LOAN

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

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Types of loans [edit]Secured

See also: Loan guarantee

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

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. [edit]Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages:

• credit card debt • personal loans • bank overdrafts • credit facilities or lines of credit • corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

1 Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible. [edit]Demand

Demand loans are short term loans [1] that are atypical in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured. [edit]Subsidized

A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context of college loans in the United States, it refers to a loan on which no interest is accrued while a student remains enrolled in education.[2] Otherwise, it may refer to a loan on which an artificially low rate of interest (or none at all) is charged to the borrower.

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

1. Personal Loans These loans are offered by most banks, and the proceeds may be used for virtually any expense (from buying a new stereo system to paying off a common bill). Typically, personal loans are unsecured, and range anywhere from a few hundred to a few thousand dollars. As a general rule, lenders will typically require some form of income verification, and/or proof of other assets worth at least as much as the individual is borrowing. The application for this type of loan is typically only one or two pages in length. Approvals (or denials) are generally granted within a few days.

The downside is that the interest rates on these loans can be quite high. According to the Federal Reserve, they range from about 10-12%. The other negative is that these loans sometimes must be repaid within two years, making it impractical for individuals looking to finance large projects.

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

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

In addition, to obtain a card (and, by extension, $5,000 or $10,000 worth of credit), all that's required is a one-page application. The credit review process is also rather quick. Written applications are typically approved (or denied) within a week or two. Online / telephone applications are often reviewed within minutes. Also in terms of their use, credit cards are extremely flexible. The money can be used for virtually anything these days from paying college tuition to buying a drink at the local watering hole. (To find out more about this process, see The Importance of Your Credit Rating and How Credit Cards Affect Your Credit Rating.)

There are definitely pitfalls, however. The interest rates that most credit-card companies charge range as high as 20% per year. In addition, a consumer is more likely to rack up debt using a

2 credit card (as opposed to other loans) because they are widely accepted as currency and because it's psycho logically easier to hand someone a credit card than to fork over the same amount of cash. (To read more on this type of loan, see Take Control Of Your Credit Cards, Credit, Debit And Charge: Sizing Up The Cards In Your Wallet and Understanding Credit Card Interest.)

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

The loan proceeds may be used for any number of reasons, but are typically used to build home additions, or for debt consolidation. The interest rates on home-equity loans are very reasonable as well. In addition, the terms of these loans typically range from 15 to 20 years, making them particularly attractive for those looking to borrow large amounts of money. But, perhaps the most attractive feature of the home-equity loan is that the interest is usually tax deductible.

The downside to these loans is that consumers can easily get in over their heads by mortgaging their homes to the hilt. Furthermore, home-equity loans are particularly dangerous in situations where only one family member is the breadwinner, and the family's ability to repay the loan might be hindered by that person's death or disability. Even a 1% increase in interest rates could mean the difference between losing and keeping your home if you rely too heavily on this style of loan.

Note: In situations like these, life/disability insurance is frequently used to help protect against the possibility of default. (To keep reading on this subject, see Home-Equity Loans: The Costs and The Home-Equity Loan: What It Is And How It Works.)

4. Home-Equity Line of Credit This line of credit acts as a loan and is similar to home-equity loans in that the consumer is borrowing against his or her home's equity. However, unlike traditional home-equity loans, these lines of credit are revolving, meaning that the consumer may borrow a lump sum, repay a portion of the loan, and then borrow again. It's kind of like a credit card that has a credit limit based on your home's equity! These loans may be tax deductible and are typically repayable over a period of 10 to 20 years, making them attractive for larger projects.

Because specific amounts may be borrowed at different points in time, the interest rate charged is typically pegged to some underlying index such as the "prime rate". This is both good and bad in the sense that at some times, the interest rates being charged may be quite low. However, during period of rising rates, the interest charges on outstanding balances can be quite high.

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

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

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

• They are not typically tax deductible. • Loan amounts are typically in the hundreds of dollars, making them impractical for many purchases, particularly large ones. • The effective interest rate charges and related fees can be very high.

3 In short, cash advances are a fast alternative for obtaining money (funds are typically available on the spot), but because of the numerous pitfalls, they should be considered only as a last resort. (Learn more about cash advances in Payday Loans Don't Pay.)

6. Small Business Loans The Small Business Administration (SBA) or your local bank typically extend small business loans to would-be entrepreneurs, but only after they've submitted (and received approval for) a formal business plan. The SBA and other financial institutions typically require that the individual personally guarantee the loan, which means that they will probably have to put up personal assets as collateral in case the business fails. Loan amounts can range from a few thousand to a few million dollars, depending on the venture.

While the term of the loan may vary from institution to institution, typically, consumers will have between five and 25 years to repay the loans. The amount of interest incurred from the loan depends on the lending institution in which the loan is made. Keep in mind that borrowers can negotiate with the lending institution with regard to the level of interest charged. However, there are some loans on the market that offer a variable rate.

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

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

Advantages of loans

Basic Advantages of Bank Loans

A bank loans money to a business based on the value of the business and its perceived ability to service the loan by making payments on time and in full. Banks do not take any ownership position in businesses. Bank personnel also do not get involved in any aspect of running a business to which a bank grants a loan. Once a business borrower has paid off a loan, there is no more obligation to or involvement with the bank lender unless the borrower wishes to take out a subsequent loan. Tax and Financial Planning Advantages

The interest on business bank loans is tax-deductible. In addition, especially with fixed-rate loans, in which the interest rate does not change during the course of a loan, loan servicing payments remain the same throughout the life of the loan. This makes it easy for businesses to budget and plan for monthly loan payments. Even if the loan is an adjustable-rate loan, business owners can use a simple spreadsheet to compute future payments in the event of a change in rates. Difficulties in Obtaining Loans

One of the greatest disadvantages to bank loans is that they are very difficult to obtain unless a small business has a substantial track record or valuable collateral such as real estate. Banks are careful to lend only to businesses that can clearly repay their loans, and they also make sure that they are able to cover losses in the event of default. Business borrowers can be required to provide

4 personal guarantees, which means the borrower's personal assets can be seized in the event the business fails and is unable to repay all or part of a loan. Cost of Bank Loans

Interest rates for small-business loans from banks can be quite high, and the amount of bank funding for which a business qualifies is often not sufficient to completely meet its needs. The high interest rate for the funding a business does receive often stunts its expansion, because the business needs to not only service the loan but also deal with additional funding to cover funds not provided by the bank. Loans guaranteed by the U.S. Small Business Administration offer better terms than other loans, but the requirements to qualify for these subsidized bank loans are very strict.

Speed • A bank loan can be secured quickly; in less than an hour, a qualified borrower can complete a bank loan transaction.

Uses • A bank loan can be used in a number of ways; money can be borrowed for many large-ticket items, such as furniture, vehicles or home renovations.

Disadvantages

Disadvantage: Fees • Some loans carry a prepayment penalty, preventing the borrower from paying the note off early without incurring extra cost.

Disadvantage: Limitations • There are a number of limitations on the transaction. Good credit is often required to borrow money, and there are stipulations on how the money can be used.

Disadvantage: Cash Flow • Borrowing too much money can lead to decreased cash flow and payments can even overtake income in some cases; this is why many loan payments are limited to a certain percentage of a borrower's income.

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

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

1. Time or term deposits – These are those deposits that are deposited by savers for a fix period of time hence they can withdrew the deposit only on the maturity of deposit. If it is withdrawn in advance then it involves penalty. They offer the maximum amount of interest.

A time deposit (also known as a certificate of deposit in the United States, a term deposit, particularly in Canada, Australia and New Zealand; a bond in the United Kingdom; Fixed Deposits in India and in some other countries) is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time (unless a penalty is paid)[citation needed]. When the term is over it can be withdrawn or it can be held for another term. Generally speaking, the longer the term the better the yield on the money. In its strict sense, certificate deposit is different from that of time deposit in terms of its negotiability. CDs are negotiable and can be rediscounted when the holder needs some liquidity, while time deposits must be kept until maturity.

The opposite, sometimes known as a sight deposit or "on call" deposit, can be withdrawn at any time, without any notice or penalty: e.g., money deposited in a checking account or savings account in a bank.

The rate of return is higher than for savings accounts because the requirement that the deposit be held for a prespecified term gives the bank the ability to invest it in a higher-gain financial product class. However, the return on a time deposit is generally lower than the long-term average of that of investments in riskier products like stocks or bonds.

6 A deposit of funds in a savings institution is made under an agreement stipulating that (a) the funds must be kept on deposit for a stated period of time, or (b) the institution may require a minimum period of notification before a withdrawal is made.

"Small" time deposits are defined in the U.S. as those under $100,000, while "large" ones are $100,000 or greater in size. The term "jumbo CD" is commonly used in the United States to refer to large time deposits.

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

2. Saving deposits – This is a kind of demand deposit and there is certain limit on number of withdrawals from the account during a specific period of time, also account holder has to maintain minimum balance in the account which is decided by the bank, non compliance of which leads to penalty. Interest rates offered on these deposit is lower than that of term deposits.

Saving accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money in the narrow sense of amedium of exchange (for example, by writing a cheque). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. For the bank, money in a savings account may not be callable immediately and in some jurisdictions, does not incur a reserve requirement, freeing up cash from the bank's vault to be lent out with interest.

The other major types of deposit account are transactional (checking) account, money market account, and time deposit.

In the United States, under Regulation D, 12 Code of Federal Regulations(CFR) 204.2(d)(2), the term "savings deposit" includes a deposit or an account that meets the requirements of Sec. 204.2(d)(1) and from under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted to make up to six pre-authorized transfers or withdrawals per month or statement cycle of at least four weeks. There is no regulation limiting number of deposits into the account.

Within most European countries,[clarification needed] interest paid on deposit accounts is taxed at source. The high rates of some countries has led to the development of a significant offshore savings industry. The European Union Savings Directive has made arrangements with many offshore financial centres for either information on interest earned to be shared with EU tax authorities or for withholding tax to be deducted on interest paid on offshore accounts, because of concerns relating to potential tax evasion. Account holders must either pay the withholding tax or disclose account holder information to relevant tax authorities.[1]

Withdrawals from a savings account are occasionally costly, and they are more time-consuming than withdrawals from a demand (current) account. However, most saving accounts do not limit withdrawals, unlike certificates of deposit. In the United States, violations of Regulation D often involve a service charge, or even a downgrade of the account to a checking account. With online accounts, the main penalty is the time required for

7 the Automated Clearing House to transfer funds from the online account to a "brick and mortar" bank where it can be easily accessed. During the period between when funds are withdrawn from the online bank and transferred to the local bank, no interest is earned.

3. Current deposits – Though it is similar to saving deposit but it does not offer any interest and hence there is no limit on the number of withdrawals by individuals from his account. This type of account is normally maintained by companies and individuals who have higher frequency of withdrawing from their accounts.

Apart from above there is another type of deposit which is called recurring deposit in which individual will have to pay a small sum every month for a particular period of time; it can be on a daily, weekly or monthly basis. The interest offered on this is almost equivalent to that of term deposits.

Current account is the name given to a transactional account in the United Kingdom and countries with a UK banking heritage, offering various flexible payment methods to allow customers to distribute money directly to others. Most current accounts come with a cheque book and offer the facility to arrange standing orders, direct debits and payment via a debit card. Current accounts may also allow borrowing via an overdraft facility.

Current Deposit Meaning: In deposit terminology, the term Current Deposit refers to a deposit to a bank account or financial institution without a specified maturity date. These types of Current Deposit account generally only earn demand deposit interest.

Current Deposit Example: For example, a Current Deposit will often be made into a bank or other financial institution’s account in the local currency. The deposit will then generally be made available to the customer for withdrawal at any time and without an early withdrawal penalty. Funds are typically made immediately available to the customer for withdrawal by writing a check. Such Current Deposit accounts are generally used for businesses that have a need for issuing checks to pay employee salaries and bonuses, as well as to provide cash for inventories and other such business expenses. The bank or financial institution where the Current Deposit account is held usually pays out interest on the funds periodically, such as monthly or quarterly.

4. fixed deposits

A fixed deposit (FD) is a financial instrument provided by Indian and South African banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date . It may or may not require the creation of a separate account. It is known as a term deposit or time deposit in Canada, Australia, New Zealand, and the US, and as a bond in theUnited Kingdom. They are considered to be very safe investments. Term deposits in India is used to denote a larger class of investments with varying levels of liquidity. The defining criteria for a fixed deposit is that the money cannot be withdrawn for the FD as compared to a recurring deposit or a demand deposit before maturity. Some banks may offer additional services to FD holders such as loans against FD certificates at competitive interest rates. It's important to note that banks may offer lesser interest rates under uncertain economic conditions. The interest rate varies between 4 and 11 percent.[1] The tenure of an FD can vary from 10, 15 or 45 days to 1.5 years and can be as high as 10 years.[2] These investments are safer than Post Office Schemes as they are covered under the Deposit Insurance & Credit Guarantee Scheme of India. They also offer income tax and wealth tax benefits.

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

To compensate for the low liquidity, FDs offer higher rates of interest than saving accounts. The longest permissible term for FDs is 10 years. Generally, the longer the term of deposit, higher is the rate of interest but a bank may offer lower rate of interest for a longer period if it expects interest rates, at which RBI lends to banks ("repo rates"), will dip in the future.[3]

Usually in India the interest on FDs is paid every three months from the date of the deposit. (e.g. if FD a/c was opened on 15th Feb., first interest instalment would be paid on 15 May). The interest is credited to the customers' Savings bank account or sent to them by cheque. This is a Simple FD.[4] The customer may choose to have the interest reinvested in the FD account. In this case, the deposit is called the Cumulative FD or compound interest FD. For such deposits, the interest is paid with the invested amount on maturity of the deposit at the end of the term.[5]

Although banks can refuse to repay FDs before the expiry of the deposit, they generally don't. This is known as a premature withdrawal. In such cases, interest is paid at the rate applicable at the time of withdrawal. For example, a deposit is made for 5 years at 8%, but is withdrawn after 2 years. If the rate applicable on the date of deposit for 2 years is 5 per cent, the interest will be paid at 5 per cent. Banks can charge a penalty for premature withdrawal.[4]

Banks issue a separate receipt for every FD because each deposit is treated as a distinct contract. This receipt is known as the Fixed Deposit Receipt (FDR), that has to be surrendered to the bank at the time of renewal or encashment.[6]

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

Income tax regulations require that FD maturity proceeds exceeding Rs 20,000 not to be paid in cash. Repayment of such and larger deposits has to be either by " A/c payee " crossed cheque in the name of the customer or by credit to the saving bank a/c or current a/c of the customer.

Some Benefits of FD

• Customers can avail loans against FDs up to 80 to 90 per cent of the value of deposits. The rate of interest on the loan could be 1 to 2 per cent over the rate offered on the deposit.[7]

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

[edit]Taxability

Tax is deducted by the banks on FDs if interest paid to a customer at any branch exceeds Rs 10,000 in a financial year. This is applicable to both interest payable or reinvested per customer or per branch. This is called Tax deducted at Source and is presently fixed at 10% of the interest. Banks issue Form 16 A every quarter to the customer, as a receipt for Tax Deducted at Source.[8]

9 If the total income for a year does not fall within the overall taxable limits, customers can submit a Form 15 G (below 65 years of age) or Form 15 H (above 65 years of age).

ACKNOWLEDGEMENT

The internship was carried out for the partial fulfillment of the BBA program conducted by Purbanchal University Faculty of Management. The primary objective of the internship program is to enable the students to transform the academic knowledge learnt through the years into the practical real world environment where organizations are facing tough competition with the effect of globalization. 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.

10 Thank you all! Sincerely Lochan Khanal I

EXECUTIVE SUMMARY

Himalayan Bank is one of the pioneer private banks of the Nepalese banking industry being established in 1993 AD as a joint venture with Habib Bank Limited, Pakistan. It holds a vision of becoming a leading bank of the country and providing the customers with premium services to give substantial return to its stakeholders. HBL has a huge base of customer base and especially “A” rated clients which are there due to 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

11 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 in the internship period enable me to incorporate my theoretical knowledge into real working situations which has increased my level of knowledge and understanding.

12 III

Table of Contents Title Page Recommendation Letter Internship Certificate Acknowledgement I Executive Summary II Table of Content IV List of Tables VI List of Figures VII Abbreviation VIII Chapter-One: Introduction 1.1 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

13 1.7.1 Internship report design 14 1.7.2 Population and sample of data 14 1.7.3 Data collection procedures 15 IV 1.7.4 Nature of sources of data 15 1.7.5 Data analysis tools & techniques 16 1.8 Organization of Internship Report 16 1.9 Assumptions & Limitation of Internship Report 17 Chapter- Two: Presentation& Analysis of data 2.1 Presentation of deposit & loan policy data 18 2.1.1 Introduction to deposit & loan policy 18 2.1.2 Deposit structure of Himalayan Bank Limited 20 2.1.3 The major policies offered for the loan market 20 2.1.4 The principles of loan lending policies of bank 21 2.1.5 Loan & interest rate of HBL Itahari branch 22 2.2 Analysis of deposit and loan 24 2.2.1 Deposit in Non-interest bearing account 24 2.2.2 Deposit in interest bearing account 24 2.2.3 Factors considered by HBL to attract deposit 27 2.2.4 Deposit structure of HBL 28 2.2.5 Loan structure of HBL Itahari branch 31 2.2.6 Relationship between deposit and loan policy 34 Chapter- Three: Major findings, Conclusion & Recommendation 3.1 Major finding of the study 36 3.2 Conclusion 37 3.3 Recommendation 38 BIBLIOGRAPGY

14 V

List of Tables

Table No. Description Page No.

1.1 Services of Himalayan Bank Limited 8 2.1Deposit Products policy Offered by HBL 21 2.2 Statement of deposit structure of HBL 22 2.3 Loan Products of HBL 22 2.4 Interest rate on Loans 24 2.5 Loan of HBL Itahari Branch 25 2.6 Statement of rate of interest of fixed deposit 27 2.7 Statement of interest rate of saving deposit 29 2.8 Statement of Deposit structure 30 2.9 Total Deposits 32 2.10 Statement of loan 34 2.11 Total Loan 35 2.12 Correlation coefficient between deposit & loan 37

15 VI

List of figures

Figure No. Page No.

2.1 Structure of deposit 31

2.2 Trend line of Total deposit 33

2.3 Structure of loan 35

2.4 Trend line of total loan 36

2.5 Trend relationship between deposit and loan 36

16 VII

ABBREVIATION

KCM= Kasturi College of Management

HBL = Himalyan Bank Limited i.e. = that is etc. = etcetera

A.D. = Iswi-Sambat

B.S. = Bikram Sambat

ATM = Automated Teller Machine

Dept. = Department

17 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

18 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

19 CHAPTER-ONE

INTRODUCTION

1.1 General Background

Nepal is an under developed country characterized by the problems like poverty, literacy, unemployment and so on. All these are not the result of temporary misfortune and absolute method of production and social organization. Some more features of an underdeveloped nation include low level of technology, skills and unsuitable political and social structure. In such a situation, banks play an important role in the development of economy and enlistment society.

The network of all well organized financial system of the country has a great bearing in this regard. It collects scattered financial resources form the masses and inverts them among than engaged in commercial and economic activities of the country. In this the financial institution provides saver highly liquid divisible assets at lower rate while the investor received large pool of resources. Integrated and speedy development of the country is possible only when competitive services reach looks and corner of the country. It has been well established that economic activities of any country can hardly be carried forward without assistance and support of financial institution. Financial institute has catalytic role in the process of economic development.

Consequently, Nepal bank act 063, having elementary function of commercial bank. Later in 1956, the first central bank named as Nepal Rastra Bank was established in 1966 A.D. to spread banking services to both rural and urban areas. In 1936 co-operative bank was established that was converted later into agricultural development bank in 1967. The pace of financial sector, development enhanced rapidly after the financial liberalization policy introduced by government in 1984 A.D. since then, various financial institution i.e. JUB is domestic commercial banks,

20 development bank, financial companies, co-operative banks, credit guarantee cooperation, employee provident fund national insurance corporation, Nepal stock exchange has come into existence to cater the financial needs of the country thereby assisting financial development of the country.

So the commercial banks are the heart of our financial system. They hold the deposit of million persons, government and business unit, “they make fund available through their investing and landlines activities to borrow individual business unit and government”. They facilitate both the activities, flow of goods and services from procedures to consumers and financial activities of the government. They provide a large portion of our medium of exchange and they are media through which monetary policy is affected.

In short, banks are extremely necessary for healthy and prompt progress of a country, its citizens and the societies it has. By creating and mobilizing the capital and rendering various financial services, banks are contributing to establishment and development of so many small and large scale industries and domestic as well as international trade and commerce.

1.1.1 Introduction of Bank

Bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests or safeguards money for its customers. This includes many other financial initiations that are not usually thought of as bank but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, pension fund, security brokers, mortgage companies etc.

Banking services is extremely important in a free market economy such as that found in Canada and the United of States. Banking services serve two primary purposes, first by supplying customers with basic medium-of-exchange (cash, checking accounts and credit cards), bank play key role in the way goods and services are purchased. Without these familiar methods of payments, goods could only be exchanged by barter, which is extremely time-consuming and inefficient. Second by accepting money deposits from savers and then lending the money to the borrower

21 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. 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

22 specific banking related to co-operative, agriculture and industry and other objectives.” (Commercial Banking Act 2031 B.S.)

The history of commercial banks in Nepal starts from the establishment of the Nepal Bank Limited on 1994 B.S. it is the first bank in Nepal. Hence, the commercial banks are so much important in the modern business world that the commercial life will be paralyzed if banks stop function for a day or two. So, commercial banks are essential for domestic and foreign trade, industries and commerce in particular and economic development in general.

1.1.3 Introduction of HBL

During the last two and half decades the Nepalese financial system has grown significantly. At the beginning of 1980s there were only two commercial banks and two development banks. After the adoption of economic liberalization policy, particularly the financial sector liberalization that paved the way for establishment of new banks and non-bank financial institutions into the country. Consequently, by the end of mid July 2011, altogether 272 banks and non-bank financial institutions licensed by NRB are in operation. Out of them, 31 are “A” class commercial banks, 87 “B” class development banks, 79 “C” class finance companies, 21 “D” class micro- credit development banks, 16 savings and credit co-operatives, and 38 are NGO.

HBL is one of the pioneer commercial banks in Nepalese industry with it being one of the initial private commercial banks in Nepal. HBL is known for its expertise project financing and having a reputed and “A” rated clientele. Especially with its BOD containing reputed business houses like the Khetan Group, this bank has a good business in hand. HBL is well known for its friendly work culture with educated and professional employees motivated to work for a long working hours. Hence, HBL was chosen so as to experience the professional working culture and acquire the best possible knowledge of 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

23 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.

24 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,

25 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 5th 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 19th February, 2009 as 18th branch. It is situated in Pathibara Market Dharan road Itahari, Sunsari.

26 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

CSD Cash Administration Remittance Credit Day Dept. Dept. Book Dept.

Security Guard

Source: Internal Organizational chart of HBL, Itahari branch

27 1.1.9 Products/services offered by Himalayan Bank Limited

The services offered by HBL are summarized follows:

Table 1.1

Services of Himalayan Bank Limited

S.N. Products/Services 1 Deposit Product 2 Loan 3 International Banking (LC) 4 Himal Remit 5 Safe Deposit Locker 6 Card Services 7 SMS Banking 8 Internet Banking Source: Profile of HBL,Itahari branch.

Fierce competition has erupted in Nepalese banking sector. At a time when the market pie has not increased over four dozen industries are lying closed across the country, the rise in the number of financial institutions is leading to cut-throat competition in the domestic banking sector. Apart from over a half dozen financial institutions, including B-class development banks and C-class finance companies, the entry of two ‘big’ A-class commercial banks will not only swell the number to 31 but also force them to look for new investment avenues.

The proposed Civil Bank Ltd, the 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.

28 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.

29 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.

30 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.

31 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.

32  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

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

• What is the deposit & loan policy of the HBL?

• What kinds of loan they provide to the customers?

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

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

• What kinds of deposit scheme/policy are provided?

1.6 Importance of the Internship Report

The internship report provides the practical knowledge and enhances the creativity of the researcher. It develops confidence and sharpens the skills and ability to interact with others. It is the implementation of the theoretical study into the practical use.

1.7 Methodology of Internship report

Different kinds of tools and technique are used in making the report. The data are collected from various sources by different means.

1.7.1 Internship report design

The internship report is designed as descriptive and analytical. Analytical reports takes a problem, idea or issue and break it down into its components part to examine how the parts fit together. Analytical report call on us to answer questions, to ask questions why something happens, which product is best or is a good idea. Descriptive and analytical reports call for research, interpretation and recommendation. And when we work within particular professional context, analysis often means very specific thing involving our particular skill set and expertise. Such report not only describes the facts of real situation phenomenon but also analyze the facts and the problem related to the statement. So, on the basis of description and analysis of information and data conclusion and findings are made.

1.7.2 Population and sample of data

34 Population refers to the totality of the observation that have selected for study or it can be defined as the whole or universe. Population is total unit, which is going to study or research where as sample is the number of representative which are going to be studied. Sample refers to the part chosen from the population. The process of selecting a sample from population is called sampling. All the financial years from the date of establishment till FY 2067/68 are population data. For the analysis of deposit and loan of HBL three FY data from 2065/66 to 2067/68 are taken as sample data.

1.7.3 Data collection procedure

For the preparation of internship report two months passed in HBL in order to obtain essential data. For the collection, essential data and information to 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

35 Bank. The researcher expressly to solve the problem under consideration at that time gathers primary data.

Secondary data

Secondary data is defined as data collected earlier for a purpose other than the one currently being pursued. Secondary data are often in a form of public data but the unpublished data such as records, reports or statistics gather or complied by others prior to your study are also secondary data. For the internship report the statement of Loan and advance and deposit is obtained from books of account and financial record of the bank.

1.7.5. Data analysis tools and technique

To analyze the data, there is need of certain tools and techniques. In this study, tables, simple bar chart, trend line, mean are used to analyze the data.

1.8. Organization of internship report

Organization of internship report is made by three chapters. Among them introduction is the first chapter. Under this chapter, the sub topic such as background information, introduction of the organization conceptual review, focus of the study, purpose of internship report, statement of problem, importance of the IR, methodology of internship report, organization of IR, assumption and limitation of IR are included. The sub topic background information includes origin, location, work area, objectives, authority area, organization structure, function/services of HBL, Itahari branch.

In conceptual review the concept of research title is defined. Statement of problem includes the question which the whole report is going to find out. Methodology of the internship report includes the way in which IR is design, population and sample of data, data collection procedure, nature and sources of data, data analysis tools and techniques etc. the objective of field work study is made clear in the sub topic purpose of IR. In gist, organization of IR is the brief summary of the field study report.

Presentation and analysis of data fall into the second chapter of the report. This chapter includes the presentation of data, analysis of data, by using statistical

36 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.

37 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.

38 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

39 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 Deposit 2 Saving Deposit 3 Current Account 4 Premium Savings Account 5 Super Premium Savings Account 6 Call Deposit 7 Bishes Savings Account 8 Recurring Savings Account 9 Jumbo Term Deposit Source: Profile of Himalayan Bank Ltd.,Itahari branch.

40 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 Small & Medium Loan Enterprise Loan

Funded: *Hire Purchase Loan *Funded/Non-Funded *Project/ Consortium *Housing Loan facility range of Rs. 0.5 M to Rs. 40.0 M. Loan *Subidha Loan *Non Revolving Cash *Credit Card Loan Credit *Loan against FDR *Working Capital Financing *Loan against Govt. Bonds & Bonds of *Overdraft Facility Bank *Demand Loan *Loan against First -Revolving Demand Class Bank Loan Guarantees -Short Term Demand *Loan against Share Loan

41 *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

42 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 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 (% Type of Loan Interest Rate (% pa) pa) Home Loan: SME Loan Tenure 5 yrs 12.25-14.00 Package: Tenure 10 yrs 12.75 - 14.50 WC Loan 12.50 – 13.50 Tenure 15 yrs 13.25 - 14.75 Fixed Term Loan 12.50 – 13.50 Tenure 20 yrs 13.75 - 15.00

Loan against HBL Plus 1.00 Loan in Local Plus 1.00 or 8% FD (NPR) (Min. 8%) Currency against whichever is FD higher Loan against FD Plus 1.00 Loan against 3 month TB rate +

43 of other banks (Min. 8.5%) government bonds 2.50% or 8% whichever is higher Educational Loan against first Rated Bank: Institution class bank 11.00 – 13.00 Financing: 12.00 - 14.00 guarantee Non- Rated WC facility: 13.00 - 15.00 Bank: FT Tenure Up to 12.50 – 15.00 10yrs Subidha Loan 13.25 - 15.00 USD Denominated 4.50 – 6.00 Loan Loan against 13.25 -15.00 Card Merchant share of company Loan: listed in stock WC Loan: 12.50 – 13.50 exchange Fixed Term Loan: 12.50 – 13.50 HBL Small HBL Fixed Rate Personal Hire Purchase 11.25 Business Loan 13.25 – 15.00 Loan ( Fixed Rate Term Loan: 13.00 - 15.00 for 2 Years) Overdraft: HBL Fixed Rate Home Loan 10.90 (FR for 3 yrs) Source - www.himalayanbank.com

Table 2.5 Loan 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- 3.060 12.208 17.783 revolving

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 - - 0.540 FDT

44 8 Demand Loan - - 2.000 TOTAL 18.335 65.410 151.733

Source – HBL Itahari Branch 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

45 interest for different period of deposited amount offered by HBL on fixed deposit in year 2012 is as under:

46 Table 2.6

Statement of rate of interest of fixed deposit

Fixed Deposit Rate of interest % pa 14 days 2% 1 month 3% 3 month 3% 6 month 4% 1 year 5.5% 2 year 5.5% 5 year 5.5% Jumbo Term 3 year 6.5% 5 year 6.75% 10 year 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

47 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:

48

49 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 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

50 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. % F.Y. % F.Y. % 2065/066 2066/067 2067/068 Current deposit 53.4 12.91 154.7 12.9 173.0 12.91 2 Saving deposit 94.2 227.9 272.9 22.7 305.3 22.79 8 Fixed deposit 152.6 369.1 442.2 36.9 494.6 36.92 2 Other deposit 113.2 273.8 327.9 27.3 366.8 27.38 8 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

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

52 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

53 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.

54 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 Branch Table 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- 3.060 revolving 16.69 12.208 18.66 17.783 11.72 4 Hire Purchase 3.433 Loan 18.72 9.833 15.03 21.788 14.36 Staff Loan 5 1.800 9.82 3.958 6.05 3.660 2.41 Fixed Term Loan 6 - - 1.503 2.30 2.556 1.68 7 Loan against - HBL FDT - - - 0.540 0.36 Demand Loan 8 - - - - 2.000 1.32 TOTAL 18.335 100 65.410 100 151.733 100

Source: HBL, Itahari Branch

55 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.

56 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

160 140 s

n 120 o i l l

i 100 m 80 Loans n i

t 60 n u

o 40 m

A 20 0 2065/066 2066/067 2067/068 Fiscal Year

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:

57 Fig. 2.5

Trend relationship between deposit and loan

1600

s 1400 n o i

l 1200 l i 1000 m

Loans

n 800 i

t Deposits

n 600 u

o 400 m 200 A 0 2065/066 2066/067 2067/068 Fiscal Year

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

58 S.n X Y XY X2 Y2

1 18.335 413.4 7579.68 336.1722 170899.56 2 65.410 1197.8 78348.09 4278.4681 1434724.84 3 151.733 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

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.

59 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.

vi. There is a moderate positive relation between deposit and loan. vii. The mean deposit is increasing in each fiscal year.

60 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.

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

61 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.

62