1

CHAPTER I

INTRODUCTION

1.1 Background of the Study

The development of any country largely depends upon its financial as well as

economic development. The primary goal of any nation, including Nepal, is rapid

economic development to promote the welfare of the people and the national as well.

Nepal, being listed amongst the least development country, is trying to embark upon

the path of economic development by economic development by economic growth

and developing all sectors of the economic. The process of economic development

depends upon various factors; however, economists are now convinced that capital

formation and its proper utilization play a paramount role in rapid economic

development. In every aspects, all the deposit funds become non productive unless

they are financed or invested in the market. For the sustainable development of

economic status the financing should continue regularly demands, which is possible

by a sufficient deposit that allows the adequate flow of money.

NABIL Bank limited the first modern commercial bank in the history of

Nepal. To formulate and control monetary policy, Nepal Rastra Bank was established

as central bank in 2013B.S. under Nepal Rastra Bank Act 2012 B.S. Then after to

meet the increasing commercial activities inside the country another commercial

bank Rastriya Banijya Bank. Industrial Development Center (IDC) was set up in

2013 for industrial development and it was later converted to Nepal Industrial

Development Corporation on 2016 B.S. Similarly, agriculture development bank

(ADB) was established on 7th Poush 2024 for the development for the agriculture

sector of the country. As the government launch open liberal policy on the year 2040

B.S. the first joint venture bank, Nepal Arab Bank (NABIL) was established.

NABIL has 190 correspondent banking relationships and has drawing

arrangements with Banks in 47 countries. Major correspondent banks include

Dresdner, CITI, ABN Amro, HSBC, Danske, Bank of Tokyo-Mitsubishi, standard

chartered, EBIL, UBAF, American Express, Commerce etc. NABIL is the sole

Principal Agent Bank in Nepal of Western Union Financial Services & facilities

transfer of funds, through an on-line computer system, instantly to or from more than

2

170,000 locations in 196 countries. NABIL is a member of SWIFT. The present focus

on selectively increasing quality assets and liabilities is expected to be assisted by the

advanced technology presently being implemented which will be much more

customer friendly. The marketing department and retail-banking unit of the bank will

be further strengthened with an emphasis on the retail banking activities in order to

increase its share of the total business of the bank. The bank will also expand its

branch network. A branch at Dharan is being opened shortly and studies are being

conducted to determine how and where the branch network should be modified or

expanded.

Due to the changes occurred in industrial field and trade, the beginning of

competitive age and change in the people’s ideology etc. The modern banks are more

advances than the ancient ones. Hence, banks play an important role in the economics

development of the country. This is modern age i.e. the age of specialization.

Therefore, different types of bank emerged in banking industry specializing in

different functional areas. Today, we can find different types of banks like saving

bank, merchant bank, exchange bank, co-operative bank, development bank,

agricultural bank, etc. apart from central and commercial bank.

The major function of the commercial bank is accepting deposit from surplus

sector. By collecting small saving in the form of deposit, bank raises capital. Bank

accepts deposits from those who can save but cannot utilize profitably. When money

is deposited in the bank, the depositors get interest and the money is safe in the bank.

Thus, the savers are interested in depositing money in the bank. On the base of that

deposit, bank creates credit i.e. provides loans and advances to the deficit sectors. The

bank has to deal with different types of customers. They may be individual, business

houses etc. to facilitate different types of customers; bank accepts deposit under

different accounts such as fixed a/c, saving a/c, current a/c etc.

1.1.1 Statement of the Problems

Banking and Financial Institutions Act 2063 defines deposit as "The amount

deposited to current, saving or fixed deposit account of bank or financial institutions

in call deposit." General public, businessman deposit the idle money left with them in

banks to earn interest on the idle money and for safety purpose. This amt. which bank

receives as deposit is the main sources for the bank. Just as a manufacturing company

can't operate without raw materials, a bank can't operate without collection of

depositors. Deposits are the main sources for all types of banks. These deposits are

3

collected for different frame. In other word deposits are the main sources of raising

capital. These deposits are received in different form of a/c.

As per Banking and Financial Institutions Act 2063 deposit means "The

amount stored in current/saving/fixed a/c by the customers in any banking or financial

institute." As per the clause of Banking and Financial Institutions Act 2063,"The a/c

which records transaction of such deposits which are deposit for a certain fixed time is

known as fixed deposit a/c." According to Banking and Financial Institutions Act

2063 “Saving a/c is the account which records transaction of such deposit which is

deposited for saving purpose."

Industrialization requires development of corporate industrial sector within

the nation's economic framework. For the economic development increase in saving

is required and channeled to corporate sector for financial institution. The transfer of

surplus fund to the users is facilitated by saving account. Saving is encouraged

directly and indirectly and channel to the corporate sector only if investors are

rewarded adequately in that sectors.

According to Bailey "Deposit may defined as the surplus by and individual

depositors of bank that proportional to the risk assumed over some future deposit

period". A bank is an instruction where financial services are broadly offered and

wide ranges of financial are performed. It accepts deposit from public, makes the

fund available to those who need them and helps in remittance of money from one

place to another. A bank performs a highly appreciable function in the economy by

offering relatively safe, convenient, liquid and accessible securities and at the same

time by accepting relatively risky, illiquid, inconvenient, long term and large

denomination securities offered by the borrower.

According to Banking Regulation Act of India “Banking means the accepting

for the purpose of lending or investment of deposit of money from the public

repayable on demand or otherwise, and withdrawal by cheque, draft or otherwise.”

Transfer of funds

Discount of bill of exchange

Exchange foreign currency

Overdraft facility

Underwriting of securities

Safety locker etc.

4

1.2 Objectives of the study

Deposit plays a key role in the income and the investment of the bank. There

is a keen a competition among the commercial bank for receiving deposit. So,

researcher chooses the topic ‘Total Deposit’ for the fieldwork study with the

objectives given below:-

To analyze the composition of total deposit of NABIL bank.

To analyze the problems regarding total deposit and its mobilization.

To evaluate the relationship between deposits with other variables.

1.3 Review of Literature

A review of the literature helps us to develop through understanding and

deep insight into previous research work that relates to our study. It is also a way to

avoid investing problems that has already been definitely answered. While preparing

this report I have consulted many books of different writers, viewed different

websites, read magazines and newspaper. Different writers have defined the term

DEPOSIT in their own way and out of them some are given below.

This is modern age i.e. the age of specialization. Therefore, different types of

bank emerged in banking industry specializing in different functional areas. Today,

we can find different types of banks like saving bank, merchant bank, exchange bank,

co-operative bank, development bank, agricultural bank, etc. apart from central and

commercial bank. Bank has many problem for collected money and also utilization

its. To get high return bank was invested, deposit amount in different sector which is

more risky. Some questions are as follow:-

What are the various deposit composition collected by the bank?

Is the bank able to utilize its deposit in effectively?

What are the problems regarding total deposit and its mobilization?

What is the relationship between deposits with other variables?

According to Justin Pritchard, “ The term deposit can mean two things. First, it

may refer to funds held at the bank. Second, it can be about the action you take when

you add funds to a bank account.”

As Commercial Bank act 2031 sec.2 simply deposit means "The amount stored

in current/saving/fixed a/c by the customers in any banking or financial institute."

5

According to Banking Regulation Act of India, “ Banking means the accepting

for the purpose of lending or investment of deposit of money from the public

repayable on demand or otherwise, and withdrawal by cheque, draft, or otherwise.”

According to Bailey, “ Deposit may defined as the surplus by and individual

depositors of bank that proportional to the risk assumed over some future deposit

period.” A bank is an instruction where financial services are broadly offered and

wide ranges of financial are performed. It accepts deposit from public, makes the fund

available to those who need them and helps in remittance of money from one place to

another. A bank performs a highly appreciable function in the economy by offering

relatively safe, convenient, liquid and accessible securities and at the same time by

accepting relatively risky, illiquid, inconvenient, long term and large denomination

securities offered by the borrower.

There are four major types of deposits: demand deposits, saving deposits,

hybrid/checking deposits and time deposits. What distinguish one type from another

are the conditions under which the deposited fund may be withdrawn.

Demand Deposit:

A demand deposit that can be withdrawn on demand at anytime and in any amount up

to the full amount of the deposit. The most common example of demand deposit is a

checking account. Most orders and traveler’s checks are also technically demand

deposits.

Saving Deposit:

Saving accounts pay interest to the depositors, but have no specific maturity date on

which the funds need to be withdrawn or reinvested. Any amount can be withdrawn

from a saving account up to amount deposited. Under normal circumstances,

customers can withdraw their money from a saving account simply by presenting their

“passbook” or by using their automated teller machine (ATM) card. Saving accounts

are highly liquid. They are different from demand deposit, however, because

depositors cannot write checks against regular saving accounts. Saving accounts

cannot be used directly as money to purchase goods or services. The hybrid saving

and checking account allows customers to earn interest on the account and write

check against the account. These are called either negotiable order of withdrawl

(NOW) accounts, which are saving accounts that allow a maximum of three third

party transfer each month.

6

Term Deposit:

Term deposit also called fixed deposit has fixed duration to keep money in bank.

Bankers can use this money for fixed period of time and make a plan accordingly.

With the growth of sufficient banking habits, there is a slow shift from the lower

interest rate bearing term deposits. It provides quite higher rate of interest than saving

and call accounts.

Collecting small scattered amount of capital through different media and

investing the deposit fund in productive sector with a view to increase the income of

the depositors is meant deposit mobilization. In other words, investing the collected

funding the productive sector and increase the income of the depositors, also support

increase in the saving through the investment of increased extra amount.

NABIL has 190 correspondent banking relationships and has drawing

arrangements with Banks in 47 countries. Major correspondent banks include

Dresdner, CITI, ABN Amro, HSBC, Danske, Bank of Tokyo-Mitsubishi, standard

chartered, EBIL, UBAF, American Express, Commerce etc. NABIL is the sole

Principal Agent Bank in Nepal of Western Union Financial Services & facilities

transfer of funds, through an on-line computer system, instantly to or from more than

170,000 locations in 196 countries. NABIL is a member of SWIFT. The present focus

on selectively increasing quality assets and liabilities is expected to be assisted by the

advanced technology presently being implemented which will be much more

customer friendly. The marketing department and retail-banking unit of the bank will

be further strengthened with an emphasis on the retail banking activities in order to

increase its share of the total business of the bank. The bank will also expand its

branch network. A branch at Dharan is being opened shortly and studies are being

conducted to determine how and where the branch network should be modified or

expanded.

1.4 Methodology of the Study

1.4.1 Research design

Fieldwork work design helps to collect right quantum of accurate data. Here,

researcher has applied descriptive and analytical research design as it deals with

description of situation and interpretation of data.

1.4.2 Data collection method

7

In order to collect data, both the 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 bank was

collected from network the records, and the annual reports of the bank as well as

balance sheet. Beside these sources information were derived through the literatures

concerned with the bank investment, deposit etc. were collected from different kinds

of books, journals and newspaper. As such research programmed has been considered

as specific one.

1.4.3 Data presentation and analysis tools

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

Trend line

Average

Percentage

Correlation

1.4.4 Limitations of the Study

The criteria, which are not covered by this study, are the limitation and the

things assumed as neutral while studying are the assumptions of this study. Here it

was consulted as better to specify such subjects as follows:-

The study has been covered only the Butwal branch and only 5 years data.

The fieldwork is mostly based on secondary data. So its effectiveness depends

upon the validity of the data provided by the bank.

This study has been used only the simple statistical tools to analyze the data.

8

CHAPTER II

DATA ANALYSIS AND MAJOR FINDINGS

2.1 Structure of Total Deposit in NABIL Bank Limited

NABIL Bank Limited has been providing mainly current, margin, saving,

fixed and call deposit schemes to its account holders. The deposit mix of NABIL bank

Ltd. during the fiscal year 2069/70 has been shown in the table below:

Table 1: Composition of total deposit for 2069/70 (Rs. in million)

Deposits Amount Composition (%)

Current Deposit 2688.97 19

Saving Deposit 5994.12 43

Fixed Deposit 2310.57 16

Call Deposit 2801.41 20

Others (Margin + others) 323.97 2

Total 14118.97 100

Source: total deposit for 2069/70

Figure 1: Composition of total deposit for 2069/70

Current Deposit Saving DepositFixed Deposit Call DepositOthers (Margin + others)

In the above table and pie chart, we found that the total deposit of NABIL

Bank is composed of six different deposits. The current deposit has contributed 19%

9

saving deposit 43%, fixed deposit 16% call deposit 20%, and others deposit which

includes margin deposit contribution is of saving deposit. This shows that the public

trusts NABIL Bank and is satisfied with given interest rate.

2.2 Interest Bearing and Non Interest Bearing Deposits

Every bank has two types of deposit, interest bearing and non-interest

bearing. Interest bearing deposit are those type of deposit where the bank has to pay

interest to the depositors and for non-interest bearing deposit bank does not pay nay

interest to the depositors only facilities are provided. The total interest bearing deposit

and non interest bearing deposit of NABIL Bank in different years are shown below:

Table. 2: Interest bearing and non interest bearing deposit (Rs. in million)

Years Interest bearing deposit Non interest bearing

deposit

2065/066 9428.46 3351.05

2066/067 12584.68 3254.33

2067/068 2363.86 3142.57

2068/069 10022.97 3424.69

2069/070 11106.10 3012.93

Source: Interest bearing and non-interest bearing deposit 2065 to 2070

0

2000

4000

6000

8000

10000

12000

14000

2065/066 2066/067 2067/068 2068/069 2069/070

Years

IBDNon IBD

10

Figure 2: Interest bearing and non interest bearing deposit

Above table and figure shows the interest bearing and non-interest bearing

deposit of NABIL Bank in past 5 years. It shows that the interest bearing deposit has

been increasing up to fiscal year 2065/66 and than it decreased slightly by Rs. 220.82

million and Rs. 2340.89 million in the fiscal year 2066/67 and 2067/068 respectively.

But it has slightly increased by Rs. 1083.13 million in the fiscal year 2068/069. In the

FY 2065/66 and 2066/67 in decreased by Rs. 96.72 million and Rest. 111.76 million

respectively. Again it increased in the FY 2068/69 reaching Rs. 3424.69 million and

decreased to Rs. 3424.69 million and decreased to Rs.3012.93 million in the FY

2069/70.

2.3 Total Deposit of NABIL Bank in Different Years

Deposit trend is the accumulation of deposit in different years. Deposit trend

helps to analyze the bank’s performance in terms of deposit collection. Deposit trend

also helps to depict the efficiency of bank and customer’s faith towards the bank.

-5000

0

5000

10000

15000

20000

25000

30000

35000

40000

2065/66 2066/67 2067/68 2068/69 2069/70

Year

Change in %Change InTotal DepositOthers DepositMargin DepositCall DepositFixed DepositSaving DepositCurrent Deposit

11

Table 3: Total deposit composition in different years (Rs. in million)

Years 2065/66 2066/67 2067/68 2068/69 2069/70

Current deposit 2880.65 2850.97 2703.00 3034.00 2688.97

Saving deposit 4150.19 4917.14 4972.06 5229.72 5994.12

Fixed deposit 5728.27 3179.20 2446.85 2252.54 2310.57

Call deposit - 3948.34 4944.96 2540.70 2801.41

Margin deposit 416.26 296.19 364.29 381.32 304.68

Others deposit 54.14 107.17 74.46 9.37 19.28

Total deposit 12779.51 15839.01 15506.43 13447.65 14119.03

Change in amount 3315.23 3059.50 -332.58 -2058.78 671.38

Change in % 35.03 23.94 -2.09 -13.28 4.99

Figure 3: Total deposit composition in different years

Above table and figure shows that the total deposit composition from the fiscal

year 2065 to 2070. In the year 2065/66, the current deposit was 2880.65 million. It

become 2850.97 million in the year 2066/67.However, in the year 2067/68, current

deposit is decreasing. It decreased to 2703.82 million. In the year 2068/69, it

increased to 3034 million and in the year 2069/70 it again decreased to 2688.97

million. Saving deposit is in increasing trend. In the year 2065/66, total saving deposit

was 4150.19 million and it increased to 4917.14 million, 4972.06 million, 5229.72

12

million and 5994.12 million respectively in the year 2066/67, 2067/68, 2068/69,

2069/70 respectively.

In the year 2065/66, the total fixed deposit was 5278.27 million, in the year

2066/67, it decreased to 3719.20 million. However, in the year 2067/68 and 2068/69,

again it decreased to 2446.85 million and 2552.54 million respectively. However in

the year 2069/70 it slightly increased to 2310.57 million, but there is no consistency in

fixed deposit.

Other deposit has been changed in great amount. Here, margin deposit is also

included in other deposit. In the year 2065/66, other deposits are 470.40 million. It is

also in increasing trend. It has increased to 403.3 million in the year 2066/67.

However, in the year 2067/68, it has increased to 438.74 million and again decreased

to 390.68 million and 323.97 million in the year 2068/69 and 2069/70 respectively.

The total deposit of fiscal year 2065/66 is 12779.51 million. The percentage

increase is 35.03%. In the year 2066/67, the total deposit increase rapidly and reaches

to 15839.01 million. The increase in percentage is 23.94%. Again in the year 2067/68

and 2068/69; total deposit has decreased to 15506.43 million and 13447.65 million

respectively. The reduction in total deposit is by 2.09% and 13.28% respectively.

However in the year 2069/70 the total deposit has increased to 14119.03 million. The

incremental percentage is 4.99%.

2.4 Total Lending and investment of NABIL Bank in Different Years

Most of the amount derived from the deposit of the customers has to be lend to

someone else in order to gain interest income, which is the main source of bank’s

income. Another important source of the bank’s income from the investment of

collected deposits. The lending and investment pattern of NABIL bank from 2065/66

to 2069/70 is shown below.

Table 4: Total lending and investment of NABIL bank (Rs. in million)

-10000

100020003000400050006000700080009000

10000

2065/066 2066/067 2067/068 2068/069 2069/070

Year

Total loanChange in amountChange in %Total InvestmentChange in amountChange in %

13

Years Total

loan

Change

in

amount

Change

in %

Total

Investment

Change

in

amount

Change

in %

2065/066 7335 1546 26.71% 5882 1248 26.93%

2066/067 8324 989 13.48% 8226 2344 39.085%

2067/068 7802 - 522 - 6.27 % 8231 5 0.06%

2068/069 8114 312 4% 6701 1530 - 18.59%

2069/070 8549 435 5.36% 6755 54 0.81%

Source : Total lending and investment of NABIL bank

Figure 4: Total lending and investment of NABIL bank

According to above table and figure we can see that the total loan amounts are

in an increasing trend initially than it went down in the year 2067/68 and it is the

increasing trend then after.

Above table and figure it shows the change in the investment of NABIL bank

in different years. The investment increased during the first 2 years up to 2065/66 and

then after 2066/67 it decreased for 2 years and it again increased during the year

2067/68. The investment is always less than

loans and advances except in the year 2067/68 where investment is slightly more. The

above clearly reflects the relationship between investment and loans and advances.

0

2000

4000

6000

8000

10000

12000

14000

16000

2065/66 2066/67 2067/68 2068/69 2069/70

Total DepositTotal Investment

14

2.5 Relationship of Deposit with Investment of NABIL Bank

Deposit is a liability for a bank. Interest must be given to the depositors along

with the deposited amount. To give interest one must earn. Investment is one of the

sources of income for a bank. Huge amount of fund collected from the deposit is spent

in the investment to generate income. Here total investment consists of investments

and placements.

Figure 5: Total investment to total deposit

In the above, we can see that to sustain the liability of interest and develop the

investment is also increasing in proportion to total deposit. In the fiscal year 2065/66,

total deposit is Rs. 12780 million and total investment is Rs. 5882 million and the

ratio between total investment and total deposit is 46.03%. During the fiscal year

2066/67 & 2067/68 total deposits is in increasing trend as such total investment is also

increasing. However, during the fiscal year 2068/69, total deposit has decreased to Rs.

13448 million as result total investment has also decreased to Rs. 6701 million. As

shown above we can also find out the correlation between total deposits and

investment.

Table 5: Correlation between total deposit and investment

Deposit (x) Investment (y) x2 y2 Xy

15

12780 5882 163328400 34597924 75171960

15839 8226 250873921 67667076 130291614

15506 8199 240436036 67223601 127133694

13448 6701 180848704 44903401 90115048

14119 6755 199346161 45630025 95373845

∑ ¿ ¿x=

97646

∑ ¿ ¿y=

47401

∑ ¿ ¿x2=

1260846666

∑ ¿ ¿y2=

306034359

∑ ¿ ¿xy=

619761309

Correlation coefficient (r xy ) =

n∑ xy−∑ x∑ y

√n∑ x2−(∑ x )2×√n∑ y2−(∑ y )2

=

5×619761309−97646×47401

√5×1260846666− (97646 )2×√5×306034359− (47401 )2 = 0.988

Test significant

6 PE = 6 ¿0 .6745×

(1−r 2 )√n = 6 ¿

0 .6745×(1−0 .988 2 )

√5 = 0.033

The correlation coefficient always ranges from -1 to +1. From the above

statistical calculation, it is clear that the coefficient of correlation is +0.988

(approximate.), which is closer to +1 and is greater than 6 PE, this signifies that there

is high degree of positive correlation between total deposit and investments.

2.6 Relationship of Deposit with Total Credits of NABIL Bank

16

The main source where the deposits accepted are utilized is the total credit.

Loans\advances & investment is the major sectors of mobilization of the deposits. The

ratio between total credit & total deposits are shown below.

Figure 6: Total credits to total deposit

From the above figure we can analyze total credit and total deposit of

NABIL bank. Total credit is the sum of total investment and loans and advances.

Total credit is the utilization of the collected deposit. The above figure clearly shows

that the NABIL bank utilization of deposit has been very effective. It has been very

good in proper utilization/mobilization of deposits. The correlation between total

deposits and total credit (Investment + Lending) is given below.

Table 6: Correlation between total deposit and total credits

Deposit

(x)

Total credits

(y)

x2 y2 Xy

12780 13217 163328400 174689089 168913260

15839 16550 250873921 273902500 262135450

15506 16033 240436036 257057089 248607698

13448 14815 180848704 219484225 199232120

14119 15304 199346162 234212416 216077176

∑x=

97646

∑y=

103206

∑x2=

1260846666

∑y2=

1410449408

∑xy=

1333013532

17

Correlation coefficient (r xy ) =

n∑ xy−∑ x∑ y

√n∑ x2−(∑ x )2×√n∑ y2−(∑ y )2

=

5×1333013532−97646×103206

√5×1260846666− (97646 )2×√5×1410449408− (103206 )2 = 0.99

Test significant

6 PE = 6 ¿0 .6745×

(1−r 2 )√n = 6 ¿

0 .6745×(1−0 .99 2 )

√5 = 0.020

The correlation coefficient always ranges from -1 to +1. From the above

statistical calculation, it is clear that the coefficient of correlation is +0.99

(approximate), which is closer to +1 and is greater than 6 PE, this signifies that there

is high degree of positive correlation between total deposit and total credits.

2.7 Major Findings of the Study

The total deposit of NABIL Bank is composed of six different deposits. The

current deposit has contributed 19% saving deposit 43%, fixed deposit 16% call

deposit 20%, and others deposit which includes margin deposit contribution is of

saving.

The interest bearing deposit slightly increasing where the non interest bearing

deposit is slightly decreasing.

The total deposit of Nabil bank increased in 2066/067 from 2067/068 but then

after slightly decreased.

The loan amounts are in an increasing trend initially then it went down in the year

2067/68 and it is increasing trend than after.

The coefficient of correlation is +0.988 (approximate.), which is closer to +1 and

is greater than 6 PE, this signifies that there is high degree of positive correlation

between total deposit and investments.

The coefficient of correlation is +0.99 (approximate), which is closer to +1 and is

greater than 6 PE, this signifies that there is high degree of positive correlation

between total deposit and total credits.

The Nabil bank has used all deposit in different sector like loan and investment.

This analysis shows good performance of Nabil bank.

18

CHAPTER III

SUMMARY AND CONCLUSIONS

3.1 Summary

History of banks in Nepal has come a long way with the establishment of

Nepal Rastra Bank limited in 1994 B.S., Nepal Rastra Bank has been established as

central bank of Nepal under Nepal Rastra bank Act, 2012. Then Rastrya Banijya bank

was established in 2022 B.S. as a commercial bank. Up to now several commercial

and Industrial banks have been established in the country. Establishment of several

Finance companies and co-operative societies under Finance Company Act and Co-

operative Act has added advancement to the banking history of Nepal.

NABIL bank limited was established in the year 2014 B.S. it is the first join

venture bank in Nepal. NABIL bank provides vast range of modern banking

facilities .It has branches through out the country. Deposit collection is the major

function of the banks. Deposit is a surplus or saving of public deposited in the bank

with the intention of getting certain amount of interest or special services and

facilities. Mainly bank collects two types of deposit i.e. interest bearing deposit and

interest free deposit. Interest bearing deposits are saving, fixed call and recurring

deposits. Interest free deposits are current and margin deposits.

The major objectives of this study is to analyze the composition and trend of

total deposit, finding and analyzing the relationship between different components

relating to deposit such as investment, credits etc. Mostly secondary sources have

been used for the study i.e. annual reports and catalogues of NABIL bank. Primary

data consists of depositors and banks staffs’ interview. Statistical tools like average,

percentage, correlation; trend analysis etc. has been used. Data has been tabulated and

expressed with the help of different graphs bar diagrams and trend line.

Total deposit is composed of saving. Fixed call current margin and others

deposit. Saving deposit occupies the percentage i.e. 43% of total deposit. There is

positive correlation between total deposit and loan and advances i.e. +0.95. The

coefficient of correlation +0.95 signifies that if Rest. 1 is collected as deposit then 95

paisa can be mobilized as loan and advances. Total deposit and loan and advances are

closely related to each other. The investment has been handled in well manner. The

19

rate of investment is increasing in proportion to increase in total deposit showing

good efficiency of the bank in handling total deposit.

3.2 Conclusion

From the analytical study, bank has sufficient amount of fund collected from

different deposit accounts. It has collected Rest. 14119 million as total deposit in the

fiscal year 2069/70. NABIL bank has been able to make sufficient deposit collection

It has qualified staff to handle the deposit collected and invest it in productive sector.

Last year, the bank has soon title slackness in deposit collection loan and advance and

investment compared to the fiscal year 2068/69 and 2069/70 NABIL banks current

position is good but due to adverse effect of doggish economic condition and

uncertain political stability the Bank is suffering from slow growth.. In conclusion

NABIL Bank is functioning effectively and efficiently.

3.3 Recommendations

On the basis of above analysis, the following recommendation has been drawn

which will help increase the performance and maintain the quality services of NABIL

Bank. Recently NABIL Bank has been able to accumulate sufficient deposit from its

customers but it is facing the problem of utilization of deposit and comparatively less

deposit collection in 2065. Following suggestions are recommendation for

improvement. Quick and quality service should be continued:-

The bank’s policy of maintaining minimum balance level may not be applicable in

rural branch.

Maintenance fees should be decreased because this may also be one of the reasons

of decline in total deposit.

Interest rate seems to be declining. Interest rate should be considered or some

additional facilities should be given to the account holders to attract more

depositors.

New investment sectors should be identified to invest the huge sum collected from

deposit.

There should be frequent communication between bank’s staff and depositors,

particularly businessman to again their confidence and loyalty towards the bank.

NABIL Bank should carry on the same total deposit growth rate trend.

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Deposit is the liability of the bank and they should be able to make maximum use

of it. NABIL Bank should try to bring new interesting schemes towards the public

so that a proper investment can be made. Such as SCBNL’s housing loan scheme

introduced recently can be taken as an example.

Fixed deposit and current deposit should be increased. These two accounts bear

less maintenance cost or interest expense and give maximum return.

In comparison to local currency the foreign currency is much less it would be

quite benefiting if more foreign currency could be deposited.

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BIBLIOGRAPHY

Bhandari, Dilli Raj (2000), Principle and Practice of Banking and Insurance;

Kathmandu, Asia Publication.

Brigham, Eugune F. and Gapenski Louis C. (1990), Financial Management Theory

and Practice; New York, The Dryden Press.

Dangol, Ratna Man (2061), Accounting for Financial Analysis and Planning;

Katmandu, Taleju Prakashan.

NABIL Bank Limited (2058 to 2063), Annual Report, Kathmandu.

Pandey, I.M. (1987), Financial Management; New Delhi, Vani Educational Books.

Pant, Govinda Dev and Chaudhary, Arun Kumar (2058 B.S.), Kathmandu, Business

Statistics and Mathematics for Bachelor of Business Administration ; Bhundi Puran

Prakashan.

Pradhan, Rajendra Prasad (2000), A Study on Deposits and its Utilization by

Commercial Bank in Nepal; Kathmandu, An Unpublished Thesis Submitted to

Faculty of Management T.U., Kirtipur.

Vaidya, Shakespeare (2002), Banking and Insurance Management; Kathmandu,

Taleju Prakashan.

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APPENDIX “A”

Questionnaire

I have been writing a field work report on “A Study on Total Deposit and its

Utilization of Nabil Bank Limited, Butwal” in Partial fulfillment of the requirement

for Bachelor of Business Administration in Banking and Insurance (BBA-BI). I

humbly request you to fill it up at the best of your knowledge. Your kind cooperation

in this regard will be great value for me.

Questionnaire with Customer:

1. Do you have A/C in NABIL Bank?

2. Why did you choose NABIL Bank?

3. Do you have any complains regarding the service provided by NABIL Bank?

4. Are you satisfied with the interest rate?

Questionnaire with Staff:

1. Can you tell me about the history of NABIL Bank?

2. What are the facilities provided by the Bank?

3. What is the interest rate tat the bank is giving to the depositors?

4. Why the interest rate is in decreasing trend?

5. Does the deposit effect the liquidity position of the bank?

6. Why the amount of deposit is in decreasing order for the last two fiscal years?

7. How the collected deposits are mobilized?

8. Can you tell me the pattern of the deposit in this bank?

Can you tell me the pattern of the deposit in this bank?

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APPENDIX “B”

Organization Structure of NABIL Bank Limited, Butwal

Board of Director

Deputy Executive Director

Executive Director

General Manager Credit and marketing Assistant General Manager

Senior Manager

Manager

Deputy Manager

Assistant Manager

Officer

Junior Officer

Assistant

Junior AssistantSenior Assistant

Non-Banking Staffs

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APPENDIX “C”

A Proposal on a Study on Total Deposit and its Utilization of NABIL Bank Limited, Butwal

1.1 Background Information

The development of any country largely depends upon its financial as well as

economic development. The primary goal of any nation, including Nepal, is rapid

economic development to promote the welfare of the people and the national as well.

Nepal, being listed among the least development country, is trying to embark upon

the path of economic development by economic development by economic growth

and developing all sectors of the economic. The process of economic development

depends upon various factors; however, economists are now convinced that capital

formation and its proper utilization play a paramount role in rapid economic

development. In every aspects, all the deposit funds become non productive unless

they are financed or invested in the market. For the sustainable development of

economic status the financing should continue regularly demands, which is possible

by a sufficient deposit that allows the adequate flow of money.

NABIL Bank limited the first modern commercial bank in the history of

Nepal. To formulate and control monetary policy, Nepal Rastra Bank was established

as central bank in 2013B.S. under Nepal Rastra Bank Act 2012 B.S. Then after to

meet the increasing commercial activities inside the country another commercial

bank Rastriya Banijya Bank. Industrial Development Center (IDC) was set up in

2013 for industrial development and it was later converted to Nepal Industrial

Development Corporation on 2016 B.S. Similarly, agriculture development bank

(ADB) was established on 7th Poush 2024 for the development for the agriculture

sector of the country. As the government launch open liberal policy on the year 2040

B.S. the first joint venture bank, Nepal Arab Bank (NABIL) was established.

1.2 Objectives of the study

Deposit plays a key role in the income and the investment of the bank. There

is a keen a competition among the commercial bank for receiving deposit. So,

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researcher chooses the topic ‘Total Deposit’ for the fieldwork study will have with the

objectives given below: -

To analyze the composition of total deposit of NABIL bank.

To analyze the problems regarding total deposit and its mobilization.

To evaluate the relationship between deposits with other variables.

1.3 Review of Related Studies

Banking and Financial Institutions Act 2063 defines deposit as "The amount

deposited to current, saving or fixed deposit account of bank or financial institutions

in call deposit." As per Banking and Financial Institutions Act 2063 deposit means

"The amount stored in current/saving/fixed a/c by the customers in any banking or

financial institute." As per the clause of Banking and Financial Institutions Act

2063,"The a/c which records transaction of such deposits which are deposit for a

certain fixed time is known as fixed deposit a/c." According to Banking and Financial

Institutions Act 2063 “Saving a/c is the account which records transaction of such

deposit which is deposited for saving purpose."

According to Bailey "Deposit may defined as the surplus by and individual

depositors of bank that proportional to the risk assumed over some future deposit

period". A bank is an instruction where financial services are broadly offered and

wide ranges of financial are performed. It accepts deposit from public, makes the

fund available to those who need them and helps in remittance of money from one

place to another. A bank performs a highly appreciable function in the economy by

offering relatively safe, convenient, liquid and accessible securities and at the same

time by accepting relatively risky, illiquid, inconvenient, long term and large

denomination securities offered by the borrower.

1.4 Methodology of the Study

Research design

Fieldwork work design helps to collect right quantum of accurate data. Here,

researcher will be applied descriptive and analytical research design as it deals with

description of situation and interpretation of data.

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Data collection method

In order to collect data, both the primary as well as secondary sources of data

and information will be used as data were found generally, in secondary sources. In

this case, the secondary data concerning the actual financial position of the bank was

collected from network the records, and the annual reports of the bank as well as

balance sheet. Beside these sources information will be derived through the literatures

concerned with the bank investment, deposit etc. were collected from different kinds

of books, journals and newspaper. As such research programmed has been considered

as specific one.

Data presentation and analysis tools

Various statistical tools will be used after compilation. The data will be

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 will be used.

Tables

Bar diagrams

Pie charts

Trend line

Average

Percentage

Correlation

1.5 Limitations of the Study

The criteria, which are not covered by this study, are the limitation and the

things assumed as neutral while studying are the assumptions of this study. Here it

was consulted as better to specify such subjects as follows:-

The study will be covered only the Butwal branch and only 4 years’ data.

The fieldwork will be mostly based on secondary data. So its effectiveness

depends upon the validity of the data provided by the bank.

This study will be used only the simple statistical tools to analyze the data.

This study will deal only with the total deposit but not with the other areas of the

bank.

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1.6 Time Allotment

Selection of topic 5 days

Proposal writing 7 days

Field visit and data collection 10days

Presentation and analysis of data 8 days

Proof reading 2 days

Setting and printing report 3 days

Total 35 days