CHAPTER-I

INTRODUCTION
1.1 BACKGROUND OF THE STUDY

The origin of bank linked to the Italian word ‘banco’ which means where money lenders and
money changers of the period gather to keep their money and their records of lending or
exchanging of coins in the market place. A bank is define as financial institution which works
as mediator between surplus unit and deficit unit i.e. it collects deposit in different form of
surplus unit and provides loan to deficit units to carry out different work.

In the context of Nepal, like as other countries the goldsmith and landlord was tile ancient
banker. The Nepalese people were highly exploited by Sahumahajan by charging higher
interest rate, compounded interest rate and even manipulating the principal amount. In the
time of Shankhardhar Sakuwa Tankadhari was formed to deal monetary transactions during
the regime of Jung Bahadur Rana. Mulikhana was established for taking care of financial
responsibility of the country. Tejrarath Adda was established on 1933 BS, during the
primeminister Ranoddip Singh which was the first step towards the institutional development
of banking in Nepal. Tejrarath Adda did not collect the deposit from the public but gives
loans to employees and public against bullion. The first commercial bank ‘Nepal Bank
limited’ was establishment on 30th kartik 1994 BS and start to perform banking activities then
after on B.S.2013.01.14 Nepal Rastra bank was established as a central bank and Rastriya
Banijya Bank on B.S.2022.10.10 as a fully government owned commercial bank. Nowadays
a several banks and other financial institutions have been established and performing their
banking activities.

In every aspects, all deposits funds became nonproductive until it is financed or invested in
the market for the sustainable development of economic status, the financing should continue
regularly as the market demands which is possible by sufficient deposit that allows the
adequate flow of money. When we deal with the money and its long term mobilization, it is
very important to analysis the trend and utilization to make the future real.

A deposit consists of money placed into banking for safekeeping. Deposit is one of most
important functions of commercial banks. Without deposit, bank cannot perform its function
smoothly. Banks accept the deposit into two forms i.e. noninterest bearing and interest
bearing deposit. The non-interest bearing deposit is known as current deposit or demand

1
deposit. Saving deposit account, fixed deposit and call deposit accounts are interest bearing
deposit. Deposit traditionally provide a cheap and reliable sources of funds for development,
which is of great value developing countries, especially when the economy has difficulty
raising capital in international markets.

Among 27commercial bank, NMB has been in operation in Nepal. NMB Bank Nepal is one
of those with headquarters in Kathmandu. NMB was formed in May 2008 is licensed as ‘A’
class financial institution. It was created as merger with four financial institution i.e. Bhrikuti
development bank, Pathibhara bikash bank, prudential financed company and cleaned energy
development. It has 110 branches across the nation providing retail and commercial banking
services. NMB Bank has been recognized as “Bank of the year in Nepal” for two consecutive
years, 2017 and 2018 by, The Banker a service of Financial Times, for leading roles in the
country’s financial sector by using new digital technologies.

1.2 Profile of the organization /Place /Event etc.

Jan 14, 2019 — NMB Bank Limite– "A" class financial institution has been . Location where
copies of this annual report are kept . Creating an innovative climate within the Organization 
utilizing the skills .all staff are informed of all relevant financials/events. Committee, HR
Service Committee, AML Committee etc.

1.3 Statement of problems

If bank resorts less deposits funding and reply more on open market funding, this is widely
seen as negative for financial stability. Research problem may be stated in the form of
following questions:

 What is the deposit trend of NMB bank?

 What is the position of deposit of NMB Bank?
 What is the relationship between deposit and credit?

1.4 Objectives of the study

This study mainly focuses on the following objectives:

 To examine the trend of deposit of NMB.

 To identify total deposit of NMB.
 To analyze relationship between deposit and credit of NMB.

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1.5 Rationale

Deposit collection is the major function of all commercial banks. This study will help in
tracing the various problems regarding the management of deposit of the bank. Similarly, this
study will be useful to the customers because it makes the knowledge of the customers grow
even more about the types of deposit and encourage for saving. Likewise, this study will also
be useful to the investor as it helps to reduce risk when making a big investment. A study of
position of deposit and trend of deposit will also help management of the bank as it will strive
to disclose the internal weakness of the organization and furnish ideas for improvement.

1.6 Literature review

Review of literature is concerned with different articles which are published by different
organizations. Related books, magazines, journals, articles and published research studies
will be reviewed and will be included in theoretical frameworks on the review study.
According to Cardesco and Ganter, “A literature review is a self-contained unit in abody
which analysis critically a segment of published body through summary, classification and
comparison of prior research studies and theoretical articles”.

The term ‘Bank’ is a financial institution established by law basically dealing with monetary
transaction. In other words, bank is defined as financial institution which works as mediator
between surplus unit and deficit unit i.e. it collects deposit in different form from surplus unit
and provides loan to deficit unit to carry out different work. According to business dictionary
“Bank” is an establishment authorized by a government to accepts deposits, pay interest,
clearly checks, make a loans act as an intermediary in financial transaction and provides other
financial services to its customers”

Bank deposits consist of money placed into banking institutions for safekeeping. These
deposits are made into deposit accounts such as saving accounts, checking accounts and
money market accounts. The account holder has right to withdraw deposits funds, as set forth
in term and conditions governing the account agreement.

Deposit itself is a liability owned by the bank to the depositors, and the word refers to this
liability rather than to the actual funds that have been deposited. When someone opens a bank
account and make a cash deposit, he surrenders legal title to the cash, and it becomes an asset
of the bank. In turn, the account is liability to the bank.

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A commercial bank is a type of bank that provides services as keeping deposits, making
business loans and offering basic investment products that is operated as a business for
profits. It can be refers to a bank which deals with corporation or large/middle-sized business
to differentiate it from retail bank and investment bank. A commercial bank is where most
people do their banking as opposed to an investment bank.

Deposit is one of the major functions of the commercial bank. It is the main sources of
capital. Bank collects money from public in the form of different types of deposit such as
current deposit, saving deposit, call deposit, time deposit, flexi deposit and other form of
deposit accounts. Among various deposit account NMB Bank collects its major deposits from
current deposit, saving deposit and fixed deposit
According to Commercial Bank Act 2031(Nepal), “Bank is an organization established for
the purpose of exchange: money deposit, money lending and participation in transaction”.

According to Kent, “ A Bank is an organization whose principal operation are concerned with
accumulation of the temporarily idle money of the general public for the purpose of
advancing to others for expenditure”.

According to water loaf “Bank is that institution or individual who is always ready to serve
money on deposit to be returned against the cheques of their deposits(savers)”

According to Bologna(2011), “Deposits plays a vital role in bank funding as a major portion
of a commercial bank’s assets is usually financed through customer deposits.’’

According to Khan(1997), “Nobody is allowed to solicit deposits on behalf of Non Banking

Financial Companies (NBFCs) by publishing a prospectus or advertisement or through any
other manner unless he is authorized in writing to do so and the advertisement/prospectus
conforms to the Reserve Bank of India (RBI) stipulations and the other provision of law.”

According to Szczesmy & Schenk (2000), “Since commercial banks depends on depositor’s
money as a source of funds, it means that there are some relationships between the ability of
the banks to mobilize deposits and the amount of credit granted to the customers.”

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 Methods

1.7 Research Methodology

Research is the systematic and organized effort to investigate a specific problem that need a
solution. Research methodology refers to the various sequential steps to be adopted by a
researcher in studying problem, with certain objects in view to get conclusion. It describes
the methods and process applied in the entire subject of the study. This research is conducted
to solve out the problems related to deposit. The project is based on descriptive research
designed. As it explains the facts and characteristics in quantitative forms and the data that
are collected to presents the facts and figures of past five fiscal years. Under descriptive
research design the data are based on case study as well as trend study.

The methodology, which has been used in this study, consist of research design, nature and
sources of data, data gathering procedure and the analytical tools etc.

1.8 Population and Sample

1.8.1 Population

In a research, a population is not demographic population but the entire collection of all
observation of interest i.e people, objects or events as defines by the research is known as
population. The term “population” used in statistics denotes the area or group from which the
sample is to be taken and the term ‘sample’ is the part of population which we select for the
purpose of investigation. Population is also known as universe. Since this study is focused on
the banks. Thus, here the population encompasses all the commercial banks they are:

1. Nepal Bank Ltd.

2. Rastriya Banijya Bank Ltd.
3. Nepal Investment Bank Ltd.
4. Standard Chartered Bank Ltd.
5. Nepal SBI Bank Ltd.
6. Himalayan Bank Ltd.
7. Nabil Bank Ltd.
8. Nepal Bangladesh Bank Ltd.
9. Bank of Kathmandu Lumbini Ltd.
10. Everest Bank Ltd.

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 11. Nepal Credit and Commerce Bank Ltd.
12. NIC ASIA Bank Ltd.
13. Machhapuchhre Bank Ltd.
14. Laxmi Bank Ltd.
15. Kumari Bank Ltd.
16. Siddhartha Bank Ltd.
17. Agriculural development Bank Ltd.
18. Sunrise bank Ltd.
19. Prime Commerical Bank Ltd.
20. Prabhu Bank Ltd.
21. Mega Bank Ltd.
22. Civil Bank Ltd.
23. Sanima Bank Ltd.
24. NMB Bank
25. Global IME Bank
26. Century Commercial Bank Ltd
27. Citizens Bank international ltd

1.8.2 Sampling

Sampling is the process of selecting sub-set of the population by the study of which
researcher would able to draw conclusions that would be generlizable to the population.So,
among the 27 Commercial Banks in Nepal, I have chosen NMB Bank Ltd as the sample of
my study.

1.9 Types of Data

This study is based on secondary data. True and fact information are necessary for the
reliability and effectiveness of research work. For this study different techniques and
procedure have been adopted to collect necessary information and data.

a] Primary data

Data developed by the researcher himself for the purpose of present research using the
application of appropriate data collection tools are called primary sources of data. Data
collected from the primary sources are fresh as well as more authentic and reliable.

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b] Secondary data

The data which had been collected by previously by someone or other organization, used for
their personal as well as organizational benefit and are made available to others in the form of
published and unpublished document are known as secondary data. It is already mentioned
that huge data of this project report is based on secondary sources of data. Annual report is
used in order to get actual and accurate information for this report.

1.10 Data Collection Instruments

a) Observation method
In this method data are gathering by a researcher on observing some events as they
occur without asking from the respondent.
b) Interview method
It is a method in which where interviewer and interviewee personally asks the
questions and give the answer. It is a method of expressing internal interest, attitude
ad feelings.
c) Questionnaire method
In this method of a questionnaire (a list of questions related to the investigation of
inquiry) is prepared and is given to the respondent that are expected to read and
understand the questions and write down reply in the questionnaire itself. After filling
the questionnaire, the respondents return the questionare to the investigator.

1.11 Data Analysis Tools

Data are collected from various sources and method cannot be measurable and meaningful
without its appropriate presentation and analysis. This study uses the following tools for data
presentation and analysis are:

a)Financial tools

 Deposit trend
 Total deposit position
 Current deposit position
 Saving deposit position
 Fixed deposit position
 Total deposit and total credit

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B) Statistical tools

 Trend line
 Bar-diagram

1.12 Limitation if study

There are certain criteria which bounds the research to be limited in specific area which are as
follows:

 This study will cover only the past five year’s data from 2071 to 2076.
 In this study, only selected financial and statistical tools will be used.
 This study is based on secondary data. It doesn’t include the view of customers and
strategies.
 The scope of study is limited to deposit analysis.

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 CHAPTER-II

RESULT AND ANALYSIS

2.1 Data Presentation

The presentation of data plays the vital role in report writing. As it provide bird’s eye view to
entire data in very few words and figures. In this research, generally collection of data are
arranged and presented in proper table and graphs. For presentation and analysis the data,
tables, bar diagrams, trend line, average and percentage will be used.

2.1.1 Deposit trend of NMB

A bank must mobilize its deposit and other funds to the profitable, secured, stable,
marketable sector so that it can earn a profit. On the other hand, bank must fulfill the credit
needs of the several of the economics including agriculture, industries, commercial and social
sectors so that the deposit structure and policy of the company ultimately leads to the path of
success. Hence deposit policy is the most important function of the bank or financial
institutions. The given table and figure shows the deposit trend of the NMB.

Table No.1:

Deposit trend of NMB (in millions)

Types of deposit Fiscal years

2071/72 2072/73 2073/74 2074/75 2075/76

Saving deposit 3718 5500 7827 18618 16972

Fixed deposit 8321 7710 11196 26975 41192

Call deposit 8179 11336 14345 14457 7821

Current deposit 664 881 1457 2669 4911

Margin deposit 1304 1660 1889 2062 2328

Total 22186 27087 36723 64781 73228

Growth (Rs) 6203 4901 9636 28058 8443

Growth (%) 10.83% 8.56% 16.83% 49.02% 14.75%

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 Source: www.nmbnepal.com

Figure No. 1:

Deposit trend NMB

45000

40000
Saving
deposi
35000 t

30000 Fixed
deposi
amt in million

t
25000
Call
20000 deposi
t
15000

10000

5000

0
2071/72 2072/73 2073/74 2074/75 2075/76

This table and figure show the deposit trend of NMB. Here total deposit of NMB in 2071/72
was Rs. 22186 million which was 10.84% more than that of year 2070/71. In 2072/73,
deposit increased by Rs. 4901 million and reached to Rs. 27087. Similarly, in the year
2073/74 deposit reached to Rs. 36723 million due to increase n deposit by 16.83%. During
the year 2074/75, the deposit increased by 49.02% which reached to Rs. 64781 million. In
2075/76 deposit increased by 14.75% to Rs. 73224 million.

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2.1. 2 Total deposit position of NMB

Table No. 2:

Total deposit position of NMB

Fiscal years Total deposit ( in millions) Growth ( Rs in millions) Growth (%)

2071/72 22186 6203 10.84%

2072/73 27087 4901 8.56%

2073/74 36723 9636 16.83%

2074/75 64718 28058 49.02%

2075/76 73224 8443 14.75%

Total 224001 57241 100%

Average 44800.2 11448.2 20%

Source: www.nmbnepal.com

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 Figure No. 2:

Total deposit position of NMB

80000 73224
70000 64718
60000
Amt in million

50000
40000 36723
30000 27087
22186
20000
10000
0
2071/72 2072/73 2073/74 2074/75 2075/76
Total deposits (in million)

The above table and figure show the total deposit position of NMB, during the period of five
years. In the year 2071/72 was Rs. 22186 million which was increased by 10.84% than the
previous year. There had been great increase in total deposit during the year 2071/72
by10.84% corresponding to Rs. 6203 million. During the year 2072/73, deposit increased by
8.56% and reached to Rs. 27087 million. In 2073/74, total deposit was Rs. 36723 million
which is Rs. 9636 million more than 2072/73. In 2074/75, total deposit increased by 49.02%
i.e. Rs. 28058 million and reached to Rs. 64781 million and in the last year 2075/76 deposit
increased by Rs. 8443 million.

From the above table and figure, total deposit is seemed to be increasing. NMB should attract
people towards different deposit account and manage its incremental.

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2.1.3 Current deposit position of NMB

Table No.3:

Current deposit position of NMB

Fiscal year Current deposit (in millions) Growth (Rs in millions) Growth (%)
2071/72 664 55 1.28%
2072/73 881 217 5.04%
2073/74 1457 576 13.39%
2074/75 2669 1212 28.17%
2075/76 4911 2242 52.12%
Total 10582 4302 100%
Average 2116.4 860.4 20%

Source: www.nmbnepal.com

Figure No. 3

Current deposit position of NMB

6000

4911
5000

4000
Amt in million

3000 2669

2000
1457
1000 881
664

0
2071/72 2072/73 2073/74 2074/75 2075/76
Current deposit (in millions)

Above the table and figure shows the current position of NMB. In the year 2071/72 was Rs.
664 million which was increased by 1.28% than the last year. There was an increase in
2072/73 by 5.04% and the current deposit reached to Rs. 881 million. In 2073/74, it was

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increased by Rs. 576 million and in 2074/75 it was increase by Rs. 1212 million. In the year
2075/76 it continues to increased to Rs. 4911 million which was increased by 52.12% i.e. Rs
2242 million.

2.1.4 Saving deposit position of NMB

Table no.4

Saving deposit position of NMB

Fiscal year Saving deposit(Rs in millions) Growth(Rs in millions) Growth (%)

2071/72 3718 407 2.98%
2072/73 5500 1782 13.04%
2073/74 7827 2327 17.03%
2074/75 18618 10791 78.99%
2075/76 16972 -1646 -12.05%
Total 52653 13661 100%
Average 10627 2732.2 20%
Source: www.nmbnepal.com

20000 18618
18000 16972
16000
14000
Amt in million

12000
10000
7827
8000
6000 5500
3718
4000
2000
0
2071/72 2072/73 2073/74 2074/75 2075/76
Saving deposit (in millions)

Figure no.5

SAVING DEPOSIT POSITION OF NMB

The above table and figure show the saving deposit of NMB bank. In the year 2071/72,
saving deposit was Rs.3718 million which was increased by Rs.407 million. Similarly in
2072/73 saving deposit increased by 13.04% and in 2073/74 increased by 17.03% to Rs.7827
million. In 2074/75, saving deposit increased by 78.99% i.e. Rs.10791 million and reached to
Rs.18618 million. But in the year 2075/76 there was decrease in saving deposit. It decreased
by 12.05% to Rs.16972 million.

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2.1.5 Fixed Deposit position of NMB
Table no.5:
Fixed deposit position of NMB

Fiscal year Fixed deposit ( Rs in millions) Growth ( Rs in millions) Growth (%)

2071/72 8321 1440 4.05%
2072/73 7710 611 1.72%
2073/74 11196 3486 9.81%
2074/75 26975 15779 44.41%
2075/76 41192 14217 40.01%
Total 95394 35533 100%
Average 19078.8 7106.6 20%
Source: www.nmbnepal.com

45000
40000
35000
30000
Amt in million

25000
20000 41193

15000
26975
10000
5000 11196
8321 7710
0
2071/72 2072/73 2073/74 2074/75 2075/76
Fixed deposit (in millions)

Figure no.6

FIXED DEPOSIT POSITION OF NMB

In the above table and figure, fixed deposit was increased by 4.05% in the year 2071/72 to
Rs.8321 million. Similarly, in the year 2072/73 it again increased by 1.72% i.e. Rs.611
million. During the year 2073/74, fixed deposit increased to Rs. 11196 million and 2074/75 it
increased by 44.41% and reached to Rs.26975 million. In the year 2075/76, fixed deposit
increased by Rs. 14217 million and reached to Rs. 41192 million.

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2.1.6 Relationship between Total deposit and Total credit
Deposit and credit, these two components are the main part of any financial company, which
can’t be separated and it is impossible to think the profit unless mobilizing money either
collecting or investing. Therefore its relation is like a coin of two sides, without both side a
coin has no value, as only deposit or credit doesn’t give any sense of business.

Hence to analyze the relationship of deposit and credit of the NMB, the ratio between the
total deposit and total credit are analyzed here. The following table and graph give the total
deposit and total credit with relation to the ratio of NMB.

Table No. 6

Total deposit and total credit ratio

Fiscal year Total credit Total deposit Total credit to total

( in millions) ( in millions) deposit ratio
2071/72 16491 22186 74.33065897
2072/73 20467 27087 75.56023185
2073/74 27289 36723 74.31037769
2074/75 53021 64781 81.8465907
2075/76 61157 73224 83.52043046
Total 178425 224001 389.568228
average 35685 44800.2 77.91364561

Source: www.nmbnepal.com

Figure No. 6

Total credit and total deposit

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 80000
70000
60000
Amt in million

50000
40000
30000
20000
10000
0
2071/72 2072/73 2073/74 2074/75 2075/76

Total deposit (in millions) Total credit (in millions)

The above table and figure show the deposit was higher than credit in all years. Credit was
increasing year by year in the ratio of increase in deposit year by year. This was due to secure
investment field due to conductive business environment.

2.2 Analysis of Results

Nepal Rastra Bank in its monetary policy 2015, directed the commercial banks to meet minimum paid
-up .Due to this.NMB Bank has increased its paid up capital. The paid-up capital has grown in last
five years. NMB has increased its capital through bonus share only. This shows the strength and
profitability of the bank.

2.3 Major findings of the study

NMB is well known for providing highly personalized services to the customer. It provides
different services like ATM card, credit card, safe deposit locker etc. the deposit amount is

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increasing significantly yearly. To add its strength NMB has vast network system in the
nation thus, helping customer to transact through bank from place to place.

The major findings of the study from different analysis are as follows:

 The types of deposit of NMB are fixed deposit, current deposit, saving deposit, call
deposit and margin deposit.
 The main source of fund of the NMB is fixed deposit which figure is 42.59%.
 On the basis of a yearly pattern of increasing and decreasing of deposit, the average
rate of increasing the deposit amount is 20%.
 Deposit was higher than credit in all selected years.
 The ratio of deposit is increasing trend.

CHAPTER-III

SUMMARY, CONCLUSION
3.1 Summary

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This chapter is a complete conclusive and suggestive package, which contains a summary of
the findings and actionable plans i.e. suggestion for further improvement. The summary gives
a brief introduction to all chapters of the study and shows the actual facts of the present
situation under the topic of the study. The conclusion of the findings is based on the
consequences of the analysis of relevant data by using various statistical tools which presents
the strength, weakness, opportunities and threats of the company. The recommendations are
presented in the term of suggestions, which are prepared on the basis of findings and
conclusions.

Banks are one of the financial institutions, which occupy quite an important place in
framework of every economy. Banks provide capital for the development of industry, trade,
business and other resource deficit sectors by investing the saving collected as deposit. In the
process the bank earns commission. The rate of interest paid to the depositors is generally
lower than the rate charged to the borrowers. The difference between these two rates of
interest is the profit of the bank. Deposit collection is the main function of the commercial
bank.

To attain the objectives of the study, trend analysis of total deposit, analysis of position of
current deposit, saving deposit and fixed deposit, relation between deposit and credit have
been done. To attain the necessary information and data, secondary data is the main source of
the study, according to the needs and objectives of the study the secondary data was
compiled, processed, tabulated and graphed for better presentation.

3.2 Conclusion

The deposit of NMB is in increasing trend. The share of fixed deposit is more than that of
saving, current, margin and other deposits in the deposit trend of NMB. In the addition to

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this, the bank is being able to satisfy its customers and in providing higher quality and newer
services to them.

All the financial profits are not possible without investment and investment is possible where
there is deposit as NMB data analysis clearly shows the profits they might have made are due
to the public and investor’s goodwill in depositing cash. Therefore deposits are very
important part of bank but since the insecure and unstable political situation has arises
business and personal creditors and investors are decreasing yearly.

This is not a healthy symptom for their long term condition because people are longing to
save rather than to invest in business. Therefore, banks have to develop advance plans in
investment schemes for the good profit to continue to have a significant existence in the
future.

REFERENCES
Adhikari, D.R & Pandey, D.L. (2016). Business Research methods. Kathmandu

Asmita Publications(P) Ltd

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Upadhyay, D.R. (2016), Account for Banking., Kathmandu

Bologna, P. (2011). Is there a role for funding in explaining recent US Bank Failure?

Bajracharaya B.C. (2056) Business Statitics & Mathematics, Kathmandu, M.K.

Ewer t, R., Szczesmy, A. & Schenk, G. (2000). “Determination of Bank lending performance
in Germany”.

Kent ,2018,Genral Public for the purpose of advancing to other for expenditure. America.

Khan, M.Y. (1997) “Financial Services”. New Delhi: McGraw Hill Education(India) Private
Limited

Publisher & Distributor Bhotality.

(n.d), Retrieved from www.nmb bank.com

The Annual Reports of NMB Bank Limited, Sunwal, Nawalparasi

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