CHAPTER I INTRODUCTION

1.1. Background of the study Bank constitutes an important segment of the financial infrastructure of a country. Economic development of a country depends upon the growth of financial infrastructure of the country. Generally, a bank does the business of money. It is a financial institution whose principal operation is concerned with the accumulation of the temporary idle money from the general public for the purpose of advancing to other expenditure. Bank collects money from general public by attracting them with sound interest rate in their deposit and utilizes those funds by providing loans to different sectors e.g. business houses, industries, firms, agriculture and other needy people. For the economic development, capital formation, supply of money, business promotion, industrial and agricultural development, Bank plays a vital role in the economic history of any country. There are different types of banks and among them commercial bank is one of them whose main objective is to mobilize the collected funds/resources in productive areas and through this generates profit.

1.1.1. Introduction of HBL: Himalayan Bank Ltd. is a joint venture commercial bank. It was establish\ed in Feb. 16th 1992 by distinguished business personalities of Nepal in partnership with Employees Provident Fund and Habib Bank Ltd. is one of the largest commercial banks of Pakistan. Himalayan Bank Ltd. is the first commercial bank of Nepal with maximum share holding by the Nepalese private sector and financial institutions. Apart from the commercial activities, the bank also provides facility of industrial and merchant banking. The bank has currently five well-equipped commercial branches in the Kathmandu valley under operation namely: Branches of HBL: The Bank has five branches in Kathmandu Valley at the following locations: Thamel, New Road, Maharajgunj, Pulchowk (Patan) and Suryavinayak (moved from Nagarkot). In addition, the bank also has nine other branches outside Kathmandu Valley in Banepa, Tandi, Bharatpur, Birgunj, Hetauda, Bhairawa, Biratnagar, Pokhara, Dharan and Butwal. The bank also operates a counter in the premises of the Royal Palace. The Bank will be aggressively opening new branches at different parts of the Kingdom to serve its customers better. A new Branch at Butwal will be operational soon. A banking counter has been established within the premises of Royal Palace. The bank has a very aggressive future plan of establishing more branches in different parts of the kingdom. Himalayan bank Ltd. policy is to maintain, extend more effective and efficient quality and personalized service to its customers as promptly as possible. Himalayan Bank Ltd. has been will tailor the facilities to be extended to its clients

taking into A/c their needs and requirements. Moreover, it treats all its customers with utmost courtesy as valued clients. Himalayan bank Ltd. has been pioneer in introducing new technology right from the commencement, which has made possible to maintain its image of being leader in the financial sector. It has not only helped the bank to constantly improvise its services but also kept it prepared for future adoption of new technologies. The Management Team: The Promoters of HBL are as follows: Mr. Himalayan Shamsher Rana Late Sardar Bhim Bdr Pande Late Mr. Mani Harsha Jyoti Mr. Narsingha Bdr Shrestha Mr. Ananda Bhakta Rajbhandari Mr. Pritivi Bdr. Pande Mr. Mohan Gopal Khetan Board of Directors: Name Mr. Manoj B. Shrestha Mr. Aziz Rajkotwala Mr. Prem P. Khetan Mr. Prachanda B. Shrestha Mr. Ramesh K. Bhattarai Mr. Bijaya B. Shrestha Mr. Amar SJB Rana Mrs. Ranjana Shrestha Mr. Tulu Islam Mr. Surendra Silwal Mr. Kishore Bade Shrestha Mr. Laxman Maskey Mr. Himalaya SJB Rana Mr. Sushil Joshi Designation Chairman First Vice Chairman Second Vice Chairman Director Director Director Director Alternate Director Alternate Director Alternate Director Alternate Director Alternate Director Chief Advisor Company Secretary.

The capital structure of HBL Share structure Authorized capital Issued capital Paid-up capital (429,000shares@100each)

Rs. 1,000,000,000 650,000,000 429,000,000

The Capital Structure of HBL

Fig 1: The Capital Structure of HBL Share subscribed by HBL Subscription Holding% Promoter Shareholders 51% Habib Bank Ltd, Pakistan 20% Financial Institution (Employee Provident Fund) 14% Nepalese Public Share Holder 15% Total 100%
Share Subscribed by HBL

15%

Promoter Shareholders Habib Bank Ltd, Pakistan 51% Financial Institution Nepalese Public Share Holder

14%

20%

Fig2: Share Subscribed by HBL

1.1.2. Function and services of HBL: Himalayan Bank Limited is one of the successful banks of Nepal. It has been serving different services to its customers. HBL is operating in a smooth and systematically way so as to address all its customers. HBL is providing different services to its customer in an effective way. Due to more concentration on customers service HBL is constantly improving its service level. To cover the more customers it has extended its branch offices to different parts of the country. It has planned to open its branch office in Pokhara in near future. The different functions operated by HBL are as follows:

a) Automatic teller Machine (ATM): HBL has introduced ATM service in Nepal through which it has enabled to provide 24 hours services to its customers. Round the clock withdraw and deposit services to its customers are provided by ATM services in all branches in Kathmandu valley. It has planned to install more ATMs at different locations so that it can provide better services to its customers. b) Credit card: HBL pioneered credit card in the Nepalese society HBL offers both domestic and international VISA cards. HBL is striving to expand the credit card business so that many more clients can avail the facilities of credit card. c) Tele-banking: HBL is first bank to offer Tele-banking to its customers enabling them to place orders for cheque books, order their statement of account, ascertain the latest balance in their account and get feedback on the ruling interest rate and foreign exchange rates, on telephone. d) Any Branch Banking Services (ABBS): HBL has been providing ABBS to its customers. It means that its customers can deposits or withdraw cash from any of its branches. There is no restriction to its customers for deposits or withdrawal of cash from any of the branches of HBL. e) Correspondent Network: HBL has world-wide correspondent network which helps its customers for international banking and fund transfer transactions.

1.1.3 Introduction of Fixed Deposit Under the Commercial Bank Act 2031 (1974), Fixed account means an account of amounts deposited in a bank for certain period of time. The customers opening such account deposit their money in this account, for a fixed period. In another words, it is called time deposited for a certain period. In fixed deposit the interest rate is even higher but depositors are prohibited to withdraw their deposits before the maturity of the deposit period, which is fixed beforehand. Hence depositor receives higher income but lose liquidity on their assets. Usually, only the person or institution that wants to gain more interest opens such type of account. More interest rate is payable in this deposit than other deposits. Both parties, the bank and the customers, can take benefit from this deposit. The bank invests this money on the productive sector and gains profit and the customer too can be made his financial transaction stronger by getting more interest from this deposit. The amount collected in the fixed deposit must be returned to the customer after date is expired. 1.1.3.1 Features of Fixed Deposit a) The amount (money) cant be withdrawn by check in this deposit like in other current and saving deposits. b) Usually, the interest is awarded every 3 months in this deposit.

c) The customer can renew the fixed period deposit after the expiry of the fixed time. d) In the fixed period deposit, the interest is provided minimum 3.5% to maximum 13.5% according to the duration of time. e) Though the fixed period deposit can be opened in a bank for a period of more than five year, no more interest than 13.5% can be gained in it. f) The bank can invest the money of the fixed period deposit in another sector. g) The fixed period deposit is opened for a certain time. Such duration of time may be from 7 days to 5 years or more than that of other deposits. h) The rate of interest in the fixed period deposit is higher than that of other deposits.

1.1.4. Organizational Structure

Organization Management Company Board of director Executive Director Secretary

Internal Audit

General Manager

DGM

System Assistant General Manager Treasury

Marketing

Credit

Loan Administrative L/C & Guarantee Planning & New Product

Account Debt

Legal & Share Deposit Operation Service

Branches

Reconciliation

1.2. Objectives of the Study The basic objective of the fieldwork is to understand basic concept of conducting a fieldwork project. As being a commerce student, the knowledge might help in future. The other objectives of the fieldwork with regards to the subject matter of Himalayan Bank are listed below. a) To examine how far the deposits of Himalayan bank have been efficiently mobilized. b) To analysis the trend of fixed deposits in HBL. c) To analysis the share of fixed deposit out of total deposit in HBL. d) To analysis the contribution of fixed deposit for investment. e) To provide better information and activities of HBL to their investors and general public. f) To specify how the bank collects its funds through savings of the public.

1.3. Statement of Problem We are facing money problem which are very coincide to be vital role in the financial institution in the fixed deposit A/C. In this A/C money is to deposit till maturity period of the time .Before expiry date money cannot with draw because it is fixed for specified period of time which was write in the deposit form. This is one of the biggest problems of fixed deposits A/C. However, if we need money we can take loan from bank for that we have to pay interest to the bank, which is very high than we get from bank in fixed deposit .This is also one of the major problem of Fixed Deposit A/C. The market size of the fixed deposit is very small and due to lean competition bank should have utilize their money in proper way otherwise bank will be in solvent because they need money at any time. If they opened fixed deposit A/C money cannot withdrawn at required time because in fixed deposit money is to be deposit far fixed period of time. 1.4. Significance of the Study Mostly among the various deposit features provided by commercial banks, fixed deposit is considered to be more important .In the case of term deposit although the bankers pays interest (Longer the period , higher is the interest), the funds are committed for longer periods which can safely be lent for long-term project. But in the case of current deposit, although no interest is payable, these deposits are repayable at demand and therefore bankers must be cautious in lending such deposits. Fixed deposit is considered to be must suitable because this deposits can be invested in long-term loans with higher rate of return (Interest) and hence and helps to earn high profits. Moreover, the report itself keeps important for the bank. This help to equity holders, Investor to get information about their bank. The study is also

important for them who are related to management faculty like teachers, researcher and students etc.

1.5. Limitation of the Study There are many limitations which have to face while preparing report which are given below: a) The fieldwork is concentrated only to certain aspects of Fixed Deposits of HBL. b) The report should be submitted within specific time. Limited types of ratio analysis are adopted to fulfill the basic objectives of fieldwork. c) Prefect view of Fixed Deposit of HBL is difficult due to lack of required information and enough data. d) The study is mostly based on secondary data due to the lack of time to collect primary data. e) Based on statistical publication, annual reports, personal interviews and references of various books and other available data. f) Limited within the past 8-years trend. (Form Mid-July 2000 to mid January 2008) g) Lack of budget.

1.6 RESEARCH METHODOLOGY

Research methodology is the main step that is carried out by the students regarding their field visit. Our creativity leads us to make us our identity. Research methodology evaluated the performance of the students. Research methodology deals with collecting, presenting, and analyzing data. For my research work, the necessary materials are collected from Nepal Himalayan Bank Ltd.

1.6.1. Research Design: First of all, the researcher has identified the places where required information and concerned data of the study could be collected. The researcher chose loan department, Himalayan Bank Limited. For the purpose of contacted interviewed several personnel's and collected the information and data available with them. Only the useful information and data have been studied and analyzed carefully. Unnecessary information and data have been omitted to make the report simple and straightly concerned with its objective.

1.6.2. Sources of Data: Generally, there are two sources of data: Primary and Secondary.

1.6.2.1 Primary source of data: The first hand data are the primary source of data. Primary source of data are generally collected by direct interview, observations, and questionnaires. It is difficult to get the primary source of data due to various problems that may arise while collecting it. 1.6.2.2 Secondary source of data: Since it is very difficult and time consuming to get the primary data, secondary data are also in practice. Secondary data are those data, which are derived from already printed source. 1.6.3 Data Collection Methods: Data collection is the process of obtaining valuable and reliable information for the purpose of research. The following procedures or methods are followed for collecting data for this study. a) Field Visit b) Interviews c) Questionnaire

a) Field Visit: This study is based on field visit of HBL. This is one of the methods used in the process of data collection. From this I collect the data, which I see at the spot various services provided by HBL such as ATM, Safe Deposit Locker, Visa Card, Any Bank Branching, Tele-Banking etc were visited during this study period. This is felt important because without this one cannot know actually how the bank deals with the customers. b) Interviews: The branch manager and other concerned staff of HBL were interviewed during study period. The interview includes structured question and a few unstructured questions so as to clarify the content of the response. Unstructured question such as standard of the bank, number of customers, various services provided by bank and so on were included in interviews. c) Questionnaire: This is also another method of data collection. In this we prepare the questionnaire for the manager of banks and other department. There are various questions in the questionnaire for different department. 1.6.4 Financial Tools:

These wide areas of financial tools that can be applied in order to analysis the financial performance of HBL. But for this study following ratio analysis and tools are used: (A) Liquidity Ratio: a) Cash Reserve Ratio b) Balance with NRB to Total Deposit Ratio (B) Fixed to Other Ratio: a) Fixed to total Deposit Ratio b) Cash and Bank Balance to Fixed Deposit Ratio c) Investment to fixed Deposit Ratio d) Fixed Deposit to total Deposit Ratio of the country. 1.6.5 Statistical Tools: Similarly, after collecting the numerical data for statistical inquiry it has to be classified and tabulated and as well other different types of statistical tools can be used to examine the economic data of HBL. But for this study following tools are takena) Mean ( A.M) e) Time Series b) Standard deviation f) Percentage c) Correlation Coefficient g) Deviation Bar Diagrams d) Coefficient Variance h) Pie chart

1.7. Chapter Scheme: The field study has been divided into four sequential chapters along with bibliography and appendices. a) The first chapter includes (Introduction): This first chapter includes background of the study. The background consists of establishment and introduction of the HBL, function of HBL, this chapter also contains introduction of the topic, analysis of different ratios. Research methodology explains types of procedures were used in order to collect the necessary data for the report writing. It contains nature & sources of data, data collecting procedure, data processing and financial tools used b) The second chapter involves (Data Presentation & Analysis): Data presentation and analysis is the third chapter. This chapter includes the presentation of necessary data in tables and presentation of them in charts. This chapter also includes the analysis of presented data. The data had been analyzed with the help of tables and charts. c) The third chapter implies (Summary, Conclusion & Recommendation): The final chapter in the report writing involves summary, recommendation and conclusion. The study and analysis of the topic has been summarized in the

summary. A recommendation to the HBL for its better performance has been given. In conclusion the results of the study have been explained.

CHAPTER 2 DATA PRESENTATION AND ANALYSIS

2.1 Data Presentation

2.1.1. Fixed Deposit of HBL Year 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Fixed Deposit 4927.37 5480.84 3205.37 4717.17 6107.43 7369.22 Change in Fixed Deposit 1010.23 553.47 -2275.47 1511.8 1390.26 1261.79

Table 1: Fixed Deposit of HBL

8000 6000 4000

Chart Title
8000 6000 4000
Fixed Deposit Fixed Deposit Change in Fixed Deposit

2000 2000

Axis Title

0 -4000

Change in Fixed Deposit

0 -2000 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 -2000 -4000

Axis Title

10

Figure 3: Fixed Deposit of HBL

2.1.2. Total deposits of HBL and its trend: The first and foremost important thing to know is the total deposit trend of HBL. Total deposit trend refers to the total deposits of the public in various accounts of HBL during specific period. Table No: 2 Total Deposits of HBL Fiscal year 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Total Deposit 17532.40 18619.38 21007.38 22010.33 24814.01 23450.32

Table 2: Total Deposits of HBL Source: Seventeenth Annual report of HBL & provisional data by NRB.
Total Deposit 30000 25000 20000 15000 10000 5000 0 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Total Deposit

11

Figure 4: Total Deposits of HBL Table No.2 along with Diagram no. 4 indicates the increasing trends of HBL on total deposit. From the table we can see that the total deposit of the bank increased from Rs.17532.40 million in the period fiscal year 2061/62 to 2066/67.

2.1.3. Deposit mix of Himalayan Bank Limited: After knowing the total deposit, it is necessary to known the composition of those deposits of HBL such as fixed deposit, saving deposit, current deposit and other deposits. The total deposit comprises of all these kinds of deposit. Deposit mix of Himalayan Bank Limited

Table 3: Deposit mix of HBL Year 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Saving 9163.44 10870.54 11759.60 12852.41 14582.86 16283.25 Fixed 5480.8 3041.5 4710.2 6107.4 6350.2 7032.6 Current 3503.1 3540.9 4145.4 5045.2 5028.2 6125.3

The above table shows that the amount of deposit position of HBL is in increasing trend since fiscal year 2061/62 in current deposit, saving deposit and fixed deposit. So we can say that the deposit trend of HBL is satisfactory except in year 2065/66 regarding fixed deposit. Fig: 5 Deposit mix of HBL
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2061/62 2062/63 2063/64 Saving Fixed Current

12
2064/65 2065/66 2066/67

From the above graphic presentation, we can clearly see that fixed deposit is in increasing trend. It is increasing every year satisfactory since there is no drastic change. 2.1.4. Fixed Deposit Structure of HBL: Fixed Deposit of HBL Year 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Fixed Deposit 4927.07 5480.84 3205.37 4717.17 6107.43 7369.22 Change in Fixed Deposit 1010.23 553.47 -2275.47 1511.8 1390.26 1561.79

Table 4: Fixed deposit of HBL

13

Fixed Deposit 8000 7000 6000 5000 4000 3000 2000 1000 0 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 Fixed Deposit

Figure 6: Fixed Deposit of HBL The above table no.4 along with diagram no 6 shows that the trend of fixed deposit is increasing in Himalayan Bank Ltd. In fiscal year 2061/62 & has been increasing in the year of 2062/63, decreased in the year 2063/64, then again increased in 2064/65, 2065/66 and 2066/67. It has fixed deposit of Rs. 5480.84 million on 2061/62, which is 7369.22 million on 2066/67. Increasing trend shows that the peoples are getting attracted to deposit their surplus money for future. 3.1.6. Relation between Total Deposit and Fixed Deposit Increment % of Total Deposit and Fixed deposit (In Millions) Year Total Deposit %Increment 2061/62 2062/63 2063/64 2064/65 18619.38 21007.38 22010.33 24814.01 6.20 % 12.83 % 4.77% 12.74%

Fixed Deposit 5480.84 3205.37 4717.17 6107.43

%Increment 11.23% -41.52% 47.36% 29.47%

14

2065/66 2066/67

26490.85 28264.70

6.76% 8.79% Mean=9.17%

6350.2 7035.21

3.97% 28.31% Mean=13.51%

Table 5: Increment % of Total Deposit and Fixed Deposit

30000 25000 20000 15000 10000 5000 0 2061/62 -5000 2062/63 2063/64 2064/65 2065/66 2066/67 Total Deposit %Increment Fixed Deposit %Increment

Figure 7: Total and Fixed Deposit of HBL Table no. 7 along with diagram no.7. Shows the increasing trend of total deposit, the total deposit was Rs. 18619.38 on 2061/62and in 2062/63, 2063/64, 2064/65, 2065/66 and 2066/67 is 21007.38, 22010.33, 24814.01, 26490.84 and 28264.70 respectively. In 2061 61/62 fixed deposit is Rs. 5480.84 as well as total deposit is Rs. 18619.38. It has increased by 11.23% in the year of 2063/624and has increased by 47.36%, 29.47% , 3.97%, 28.31% respectively in the year of 2064/65, 2065/66, 2066/67 and 2062/63 decreased by 41.52% in the year 2061/62.

2.1.7. NRB Balance to Fixed Deposit: Year 2061/62 NRB BALANCE 695.38 FIXED DEPOSIT 5480.84

15

2062/63 2063/64 2064/65 2065/66 2066/67

1153.14 1625.98 1604.15 1096.25 1234.60

3205.37 4717.17 6107.43 6350.20 7035.21

Table 6: NRB Balance to Fixed Deposit

8000 7000 6000 5000 4000 3000 2000 1000 0 Figure 8: NRB Balance to Fixed Deposit 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 NRB BALANCE FIXED DEPOSIT

The above table no.6 along with diagram no.8 shows the relation between the NRB balances with the Fixed Deposit of the HBL.

2.2

DATA ANALYSIS:

2.2.1 Financial Analysis 2.2.1.1 Balance with NRB to total deposit ratio Commercial banks have to hold a balance of certain percentage of the deposits at Nepal Rastra Bank in order to satisfy the ledger requirements, where by the standard ratio must be 7% of the total deposit. This ratio is calculated by dividing Total Balance with NRB by Total Deposit.

16

Balance with NRB to total Deposit Ratio = Balance with NRB Total deposit The following table shows the balance with NRB to Total Deposit Ratio: NRB Balance to Total Deposit Ratio ( In Million) YEAR NRB Balance Total Deposit RATIO (%) 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67 695.38 1153.14 1625.98 1604.15 1096.25 1234.60 18619.38 21007.38 22010.33 24814.01 26490.85 28814.50 Mean S.D. C.V. Table 7: NRB Balance to Total Deposit Ratio 3.73 5.49 7.85 6.96 4.14 5.23 5.50 1.39 23.17

17

2.2.1.2 Fixed deposit to total deposit ratio This ratio measures the percentage of fixed deposit. This ratio is calculated by dividing Fixed Deposit by Total Deposit. The following table shows the Fixed Deposit to Total Deposit Ratio.

Year 2061/62 2062/63 2063/64 2064/65 2065/66 2066/67

Fixed Deposit 5480.84 3205.37 4717.17 6107.43 6350.20 7035.21

Total Deposit 18619.38 21007.38 22010.33 24814.01 26490.85 28814.50 MEAN S.D C.V.

Ratio (%) 29.44 15.26 21.43 24.61 23.98 24.60 23.22 6.02 21.93

Table 8: Fixed Deposits to Total Deposit Ratio

FixedDeposit Fixed Deposit to Total Deposit Ratio= TotalDeposit

2.2.2 STATISTICAL ANALYSIS: Karl Pearson's Correlation Coefficient: One of the widely used mathematical methods of calculating relationship between two variables is Karl Pearson's Correlation Coefficient. It is denoted by 'r' and defined by: xy
2 2 r = x y Value of 'r' always lies between (-1) and (+1), and (r=+1) denotes the perfect positive correlation between the two variable and (r = - 1) denotes the negative correlation between the two variables.

18

Probable error (PE) PE of the coefficient of correlation is the measure of testing the reliability of the calculated 2 xy YEA x x ( x x) x y ( y y) y R

value of 'r'.
n If the value of 'r' is less than PE, it is insignificant; perhaps there is no evidence of correlation. And if 'r' is greater than 6 P.E. then it is significant. PE 0.6745 1 r2

19

2062

5480.84 18619.3 8

593.204 2063 3205.37 21007.3 8

351891

-2177.32

4740722

-1291595

-1682.27 2064 4717.17 22010.3 3

2830019

210.68

44386.06

-354420

-170.466 2065 6107.43 24814.0 1

29058.6 6

1213.63

1472898

-206883

1219.794 2066 6350.2 26490.8 5

1487897

4017.31

16138780

4900291

x =
25861.0 1

y =
112941. 95

1177.998

1387680 x2 = 4700445

3902.46

15229194 y2 = 33052440

xy =
2917690

20

CORRELATION BETWEEN FIXED DEPOSIT AND TOTAL DEPOSIT Table 9 Correlation between Fixed Deposit and Total Deposit Here, x is Fixed Deposits and y is Total Deposits
x =4887.636,

y =20796.7

Using the formula "r"

r
Now,

xy x2 y2
2917690

4700445 33052440 2917690 2168.051 5749.125 2917690 12464396 = 0.234082

r = 0.23 From the above table the coefficient of correlation r=+0.23 which is near to 1. It indicates that the degree of positive correlation between fixed and total deposit is high. It can be considered as high correlation. It shows that if the amount of fixed deposit increases the amount of total deposit also increases accordingly. 1 r2 n PE =0.6745
1 (0.2341 ) 2

= 0.6745

1 0.0548

5 = 0.6745 0.6375 = 2.24 = 0.2846 PE 6 = 1.7076

Since r < 6PE The test shows that the correlation coefficient is less than 6 times of its PE. It shows that there is insignificant relationship between fixed deposits and total deposit. TREND ANALYSIS (LEAST SQUARE METHOD):

21

The statistical tool used in this study is least square method , which is used to describe the trend of any variables weather it increase or decrease with the passage of time . The formula of least square method is: Yc = a+bx y xy 2 Where, a= n b= x Here Yc is used to designate the trend value of distinguish the actual value. 'a' = 'y' intercept (the computed trend figure of the trend line)or the amount of change in 'y' variable that is associated with a change of one unit on 'x' variable. The 'x' variable represents the time. Year(x) 2062 2063 2064 2065 2066 Fixed Deposit 5480.84 3205.37 4717.17 6107.43 6350.2 y=24438.18 X= X-2061 -2 -1 0 1 2 x=0 x2 4 1 0 1 4 x2=10 xy -9854.74 -5480.84 0 4717.17 12214.86 xy=1596.45 Yc 4568.35 4721.995 4887.64 5047.285 5206.93

Table 10: Trend Analysis (Least Square Method) Where, y=Fixed Deposit (Amount) x=Deviation from mid-year Yc=Trend Values Here, x=0, y=24438.18, x2 =10, xy=1596.45, n=5
xy y 2 So, a= n b= x =24438.18/5 =1596.45/10 =4887.64 =159.645 The Equation of a straight-line trend is Yc =a+bx............ (a)

Putting the value of a and b in equation no. (a) Yc =4887.64+159.645x

(a) Trend Values For 2062 For 2063 Y1 =4887.64+159.645X (-2) Y2 =4887.64+159.645X (-1) =4568.35 =4721.995 For 2064 For 2065 Y3 =4887.64+159.645X (0) =4887.64 = 5047.285 For 2066 Y5 = 4887.64+159.645X (+2)

Y4 = 4887.64+159.645X (+1)

22

= 5206.93 Now by plotting the above trend value in the graph, we get the straight line trend of the listed 5 years Since the growth rate 'b' is positive, the given figure shows a rising trend.

CHAPTER 3 SUMMARY, CONCLUSION AND RECOMMENDATION Summary Modern banking system started in Nepal nearly 60 years ago, When HBL, a joint venture with Habib Bank Limited; Pakistan was started ten years ago. Though there are many institutions that mobilize resources, commercial Banks play a vital role for the rapid economic development of an under developed country by mobilizing the collected deposit in proper channel. In Nepal's present situation bank deposit is the dependable and permanent source of capital accumulation. The problems of HBL branches are high rate of interest of Loans and advances, indifferent credit for productive and priority features traditional thinking (Security minded) and long procedure of banking services etc. Bankers are attracting deposits to increase the assets for the purpose of loans or providing loans. They increase rate to attract the customers to save and deposit at bank. It also related with credit utilization of deposits and its mobilization. We know that deposits are the obligation of the commercial banks. So the bank must collect the funds in different investment. The purpose of my study is to see the trend of Fixed Deposit of HBL, this study includes Deposit collection of Himalayan Bank Limited. The credit of the commercial banks depends upon the deposit position of the banks. So far as concerned with HBL, the Fixed Deposits and Total Deposit were Rs.49271.37 million and Rs17532.40 million in 2061/62 when in 2064/65 Fixed Deposit and Total Deposit was Rs. 6107.43 million and Rs. 24814.01. In short we can say that the fund of fixed deposit and total deposit is increasing. After analyzing the whole data given in this report, it is seen that although interest is low but the collection of deposit is increasing. But people least bother the rate of interest, as they are satisfied with the interest rate provided by commercial banks. Besides this we can say that due to slow development of economy, it creates a situation of panic to utilize the fund, they keep their money in bank even if the rate of interest is decreasing.

MAJOR FINDINGS

2.3.1. SWOT Analysis: Among the various tools, SWOT analysis can be used to find out the internal and external change in the environment. SWOT analysis are conducted to find out the strength and

23

weak point as well as the opportunity and treats of Himalayan Bank on the basis of the information and data collected through primary and secondary services. 2.3.1.1. Strength: a) Strong Financial Position i.e., increasing deposit, loan and advance. Increase in branch network. b) Installation of latest technology and product like ATM machine. c) Prompt service and co-operative human resources. d) Increasing of foreign currency, which leads to surplus in over all balance of payment. e) Any branch tele-banking service as well as credit card facilities. 2.3.1.2. Weakness: a) Less profit earning capacity as compare to some other commercial bank. b) Investment is declining in comparison to previous fiscal year. c) Loan and advances could not make an effective result as well as interest declining in compare to previous year. d) Less investment in secured securities such as government bonds and securities. e) Long procedure for loan services. 2.3.1.3. Opportunities: a) Employment opportunities through increase in branch network, Inwards remittance. b) High motivation through different rewards. c) Installation of ATM machine in year branches of HBL. d) Introduction of Master card. e) Commercial of homo-banking service. f) Commercial of 24 hour Banking service. g) HBL may bring foreign equity. 2.3.1.4. Threats: a) Political Instability. b) Increasing numbers of commercial banks and financial institution. c) Comparative and small size market. d) Bad loans. e) Sluggish economic growth.

rate is

4.2 Conclusion: a) The deposit collection of HBL banking office is satisfactory. b) The fixed deposit of the branch is increasing.

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c) The interest rate has not so influenced the deposit collection as well as lending section of the bank. People seem to be insensitive towards change in the rate of interest. d) The activities of the HBL banking for Fixed Deposits seem to be idle. The branch has taken little trouble for collecting more deposits or advancing more loans except customers themselves knock the door of the branch, to the branch is not successful to provide door to door service in locality. e) The bank staffs are not well trained as much as talked about f) As it has a very promising development it is able to gain profit in four months.

4.3 Recommendation: I have chosen Himalayan Bank Limited for my fieldwork, which is one of the prominent parts of Nepal by mobilizing the financial resources. Most of the people are interested to deal with the bank because the bank has been given secured and beneficial facilities. The staffs of the bank are very co-operative and friendly. The policy of HBL is to provide goal quality services to its customers.. To provide more prompt and efficient services to the customers HBL has been pioneering in instituting Tele-Banking services. Customers prefer this bank because of ATM services. There is an accidental death insurance coverage for individual account holders. HBL also provide the services of premium saving account scheme (PSA). They are also given preference in providing safe deposits lockers to encourage the demand of credit card system; the bank has also introduced Himalayan Bank Gold Card. This bank issues all types of visa card and master card too. This bank is providing convenient services to all the customers. a) The bank should be serious about the management capability of proposed borrower and the probability of good income and then by to motive the borrowers to repay the installment and interest within assigned time schedule. b) Considering the nature of loan, a certain minimum number of post loan visits (besides these undertaken for the release of loan) might be useful to undertake to ensure the profit utilization of flowed loan amount. c) Continuation of workshop should be done to make the employer service oriented. d) A fund should be excited to make the financial condition good even though the amount of bad debt increases. e) New areas for investment should be researched.

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BIBLIOGRAPHY Annual Report and Brochures from Himalayan Bank Limited, Tridevi-Marg Business Magazines & other news papers. Bajrachjarya B.C. "Business Statistics and Mathematics", M.K. Publishers and Distributors, Bhotahity, Kathmandu. "Commercial Banking Act. 2031 B.S. ", Ministry of Law and Justice, HMG Data provided by HBL. Thamel Branch, Kathmandu Dahal, Sarita and Dahal Bhuvan (1999) a hand book to Banking Kathmandu, Authors. Hodgeman, D.R. Commercial Bank loan and Investment Policy http//www.hbl.com.np and http//www.himalayanbank.com. Khadka Sherjing, Singh Haridaya Bir, Banking Principles, Legislation and Practice N. Chabbra, Trilok & Piyush K. Taneja (1990) Banking Theory and Practice Delhi Dhanpat Rai & Sons. N.R. Bank Annual Report. Pant, P.R. (2000) Fieldwork assignment and Report writing Kathmandu Veena Academic Enterprises. Shrestha, Shyam K. (2002) Fundamentals of Marketing.

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