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. The

practical 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 KCM’s internship co-coordinator Mr. Santiram Khanal whose

help, stimulating suggestions and encouragement helped me in writing of this

internship report.

Thank you all! Sincerely

Lochan Khanal

I

1

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 HBL’s

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

II

branch. Similarly, I get opportunity to establish a relationship among the bank’s

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

2

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

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

III

3

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

1.1 General 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 14

1.7 Methodology of Internship Report 14

1.7.1 Internship report design 14

1.7.2 Population and sample of data 14

1.7.3 Data collection procedures 15

IV

4

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

V

5

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 Total Deposits 32

2.10 Statement of loan 34

2.11 Total Loan 35

2.12 Correlation coefficient between deposit & loan 37

VI

6

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

VIIABBREVIATION

7

KCM= Kasturi College of ManagementHBL = Himalyan Bank Limited

i.e. = that is

etc. = etcetera

A.D. = Iswi-Sambat

B.S. = Bikram Sambat

ATM = Automated Teller Machine

Dept. = Department

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

8

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, Asia

Publication (P) Ltd.Commercial banking Act 2031

CHAPTER-ONE

9

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,

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.

10

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 by

accepting money deposits from savers and then lending the money to the borrower

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 someone’s

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.

11

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 of

advancing 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 it’s liabilities increase and it become a debtor, but when it make advances it’s

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

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

12

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 HBL’s 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 huge

numbers of customers both for deposit and lending. HBL has also been known for its

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.

13

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,

14

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, credit

card, 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 that’s 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.

15

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

16

CSD Cash Dept.

Administration Remittance Credit Dept.

Day Book Dept.

Security Guard

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 Product2 Loan3 International Banking (LC)4 Himal Remit

5 Safe Deposit Locker6 Card Services7 SMS Banking8 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 30th 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

Bank’s 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.

17

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.

18

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 RBB’S 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 bank’s 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

shareholder’s 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.

19

Therefore, for the safety of depositor’s 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 operation

horizon. 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 desirable

sector. 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.

20

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 in

business 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 country’s 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.

21

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 today’s working culture is evident and to learn this attitude

is very important to be successful in today’s 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, it’s 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

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

follows:

22

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

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

23

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 the

researcher 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

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

24

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

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.

25

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 8th 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 Bank’s policy, abundant

statistical data could not be collected, which didn’t 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, understandably,

disclose financial information.

Lack of elaborate knowledge:

Study is done on loan & deposit policy issued by Himalayan bank only, so

information about credit and deposit on other banks is not mentioned elaborately.

With limited information collected, the study may not cover other relevant aspect of

the topic under study. Also being a student, limited by knowledge, time and resources,

the study may not be as elaborative as it could have been.

Financial problem:

The project was funded fully by student themselves.

26

CHAPTER- TWO

PRESENTATION & ANALYSIS OF DATA

2.1 Presentation of deposit & loan policy

In this chapter available data are presented and analyzed by using different

statistical tools such as bar diagram and trend analysis. This section is the heart of this

study that fully related to analysis and interprets various outcomes. In this study,

mainly focus is given to the loan & advances and deposit policy, rules & regulations.

2.1.1 Introduction to Deposit and Loan policy:

Loan policy is defined as the decision made in advance about the management

of credit. Today, the service of bank have expanded and different loan procedure are

been applied in order to maximize shareholders funds. Different types of loan such as

hire purchase loan, housing loan, Subidha loan and others are explained in this

section. The trend analysis for three year has also been present in the report.

Deposit policy is defined as the decision made in advance about the

management of funds of the customers. Today, the bank have extended its services

and different types of deposit procedure are been applied in order to attract the

deposit. Different types of deposit such as saving, current, fixed and other are

explained in this section. The trend analysis for three year has also been presented in

this section. Some of the competitive products that HBL came up to fight with the new

banks are:

1. Small and Medium Enterprise Loans:

To help establishment, growth and expansion of small and medium sized

enterprises, Himalayan Bank has developed a special loan package meant just

to suit small and medium sized enterprises.

2. Bishes Savings Account:

‘Bishes Savings Account’ is a deposit product targeted to special section

27

of society which includes minors, senior citizens completing the age of 50

years, physically challenged and illiterate individuals.

3. Zero Balance Account:

Customers can open an account for a minimum balance of zero. HBL came up

with this product to counter other low balance accounts of banks.

4. Credit Card Services:

In order to keep its customers satisfied, HBL provides VISA Debit and VISA

Credit cards to its customers at competitive prices.

5. Internet Banking:

Internet banking helps doing many banking transactions using the internet. It’s

easy, convenient, and best of all, it’s available anytime.

6. Mobile Banking:

Himalayan Bank also provides SMS Banking. Now customers can take care of

banking needs without ever having to wait in queues. Customer can check their

balance, status of check (en-cashed or not), last three transactions and the Bank’s

since the major products are deposit and the loans. They have various assortments of

product offered to the public in the deposit market are summarized in the figure

below:

Table 2.1: Deposit Products policy Offered by HBL

S.N. Deposit Products

1 Fixed Deposit2 Saving Deposit3 Current Account4 Premium Savings Account5 Super Premium Savings Account6 Call Deposit7 Bishes Savings Account8 Recurring Savings Account9 Jumbo Term Deposit Source: Profile of Himalayan Bank Ltd.,Itahari branch.

28

2.1.2 Deposit structure of HBL:

Table 2.2

Statement of deposit structure of HBL (Amount in millions)

Deposit F.Y. 2065/066 F.Y. 2066/067 F.Y. 2067/068

Current deposit 53.4 154.7 173.0

Saving deposit 94.2 272.9 305.3

Fixed deposit 152.6 442.2 494.6

Other deposit 113.2 327.9 366.8

Total 413.4 1197.8 1339.7

Source – HBL Itahari Branch

2.1.3. The major policies offered for the loan market are as follows:

Table 2.3: Loan Products of HBL

Corporate Loan Retail/Consumer Loan

Small & Medium Enterprise Loan

Funded:*Project/ Consortium

Loan

*Non Revolving Cash Credit

*Working Capital Financing

*Overdraft Facility

*Demand Loan

-Revolving Demand Loan

-Short Term Demand Loan

*Hire Purchase Loan

*Housing Loan

*Subidha Loan

*Credit Card Loan

*Loan against FDR

*Loan against Govt. Bonds & Bonds of Bank

*Loan against First Class Bank Guarantees

*Loan against Share

*Funded/Non-Funded facility range of Rs. 0.5 M to Rs. 40.0 M.

29

*Revolving Cash Credit

*Import Credit for Telex Transfer and Demand Draft Payment

*Trust Receipt Loan

*Export Credit Facilities

*Pledge Loan

*Clean Bills purchased & discounted

*Documentary Bills purchased & discounted

Non- Funded:

*Bank Guarantee

*Letter of Credit

Source: Profile of Himalayan Bank Ltd,Itahari branch.

2.1.4 The Principles of loan lending policies of bank

The bank has been accepting various principles of loan lending policies. These

principles are as follows:

a) Liquidity

Liquidity is important principle of bank lending. Bank lends for short period

only because they lend public money which can be withdrawn at any time by

depositors. They, therefore advance loan on the security of such assets which

are easily marketable and convertible into cash at a short notice.

b) Safety

Safety means that the borrower should be able to repay loan and interest at

time regular intervals without defaults. The repayment of the loan depends on

the nature of security, the character of the borrower, his capacity to repay and

his financial standing.

c) Diversity

A commercial bank should follow the principle of diversity. It should not

invest its surplus fund in particular type of security but in different type of

security. It should choose the share and debenture of different types of

30

industries situated in different region of the country. Diversity aims at

minimizing risk of the investment portfolio of the bank.

d) Stability

Another important principle of a bank’s investment policy should be to invest

in those stock & securities whose possesses a higher degree of stability in their

prices. The bank cannot afford any loss on the value of its securities. It should,

therefore, invest its funds in the shares of reputed companies where the

possibility of decline in their prices is remote. Government bonds debenture of

companies carries fixed rate of interest. Their value changes with change in

the market rate of interest.

e) Profitability

This is the important principle for making investment by bank. It must earn

sufficient profits. It should therefore invest in such securities, which assure a

fair and stable return of the funds invested. The earning capacity of securities

& share depends upon the interest rate, the dividend rate and the tax benefits

they carry.

2.1.5 Loans and interest rate of HBL Itahari Branch

Table 2.4: Interest rate on Loans

Type of Loan Interest Rate (% pa)

Type of Loan Interest Rate (% pa)

Home Loan:Tenure 5 yrsTenure 10 yrsTenure 15 yrsTenure 20 yrs

12.25-14.0012.75 - 14.5013.25 - 14.7513.75 - 15.00

SME Loan Package:WC LoanFixed Term Loan

12.50 – 13.5012.50 – 13.50

Loan against HBL FD (NPR)

Plus 1.00 (Min. 8%)

Loan in Local Currency against FD

Plus 1.00 or 8% whichever is higher

Loan against FD of other banks

Plus 1.00 (Min. 8.5%)

Loan against government bonds

3 month TB rate + 2.50% or 8% whichever is higher

Educational Institution Financing: 12.00 - 14.00

Loan against first class bank guarantee

Rated Bank:11.00 – 13.00Non- Rated

31

WC facility:FT Tenure Up to 10yrs

13.00 - 15.00 Bank:12.50 – 15.00

Subidha Loan 13.25 - 15.00 USD Denominated Loan

4.50 – 6.00

Loan against share of company listed in stock exchange

13.25 -15.00 Card Merchant Loan:WC Loan:Fixed Term Loan:

12.50 – 13.5012.50 – 13.50

HBL Small Personal Business Loan Term Loan:Overdraft:

13.25 – 15.0013.00 - 15.00

HBL Fixed Rate Hire Purchase Loan ( Fixed Rate for 2 Years)

11.25

HBL Fixed Rate Home Loan (FR for 3 yrs)

10.90

Source - www.himalayanbank.com

Table 2.5Loan of HBL Itahari Branch:

(Rs. in Millions)

S.N. Types of Loan F.Y. 2065/066 F.Y. 2066/067 F.Y. 2067/068

1 Home Loan 5.183 19.734 61.695

2 Overdraft Loan 4.859 18.173 41.711

3 SubidhaNon-revolving

3.060 12.208 17.783

4 Hire Purchase Loan 3.433 9.833 21.788

5 Staff Loan 1.800 3.958 3.660

6 Fixed Term Loan - 1.503 2.556

7 Loan against HBL FDT

- - 0.540

8 Demand Loan - - 2.000

TOTAL 18.335 65.410 151.733

Source – HBL Itahari Branch

32

2.2 Analysis of Deposit and Loan

2.2.1. Deposit in Non-interest bearing accounts:

In these types of account, no interest is provided. The non-interest bearing

accounts are:

1) Current deposit:

The deposit which gives immediate payment and demand for customer is

known as current deposit. These deposit generally maintained by the trader &

businessman who have to make a number of transaction every day. Any amount

can be deposited and withdrawn from this account. This account only provides

security for money instead of interest.

2) Marginal deposit:

Marginal deposits also don’t earn any interest from their deposited amount. As

margin deposit is not a real accounts, the sources of margin deposit is from

employees guarantee or locker margin, guarantee margin & from LOC margin.

2.2.2 Deposit on interest bearing account:

Deposits on interest bearing account bear certain percentage of interest. Interest

bearing deposits are:

1) Fixed deposits:

Money in this deposit is deposited for fixed period of time and cannot be

withdrawn before expire of that period. The rate of interest of this deposit is

higher than other types of deposits. It is called fixed deposit account because the

amount of money, time period & rate of interest are predetermined and they are

applicable for the account unlike in other account. All Nepali citizens with

minimum balance i.e. more than Rs. 1000 can open this account. The rate of

interest for different period of deposited amount offered by HBL on fixed deposit

in year 2012 is as under:

33

Table 2.6

Statement of rate of interest of fixed deposit

Fixed Deposit Rate of interest %

pa

14 days

1 month

3 month

6 month

1 year

2 year

5 year

2%

3%

3%

4%

5.5%

5.5%

5.5%

Jumbo Term

3 year

5 year

10 year

6.5%

6.75%

7%

Structured Deposit

1 year & above 5.25%

Source – www.himalayanbank.com

2) Saving deposit:

The aim of this deposit is to encourage the small saving of the public. Certain

restrictions are imposed on the deposition regarding the number of withdrawals

and the amount to be withdrawn in given period. Cheque facility is provided to

depositors. Rate of interest paid on these deposit is low as compared to that of on

fixed deposits. To earn some interest the middle class peoples, farmers, officials,

small business person open this type of A/C. Customers are provided free

personal accidental death insurance.

HBL has offered different types of saving deposit such as Normal saving, Himal

saving, Bishesh saving, Recurring saving, Premium saving, Himal Remit savings

and others. Normal saving is such type of saving which can be open by any

person. In this type of saving, transaction can be done at any time by the

34

authorized person. In this type of saving bank provides free cheque books, free

statement on demand, free ATM cards, free SMS and online banking & other

facilities.

3) Himal saving:

Himal saving account is a deposit product targeted to the customers willing to

open a saving account with low minimum balance and avail flexibility of financial

services associated with a Debit card like any time (24 hours 7 days a week) cash

through ATMs and manages cash payments requirements in shopping malls,

departmental stores, restaurants, hotels & services outlets in Nepal and India.

Special attraction of this account is very low minimum balances of Rs. 100, free

VISA debit card, interest rate which is calculated on monthly basis and paid on

semi-annual basis, accidental death insurance coverage for maximum Rs. 0.5

million, ABBS and SMS banking service. The bank provides some facilities for

opening this A/C:

- Free ATM

- ABBS facility connecting all branches

- Unlimited deposit

- Free statement on demand

4) Recurring saving:

Recurring Saving Account is 3 years fixed tenure savings account targeted to

individuals who would like to save funds in installment for future use. The special

attractions of this account are monthly deposit installment of Rs. 1000 or multiple

thereof, most attractive interest rate of 6% p.a. which is capitalized on monthly

basis, accidental death insurance coverage for maximum Rs. 0.5 million and

availability of loan facility for value of 90% of the balance in the account

whenever required.

The interest rate offered by HBL on the saving accounts is shown in the following

table:

35

Table 2.7

Statement of interest rate of saving deposit

Saving Deposit Rate of interest (% pa)

Normal Saving 2.75%

Himal Saving 2.85%

Bishesh Saving 3%

Recurring Saving 6%

Premium Saving 4.25%

Shareholder’s Saving 3.25%

Himal Remit Saving 4.25%

Source – HBL Itahari Branch

2.2.3 Factors considered by HBL to attract deposit:

As deposit is the main source to operate function of any financial institution

HBL has also considered different factors to attract the deposit. If the serving in a

selective clientele, the bank is not worried for deposits to a large extent while mass

clientele demands more deposits. The policy of the bank is respect to deposits is

clearly reflected in the option exercised by customers in using retail or wholesale

banks.

In spite of several factors that influence deposit of the bank, the following factors

are considered by HBL in affecting deposits:

1) Type and range of service offered:

The deposit is much attracted where all types of banking services are available.

The efficiency of bank in attracting new deposits depends upon the level of

economic activity to a large extent. Bank deposit increases in period of prosperity

36

and decline in the period of recession. The local economy may also be

characterized by a fluctuation in banks deposits. To attract the deposit HBL has

offered various types of product and services such as Bishes Saving, Himal

Saving, Himal Remit Saving, and so on.

2) Physical facilities:

The physical facilities available in the bank in respect to the depositors also

decide the quantum of deposit in a bank.

3) Interest rate:

The basic factor that determines the deposits in a particular bank is the earnings

from the deposits. So interest rate offered by a bank plays a vital role in

determining the quantum of deposit.

4) Types of customer:

The nature of customer is also one factor determining the volume of deposits.

2.2.4 Deposit structure of HBL:

Table 2.8

Statement of Deposit structure (Rs. in millions)

Deposit F.Y.2065/066

% F.Y.2066/067

% F.Y.2067/068

%

Current deposit 53.4 12.91 154.7 12.92 173.0 12.91

Saving deposit 94.2 227.9 272.9 22.78 305.3 22.79

Fixed deposit 152.6 369.1 442.2 36.92 494.6 36.92

Other deposit 113.2 273.8 327.9 27.38 366.8 27.38

Total 413.4 100 1197.7 100 1339.7 100

Source – HBL Itahari Branch

The table 2.8 shows the deposit structure of the HBL Itahari Branch for the past

three fiscal years. The deposit structure is in increasing trend as each fiscal year

progresses. The total deposit in F.Y. 2065/066 is Rs. 41.34 corer and at the end of

F.Y. 2067/068 it has reached to Rs. 133.97 corer. It is clear that HBL Itahari branch

has been success to attract the deposit. It is clear from the above deposit trend that in

the short length of period the bank has been able to attract the customer towards its

37

deposit products and services. Among the several deposit products the volume of

fixed deposit is increasing in higher rate. Similarly, saving deposit and volume of

other deposits product is also increasing in higher rate in compare to current deposit.

A bar chart or bar graph is a chart with rectangular bars with lengths

proportional to the values that they represent. Bar charts provide a visual presentation

of categorical data. In this section the data regarding different fiscal years are shown

in bar chart.

Fig. 2.1.

Structure of deposit

The deposit structure is shown in the fig.2.1 bar diagram. From the above bar

diagram it is clear that the bar of fixed deposit is in increasing rate as each fiscal year

progresses. Similarly, the bar of other deposits and saving deposits volume is also

increasing in comparison to current deposit. It is because current deposit is used only

by the trader and businessman for the everyday transaction. Similarly, this account

only provides security of money instead of interest. Due to this the volume of current

deposit is low in comparison to other deposit products.

Trend of Deposit:

Trend analysis is one of the most frequently used tools to measure the financial

performance of any commercial bank. It shows the fluctuation of the variables. It is

38

also called growth analysis because it shows the growth trend of the financial

institutions.

In this section data, relating to the deposits policy has been analyzed in terms

of time series or trend analysis, to show the actual trend of relative variables of

Himalayan Bank Limited during four fiscal years i.e. 2064/065, 2065/066, 2066/067

and 2067/068.

Table 2.9

Total Deposits

Fiscal Years Deposits ( Rs. in millions)

2065/066 413.4

2066/067 1197.8

2067/068 1339.7

Fig. 2.2

Trend of total deposit

In the figure 2.2 it is clearly shown that the trend line of deposit is increasing as

each fiscal year progresses. From this it is clear that the deposit policy of HBL Itahari

branch has been popular among the customers. Due to this in a very short period of

establishment bank has able to attract the appropriate volume of deposits. The trend

39

line in fiscal year 2065/066, 2066/067 and 2067/068 represents the deposit of Rs.

41.34, Rs. 119.78 and Rs. 133.97 respectively.

40

Mean deposit analysis:

The most popular measure for representing the entire data is the mean. It is,

usually, denoted by . A.M. of a set of observation is a figure (numerical value)

obtained by dividing the sum of all the observations by the sum of all the

observations.

In this section the deposit is analyzed by using direct method of mean.

Mean deposit for F.Y. 2065/066 = Mean deposit for F.Y. 2066/067

Mean deposit for F.Y. 2067/068

Hence, from the calculation we found that the average deposit in fiscal year

2065/066, 2066/067 and 2067/068 are 137.8, 399.26 and 446.56 per fiscal year

respectively. The mean deposit is increasing in each fiscal year.

2.2.5 Loan structure of HBL Itahari BranchTable 2.10

Statement of loan (Rs in millions)

S. N. Types of Loan F.Y. 2065/066 % F.Y. 2066/067 % F.Y. 2067/068 %

1 Home Loan 5.183 28.27 19.734 30.17 61.695 40.66

2 Overdraft Loan 4.859 26.50 18.173 27.78 41.711 27.49

3 Subidha Non-revolving

3.060 16.69 12.208 18.66 17.783 11.72

4 Hire Purchase Loan

3.433 18.72 9.833 15.03 21.788 14.36

5 Staff Loan 1.800 9.82 3.958 6.05 3.660 2.41

6 Fixed Term Loan - - 1.503 2.30 2.556 1.68

7 Loan against HBL FDT

- - - - 0.540 0.36

41

8 Demand Loan - - - - 2.000 1.32

TOTAL 18.335 100 65.410 100 151.733 100

Source: HBL, Itahari Branch

The table 2.10 shows the loan structure of HBL Itahari branch of past three

fiscal years. It is clearly shown in the above table that the loan is increasing as each

fiscal year progresses. The total loan was Rs. 18.335 million in the F.Y. 2065/066 but

at the end of F.Y. 2066/068 it reaches to Rs. 151.733million. From this we can say

that the bank has adopted the appropriate loan policy to disburse the deposit. We

know that loan is the medium through which bank earn interest. Therefore, the loan

structure of HBL Itahari branch is satisfactory.

Fig 2.3

Structure of loan

The bar chart 2.3 shows the loan structure of HBL Itahari branch. From the

chart we found that the loan is increasing in each fiscal year. The bar of home loan is

higher in comparison to other loan products and services. Similarly, overdraft loan is

also in higher position in the bar chart. This indicates that the volume of home loan

and overdraft loan is high in each fiscal year in comparison to other loan products.

42

Table 2.11

Total loan

Fiscal Years Loan ( Rs. in millions)

2065/066 18.335

2066/067 65.410

2067/068 151.733

Fig 2.4

Trend line of total loan

The figure 2.4 shows the trend of loan of HBL Itahari branch. The trend line of

loan is increasing in each fiscal year. This shows that the bank has able to mobilize its

funds to different sectors through its loan products and services. We know that loan &

advances are the medium through which the bank earns interest. Therefore, the

increasing trend of loan is favorable for the bank. The relationship between deposit

and loan can be shown as follow:

43

Fig. 2.5

Trend relationship between deposit and loan

The figure 2.5 shows the trend relationship between deposit and loan. It is clear

that the trend line of deposit is higher than loan. Although the trend line of loan is also

increasing but it is in low pace in compared to deposit. From this it is clear that the

bank has not been able to disburse its deposit. Due to this the deposit amount is not

utilized.

2.2.6 Relationship between deposit and loan policy:-

The relationship between deposit and loan policy is shown by using the

correlation coefficient. Correlation coefficient is the appropriate method of showing

the relation between two variables. It is a mathematical measure of how much one

number can expect to be influenced by changes in another.

Table 2.12 Correlation coefficient between Deposit and loan:

S.N. Loan (X) Deposits (Y)

1 18.335 413.4

2 65.410 1197.8

3 151.733 1339.7

44

S.nX Y XY X2 Y2

1 18.335 413.4 7579.68 336.1722 170899.56

2 65.410 1197.8 78348.09 4278.4681 1434724.843 151.733 1339.7 203276.70 23022.9032 1794796.09

Now using the formula:

We have,

Where,

r = co-relation coefficient

n = sample size, in our case= 3

Now, putting the values in the formula we get,

= 0.8529

45

The range of correlation coefficient is -1 to 1. Since our result is 0.8529 or

85.29%, which means the variables have a moderate positive relation. Since, the

correlation coefficient is positive an increase in the first variable would correspond to

increase in the second variable, thus implying a direct relationship between variables.

Hence, it is clear that increase in the deposit tends to increase in the loan.

CHAPTER- THREE

MAJOR FINDINGS, CONCLUSION AND RECOMMENDATION

3.1. Major findings of the study:

Himalyan Bank Limited, Itahari Branch offers wide range of product and

services to its valued customers. The bank has always been committed to provide a

quality service to its customer with a personal touch. All the customers are treated

with outmost courtesy. The bank has been adopting innovative and latest technology

in order to extend the reliable and efficient services to its customers. The bank has

been playing an important role to develop commercial sector of surrounding Itahari

municipality. After the completion of 2 months internship at HBL, Itahari branch and

after analyzing the data and information the researcher has reached to some major

findings as follows:

i. The bank has been providing different types of loan and deposit products and

services to the customers. Such as current deposit, saving deposit, fixed

deposit, hire purchase loan, home loan, overdraft loan, demand loan and so on.

ii. In a very short establishment the inflow and outflow of the funds of Itahari

branch seems to be progressive in the manner.

iii. The bank has mobilized its deposit by providing loan to different individuals,

institution and other sector. In terms of overdraft loan, demand loan, hire

purchase loan, home loan and so on.

iv. The deposit trend is increasing in each fiscal year.

v. The loan policy is not favorable for the customers because the trend line of loan

is low in relation to deposit.

46

vi. There is a moderate positive relation between deposit and loan.

vii. The mean deposit is increasing in each fiscal year.

3.2 Conclusions:

Over the last few years, Nepal is facing political, social and economic

instability. Due to this, industry has suffered a lot and no industry has come up. In

such critical situation and adverse condition, commercial banking has served and

motions to uplift their approach to national and international bank.

HBL is one of the commercial bank of Nepal which was incorporated in 1992

by the distinguished business personalities of Nepal in partnership with employees’

provident fund at Habib Bank LTD of Pakistan.

Established on 4th January, 2009 Himalayan Bank Limited, Itahari Branch has

been spreading its activities in overall the sector of the economy. The bank has been

playing a vital role in taking the development work with its own capital and by taking

the deposits from the customers and mobilizing such funds by providing both the

short-term and long-term loan to the people and the institutions. The bank has always

endeavored in delivering innovative products & services suiting the consumer

requirements and needs therefore enriching, enabling and beautifying their lives.

From the research it is found that the deposit & loan policy of the bank is in

progressive manner. From the trend analysis it is found that the trend of deposit is

increasing in higher rate in comparison to loan. From this it is found that the bank has

not been able to disburse its funds to different sectors. Similarly, from the trend and

correlation coefficient analysis it is found that the deposit policy is favorable than loan

policy though the interest rate in some a/c are low.

While preparing the report, different technique such as questionnaire, oral

interview, observation has been applied to collect the first hand data and official

records, annual reports, magazines, internet and other published and unpublished

sources has been used for data collection.

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In the survey, not only the written and published data are used but also the

direct contact & talk with the executives and the staffs of the bank has been

conducted so as to be sure about the data provides by the bank and for the

presentation and analysis of the data different analytical and statistical measures are

used.

3.3 Recommendation:

Based on the presentation and analysis of the data & information some

suggestions are suggested to improve the condition of deposit and loan of the bank:

The bank should increase its interest rate on saving deposit. Due to the low interest

rate the deposit is low in saving account as compared to other accounts.

i. The bank should promote its products and services in rural area also especially

loan product to mobilize the funds.

ii. The effective marketing is essential for the bank.

iii. The bank should be customer oriented to provide prompt service without delay.

iv. The physical structure of bank and working environment should be improved.

v. Locker system should be made available so that security should be maintained

in valuable articles like gold, silver, diamond etc.

vi. Bank should give more attention to improve its management & lending policy,

which will help increase, more transaction.

Finally, researcher gives best wishes to the basic to success in the coming days.

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