economic welfare of the
general public. Nepal is an agriculture country to develop agriculture system and
industry. Agriculture Development Bank and Nepal Industrial Development Corporation
were established in 2024 B.S. & 2016 B.S. respectively. The initiation of the financial
sector liberalization policy by Nepal Rastra Bank, a board of joint venture banks entered
with the view to accelerate the race of development of nation. At present there are many
joint venture banks which are running successfully in a competitive environment. His
Majesty government deliberate policy of allowing foreign joint venture banks to operate in
Nepal basically targeted to encourage local tradition commercial bank to enhance their
capacity through competitions efficiency mechanization modernization, computerization
and prompt customer services. Nepal Arab Bank Limited was established in 2041 as a
first foreign joint venture bank. Now in our country, there are 17 commercial banks, 15
development banks, 48 Finance companies, 34 co-operative, (Quarry finance)
organization and 13 non-bank financial institutions.
The registered Commercial Banks are given below.
1) Nepal bank Ltd. (1994-7-30) Kathmandu
2) Rastriya Banijya Bank (2022-10-10) Kathmandu
3) Nepal Arab Bank Ltd. (2041 -3-29) Kathmandu
4) Nepal Indosuez Bank Ltd. (2042-11-16) Kathmandu
5) Nepal Grind lays Bank Ltd. Standard Chartered Bank 2043-20-16) Ktm
6) Himalayan Bank Ltd. (2049-10-5) Kathmandu
7) Nepal SB1 Bank Ltd. (2050-3-24) Kathmandu
8) Nepal Bangaladesh Bank Ltd. (2051-2-23) Kathmandu
9) Everest Bank Ltd. (2051-7-1) Kalhmandu
10) Bank of Kathmandu Ltd. (2051-11 -28) Kalhmandu
11) Nepal Bank ofCylon Ltd. (2053-6-28), Rupendehi
12) Lumbani Bank Ltd. (2055-4-1) Chitwan Bharatpur
2
13) Nepal Industrial and Commercial Bank Ltd. (2055-4-5) Biratnagar
14) Machhapuchare Bank ltd.
15) Kumari Bank Ltd.
1.2 Meaning of Banks
Banks are the most important financial institutions in economy. Bank
constitutes an important segment of financial infrastructure of any country. Economic
development &, fiscal development are related to each other.
The industrialization of continental Europe was mainly because of the Banks
are initiation of the venture banks. The development of Japan bank plays a vital role.
Banks are the financial institutions where the money is deposited and the
needy people come in the bank for loans to fulfill the requirements of cash. So we can
say that the main game of bank is to play the money and through it generate profit.
Actually the bank collects money from general public from attracting them with sound
interest rate in their deposit through the money they have collect from the public they
provides loans to the business house, industry, ready people and other potential sector,
with charging some interest, which is higher then the interest rate, they provide in the
deposit . Just by collecting cash from saver and providing loans to the investor, we can
say that the bank acts an agent between saver and the investor.
To know the precise and clear meaning of bank, some expert's definitions can
be given. Chamber's twentieth century Dictionary defines a bank as an "institution for
keeping, lending and exchanging etc of money".
According to World Bank, "Banks are the financial institutions that accept
funds in the form of deposit repayable on demand or short notice."
According to Crowther "A banker is a dealer in debts. The bankers business is
then to take the debts of other to people, to offer his own in exchange and thereby to
create money.
Therefore a bank is a financial institution which collects 'deposits and in turn
provides loans by creating credit. Today banking is such a vague term, it does a lot more
than deposits and credits , like remitting of money, issue of money , guarantee, letter of
credit, controlling, payment, other agency functions, monetary activity of country etc. are
also the major functions of bank. This multiplicity of bank service and function has led to
a bank being labeled ''financial supermarket"
3
1.3 Commercial Bank
Although banks can be categorized in to different types on the basis of it's
function, objective etc.. The word 'bank' always refers to the basically the 'commercial
bank' and its functions. Basically the functions of commercial banks all over the world are
same. Basic functions are various types of deposits facilities namely current, saving and
fixed safety of public money, remittance of money, guarantee lockers facilities, letter of
credit, loans servicing as agent of credit, foreign exchange etc. The commercial banks of
Nepal also do all these functions.
Mainstream function of commercial bank remains the mobilization rigid and
scattered saving of public for providing credit to needy firm, industry or people to get
productive use. All other functions can be said as ancillary functions.
Commercial bank is a profit oriented financial service institution certain of the
interest is given to the depositors and a certain rate of interest is charged by the bank in
the loan facility. The second charged interest rate is higher than first.
It is the main earning of the bank. According to Nepal company Act 2031 B.S. "A
commercial bank refers to such type of bank which deals in money exchange , accepting
deposits, advance loan and commercial transaction except specific banking related to
co-operative, agriculture, industry and other objectives. Basic sources of funds of
commercial bank are capital; reserve, undistributed profit and various types of deposit
basic uses of funds are loans, advance and investments.
1.4 Types of Bank
The classification of bank presents many problems. It is very difficult to have a
classification that can be applied to all countries. Today is the age of specialization and
a single institution can not fulfill all the services demanded by the customers. So the
banks are classified according to their specialization in different functional areas.
Different types of banks are given below.
1) Commercial Bank
2) Central Bank
3) Agricultural Bank
4) Industrial Bank
5) Rural Development Bank
6) Savings Bank
7) Exchange Bank
8) Universal Bank
4
1.5 Need of Bank
We can say that without banks the modem complex economy could not run
properly Bank plays vital roles for the monetization of economy as well as repaid
development of economy. Banks mobilize the internal resources for productive use. So
they are able to earn more profit on one hand and develop the nation on the other. The
banks are needed for the following reasons.
1) To mobilize saving
2) To create capital
3) To uplift the poor
4) To save the wealth and precious goods
5) To create employment
6) To transfer money
7) To promote private investment
8) To monetize of economy
1.6 Introduction of Everest Bank Ltd.
In initiation of financial Banking sector liberalization policy by Nepal Rastra Bank
many joint venture banks have been established in Nepal since 2041. Because of the
government open policy for the joint venture bank operation, the Everest Bank Limited
was established as a joint venture with Punjab National Bank India. It was established in
Kartik 1, 2051, with authorized, issued and paid up capital of 120 millions. 50% of total
capital is invested by Nepalese promoters; 30% of total capital is invested by Panjab
National Bank and 20% of total capital is invested by general public.
The capital structure of Everest Bank Limited in 16 July 2002
Authorized capital
Rs. 40, 00, 00,000
Issued capital
Rs. 26,40,00,000
Paid up capital
Rs. 25, 91, 18,600
In 2058/59 the bank was able to collect deposit Rs. 5,46,66,09,805 in various
accounts and it was able to provide loan Rs. 4,04,42,28,000. It has 217 employers and
fourteen branches. It can earn Rs 8, 53, 47,446 as net profit in fiscal year 2058/59.
5
Board of Director of Everest Bank Limited.
1)
Mr.Bishnu Krishna Shrestha
-
President
2)
Mr. S.S. Dabas
-
Executive Director
3)
Mr. Maitra Dev Pathak
-
Member
4)
Mr. Nepal Krishna Shrestha
-
Member
5)
Mr. Ved Krishna Shrestha
-
Member
6)
Mr. Arun Man Sherchan
-
Member
7)
Mr. C.P. Swarankar
-
Member
8)
Mr. Naveen Bhakta Shresth
-
Member
9)
Mr. Shiva Sharan K.C.
-
Member
Over the years Everest Bank Limited opened lew new brandies to increase
volume of its transactions.
Head office & Main Branch:
New Bancshwor
Branches:
1) New road, Kathmandu
2) Teku, Kathmandu
3) Pulchock Lalitpur
4) Satungal Kathmandu
5) Lazimpat, Kathmandu
6) Butwal, Rupandehi District
7) Birgunj, Parsa District
8) Biratnagar, Morang District
9) Janakpur,Dhanusha District
10) Dangadhi, Kailali District
1 l) Manglapur, KLailali District
12) Simara ,Bara District
13) Duhabi, Sunsari District
1.6.1
Services Provide By Everest Bank Limited.
EBL has been providing different services to their customers all of it's
Branches in and outside the valley.
6
I)
All Branch Banking Services
A person who has an account in any branch of EBL can make certain operations
withdrawal and deposit of cash and checks from any other branches easily. Draft in
Indian rupees on any Panjab National Bank branch can be transferred in competitive
rate.
II) Accepting Deposit
The main function of commercial banks is to accept deposits. In the same way
EBL. as a commercial bank has service to accept deposits. Deposits are mainly of three
types.
* Current Deposits
* Fixed Deposits
* Saving Deposits
III) Loan Services:
The main functions of commercial banks are to provide loans to potential
customers. In the same way BBL provides following types of loan.
a) Loan and advance
b)
Cash credit
c)
Overdraft
d)
Discounting of bills
e)
Other loans like hire purchase, advance education loan scheme, term loans,
consumer loan etc.
IV) Agency Services:
On this ground EBL perform following service:
* Issue the letter of credit, circulate notes, traveler cheques , bank drafts
etc.
* Dealing with the transactions of foreign exchange business.
* Servicing agent of corresponding on behalf of the client.
* Purchase and sales of different types of securities remittance of funds.
* Acting as executors
* Providing computerized services.
* Keeping valuable articles in safe lustily.
* Collection and payment of cheques, bills, promissory notes, coupons,
dividends, interests and other types of bonds.
7
V) Education Loan Scheme.
The future of the country lies in the hands of the younger generation. There are
many meritorious and deserving students aspiring to reach fur the sky. EBL cares to
ensure that their dreams do not remain unfulfilled due to lack of funds.
Education loan scheme is the latest in a series of endeavors by LBL to help
aspiring students achieve their desired goals. Hits scheme provides the right answer for
students who wish to pursue higher studies, in Nepal or abroad, but do not have the
means to do so. The scheme very well takes care of increasing costs of admission,
books, instruments, loading boarding etc.
VI) Fixed Deposit Scheme
EBL provides different types of fixed deposit schemes for its value able clients. In
case you need bulk amount in future to meet your financial needs like children's higher
education, their marriage, you can open an account under cumulative deposit scheme
and earn higher term deposit interest. There are other two types of deposit scheme,
unfixed deposit & Recurring deposit.
1.6.2 Type of Deposit of Everest Bank Ltd.
It is important that a commercial banks deposit policy is the most essential policy
for its existence. The growth of bank depends primarily upon the growth of its deposit.
The bank mobilizes its deposit to achieve its profit earning objective.
The volume of funds that management will use for creating income, through loans
and investment determined by the bank's policy governing deposits. In other words when
the policy is restrictive the growth of bank is retarded or accelerated with liberalization in
the deposit policy. The volume of credit extension depends upon the deposit base of a
bank. The deposit creating power of commercial bank forces to raise the assets give rise
to liabilities. Traditionally, file deposit structure of bank was determined by depositors.
There is a regular change in this view in the modern banking industry. Thus banks have
evolved from relatively passive acceptors of deposits to active bidders for funds.
Deposits are one of the aspects of liabilities that management has been influencing
through deliberate actions. The following factors play a key role in attracting deposits:
I) Interest rate
II) Types of customer
III) Physical facilities available in the bank.
IV) Management accessibility to customers.
V) Type and rang of services offered.
One of the most importance functions of EBL is to accept deposit. Deposits are
the main sources of fund of EBL. There are mainly three types of deposit accounts of
EBL, which brief features are given below.
8
Saving deposit Account
Saving deposit is one of the deposits collected from small and low income
depositors. The bank usually pays small interest to the depositors are allowed to
withdraw their money by cheque to the amount prescribed by bank. Tills account is
called saving account.
Current Deposit Account
Current Deposit is also known demand as deposit. Under this any amount may be
deposited in this account. There are no restriction regarding the number of withdraws or
the amount of the withdrawals. The bank does not pay any interest on such account but
charge a small amount on the customers having current account as providing services,
this account is useful for traders, businessmen and governments.
Fixed deposit Account
A fixed deposit is one where a customer is required to keep a fixed amount with
bank for a specific period generally who does not need money for fixed time. The bank
pays a higher interest on such deposit. In USA this type of deposit is called Time
Deposit'. The bank is free to make use of this money for granting loans and investment.
Except above, the EBL has calls deposit and other deposit schemes.
1.6.3
Meaning of saving Deposit Account
Meaning of saving account is a kind of deposit A/c which will be opened by
general savers and middle-class people. It can be opened by anybody on his own behalf,
on behalf of any other of whom he/she is a guardian. The main aim of opening saving
deposit account is to promote thrift among the lower income-class people. Saving
deposit indicates the habit of Nepalese people to deposit money in the bank and help to
accumulate the scattered resources & invent them in needy and productive sector. In this
deposit account, bank may give lower rate of interest and money can be withdrawn with
minimum limit given by the concerned bank. Pro-notice is needed when sums over fixed
amounts are required to be withdrawn.
According to Nepal Banijya Bank act-2031B.S, "Deposit mean amount deposit in
current, saving and fixed deposit account of bank or financial institution". Saving account
represents the accounting records of funds deposited for saving purpose.
Concept:
Saving account is generally meant for individual person and non-profit making
organization. However, Nepal Rasta Bank (NRB) has allowed some international
organization to open the account. The bank provides interest on the deposit maintained
in this account. Withdrawal of fund from the account has certain restrictions, i.e., amount
of withdrawal per week/per month.
In order to withdraw amount beyond allowed limits, a notice is to provided to the
bank seven days in advance failing no interest will be given on the balance maintained in
the
account
for
the
month.
Generally
interest
is
payable
on
half - yearly basis.
9
Personal account may also be saving account. The account can either be in
Nepalese rupee or foreign currency. Foreign currency accounts are regulated by the
directives/circular of foreign exchange department of NRB issued from time to time and
EBL's own rulers. It is necessary to be familiar with these directives and update oneself
As these circulars are amended from time to time.
1.6.4 Role and Importance of Saving Deposit Account
Role:
* To invest Money in business sector such as finance, loan etc
* Return specified interest to customer
* To earn profit
Importance:
*
*
*
To mobilize the deposit
Making habit of saving a small deposit or money
Safety for small deposit money for client
Document necessary for opening saving A/c
The documents required for opening saving A/c by various firms and individual are as
follows:
Corporate Account
* Company registration certificate.
* Board resolution for opening and operating account in any or specified commercial
bank.
* Article of Association.
* Memorandum of Association.
* Registration & Income tax certificate.
* Citizenship Identification of company secretary or chairperson or at least two
directors in case company Secretary is not available.
Partnership Firm:






Partnership deed
Registration certificate
Citizenship of the partners
Income tax certificate.
Authorization if anyone of the partner is to operate the account.
Identification of mandate, if any.
Sole Proprietorship firm
 Registration certificates
 Income tax certificates
 Citizenship of the proprietor
 Identification of mandate
10
Personal Account
Identification document (Passport, citizenship or Identity card for Nepalese
citizen). For foreigners other the Indians, passport is required. Indian nationals may also
submit temporary citizenship certificates issued by Indian Embassy and introduction by
an account holder or reference, if possible.
1.6.5 Procedure of opening saving Deposit Account
When the account opening development receivers request for opening saving
account from the customer, the department will provide account opening from and two
sets of signature card. Saving account as suitable for person or joint account but not for
a company. The authorized person and the account holder must fill the form and
signature cards in the presence of the bank staff.
The entity or individual is required to submit copy pi the required documents as
explained earlier as the time of opening A7c. The account holder can authorize third
party to operate the account by providing mandate. A mandate from needs to be
executed for this. The person authorized to operate the account on behalf of the account
holder must fill the from and signature cards in the presence of the bank staff.
The entity or individual is required to submit copy of the required document as
explained earlier as the time of opening A/C .The account holder can authorize third
party to operate the account by providing mandate , the bank must obtain proper in
densification of mandate food .Non-Government organization(NGO) can also open the
saving account .but there are very important tiling like passport identity card and
citizenship required for NGO.
When account opening form and signature cards are filed, the bank staff checks
documents for their correctives and completeness. The concerned officer must verify all
copies of documents with original copies.
Account opening from will provide space to fill the following information:*
*
*
*
*
*
*
Type of account
Full name of account holder
Address
Date
Amount (In words)
Statement delivery instruction
Copy of documents provided to the bank
11
Once the authorized person properly files the form, the bank's staff must check
that bank spaces are properly filled. Complete address of account holder should be filed.
Account numbers is to be allocated when the staff is satisfied with the form and
submitted documents. Then the account opening staff will insert the information in
computer and will forward the application form along with the documents to department's
supervisor for approved.
1.7 Statement of the Problem
As we know that the main objective of a commercial bank is to maximize its profit
by mobilizing it's resource in must efficient manner. But if the bank fails to collect
adequate deposits then it losses profitable opportunities and hence fails to generate
profit. If a bank is not able to collect sufficient deposit, then it should look forward for
policy amendments, otherwise there will be a question in the survival of that particular
bank in this highly competitive commercial sector.
In order to attract sufficient number of depositors towards bank i.e. from the
viewpoint of quantitative & quality deposits, the bank should analyze its position is cash
collection & the trend of deposits in their bank.
1.8 Objectives of the Study
Every work has aims and objectives. Without aims and objectives the works could
not run forward properly. In the same way, the objectives of this case study is to analyze
the total deposit of Everest bank limited, Head of the New Baneshwor, other sub
objectives are as follows





To analyze the total share of EBL in deposits in Nepal.
To analyze the share of saving deposit out of total deposit on EBL.
To analyze the trend of saving deposit in EBL.
To analyze various fixed deposits schemes facilities only provided in EBL.
To draw out problems in saving deposit management.
1.9 Limitation of the study:
This study is conducted in partial in fulfillment it the requirement for the BBS 3rd
year so it possesses some limitation of its own. Though the report w ill try lo find the
exact position of the bank regarding saving scheme, it cannot be accurate unless
compared with other such commercial banks. But in this report, only EBL is taken. The
analysis of the data used is for past five years only. Most of the data used are of
secondary type in forms of publications of the bank and other sources.
It focuses only on saving schemes, therefore, overall position of EBL cannot be
judged by this report.
12
1.10 Research Methodology
This is an analytical case study of Everest Bank Limited saving deposit Account. Main
source of data is to publication from EBL and some publications NRB, CBS, and MOF as
secondary sources are also taken. Primary data from interview with bank officials are
also collected wherever necessary.
13
Chapter - 2
PRESENTATION AND ANALYSIS OF DATA
The most valuable and crucial tool to show the true position of any organization is
its past data. By analyzing the data, one can find out the core problems or limitations of
the organization. Therefore, this chapter focuses on presenting the data related to EBL
saving deposit. Interpretation of data is to show the position of EBL regarding its saving
deposit.
2.1 Interest Rate of E.B.L.
In return of collected amount, The EBL use to provide some interest to the
depositors. The following table shows the interest rates on different types of account of
this bank with effect from 24th February 2003.
Table 1
S.No.
Types of Deposit
I.
Current deposit
2.
Saving Deposit
NRS
US Dollar
3.
Fixed Deposit
Interest Rate of EBL
Time
Interest Rate %(
P.A.)
All
All
5.00
1.50
14 day to less than 1 month
1 month to less than 3 month
3 month to less than 6 month
6 month to less then 1 year
1 year to less than 2 years
2 year and above
3.00
3.50
4.50
5.00
5.50
6.00
2.2 Total Deposit of EBL.
The first and most important thing to know is the total deposit trend in EBL. Total deposit
trends refer to the total deposits of public in various accounts of EBL during certain
period.
Table-2
Total Deposit of EBL (in lakhs)
Total Deposit
2054/55
11249
———
2055/56
19489
73.25
2056/57
30547
56.74
2057/58
45745
49.75
2058/59
54666
19.50
(Source: Annual Report of EBL)
Year
14
%
Diagram - 1
Amount in Lakhs
Total Deposit of EBI
60000
50000
40000
30000
20000
10000
0
Total Deposit
2054/55 2055/56 2056/57 2057/58 2058/59
Fiscal Year
The table shows that total deposit of trend of EBL over 5 years. The deposit of
EBL has Rs. 11249 lakhs in 2054/55. It has increased to Rs. 19489 lakhs in year
2055/56 . It has increased to Rs. 30547 lakhs in 2056/57. Rs. 45745 lakhs in 2057/58
and Rs. 54666 lakhs in 2058/59. It's increasing ratio has 73.25% in 2054/55. It has
increased by 56.74%, 49.75%, and 19.50% respectively in following years.
If shows that the deposit of EBL has increased, which is quite satisfactory. The
increasing ratio is decreasing trend but it is satisfactory. The ratio decrease because of
the competition in banking business and high amount of deposit. In every year the
deposit increasing ratio is more than 50%.
The figure 1 also shows the deposit trend of EBL over five years. It shows that the
deposit 'collection of' EBL has been increased every year which is quite satisfactory. It is
necessary to know the contribution of current, saving, fixed, calls and others deposit to
total deposit. Without this deposit the total deposit would not exist, show it is necessary
to find out composition of current, saving, fixed, calls and others deposit.
Table No: 3
Total Deposit Structure of EBL (In lakhs )
Current
Saving
Fixed
Calls
Others
Deposit
Deposit
Deposit
Deposit
Deposit
Amt. %
Amt
%
Amt
%
Amt %
Amt %
1276 11.34 2178 19.36 7214
64.1
173
1.5
4.08 3.63
3
4
2061 10.58 4480 22.99 11321 58.0
479
2.4
114 5.89
8
6
8
2744 8.98
8917 29.17 14789 48.3
1854 6.0
227 7.42
7
6
0
4701 10.28 1384 30.25 22846 49.9
2256 4.9
210 4.60
1
4
3
1
(Source: Annual Report of EBL)
2.3
Year
Total
deposit
2054/55
11249
2055/56
19489
2056/57
30574
2057/58
45745
15
Diagram - 2
25000
20000
2054/55
15000
2055/56
2056/57
2057/58
10000
5000
0
Current Deposit
Saving Deposit
Fixed Deposit
Call Deposit
Other Deposit
In the above table and figure shows the deposit structure of EBL for 4 years
EBL's fixed deposit is very strong. It's ratio in total deposit of 64.13% in 2053/54 and it is
49.94% in 2057/58. Saving deposit have second position it shows that the saving habit
of Nepal's people are strong. Also EBL able to collect deposit in efficient way. The
structure of current deposit only 10% for 2058/59. So it shows that banks could not
attract the businessmen properly as well as it shows the slow development of trade and
industry in Nepal. Calls and other deposit have also increasing trend each years.
2.4 Saving deposit of EBL
Since this report concentrates of saving deposit facility of EBL, it is now applicable to
know the deposit trends of saving deposit taking last five years as its source.
Table No: 4
Year
2054/55
2055/56
2056/57
2057/58
2058/59
Saving Deposit of EBL (In Lakhs)
Saving Deposit
2178
4480
105.69
8917
99.04
13841
55.22
17354
25.38
16
%
In Rs.
Diagram 3
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
Saving Deposit
2054/55 2055/56 2056/57 2057/58 2058/59
Fiscal Year
The above table 4 along with the Diagram 3shows the trend pattern of saving
deposit for five years period time. The year 2054/55 is takes the base year for analyzing
purpose. While looking at the above table and diagram. There has been increasing trend
in saving deposit it has proved that the people of Nepal has been motivated and
encouraged to open the saving account and deposit there money which are useless
condition and earn some interest from the deposit . After that the collected deposit, the
bank invest them in different sector and charge higher rate of interest then they give to
the depositor. In this way they are also getting the profit as well as the depositor. The
previous table showed only the broadest from saving deposit. To know the impact of
saving deposit to the table four will be helpful.
2.5 Tools & Technique of Analysis
For Analysis of the data financial tools are used. There are wide areas of financial
tools that can be applied in order to analyze the financial performance.
Financial Tools:
Liquidity Ratio
i) Cash Reserve Ratio (CCR)
ii) Balance with NRB to total deposit ratio
Saving with other Ratio
i) Saving to Total Deposit Ratio
ii) Cash & Bank Balance to Saving Deposit Ratio
iii) Investment to Saving Deposit Ratio
2.6 Financial Analysis
2.6.1
Liquidity Ratio
Liquidity ratio measures the ability of the firm meet its current obligations
regarding liquidity need. A firm ensure that its doesn't suffer from lack of liquidity and not
a situation of too much liquidity. The failure of a firm to meet it's obligation of fulfilling
liquidity need of it's clients may result in bad credit image, loss of creditor's confidence
and even lawsuits and legal problems resulting in closure of the firm loo much idle cash
17
as a liquidity is bad as it doesn't create profit. Therefore it is quite necessary to point a
proper balance liquidity and lack of liquidity.
Liquidity ratio position of EBL is measured through calculation of following relevant
liquidity ratios.
2.6.2
Cash Reserve Ratio (CCR)
Cash Reserve Ratio indicates the availability of bank's liquidity of immediate cash
fund to meet its unanticipated calls on Deposit i.e. current, saving, fixed, calls deposits &
many others.
The ratio is brought about by dividing cash & bank balance with total deposit.
CRR =
Cash & Bank Balance
Total Deposit
Total Deposit Cash & bank balances are assets that the banks first line of defense & it
consists of cash in hand, foreign cash in hand, balance with NRB, balance with Domestic
Bank & balance hold abroad.
The following table shows the CRR of EBL:
Table - 5
Year
2054/55
2055/56
2056/57
2057/58
2058/59
Cash Reserve Ratio (CRR) in Lakhs
Cash & bank Total Deposit
Ratio
Balance
2551
11249
22.68%
4607
19489
23.64%
2786
30574
9.11%
8349
45745
18.11%
5927
54666
10.84%
Mean
16.88
(Source: Annual Report of EBL)
From the above table it is clear that the bank has extended its cash reserve up to
23.64% maximum. In 054/55 total deposit amount 11249 lakhs and cash and bank
balance 2551. In the same way in 055/56 total deposit 19489 and cash is 4607. The
cash reserve ratio is increased from 22.68% to 23.64% respectively. But further in
056/57 CRR decreased to 9.11% but the total deposit is continuously increasing to
30574 lakhs from 19489 lakhs which show that withdraws frequency of bank clients is
decreasing. In 056/57 to 057/58 its total deposit increased from 30574 lakhs to 45745
lakhs, and in 057/58 CRR is 18.11%. In 057/58 to 058/59 its total deposit increased from
45745 lakhs to 54666 lakhs but .the CRR decreased from 18.11 to 10.84 maintaining
mean CRR of 16.88%.
18
2.6.3 Saving Deposit to Total Deposit Ratio
This ratio measures the percentage of saving deposit to total deposit. It is calculated by
saving deposit to total deposit.
Saving Deposit
Total Deposit
Saving deposit to total deposit ratio =
The following table shows the percentage of saving deposit to total deposit:
Table - 6
Saving deposit to total deposit ratio (in lakhs )
Year
2054/55
2055/56
2056/57
2057/58
2058/59
Saving deposit
2178
4480
8917
13841
17354
Total deposit
11249
19489
30574
45745
54666
Mean
Ratio
19.36%
22.99%
29.17%
30.26%
31.75%
26.71%
Source: Annual report of EBL
From above table it is clear that saving deposit to total deposit ratio starting from
054/55 to 058/59 is increasing. In 054/55 saving deposit and total deposit is 2178 and
11249 lakhs respectively. The total deposit ratio is 19.36. In 055/56 the saving deposit
and total deposit are 4480 and 19489 lakhs giving ratio of 22.99%. In 056/57 show ratio
of 29.17% with saving deposit 8917 lakhs of total deposit balance 30574. In 057/58
Show a ratio of 30.26% with saving deposit balance of 13841 lakhs of total
deposit balance 45745 lakhs. Similarly 058/59 show ratio of 31.75% with saving deposit
17354 of total deposit balance 54666 lakhs. Average balance of saving deposit to total
deposit ratio is 26.71%.
2.6.4 Cash and Bank Balance to Saving Deposit Ratio
Following show the availability of bank's highly liquid or immediate fund to satisfy its
unanticipated regarding saving deposit.
Cash and bank balance to Saving Deposit Ratio = Cash & Bank Balance
Saving Deposit
The following table shows the cash and bank balance to saving deposit ratio:
19
Table- 7
Cash and Bank Balance to Saving Deposit Ratio (in lakhs)
Year
2054/55
2055/56
2056/57
2057/58
2058/59
Cash & bank balance
2551
4607
2786
8349
5927
Saving Deposit
Ratio
2178
117.13%
4480
102.84%
8917
31.25%
13841
60.32%
17354
34.15%
Mean
69.14%
(Source: Annual report of EBL)
As from above table one can see that in 054/55 cash and bank balance to saving
deposit ratio is 117.13% with cash and bank balance of 2551 lakhs and saving deposit
of 2178 lakhs. But in 055/56 the ratio drops down by 102.84% with cash and bank
balance 4607 lakhs and saving deposit of 4480 lakhs. Similarly 056/57 has ratio of
31.25% with cash and bank balance of 2786 lakhs and saving deposit of 8917 lakhs.
Similarly 057/58 has ratio of 60.32% with cash and bank balance of 8349 lakhs and
saving deposit 13841 lakhs. Similarly in 058/59 has ratio of 34.15% with cash and bank
balance of 5924 lakhs and saving deposit of 17354 lakhs. It shows average of 69.14% in
five years.
2.6.5 Investment to Saving Deposit Ratio
This ratio measures the extent to which EBL is managing to mobilize its saving deposit
fund.
Investment Saving deposit = Investment .
Saving Deposit
The following table shows the ratio of investment to saving deposit ratio:
Table - 8
Investment to Saving Deposit Ratio (in lakhs)
Year
2054/55
2055/56
2056/57
2057/58
2058/59
Investment
2180
1874
2601
9017
16930
Saving Deposit
Ratio
2178
100.09%
4480
41.83%
8917
29.17%
13841
65.15%
17354
97.56%
Mean
66.76%
(Source: Annual report of EBL)
The above table shows that EBL has maintained investment to saving deposit ratio of
100.09% in 054/55. It decreases to 41.83% in 055/56. In 2056/57 it decreased to
29.17%. Similarly in 057/58 it increased to 65.15% and in 058/59 it again increases to
97.56%. It shows average of 66.76% in five years.
20
Chapter - 3
3.1 Summary and conclusions
A field work report has been undertaken to make a through study and analysis on
the performance of EBL which was established on 1s1 kartik 2051 B.S. by issuing 30%
share to General Public. Later on, it was collaborated with Pan Jab National Bank
Limited, India in 1995 which hold 20% share of EBL. For the study the annual report of 5
years from the fiscal year 2054/55 to2058/59 have been analyzed properly. The study is
mainly based on the balance sheet prepared by EBL at the end of fiscal year and
necessary adjustment, where ever it is necessary has been undertaken with consolation
of management personnel of EBL. In this study, different financial as well as statistical
tools are used to analyze on the performance of EBL. The main concentration's area of
the study is only on saving deposit.
Every commercial bank is required to maintain at least 12% CRR of its total
deposit to meet unanticipated demand of cash from the clients as per rules and
regulation of NRB. However, EBL has maintained 10.84% CRR of its total deposit in
average which is more than legal requirement. It is quite protect able from the view point
of risk as it makes easily available of cash to meet the demand on unanticipated calls of
different deposits. In other hank holding more amount as idle will be harmful for
commercial bank fro m the view point of profitability as it decreases the fund of bank to
invest in productive sectors which ensures regular amount of interest as revenue. As per
regulation of NRB, there is a legal provision for a commercial bank to maintain its
balance with NRB at least 10% in average out of its total deposit. All the years except in
the fiscal year 2057/58, EBL has maintained above 15% balance of its total deposit. In
average, EBL'S balance with NRB is 10.43% of its total deposit which is enough to fulfill
the legal requirement. The efficiency of commercial bank highly depends on its capacity
to mobilize its available funds into productive sector which ensures to secure interest
regularly and recoverable of interest amount on mature date. So far saving deposit of
EBL is concerned; it has managed successfully to invest into productive sector in the
beginning year. In the year 2054/55 EBL has extended the ratio of investment to saving
deposit is decreasing which is not a good result for future. However the average ration of
investment to saving deposit is 66.76%.
The percentage of saving deposit out of total depositing the beginning year is not
satisfactory which indicates the back inability to attract the General Public towards
saving. This is due to the inability of EBL to create confidence among General Public on
its performance. However the ratio of saving deposit to total deposit is increasing year by
year which shows the success of EBL to attract more people towards saving deposit
year by year and to create a reputed image among General public. The upward slope of
the trend line of saving deposit from left to right indicates that more people are attracting
in saving deposit. It further indicates that the customers of EBL are keeping their amount
for long time and the banking habit of General Public is increasing year by year.
The Co-efficient of Co-relation between saving deposit and investment made by
EBL is 0.97 which indicates that there is a nearly perfect Co-relation between saving
deposit and investment.
21
3.2 Recommendation
EBL is a joint venture bank. It is running in profit. It's provides quite satisfactory
customer oriented services, its total performance and financial condition have better. To
make extra strong for EBL and to survive in competitive environment following strategy
should be adopted by EBL.
1) EBL's saving deposit increasing ratio in decreasing trend, so it should try to
increase deposit.
2) EBL's cash assets to Total deposit ratio is high, so it should try to invest It's cash in
productive sector.
3) EBL should try to use modern methods and technologies.
2) EBL should try to motivate employers.
4) EBL's management should try to maximize shareholders wealth as well
as to fulfill social responsibility.
5) EBL's management should start to train and develop its top to bottom
level employees.
6) It should try to manage of it's employers performance, reward,
Discipline and grivance.
7) It should try to extend its branch to rule area.
22
Bibliography
1)
Everest Bank Limited, 1999, Annual Report.
2)
Everest Bank Limited 2000, Annual report.
3) EBL 2001, Annual report.
4)
EBL 2002, Annual report.
5)
Joshi Shyam and Shrestha, Hari Prashad 2058. Principles of Banking & Insurance.
6)
Seth M.L. 1984 money, banking, international trade and public Finance.
7)
Radhaswami M. and S. V. vashuderan 1967 'A text book of banking'.
8) Luckett, Dudley, G.I 969 Economics of Money and Banking.
.....2002 Role of commercial bank in economic development in the Kantipur
daily January 4.
10)
K.C. Fattha Bahadur 2055 Elements of finance.
11)
Nepal Rastya Bank various years reports.
12)
World Bank various years world development report.
13)
Commercial Bank act. 2031
23
ABBREVIATION USED
EBL
:
Everest Bank Limited
NRB
:
Nepal Rastra Bank
HMG
:
His Majesty's Government
CRR
:
Cash Reserve Ratio
BS
:
Bikram Sambat
&
:
And
Ltd
:
Limited
USA
:
United State America
a/c
:
Account
NGO's
:
Non-Government Organization
MOF
:
Ministry of Finance
CBS
:
Central Bureau of Statistics
24