114436510 Internship Report on Loan Deposit Policy of HBLj

7/29/2019 114436510 Internship Report on Loan Deposit Policy of HBLj

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LOAN

In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount,interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time,between the lenderand the borrower.

In a loan, the borrower initially receives orborrows an amount ofmoney, called theprincipal, from the lender, and

is obligated topay backorrepayan equal amount of money to the lender at a later time. Typically, the money is

paid back in regularinstallments, or partial repayments; in an annuity, each installment is the same amount.

The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the

lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract,

which can also place the borrower under additional restrictions known as loan covenants. Although this article

focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks forfinancial institutions. For other institutions, issuing

ofdebt contracts such as bonds is a typical source of funding.

Types of loans[edit]Secured

See also: Loan guarantee

A secured loan is a loan in which the borrowerpledges some asset (e.g. a car or property) as collateral.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In

this arrangement, the money is used to purchase the property. The financial institution, however, is given security a lien on the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the

bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same

way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often

corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto

loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts

as an intermediary between the bank or financial institution and the consumer.

[edit]Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available

from financial institutions under many different guises or marketing packages:

credit card debt

personal loans

bank overdrafts

credit facilities or lines of credit

corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These

may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under

the Consumer Credit Act 1974.

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Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured

lender's options for recourse against the borrower in the event of default are severely limited. An unsecured

lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the

judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured

lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a

court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of

insolvency, the debt may be uncollectible.

[edit]Demand

Demand loans are short term loans [1] that are atypical in that they do not have fixed dates for repayment and

carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the

lending institution at any time. Demand loans may be unsecured or secured.

[edit]Subsidized

A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context ofcollege loans in the United States, it refers to a loan on which no interest is accrued while a student remains

enrolled in education.[2] Otherwise, it may refer to a loan on which an artificially low rate of interest (or none at

all) is charged to the borrower.

An unsubsidized loan is a loan that gains interest at a market rate from the date of disbursement

1. Personal LoansThese loans are offered by most banks, and the proceeds may be used for virtually any expense(from buying a new stereo system to paying off a common bill). Typically, personal loans

are unsecured, and range anywhere from a few hundred to a few thousand dollars. As a generalrule, lenders will typically require some form of income verification, and/or proof of other assets

worth at least as much as the individual is borrowing. The application for this type of loan istypically only one or two pages in length. Approvals (or denials) are generally granted within a few

days.

The downside is that the interest rateson these loans can be quite high. According to the FederalReserve, they range from about 10-12%. The other negative is that these loans sometimes must

be repaid within two years, making it impractical for individuals looking to finance large projects.

In short, personal loans (in spite of their high interest rates) are probably the best way to go forindividuals looking to borrow relatively small amounts of money, and who are able to repay theloan within a couple of years.

2. Credit CardsWhen consumers use credit cards, they are essentially taking out a loan with the understandingthat it will be repaid at some later date. Credit cards are a particularly attractive source of fundsfor individuals (and companies) because they are accepted by many - if not most - merchants as aform of payment.

In addition, to obtain a card (and, by extension, $5,000 or $10,000 worth of credit), all that's

required is a one-page application. The credit review process is also rather quick. Writtenapplications are typically approved (or denied) within a week or two. Online / telephone

applications are often reviewed within minutes. Also in terms of their use, credit cards areextremely flexible. The money can be used for virtually anything these days from paying college

tuition to buying a drink at the local watering hole. (To find out more about this process, see The

Importance of Your Credit Ratingand How Credit Cards Affect Your Credit Rating.)

There are definitely pitfalls, however. The interest rates that most credit-card companies charge

range as high as 20% per year. In addition, a consumer is more likely to rack up debt using a

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credit card (as opposed to other loans) because they are widely accepted as currency and becauseit's psycho logically easier to hand someone a credit card than to fork over the same amount of

cash. (To read more on this type of loan, see Take Control Of Your Credit Cards, Credit, Debit And

Charge: Sizing Up The Cards In Your Walletand Understanding Credit Card Interest.)

3. Home-Equity Loans

Homeowners may borrow against the equity they've built up in their house using a home-equityloan. In other words, the homeowner is taking a loan out against the value of his or her home. Agood method of determining the amount of home equity available for a loan would be to take thedifference between the home's market value and the amount still owing on the mortgage.

The loan proceeds may be used for any number of reasons, but are typically used to build homeadditions, or for debt consolidation. The interest rates on home-equity loans are very reasonable

as well. In addition, the terms of these loans typically range from 15 to 20 years, making themparticularly attractive for those looking to borrow large amounts of money. But, perhaps the most

attractive feature of the home-equity loan is that the interest is usually tax deductible.

The downside to these loans is that consumers can easily get in over their heads by mortgagingtheir homes to the hilt. Furthermore, home-equity loans are particularly dangerous in situations

where only one family member is the breadwinner, and the family's ability to repay the loan mightbe hindered by that person's death or disability. Even a 1% increase in interest rates could meanthe difference between losing and keeping your home if you rely too heavily on this style of loan.

Note: In situations like these, life/disability insurance is frequently used to help protect againstthe possibility ofdefault. (To keep reading on this subject, see Home-Equity Loans: The

CostsandThe Home-Equity Loan: What It Is And How It Works.)

4. Home-Equity Line of Credit

This line of creditacts as a loan and is similar to home-equity loans in that the consumer isborrowing against his or her home's equity. However, unlike traditional home-equity loans, theselines of credit are revolving, meaning that the consumer may borrow a lump sum, repay a portionof the loan, and then borrow again. It's kind of like a credit card that has a credit limit based on

your home's equity! These loans may be tax deductible and are typically repayable over a periodof 10 to 20 years, making them attractive for larger projects.

Because specific amounts may be borrowed at different points in time, the interest rate charged is

typically pegged to some underlying index such as the "prime rate". This is both good and bad inthe sense that at some times, the interest rates being charged may be quite low. However, during

period of rising rates, the interest charges on outstanding balances can be quite high.

There are other downsides as well. Because the amount that can be borrowed can be quite large(typically up to $500,000 depending upon a home's equity), consumers tend to get in over theirheads. These consumers are often lured in by low interest rates, but when rates begin to rise,those interest charges begin racking up and the attractiveness of these loans starts to wane.

5. Cash Advances

Cash advancesare typically offered by credit-card companies as short-term loans. Other entities,such as tax-preparation organizations, may offer advances against an expected IRS tax refund oragainst future income earned by the consumer.

While cash advances may be easy to obtain, there are many downsides to this type of loan. Forexample:

They are not typically tax deductible.

Loan amounts are typically in the hundreds of dollars, making them impractical for many

purchases, particularly large ones.

The effective interest rate charges and related fees can be very high.

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In short, cash advances are a fast alternative for obtaining money (funds are typically available onthe spot), but because of the numerous pitfalls, they should be considered only as a last resort.

(Learn more about cash advances in Payday Loans Don't Pay.)

6. Small Business Loans

The Small Business Administration (SBA) or your local bank typically extend small business loans

to would-be entrepreneurs, but only after they've submitted (and received approval for) a formalbusiness plan. The SBA and other financial institutions typically require that the individual

personally guarantee the loan, which means that they will probably have to put up personal assets

as collateralin case the business fails. Loan amounts can range from a few thousand to a fewmillion dollars, depending on the venture.

While the term of the loan may vary from institution to institution, typically, consumers will havebetween five and 25 years to repay the loans. The amount of interest incurred from the loan

depends on the lending institution in which the loan is made. Keep in mind that borrowers cannegotiate with the lending institution with regard to the level of interest charged. However, there

are some loans on the market that offer a variable rate.

Small business loans are the way to go for anyone looking to fund a new or existing business.However, be forewarned: getting a business plan approved by the lending institution may bedifficult. In addition, many banks are unwilling to finance "cash businesses" because their books(ie. tax records) often do not accurately reflect the health of the underlying business.

Bank loans are available to finance the purchase of inventory and equipment as well as to obtain operatingcapital and funds for business expansion. These loans are a time-honored and reliable method of financing asmall business, but banks often only finance firms with substantial collateral and a long track record, and theterms they offer are often very strict. Business owners should weigh the advantages and disadvantages of bankloans against other means of finance.

Advantages of loans

Basic Advantages of Bank Loans

A bank loans money to a business based on the value of the business and its perceived ability to

service the loan by making payments on time and in full. Banks do not take any ownership position

in businesses. Bank personnel also do not get involved in any aspect of running a business to

which a bank grants a loan. Once a business borrower has paid off a loan, there is no more

obligation to or involvement with the bank lender unless the borrower wishes to take out a

subsequent loan.

Tax and Financial Planning Advantages

The interest on business bank loans is tax-deductible. In addition, especially with fixed-rate loans,

in which the interest rate does not change during the course of a loan, loan servicing payments

remain the same throughout the life of the loan. This makes it easy for businesses to budget and

plan for monthly loan payments. Even if the loan is an adjustable-rate loan, business owners can

use a simple spreadsheet to compute future payments in the event of a change in rates.

Difficulties in Obtaining Loans

One of the greatest disadvantages to bank loans is that they are very difficult to obtain unless a

small business has a substantial track record or valuable collateral such as real estate. Banks are

careful to lend only to businesses that can clearly repay their loans, and they also make sure that

they are able to cover losses in the event of default. Business borrowers can be required to provide

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personal guarantees, which means the borrower's personal assets can be seized in the event the

business fails and is unable to repay all or part of a loan.

Cost of Bank Loans

Interest rates for small-business loans from banks can be quite high, and the amount of bank

funding for which a business qualifies is often not sufficient to completely meet its needs. The high

interest rate for the funding a business does receive often stunts its expansion, because the

business needs to not only service the loan but also deal with additional funding to cover funds not

provided by the bank. Loans guaranteed by the U.S. Small Business Administration offer better

terms than other loans, but the requirements to qualify for these subsidized bank loans are very

strict.

Speed

A bank loan can be secured quickly; in less than an hour, a qualified borrower can

complete a bank loan transaction.

Uses

A bank loan can be used in a number of ways; money can be borrowed for many

large-ticket items, such as furniture, vehicles or home renovations.

Disadvantages

Disadvantage: Fees

Some loans carry a prepayment penalty, preventing the borrower from paying the

note off early without incurring extra cost.

Disadvantage: Limitations

There are a number of limitations on the transaction. Good credit is often required to

borrow money, and there are stipulations on how the money can be used.

Disadvantage: Cash Flow

Borrowing too much money can lead to decreased cash flow and payments can even

overtake income in some cases; this is why many loan payments are limited to a

certain percentage of a borrower's income.

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DEPOSITS

ndividuals and corporations need money to pursue their daily business. They place the money on deposit toearn interest, using the money market. Types of deposits are:

One of the most essential aspects in the functioning of a bank is to accept the deposits from public. Hence it isnecessary to classify thedeposits; basically there are basically three types of deposits

1. Time or term deposits These are those deposits that are deposited by savers for a

fix period of time hence they can withdrew the deposit only on the maturity of deposit.If it is withdrawn in advance then it involves penalty. They offer the maximum amount

of interest.

A time deposit (also known as a certificate of deposit in the United States, a term deposit,

particularly in Canada,Australia and New Zealand; a bond in the United Kingdom; Fixed

Deposits in India and in some other countries) is a money deposit at a banking institution that cannot be

withdrawn for a certain "term" or period of time (unless a penalty is paid)[ citation needed]. When the

term is over it can be withdrawn or it can be held for another term. Generally speaking, the longer the

term the better the yield on the money. In its strict sense, certificate deposit is different from that of time

deposit in terms of its negotiability. CDs are negotiable and can be rediscounted when the holder needs

some liquidity, while time deposits must be kept until maturity.

The opposite, sometimes known as a sight deposit or "on call" deposit, can be withdrawn at any time, without

any notice or penalty: e.g., money deposited in a checking account orsavings account in a bank.

The rate of return is higher than for savings accounts because the requirement that the deposit be held for a

prespecified term gives the bank the ability to invest it in a higher-gain financial product class. However, the

return on a time deposit is generally lower than the long-term average of that of investments in riskier productslike stocks or bonds.

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A deposit of funds in a savings institution is made under an agreement stipulating that (a) the funds must be kept

on deposit for a stated period of time, or (b) the institution may require a minimum period of notification before a

withdrawal is made.

"Small" time deposits are defined in the U.S. as those under $100,000, while "large" ones are $100,000 or

greater in size. The term "jumbo CD" is commonly used in the United States to refer to large time deposits.

In the U.S., banks are not subject to a reserve requirement against their time deposit holdings.

2. Saving deposits This is a kind of demand deposit and there is certain limit on

number of withdrawals from the account during a specific period of time, also account

holder has to maintain minimum balance in the account which is decided by the

bank, non compliance of which leads to penalty. Interest rates offered on these

deposit is lower than that of term deposits.

Saving accounts are accounts maintained by retail financial institutions that pay interest but cannot be

used directly as money in the narrow sense of amedium of exchange (for example, by writing a cheque).

These accounts let customers set aside a portion of their liquid assets while earning a monetary return.

For the bank, money in a savings account may not be callable immediately and in some jurisdictions,

does not incur a reserve requirement, freeing up cash from the bank's vault to be lent out with interest.

The other major types ofdeposit account are transactional (checking) account, money market account, and time

deposit.

In the United States, underRegulation D, 12 Code of Federal Regulations(CFR) 204.2(d)(2), the term

"savings deposit" includes a deposit or an account that meets the requirements of Sec. 204.2(d)(1) and

from under the terms of the deposit contract or by practice of the depository institution, the depositor is

permitted to make up to six pre-authorized transfers or withdrawals per month or statement cycle of at

least four weeks. There is no regulation limiting number of deposits into the account.

Within most European countries,[clarification needed] interest paid on deposit accounts is taxed at source. The

high rates of some countries has led to the development of a significant offshore savings industry. The European

Union Savings Directive has made arrangements with many offshore financial centres for either information oninterest earned to be shared with EU tax authorities or for withholding tax to be deducted on interest paid on

offshore accounts, because of concerns relating to potential tax evasion. Account holders must either pay the

withholding tax or disclose account holder information to relevant tax authorities.[1]

Withdrawals from a savings account are occasionally costly, and they are

more time-consuming than withdrawals from a demand (current) account.

However, most saving accounts do not limit withdrawals, unlike certificates of

deposit. In the United States, violations of Regulation D often involve a

service charge, or even a downgrade of the account to a checking account.

With online accounts, the main penalty is the time required for

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theAutomated Clearing Houseto transfer funds from the online account to a

"brick and mortar" bank where it can be easily accessed. During the period

between when funds are withdrawn from the online bank and transferred to

the local bank, no interest is earned.

3. Current deposits Though it is similar to saving deposit but it does not offer any interest

and hence there is no limit on the number of withdrawals by individuals from his account.

This type of account is normally maintained by companies and individuals who have higher

frequency of withdrawing from their accounts.

Apart from above there is another type of deposit which is called recurring deposit in which

individual will have to pay a small sum every month for a particular period of time; it can be

on a daily, weekly or monthly basis. The interest offered on this is almost equivalent to thatof term deposits.

Current accountis the name given to a transactional account in the United Kingdomand countrieswith a UK banking heritage, offering various flexible payment methods to allow customers to distributemoney directly to others. Most current accounts come with a cheque bookand offer the facility toarrange standing orders, direct debitsand payment via a debit card. Current accounts may also allowborrowing via an overdraftfacility.

Current Deposit Meaning:In deposit terminology, the term Current Deposit refers to a deposit to a bank account or financial institutionwithout a specified maturity date. These types of Current Deposit account generally only earn demand depositinterest.

Current Deposit Example:For example, a Current Deposit will often be made into a bank or other financial institutions account in the localcurrency. The deposit will then generally be made available to the customer for withdrawal at any time andwithout an early withdrawal penalty. Funds are typically made immediately available to the customer forwithdrawal by writing a check. Such Current Deposit accounts are generally used for businesses that have aneed for issuing checks to pay employee salaries and bonuses, as well as to provide cash for inventories andother such business expenses. The bank or financial institution where the Current Deposit account is held usuallypays out interest on the funds periodically, such as monthly or quarterly.

4. fixed deposits

A fixed deposit (FD) is afinancial instrument provided by Indian and South African banks which providesinvestors with a higher rate ofinterest than a regularsavings account, until the given maturity date . It may ormay not require the creation of a separate account. It is known as a term deposit ortimedeposit in Canada, Australia, New Zealand, and the US, and as a bond in theUnited Kingdom. They areconsidered to be very safe investments. Term deposits in India is used to denote a larger class of investmentswith varying levels of liquidity. The defining criteria for a fixed deposit is that the money cannot be withdrawn forthe FD as compared to arecurring deposit or ademand deposit before maturity. Some banks may offeradditional services to FD holders such as loans against FD certificates at competitive interest rates. It's importantto note that banks may offer lesser interest rates under uncertain economic conditions. The interest rate variesbetween 4 and 11 percent.[1] The tenure of an FD can vary from 10, 15 or 45 days to 1.5 years and can be as

high as 10 years.[2] These investments are safer than Post Office Schemes as they are covered under theDeposit Insurance & Credit Guarantee Scheme of India. They also offerincome tax and wealth tax benefits.

8
http://en.wikipedia.org/wiki/Automated_Clearing_Househttp://en.wikipedia.org/wiki/Financial_instrumenthttp://en.wikipedia.org/wiki/Financial_instrumenthttp://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Savings_accounthttp://en.wikipedia.org/wiki/Term_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/New_Zealandhttp://en.wikipedia.org/wiki/UShttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Recurring_deposithttp://en.wikipedia.org/wiki/Recurring_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Muranjan1952-1http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Tannan1965-2http://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Wealth_taxhttp://en.wikipedia.org/wiki/Automated_Clearing_Househttp://en.wikipedia.org/wiki/Financial_instrumenthttp://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Savings_accounthttp://en.wikipedia.org/wiki/Term_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/New_Zealandhttp://en.wikipedia.org/wiki/UShttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Recurring_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Muranjan1952-1http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Tannan1965-2http://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Wealth_tax


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Fixed deposits are a high-interest-yielding Term deposit offered by banks in India. The most popular form ofTerm deposits are Fixed Deposits, while other forms of term Deposits are Recurring Deposit and Flexi FixedDeposits (the latter is actually a combination of Demand deposit and Fixed deposit).

To compensate for the low liquidity, FDs offer higher rates of interest than saving accounts. The longest

permissible term for FDs is 10 years. Generally, the longer the term of deposit, higher is the rate of interest but a

bank may offer lower rate of interest for a longer period if it expects interest rates, at which RBI lends to banks

("repo rates"), will dip in the future.[3]

Usually in India the interest on FDs is paid every three months from the date of the deposit. (e.g. if FD a/c was

opened on 15th Feb., first interest instalment would be paid on 15 May). The interest is credited to the customers'

Savings bank account or sent to them by cheque. This is a Simple FD.[4] The customer may choose to have the

interest reinvested in the FD account. In this case, the deposit is called the Cumulative FD or compound interest

FD. For such deposits, the interest is paid with the invested amount on maturity of the deposit at the end of the

term.[5]

Although banks can refuse to repay FDs before the expiry of the deposit, they generally don't. This is known as a

premature withdrawal. In such cases, interest is paid at the rate applicable at the time of withdrawal. For

example, a deposit is made for 5 years at 8%, but is withdrawn after 2 years. If the rate applicable on the date of

deposit for 2 years is 5 per cent, the interest will be paid at 5 per cent. Banks can charge a penalty for premature

withdrawal.[4]

Banks issue a separate receipt for every FD because each deposit is treated as a distinct contract. This receipt is

known as the Fixed Deposit Receipt (FDR), that has to be surrendered to the bank at the time of renewal or

encashment.[6]

Many banks offer the facility of automatic renewal of FDs where the customers do give new instructions for thematured deposit. On the date of maturity, such deposits are renewed for a similar term as that of the original

deposit at the rate prevailing on the date of renewal.

Income tax regulations require that FD maturity proceeds exceeding Rs 20,000 not to be paid in cash.

Repayment of such and larger deposits has to be either by " A/c payee " crossed cheque in the name of the

customer or by credit to the saving bank a/c or current a/c of the customer.

Some Benefits of FD

Customers can avail loans against FDs up to 80 to 90 per cent of the value of deposits. The rate of

interest on the loan could be 1 to 2 per cent over the rate offered on the deposit .[7]

Non resident Indian's and Person of Indian Origin can also open these accounts.

[edit]Taxability

Tax is deducted by the banks on FDs if interest paid to a customer at any branch exceeds Rs 10,000 in a

financial year. This is applicable to both interest payable or reinvested per customer or per branch. This is

called Tax deducted at Source and is presently fixed at 10% of the interest. Banks issue Form 16 A every quarterto the customer, as a receipt for Tax Deducted at Source. [8]

9
http://en.wikipedia.org/wiki/Recurring_Deposithttp://en.wikipedia.org/wiki/Flexi_Fixed_Depositshttp://en.wikipedia.org/wiki/Flexi_Fixed_Depositshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Maheshwari1997-3http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-KapilaKapila2001-4http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-KapilaKapila2001-4http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Dash2009-5http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-KapilaKapila2001-4http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Muralidharan-6http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Swart2004-7http://en.wikipedia.org/w/index.php?title=Fixed_deposit&action=edit&section=3http://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Publishing2008-8http://en.wikipedia.org/wiki/Recurring_Deposithttp://en.wikipedia.org/wiki/Flexi_Fixed_Depositshttp://en.wikipedia.org/wiki/Flexi_Fixed_Depositshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Maheshwari1997-3http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-KapilaKapila2001-4http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Dash2009-5http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-KapilaKapila2001-4http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Muralidharan-6http://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Swart2004-7http://en.wikipedia.org/w/index.php?title=Fixed_deposit&action=edit&section=3http://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Fixed_deposit#cite_note-Publishing2008-8


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If the total income for a year does not fall within the overall taxable limits, customers can submit a Form 15 G

(below 65 years of age) or Form 15 H (above 65 years of age).

ACKNOWLEDGEMENT

The internship was carried out for the partial fulfillment of the BBA program

conducted by Purbanchal University Faculty of Management. The primary objective

of the internship program is to enable the students to transform the academic

knowledge learnt through the years into the practical real world environment where

organizations are facing tough competition with the effect of globalization. Thepractical approach of internship enables the students to learn what the organization

face in terms of employee diversity, the pressure that every organization face, the

regulatory environments they have to work in and other variables that are prominent

in the real working environment.

Foremost, I would like to express my deep and sincere gratitude to Himalayan Bank

Limited , Itahari Branch and the entire Himalayan Bank family for providing me the

exciting opportunity to be one of them and giving me thorough guidance and

opportunities to move ahead with my internship objective.

I would like to extend my gratitude to Mr. Tanka Raj Pokhrel, Branch Manager,

Itahari branch and Mr. Rajendra Upretti for trusting me and providing access to

confidential documents when and where required in the scope of the project. My

indebt gratitude also goes to Mr. Kamal Mahaldar of Teller department and entire

customer relations department of the bank for providing me guidance and motivation

for the project and also by sharing their knowledge with me.

I would also like to thank Mr. Prem Prasad Neupane, Principal, chairman of research

committee Dr. Kedar Prasad Poudel of Kasturi College of Management for guiding

and helping me in each every stage of the BBA course and the internship study. I am

deeply indebted to KCMs internship co-coordinator Mr. Santiram Khanal whose

help, stimulating suggestions and encouragement helped me in writing of thisinternship report.

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Thank you all!

Sincerely

Lochan Khanal

I

EXECUTIVE SUMMARY

Himalayan Bank is one of the pioneer private banks of the Nepalese banking industry

being established in 1993 AD as a joint venture with Habib Bank Limited, Pakistan. It

holds a vision of becoming a leading bank of the country and providing the customers

with premium services to give substantial return to its stakeholders. HBL has a huge

base of customer base and especially A rated clients which are there due to HBLs

long history of customer satisfaction and innovation in services.

The internship period is spent in three phases, first working in the Customer Service

Department for two weeks to know the zest of what kind of customers and clients the

bank has, second in the Credit Department to learn how a loan application is critically

examined to pass the loan and also to know the types of loan & its features and finally

in Teller department to know the deposit and withdrawal.

The study is focused on deposit and loan policy of HBL Itahari Branch. The main

objective of the study is to find out the deposit & loan policy, structure and position.

For this, past three years data are taken. To achieve the objectives the data and

information are collected. Primary and secondary sources are the medium of

collection of data & information. In the next phase, the collected data & information

are analyzed and presented by using different statistical and mathematical measures.

Finally, after the analyzing of data & information it is found that the deposit policy of

the bank is favorable for the customers in comparison to loan policy. Due to the low

interest in loan and lack of marketing the funds of the bank is not mobilized. It is clear

from the trend relationship between deposit & loan. Similarly, the relation between

deposit & loan is positive it is found from the correlation coefficient.

From this study, I gained a better understanding of what is loan and deposit policy,

how this is applied in Nepalese commercial banks. Furthermore, I also get opportunity

to know the structure of the loan and deposit of the HBL, Itahari

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II

branch. Similarly, I get opportunity to establish a relationship among the banks

customers which was a great aspect of my internship. All these and other works done

in the internship period enable me to incorporate my theoretical knowledge into real

working situations which has increased my level of knowledge and understanding.

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III

Table of Contents

Title Page

Recommendation Letter

Internship Certificate

Acknowledgement I

Executive Summary II

Table of Content IV

List of Tables VI

List of Figures VII

Abbreviation VIII

Chapter-One: Introduction

1.1General Background 1

1.1.1 Introduction of Bank 2

1.1.2 Introduction of Commercial Bank 3

1.1.3 Introduction of Himalayan Bank Limited 4

1.1.4 Vision of Himalayan Bank Limited 5

1.1.5 Mission of Himalayan Bank Limited 5

1.1.6 Objectives of Himalayan Bank Limited 5

1.1.7 Inroduction of HBL Itahari Branch 6

1.1.8 Organizaitonal structure of HBL Itahari Branch 7

1.1.9 Product/services offered by Himalayan Bank Limited 8

1.2 Conceptual Review of deposit & loan policy 10

1.3 Focus of Study 11

1.4 Objectives/purpose of internship report 12

1.5 Statement of problem 13

1.6 Importance of Internship Report 141.7 Methodology of Internship Report 14

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1.7.1 Internship report design 14

1.7.2 Population and sample of data 14

1.7.3 Data collection procedures 15

IV

1.7.4 Nature of sources of data 15

1.7.5 Data analysis tools & techniques 16

1.8 Organization of Internship Report 16

1.9 Assumptions & Limitation of Internship Report 17

Chapter- Two: Presentation& Analysis of data

2.1 Presentation of deposit & loan policy data 18

2.1.1 Introduction to deposit & loan policy 18

2.1.2 Deposit structure of Himalayan Bank Limited 20

2.1.3 The major policies offered for the loan market 20

2.1.4 The principles of loan lending policies of bank 21

2.1.5 Loan & interest rate of HBL Itahari branch 22

2.2 Analysis of deposit and loan 24

2.2.1 Deposit in Non-interest bearing account 24

2.2.2 Deposit in interest bearing account 24

2.2.3 Factors considered by HBL to attract deposit 27

2.2.4 Deposit structure of HBL 28

2.2.5 Loan structure of HBL Itahari branch 31

2.2.6 Relationship between deposit and loan policy 34

Chapter- Three: Major findings, Conclusion & Recommendation

3.1 Major finding of the study 36

3.2 Conclusion 37

3.3 Recommendation 38

BIBLIOGRAPGY

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V

List of Tables

Table No. Description Page No.

1.1 Services of Himalayan Bank Limited 8

2.1Deposit Products policy Offered by HBL 21

2.2 Statement of deposit structure of HBL 22

2.3 Loan Products of HBL 22

2.4 Interest rate on Loans 24

2.5 Loan of HBL Itahari Branch 25

2.6 Statement of rate of interest of fixed deposit 27

2.7 Statement of interest rate of saving deposit 29

2.8 Statement of Deposit structure 30

2.9 TotalDeposits 32

2.10 Statement of loan 34

2.11 Total Loan 35

2.12 Correlation coefficient between deposit & loan 37

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VI

List of figures

Figure No. Page No.

2.1 Structure of deposit 31

2.2 Trend line of Total deposit 33

2.3 Structure of loan 35

2.4 Trend line of total loan 36

2.5 Trend relationship between deposit and loan 36

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VII

ABBREVIATION

KCM= Kasturi College of Management

HBL = Himalyan Bank Limited

i.e. = that is

etc. = etcetera

A.D. = Iswi-Sambat

B.S. = Bikram Sambat

ATM = Automated Teller Machine

Dept. = Department

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CSD = Customer Service Department

% = Percentage

ABBS = Any Branch Banking Service

& = And

FY = Fiscal Year

IR = Internship Report

Govt. = Government

Pa = Per annum

Min = Minimum

LOC = Letter of Credit

A/C = Account

R.S. = Rupees

Amt. = Amount

T.D. = Teller Department

Yrs. = years

VIII

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BIBLIOGRAPGY

Chandler, L.V. and S.M. Goldfield (1997), The Economics of Money and Banking, 7th

edtn.

Chaudhary, A.K. (2063),Business Statistics, Bhudipuran Prakashan, 11th revised

edtn.

Geoffer Cowther (1948),An Outline of Money, revised edtn.

Jhingan M.L. (2004),Money, Banking, International Trade and Finance, 7th revised

edtn.

Khadka, Shrejang and Singh. (2062),Banking and Insurance, 5th

edition, AsiaPublication (P) Ltd.

Commercial banking Act 2031

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CHAPTER-ONE

INTRODUCTION

1.1 General Background

Nepal is an under developed country characterized by the problems like

poverty, literacy, unemployment and so on. All these are not the result of temporary

misfortune and absolute method of production and social organization. Some more

features of an underdeveloped nation include low level of technology, skills and

unsuitable political and social structure. In such a situation, banks play an important

role in the development of economy and enlistment society.

The network of all well organized financial system of the country has a great

bearing in this regard. It collects scattered financial resources form the masses and

inverts them among than engaged in commercial and economic activities of the

country. In this the financial institution provides saver highly liquid divisible assets at

lower rate while the investor received large pool of resources. Integrated and speedy

development of the country is possible only when competitive services reach looks

and corner of the country. It has been well established that economic activities of any

country can hardly be carried forward without assistance and support of financial

institution. Financial institute has catalytic role in the process of economic

development.

Consequently, Nepal bank act 063, having elementary function of commercial

bank. Later in 1956, the first central bank named as Nepal Rastra Bank was

established in 1966 A.D. to spread banking services to both rural and urban areas. In

1936 co-operative bank was established that was converted later into agricultural

development bank in 1967. The pace of financial sector, development enhanced

rapidly after the financial liberalization policy introduced by government in 1984 A.D.

since then, various financial institution i.e. JUB is domestic commercial banks,

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development bank, financial companies, co-operative banks, credit guarantee

cooperation, employee provident fund national insurance corporation, Nepal stock

exchange has come into existence to cater the financial needs of the country thereby

assisting financial development of the country.

So the commercial banks are the heart of our financial system. They hold the

deposit of million persons, government and business unit, they make fund available

through their investing and landlines activities to borrow individual business unit and

government. They facilitate both the activities, flow of goods and services from

procedures to consumers and financial activities of the government. They provide a

large portion of our medium of exchange and they are media through which monetary

policy is affected.

In short, banks are extremely necessary for healthy and prompt progress of a

country, its citizens and the societies it has. By creating and mobilizing the capital and

rendering various financial services, banks are contributing to establishment and

development of so many small and large scale industries and domestic as well as

international trade and commerce.

1.1.1 Introduction of Bank

Bank is any financial institution that receives, collects, transfers, pays,

exchanges, lends, invests or safeguards money for its customers. This includes many

other financial initiations that are not usually thought of as bank but which

nevertheless provide one or more of these broadly defined banking services. These

institutions include finance companies, pension fund, security brokers, mortgage

companies etc.

Banking services is extremely important in a free market economy such as that

found in Canada and the United of States. Banking services serve two primary

purposes, first by supplying customers with basic medium-of-exchange (cash,

checking accounts and credit cards), bank play key role in the way goods and services

are purchased. Without these familiar methods of payments, goods could only be

exchanged by barter, which is extremely time-consuming and inefficient. Second byaccepting money deposits from savers and then lending the money to the borrower

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banks encourage the flow of money to productive use and investment. This in turn

allows the economy grows. Without this flow savings would remain idle in someones

safe and pocket, money would not be available to borrow, people would not be able to

purchase cars, houses and businesses would not be able to build the new factories.

Enabling the flow of the money from savers to investors is called financial

intermediation and it extremely important to a free market economy.

Some economist has defined the term bank in their own way. Some of them are

as follows:

A bank is an organization whose principle operations are concerned with the

accumulation of the temporarily idle money of the general public for the purpose ofadvancing to other for expenditure. (Jhingan, 2006:130)

A bank is an institution which collects money from those who have it spare or

who are saving it out of their income and lends it out to those who require it.

(Crowther 1992:78)

1.1.2 Introduction of Commercial Bank

Commercial banks are organizations which normally performs certain financial

transactions. It performs twin task of accepting deposits from members of public and

to make advances to needy and worthy people from the society. When bank accepts

deposit its liabilities increase and it become a debtor, but when it make advances its

assets increase and it become a creditor. Banking transactions are socially and legally

approved. It is responsible in maintaining the deposits of its account holders.

Commercial banks induces the savers in the country to hold their savings in the

form of socially useful assets of which bank deposits constitute the most important

elements. Banks draw the community savings into organized that can then allocated

among the different economic activated according to the priorities laid down by

planning authorities in the country.

A commercial bank refers to such type of bank which deals in money

exchange, accepting deposit, advancing loans and commercial transactions except

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specific banking related to co-operative, agriculture and industry and other

objectives. (Commercial Banking Act 2031 B.S.)

The history of commercial banks in Nepal starts from the establishment of the

Nepal Bank Limited on 1994 B.S. it is the first bank in Nepal. Hence, the commercial

banks are so much important in the modern business world that the commercial life

will be paralyzed if banks stop function for a day or two. So, commercial banks are

essential for domestic and foreign trade, industries and commerce in particular and

economic development in general.

1.1.3 Introduction of HBL

During the last two and half decades the Nepalese financial system has grown

significantly. At the beginning of 1980s there were only two commercial banks and

two development banks. After the adoption of economic liberalization policy,

particularly the financial sector liberalization that paved the way for establishment of

new banks and non-bank financial institutions into the country. Consequently, by the

end of mid July 2011, altogether 272 banks and non-bank financial institutions

licensed by NRB are in operation. Out of them, 31 are A class commercial banks,

87 B class development banks, 79 C class finance companies, 21 D class micro-

credit development banks, 16 savings and credit co-operatives, and 38 are NGO.

HBL is one of the pioneer commercial banks in Nepalese industry with it being

one of the initial private commercial banks in Nepal. HBL is known for its expertise

project financing and having a reputed and A rated clientele. Especially with its

BOD containing reputed business houses like the Khetan Group, this bank has a good

business in hand. HBL is well known for its friendly work culture with educated and

professional employees motivated to work for a long working hours. Hence, HBL was

chosen so as to experience the professional working culture and acquire the best

possible knowledge of HBLs expertise i.e. project financing, deposits, advances and

other credit related functions and products.

HBL was established in the year 1993 as a joint venture with Habib Bank

Limited, Pakistan and soon became a pioneer in the banking industry attracting hugenumbers of customers both for deposit and lending. HBL has also been known for its

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innovative products like Personal Savings Account, Millionaire deposit scheme,

Himal Remit etc. HBL has been able to maintain a lead in the primary banking

activities Loans and deposits despite the cut-throat competition in Nepalese banking

sector.

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1.1.4 Vision of Himalayan Bank

Himalayan bank limited holds of a vision to become a leading bank of the

country by providing premium products and services to the customers, thus ensuring

attractive and substantial returns to the stakeholders of the bank.

1.1.5 Mission of Himalayan Bank

The mission of the bank is to become a preferred provider of quality financial

services in the country. There are two components in the mission of the bank;

Preferred Provider and Quality Financial Services. Therefore, HBL believes that

mission will accomplish only by satisfying these two important components with the

customer at focus. The bank always strives positioning itself in the hearts and minds

of the customers.

1.1.6 Objectives of Himalayan Bank

Himalayan bank has set is objectives as To become the Bank of first choice.

The bank is known throughout Nepal for its innovative approaches to merchandising

and customer services. Product such as Premium Savings Account, HBL Proprietary

Card and Millionaire Deposit Scheme besides services such as ATMs and Tele-

banking were first introduced by HBL. Other financial institutions in the country have

been following their lead by introducing similar products and services. With the

highest deposit base and loan portfolio amongst private sector banks and extending

guarantees to correspondent banks covering exposure of other local banks under their

credit standings with foreign correspondent banks, HBL believes that they lead the

banking sector in Nepal.

All branches of HBL are integrated into Globus (developed by Temenos), the

single Banking sector software where the Bank has made substantial investments. This

has helped the Bank provide services like Any Branch Banking Facility, Internet

Banking and SMS Banking. Living up to the expectation and aspirations of the

customers and other stakeholders of being innovative, HBL very recently introduced

several new products and services. Millionaire Deposit Scheme, Small Business

Enterprise Loan, Pre-paid Visa Card, International Travel Quota Credit Card,

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Consumer Finance through Credit Card and online TOFEL, SAT, IELTS, etc. fee

payment facility are some of the product and services. HBL also has a dedicated

offsite Disaster Recovery Management System. Looking at the number of Nepalese

workers abroad and their need for formal money transfer channel; HBL has developed

exclusive and proprietary online money transfer software- Himal Remit.

Himalayan Bank Limited holds of a vision to become a Leading Bank of the

country by providing premium products and services to the customers, thus ensuring

attractive and substantial returns to the stakeholders of the Bank.

The main branch of bank is situated in Thamel in Kathmandu. Furth more the bank

has 33 branches in all over the country ie. Maharajgunj,New Road, Patan, Bhaktapur,Teku, Kalanki, Birgunj, Pokhara, Hetauda, Biratnagar, Itahari, Dharan and Damak

amongst several other places/cities.

1.1.7 Introduction of Himalayan Bank Ltd. & Branch office, Itahari

Himalayan Bank Limited is established as commercial banks in Nepal in 5 th

magh, 2049 B.S. Himalayan Bank Limited has been playing a vital role to increase

Nepalese life style. Himalayan Bank Limited provides ATM, Tele banking, creditcard, premiere saving account and online overdraft and other general services. So, the

Himalayan bank limited is a part of commercial bank of Nepal. Himalayan bank

limited has expanded its branches all over the country. Himalayan bank limited is

branches help to provide all banking service of commercial banks. Himalayan bank

has been able to maintain a lead in the primary banking activities- loans and deposits.

Legacy of Himalayan bank lives on in an institution thats known throughout Nepal

for its innovative approaches to merchandising and customer service products.

Himalayan bank limited, Itahari Branch was established in 19 th February, 2009 as 18th

branch. It is situated in Pathibara Market Dharan road Itahari, Sunsari.

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1.1.8 Organizational Structure of HBL Itahari-branch

Himalayan Bank Limited Itahari-branch has a very typical organizational

structure where the top level management includes the Chief Executive Officer, the

Senior General Manager and General Manager. Under them are the various

departments of the bank with one person heading each department. These departments

also have been further departmentalized based on need. The major decisions of the

bank are taken by the Executive Committee which includes the following:

Figure 1.1

Organization Structure of HBL Itahari, Branch

Branch In-charge

Operational/Credit

In-charge

Source: Internal Organizational chart of HBL, Itahari branch

27

CSD Cash

De t.

Administration Remittance Credit

Dept.

Day

Book

Security

Guard


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1.1.9 Products/services offered by Himalayan Bank Limited

The services offered by HBL are summarized follows:

Table 1.1

Services of Himalayan Bank Limited

S.N. Products/Services

1 Deposit Product

2 Loan

3 International Banking (LC)

4 Himal Remit

5 Safe Deposit Locker

6 Card Services

7 SMS Banking

8 Internet Banking

Source: Profile of HBL,Itahari branch.

Fierce competition has erupted in Nepalese banking sector. At a time when the

market pie has not increased over four dozen industries are lying closed across the

country, the rise in the number of financial institutions is leading to cut-throat

competition in the domestic banking sector. Apart from over a half dozen financial

institutions, including B-class development banks and C-class finance companies, the

entry of two big A-class commercial banks will not only swell the number to 31 but

also force them to look for new investment avenues.

The proposed Civil Bank Ltd, the 30 th commercial bank, got the green license

on November 26, 2010. Century Commercial Bank Ltd, the 31st commercial bank,

also recently got permission from Nepal Rastra bank to operate. With this Himalayan

Banks competition is increasing as the new banks come up with cheaper and

attractive products.

Even after so much of competition, HBL is one of the most sought banks. Its

loan portfolio shows that 7% of the total loan market is captured by HBL as per the

NRB report. HBL has 12% coverage on the manufacturing sector in terms of amount.

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HBL has been providing competitive products at competitive prices. HBL is

not one of the players who fight solely on price. It has a brand name and customer

consider HBL to be trustworthy and they bank on HBL because of this itself.

Some of the new products brought in by competitors are:

1. Low Balance Accounts:

Banks have come up with deposit scheme where the customer can open

accounts with minimum balance of Rs. 1000, or even Rs.1 and Rs. 0.

2. Internet Banking:

With the change in technology, Banks, more than ever, felt the need for

banking convenience for their clients. Now customers can access and have full control

over their accounts 24 hours 7 days a week over the internet.

3. Mobile Banking:

Today, one has the convenience of operating their accounts through their

mobile which removes boundaries such as availability of branch or internet.

4. Any Branch Banking:

All the branches are interconnected with V-Sat and are capable of providing

online, real-time transactions to its customers. Customers can enjoy ABBS in almost

all the commercial banks.

5. Utility Payment Services:

With the advancement in technology and increasing competitiveness in the

market, banks have started providing services of utility bills payment such as

telephone, schools etc through counters and internet.

6. Visa Credit and Debit Card:

With Nepalese people becoming aware of product such as credit/debit card,

banks in Nepal introduced them here as well. With this customers have to convenience

of not carrying too much cash.

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1.2 Conceptual Review of Deposit & Loan policy

Review of literature is an essential part of all studies. It is a way to discover

what other research in the area of our problem has uncovered. It is also the process of

reading, analyzing, evaluating and summarizing scholarly materials about a specific

topic.

Deposit is the main sources of fund collected by the bank from different

customers. Deposit policy is the most important policy for RBBS existence. The

growth of the bank depends primarily upon the growth of its deposits. The volume of

funds that management will use for creating income through loans and investments is

determined by the banks policy governing deposits.

Deposit is the collection made by customer in the bank for security purpose,

future safety purpose as well as in order to earn interest of total deposit. Bank provides

reasonable rates of interest to the customers for the deposited amount on the basis of

the different account. In the banking business volume of credit extension much

depends upon the deposits base of the bank. When the deposit of the bank increases,

the assets of the bank also increases as a result liabilities of the bank rises.Traditionally, the deposit of the bank was determines by the depositors not by bank

management. There is regular change in this view in the modern banking industry.

Thus bank has evolved from relatively passive acceptors of deposits to active bidders

for the funds. Deposits are one of the aspects of the bank liabilities that management

has been influencing through deliberate actions.

Loan policy can be defined as the decision made in advances about the

management of credit. Today the services of bank have expanded and different loan

procedures are applied in order to maximize shareholders fund. The bank has used to

act as a bridge between the savers and users of fund. However, to maximize the

shareholders wealth by accepting deposit and granting loan in society has always

remained the prior purpose of commercial bank. The bank cannot remain idol.

Therefore, the bank has to invest its fund in loan and advances, risky assets in order to

provide maximum return.

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Therefore, for the safety of depositors funds and adequate return to

shareholders the loan policy is most important to be applied. As such, HBL has played

an important role in making loan policy effective and utilized the fund in the

profitable area. The bank invests most of its fund in the area where it can get

maximum return and where there is a scope of getting more outcomes.

HBL has introduced hire purchase loan and housing loan to the target

customers for the loan. Loan schemes are the salaried, self-employed and companies

who have stable source of income. HBL housing loan is available for purchase of land

and building construction of house and renovation and extension of existing houses.

The policy of the bank in respect of the deposits is shaped by its operationhorizon. Various factors like interest rate, types of customers, physical facilities and

management accessibility to the customers, types and ranges of services offered etc

influence the deposit of the bank.

1.3 Focus of the study

Deposit is the main source of fund for commercial bank to invest in profitable

sector. Money from deposit can be invested in the productive and socially desirablesector. The bank accepts deposits from those who can save but not profitably utilize

the saving themselves. To attract saving from all sort of individual the bank receives a

number of deposits in various fame in various accounts.

Bank utilize the money from deposit by providing various types of loan like

hire purchase loan, housing loan, educational loan etc. the bank also invests this

money to purchase share, debenture, bond etc of other company form that bank earn

profit after certain time period. From loan bank collect the interest in higher rate. So,

the deposit is the main source of income for commercial bank.

Similarly, bank utilizes the deposited money in the form of loan & advances. It

provides various types of loans to the customers and collects higher interest rate.

Therefore, the loan policy of the bank should be effective to attract the customers.

This study is mostly focused on deposit & loan of HBL. There are various

types of deposits such as saving deposits, fixed deposits, current deposits etc.

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similarly, HBL also provides various types of loan such as hire purchase loan, housing

loan, Subidha loan etc.

1.4 Objectives/purposes of internship report

The primary goal of internship program for the intern was to experience the

banking industry of Nepal and to experience how much has this industry evolved from

the traditional banking practices of deposits and loans. Furthermore, transforming the

academic bookish knowledge into practical knowledge and to understand how the

concepts and theories are applied in real working environment. Furthermore, working

in the banking industry also enables the intern to know what the recent business

changes taking place in the economy and what further opportunities are present inbusiness market.

Learning a professional attitude and learning the value of time was also one of

the major goals of internship program. These aspect can only be learned through

practical orientation as they are learnt only when it is adapted in the behavior of

individuals. The goals and objectives set at the beginning of the internship period have

been included in the appendices.

Internship program is the medium to provide students with real time working

experience so that they acquired knowledge in a practically oriented manner. This

knowledge is different from the textbook knowledge because the theories in the

textbooks are based on many assumptions which are not levied in the practical

environment.

Overall Objectives of the study:-

To know about various processes and working environment of a

commercial bank:

A bank is an important part of any countrys economy as it plays direct and

indirect roles in the various parts of the economy. So to know about what are the

various processes in a bank as this work is a matter of great interest and importance,

the best way to know about these things was to attain from the practical knowledge

from the internship program.

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To access career option in this sector:

Banking is considered as a high stature job with its glamorous outlook with its

good pay and stability. I aspire to get into the banking industry and hence to know

whether this job was really meant for me or not, internship program was the best

possible way to know about it.

To experience the professionalism in work culture and to learn for future

prospects:

Professionalism in todays working culture is evident and to learn this attitude

is very important to be successful in todays competitive environment. Since this

cannot be learnt from textbook knowledge and requires real working experience,

internship would be a big platform for this aspect as well.

To learn practically the knowledge learnt from academic courses:

A practical orientation for every student of what he learns is very important. Hence

internship program would be useful for putting the academic knowledge learnt in the

past years into practical reality.

The specific objectives of the study are:-

As we are connected with the bank for a limited period, it helps us to know the various

policies and principles and banking activities. The main objective of internship report

is to know the deposit and loan policy of the HBL. The objectives are as follows:

To provide the banking information, its features and facilities.

To outline the deposit and loan policy of the bank.

To know the deposit and loan position.

To provide the information relating to various types of loans and deposits and

their policy.

1.5 Statement of Problem

This part explains about the focus point on which the internship report is being

prepared. The researcher worked as the learner in HBL Itahari branch and mainly

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focused on the deposit and loan policy of the bank. The aims of the internship are as

follows:

What is the deposit & loan policy of the HBL?

What kinds of loan they provide to the customers?

What is the deposit & loan position in the recent fiscal year?

How deposits are mobilized in the development of the society and its people?

What kinds of deposit scheme/policy are provided?

1.6 Importance of the Internship Report

The internship report provides the practical knowledge and enhances the

creativity of the researcher. It develops confidence and sharpens the skills and ability

to interact with others. It is the implementation of the theoretical study into the

practical use.

1.7 Methodology of Internship report

Different kinds of tools and technique are used in making the report. The data

are collected from various sources by different means.

1.7.1 Internship report design

The internship report is designed as descriptive and analytical. Analytical

reports takes a problem, idea or issue and break it down into its components part to

examine how the parts fit together. Analytical report call on us to answer questions, to

ask questions why something happens, which product is best or is a good idea.

Descriptive and analytical reports call for research, interpretation and

recommendation. And when we work within particular professional context, analysis

often means very specific thing involving our particular skill set and expertise. Such

report not only describes the facts of real situation phenomenon but also analyze the

facts and the problem related to the statement. So, on the basis of description and

analysis of information and data conclusion and findings are made.

1.7.2 Population and sample of data

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Population refers to the totality of the observation that have selected for study

or it can be defined as the whole or universe. Population is total unit, which is going to

study or research where as sample is the number of representative which are going to

be studied. Sample refers to the part chosen from the population. The process of

selecting a sample from population is called sampling. All the financial years from the

date of establishment till FY 2067/68 are population data. For the analysis of deposit

and loan of HBL three FY data from 2065/66 to 2067/68 are taken as sample data.

1.7.3 Data collection procedure

For the preparation of internship report two months passed in HBL in order to

obtain essential data. For the collection, essential data and information to theresearcher was permitted on the definite rules of the institute manager during

internship period. Through the help of some personals and officials this information

has gather effectively and properly. To collect relevant information different

methodology were adopted such as observation, questionnaire, interview etc. first of

all the researcher has to contact with the manager of Himalayan Bank Limited Itahari

Branch and after that with different personals and officials to collect required

information by asking necessary question needed to prepare the report.

1.7.4. Nature and sources of data

This study is based on different sources of data. Report on magazines, official

record, annual reports, supplementary data and information are collected from

regulating authority, internet, customers of the bank etc.

To prepare the report on deposit and loan policy of HBL, Itahari branch,

primary data are collected by interviewing the branch manager and other staffs of the

bank and official record, published book, journal are used as secondary data.

Primary data

Primary data are the original data gather by the researcher at source for the need

of research study. Primary data are collected at the time of internship period through

observation, questionnaire, and interview method with manager and staffs of the

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Bank. The researcher expressly to solve the problem under consideration at that time

gathers primary data.

Secondary data

Secondary data is defined as data collected earlier for a purpose other than the

one currently being pursued. Secondary data are often in a form of public data but the

unpublished data such as records, reports or statistics gather or complied by others

prior to your study are also secondary data. For the internship report the statement of

Loan and advance and deposit is obtained from books of account and financial record

of the bank.

1.7.5. Data analysis tools and technique

To analyze the data, there is need of certain tools and techniques. In this study,

tables, simple bar chart, trend line, mean are used to analyze the data.

1.8. Organization of internship report

Organization of internship report is made by three chapters. Among them

introduction is the first chapter. Under this chapter, the sub topic such as background

information, introduction of the organization conceptual review, focus of the study,

purpose of internship report, statement of problem, importance of the IR, methodology

of internship report, organization of IR, assumption and limitation of IR are included.

The sub topic background information includes origin, location, work area, objectives,

authority area, organization structure, function/services of HBL, Itahari branch.

In conceptual review the concept of research title is defined. Statement of

problem includes the question which the whole report is going to find out.

Methodology of the internship report includes the way in which IR is design,

population and sample of data, data collection procedure, nature and sources of data,

data analysis tools and techniques etc. the objective of field work study is made clear

in the sub topic purpose of IR. In gist, organization of IR is the brief summary of the

field study report.

Presentation and analysis of data fall into the second chapter of the report. This

chapter includes the presentation of data, analysis of data, by using statistical

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techniques. The last chapter or third chapter is the major findings, conclusion &

recommendation. This chapter includes major findings of the IR, conclusion derived

from the study of the IR etc. similarly, on the basis of observation, recommendation

are made which is beneficial for HBL, Itahari branch.

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1.9 Assumptions and limitation of IR

Modern commercial banks provide many services to its customer. However,

the main services are to accept deposits and advance loan. Therefore, the study is

limited to deposit and loan policy analysis of HBL Itahari branch, which is inadequate

for anyone who is willing to gain complete knowledge about this bank. This study is

simply for partial fulfillment of BBA 8 th semester. The assumptions and limitations of

the study are:

Limited time:

The project was completed within a span of two months.

Limited Information:

Because of the competition and privacy of the Banks policy, abundant

statistical data could not be collected, which didnt provide the sufficient information

that was needed for conducting the study. So, it does not reflect the exact position of

bank related to the credit and deposit business, as the bank could not, understand

114436510 Internship Report on Loan Deposit Policy of HBLj

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