Loan Management of Nabil Bank

CHAPTER - 1
1.1 INTRODUCTION
1..1.1 Definition of bank:The word bank is derived from Latin word Bancus
which refers to the Bench on which the bankers would keep its
money and his records, some person trace its origin to the French
word Banke and the Italian word Banco which means a Bench
keeping leading and exchanging of money or coins in the market
place by money lenders and money exchanges.
Generally, an institution established by law, which deals
with money and credit is called bank. It is obvious that in a common
sense, an institution involved in monetary transaction is called
bank .A bank simply carries out the word of exchanging money,
providing loan ,accepting deposit and transferring the money. A
person or a company carrying on the business of receiving money
and collecting draft for customers subject to the obligation of
honoring cheques drawn upon them from time to time by the
costumes to the extent of the amount available on their current
accounts.
It is very difficult to give definition to any particular
subject matter. It is really a difficult task to express and give
meaning of any subject in few words. So different scholars have
presented the definition or meaning of the same subject matter in
different ways, which are as follow:C. R. Crowther"A bank collects money from those
who have it to spare or who are saving it out of their incomes, and it
lends this money to those who require it."
Prof. Kinley"A bank is an establishment which
makes to individuals such advance of money as may be required
and safely made, and to which individuals entrust money when not
required by them for use."
The Commercial Bank Act 2031"A commercial bank is a bank, which
deals in exchanging currency, excepting deposits giving loans and
doing commercial transactions."
From the above definition we can understand the
following features of bank:1) It deals with money; it accepts deposit and advances loans.
2) It also deals with credit; it has the ability to create credit by
expanding its liabilities.
3) It is commercial institution; it aims at earning profit.
Therefore, a bank is an institution which accepts
deposit from the public and in turn advances loan by creating

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Loan Management of Nabil Bank

credit .Therefore, it should be differentiated from other financial
institution as they can not create credit, though they accept deposit.
So we can say that any institution offering deposits subject to
withdrawal on demand and making loans of a commercial or
business nature is a bank.
1.1.2 Meaning of Commercial Bank:The commercial banks are those banks who pool
together the saving of the community and arrange for their
productive sue .They supply the financial needs of modern business
by various means. They accept deposit from the public on the
condition that they are repayable on demand or on short notice.
Commercial banks are restricted to invest their funds in corporate
securities. Their business is confined to financing the short term
needs of trade and industry such as working capital, financing. They
can not finance in fixed assets. They grant loans in the form of cash
credit and overdrafts. Apart from financing, they also render
services like collection of bills and cheque, safe keeping of
valuables, financing advising etc to their customers.
Section 2(a) of the Commercial Bank Act 2031(1974),
Commercial
bank means a bank which operates currency, exchanges
transaction, accepts deposit, provide loan; performs, dealing
relating to commerce except the banks which have been specified
for the co-operative, agricultural, industry of similar other specific
objectives.
Blacks Law Dictionary,
Commercial bank means a
bank authorized to receive both demand and time deposits, to
engage in trust services, to issue letter of credit, to rent time
deposit boxes and to provide similar services.
Hence the term commercial bank, Joint stock bank
and credit banks are frequently used interchangeably. For e.g. in the
context of English banking system the terms Joint stock banks and
commercial bank are Member banks. Now a day mean
commercial banks as distinguished from investment banks although
this distinction is often bussed in practice
In this way ,Commercial bank is different from Central
bank and the distinction between the two terms is essentially based
on their objects, while the primary objective of a commercial bank is
the maximization of profit, the central bank is primarily concerned
with the effects of its operation on the functioning of the
economy.Moreever, while their may certainty be many competing
commercial bank, their may central bank comes out it any ordinary
banking business for the general public in complete. It confines itself
mainly for controlling the operation of the banking system in a
country.

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Loan Management of Nabil Bank

There are so many commercial banks in Nepal, which has
been shown in the below table:Serial
no.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)

Name of the Banks

Established
year
1994
2022
2041
2043

Nepal Bank Limited

Rastriya Banijya Bank
Nepal Arab Bank Limited
Nepal Indosuez Bank
(Now in Nepal Investment Bank )
Nepal Grind lays Bank
2049
(Now in Nepal Standard Chartered Bank)
Himalayan Bank Limited
2050
Nepal State Bank of India Limited
2051
Nepal Bangladesh Bank Limited
2051
Everest Bank Limited
2051
Bank of Kathmandu Limited
2051
Nepal Bank of Ceylon Limited
2053
(Now in Nepal Credit & Commerce Bank)
Lumbini Bank Limited
2053
Nepal Industrial & Commercial Bank
2055
Limited
Machhapuchhre Bank Limited
2057
Kumari Bank Limited
2058
Laxmi Bank Limited
2059
Siddhartha Bank Limited
2059

1.1.3 Introduction of NABIL Bank:Nabil Bank Limited (Nepal Arab Bank Limited) was
established in July 12th 1984 as the first joint venture bank of Nepal.
Its head office is in the capital Kathmandu. Initially, the Bank was
started with the investment of Dubai Bank under the Commercial
Bank Act 2031 of Nepal. Currently, it is working jointly with the
National Bank Limited of Bangladesh. The Bank has completed 20
years of its operation and has been able to earn a fair amount of
goodwill and confidence of Nepalese people specially for providing
prompt and efficient service. At the beginning, it started its
operation with 30 employees at Kantipath, Kathmandu, now it
employs more than 400 permanent employees in 16 branches in
different parts of the country.
Initially the bank had started its transaction with an
authorize capital of Rs.60 million and paid up capital of Rs. 30
million. It has been running in profit from the first year of its
establishment .Nabil is amongst the most successful joint venture
organization in Nepal registering strong growth in balance sheet
footing as well as profits year after year. The initial capital of Rs 30
million invested in 1984 has grown to Rs 1314 million as at mid July
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Loan Management of Nabil Bank

2003. During this period the bank has paid cash dividend to totaling
Rs 1268 million. The main sources of banks income is interest on
investment, commission and discount, dividend, foreign exchange
and other non operating incomes.
The Board of directors consists of 9 directors of whom 4
directors are from the National Bank Limited (Bangladesh), 1 from
the government, 2 from the general public, 1 from Nepal Rastra
Bank and 1 from financial institution. The Board is headed by a
chairman who is selected from among the 9 directors. Presently, the
Member Secretary of the Board is the Chief of Personnel and
Administration Section.
The shareholders of Nabil bank are as follow:1)50% is owned by National Bank Limited of Bangladesh
2)30% is owned by Nepalese public
3)20% is owned by Financial Institutions
(The above percentages of shares are shown in graphical chapter.)
1.1.4 Objectives of Bank:Since the Bank is in operation as per the Commercial
Bank Act 2031 of Nepal, it has to follow its objective. Thus the main
objectives of the Bank are as follow:1) To collects funds through deposits in current, saving and fixed
account .
2)To utilize the collected funds by providing loans and increasing
investment in agriculture,industrial,irrigation,power and other
sectors as prioritized by the government.
3) To make foreign exchange transaction.
1.1.5 Functions of Bank:Nabil Bank has offered the following functions:1)Bank guarantee
2) Bills purchase
3) Remittance
4) Export credit (Nepalese rupees & US dollar)
5) Trade finance
6) Transfer of fund (Online computer system)
7) Locker facility
8) Loans & Advances
9) Deposit
10) ATM facility and
11) Clearing\Collection

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Loan Management of Nabil Bank

1.1.6 Role of Bank:It has been playing very important role in banking
system by providing various types of facilities to the customers. Bu
Virtue to the range of services provided by the bank and its strength
in the market, it is also a significant player in financing entities
involve in various infrastructure projects and growing network ATM
facilities which are available to account holders and 24 hours
facilities to the customers. Thus, it is playing very important role to
give the best facility to the customer and effective management to
improve to overall quality. Nabil Bank has come a long way since its
inception in 1984 and impressive result was possible due mainly to
the improvements in net interest income and in the quality of credit.
1.1.7 Organization Innovation:Nabil as a Commercial Bank is performing its best for
the attraction of consumers. It has been spreading its braches for
providing lost of facilities to the consumer. In process of doing best
job that has provided some other facilities that are name as
organizational innovation they are:1) Swift facility
2) ATM
3) ABBS
4) Credit Card System
5) Safe Locker System
1.1.8 Branches of Nabil Bank:Nabil Bank has opened so many branches in the
nook & corner of Nepal, which has been shown in below table:Branches of Nabil Bank
Serial no.
1)
2)
3)
4)
5)

Location of Braches
Kantipath branch
New road branch
Jorpathi branch
Airport exchange counter branch
Thamel Credit Caral Center branch

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Loan Management of Nabil Bank

6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)

Birgunj branch
Alau branch
Biratnagar branch
Lalitpur branch
Itahari branch
Butwal branch
Pokhara branch
Bhalwadi branch
Lakeside branch
Bhairahwa branch
Nepalgunj branch

1.1.9 Organization Structure of Nabil Bank:-

CHAIRMAN

EXECUTIVE DIRECTOR

GENERAL
MANAGER

BRANCH
MANAGER

ASSISTANT
GENERAL
MANAGER

PERSONAL
ADMINISTRATION

Manager
Central
Control

Manager
Treasure
Correspond

Manager
International

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Manager
Company,
Secretary & Legal

Loan Management of Nabil Bank

1.2 Problem of Study:-while keeping all the data I have to face

problem of new and improved data.But in my research up-to-date
data was not in my own place like in Internet and Bank offices.
1.3) Objective of study:Before doing something everybody must have
the knowledge about the objective of his study. If he has not made
objective or without objective the work is meaningless. objective is
the matter which motivate a man to spread his mind so there are
also some objective behind this study and selection of the topic
Loan management in banking sector we have many objective
about this topic like the meaning of bank, their position in Nepal,
meaning about loan, their rules and regulation, principle, criteria,
collateral and other many more. Although there are uncountable
objectives behind this study but the main objective of this study are
as follow:1) To have the practical knowledge about banking system.
2) To have knowledge about purpose of loan.
3) To know the management system of Nabil Bank.
4) To have in depth knowledge on Letter of Credit.
5) To have the knowledge to increase the goods of assets.
6) To asses the role of loan in development of nation.
1.4 Need of study:Today knowledge is the biggest assets and
valuable resource of mankind. Without knowledge, we are
handicapped in every share of our life. Knowledge which has been
accumulated over the centuries is the result of the continuous quest
of mankind to know more about themselves and about the ever
changing social phenomena and the environment which surrounds
them .The world; there is the repository of vast knowledge.
Knowledge can be acquired through various
sources. However research is the prime source of knowledge
generation. Research opens new frontiers of knowledge. It is
through research that new evidence is discovered, old evidence is
recorded, new facts are gathered and new insights are brought to
light .Research thus provides broader and deeper understanding of
phenomena.
We, the student of BBA 5th sem. need this study
by completing the research process to get the knowledge about the
related sector. Due to it we can understand about their sector, their

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Loan Management of Nabil Bank

condition, their position, their environment, working style and also
helps to increase our mental ability. Due to this study we can also
get some practical experience related with that topic.
So far as the study of Loan Management of
Nabil Bank is concerned, First of I felt the need of Nabil Bank
because it is the first joint venture bank and it is one of the
developed bank of Nepal, its transaction is wide and transparent
and I felt the need of this study to know about banking position of
Nepal, their management system, loan and credit policy of Nepalese
bank, loan and credit policy of Nabil Bank, position of Nabil Bank
their process and many more. To know all about these things we
need this study.

1.5 ) Limitation of Study:Following are the limitation of study:a) The study is limited to Nabil Bank Ltd, Birgunj
b) The study focuses only the loan management of Nabil Bank Ltd.
c) Unavailability of sufficient data.
d) Data may contain error because all data we have used are
secondary in nature.

1.6.1 Meaning of Loan Management:The core function of commercial bank is the

granting of credit. Although banks offer a wide spectrum of financial
service, lending has traditionally been their main function. Banks
proffers experience, expertise and flexibility in lending which gives
them a clear competitive advantage over all other financial
institution. Bank credit has been responsible for the development
and growth of many small and moderate size business that
otherwise would have withered and died .By providing credit banks
have contributed to the growth of their respective communities and
the advance of local well being.
Apart form public services, bank lending is a
profitable activity .In fact, it is the most profitable activity of
commercial banking and hence the greatest contributor to bank
profit, on the other hand, lending is instrument in creating and
maintains good deposit relationship which is essential for the
furthering of bank lending. Banks provide loan to the needy
customer for the productive purposes against the security of patent

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Loan Management of Nabil Bank

gold, solver and other fixed property. Sometimes, it can also give in
terms of overdraft for a maximum period of three month. The bank
charges interest on all forms of loan and interest rate charged by
the bank is set by the central office which keeps on changing upon
various factors. Bank provides loan for the business customer to
meet their working capital and long term requirement. Personal
customer takes loan against their fixed deposit and for consumer.
Small loan productive purpose is also given to personal customer.
The commercial banks are inspired with the
motive of gaining profit. To fulfill this objective they should widely
manage and improve its banking sector .They must pay much more
attention to the flow of loan .Regarding loan policy it should make
clear to its policy and view. In fact the bank should follow the credit
policy which would match the economic policy of Nepal Rastra bank
or country to gain more and more profit .Otherwise the bank cant
be success in its goal.
The main business of banking consists of providing
credit to manufacturers, traders engaged in inland business and
export and import business in the form of loan and credit. For
lending eyes and ears are important. For a purposeful and objective
lending for social and economic causes, the inward eye is most
important. Head alone was being considered important in old
methods of banking whereas heart is more important in the modern
social banking.
Critical appraisal is the critical examination of
various
available information
.Credit assessment is
the
determination of right amount of finance for the right man at right
point of time, nothing more and nothing more and nothing less
.Lending is an art in the sense that with the available information
.One has to take decision either in favor of or to decline a proposal
which depends upon the merits and demerits of case.
Hence the bank always should pay its attention
to make its investment wide and to lead the bank towards the way
of economic consolidation by creating the good environment to
recover the amount invested with the interest.
1.6.2 Loan (From the view point of Nabil Bank):Welcome to Business Banking. We are committed
to help your business grow.
If you plan for new business or willing to build /
expand your existing ones, we are always at your service to meet
with your expectations and help you realize your financial
aspirations. Our relationship managers are committed, accessible
and responsive to all your business needs with our diverse and
customized offers. We are not only one of the best in terms of
service quality but also equally competitive in pricing.
We have the following loan products.

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Loan Management of Nabil Bank

1. Working Capital Loan :Overdraft / Short term loans to finance your day-to-day
business activities. Basically, this loan will help you to build up your
inventory and receivables to a desired level, against which the loan
will be disbursed.
2.

Fixed Capital Loan :If you are looking to finance your projects or acquire fixed
assets, we are always open to finance your requirements. Generally,
this is a long term loan for acquiring or purchasing machinery,
equipment, land and building. The tenure of repayment is cash flow
based.
3.
Import Loan :For financing your international and local trade transactions
through letter of credit, you may get our finance to import your
goods in the form of trust receipt or time loan, bank's acceptance
etc. We facilitate you to import using our extensive banking network
around the globe.
4.
Bills discounting facility Under Suppliers Credit :we also offer discounting facilities to suppliers against the
import usance bills.
5.
Export Loan :We have different products to finance on your funding
requirement for completion of various stages of your export
processes such as pre-shipment loan, post-export loan (postshipment loan), negotiation / documentary bill purchase etc. Such
credit facility can be availed in foreign currency as well as local
currency.
6.

Hire Purchase: We can finance the purchase of vehicles, exclusively used

for commercial purpose.
7.

Project Finance :-

For any feasible project, we are committed to take it up for

funding from fixed capital to working capital loan - right from the
establishment stage which may include financial services like letter
of credit and guarantee.
8.

Consortium / Syndication Loan: -

With our expertise in diverse field of business we are

capable of arranging consortium finance / loan syndications for large
projects.

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Loan Management of Nabil Bank

9.

Mortgage Loan :You are welcome to step into the bank for loans to be used
for any purpose by mortgaging your land and building.
Within the scope of above-mentioned products, we
can also tailor our products and facilities in commensurate to your
business needs. Our staff members have acquired in-depth insight
of business complexities and can render valuable advice that will
help to enhance the success prospect of your business because we
want
your
business
to
grow
together
with
us.
You will find Nabil at the centre of almost all business hubs
of the nation.
1.6.3 Types of Loan:After knowing the meaning of Loan, we should
also know about the types of loan where bank can easily invest their
money. There are various types of loan provided for used to
business customer and personal customer, which are as follow:1) Project Loan
2) Industrial Loan
3) Loan on gold and silver
4) Bank guarantee Loan

1.6.4 Principle of credit policy:Credit is always a matter of judgment base on

ones own experience and conviction. There can not be 100%
correct approach or solutions. Ultimate result is the indicator of good
or bad of loan approvals and from such experience that one has to
arrive at a proper credit policy. General Principals of sound credit
policy involve among other things to extend a most courteous and
sympathetic service to all eligible and deserving borrowers as a duty
cast on the banker. A banker has to follow a cautious policy and
conducts the business of lending on the basis of certain sound
principle. Principles of credit policy are really important to a bank.
These policy or principles are as follows:1) Principle of safety of fund
2) Principle of Liquidity
3) Principle of profitability
4) Principle of security
5) Principle of purpose of loan
6) Principle of National interest

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Loan Management of Nabil Bank

1.6.4 Criteria for providing Loan:

A bank has to set some criteria for providing
loan. Person who come to a bank for the purpose of demanding
loan, the bank should not provide loan of random choice not by
examining and investigating. If a loan is provided without proper
investigation it will loss the principal and interest .There for the bank
always has to follow some criteria for providing loan. They are as
follow:1) Personal character
2) Capacity or Competency
3) Capital
4) Security
5) Credit information
6) External environment
1.6.5 Loan approval process:The bank approval process and working method
of a bank are really important .The person or business organization
come to borrow loan so a bank should know the process and
working method about it .Loan approval process depends upon the
types of security ,type of loan ,period of loan thought, it is approved
by the approving authority. But it is approved only after being
convinced that the loan will be repaid together with interest .There
are some steps to approve the loan by the bank. These steps are as
follow:1) Loan application
a) Name of the borrower
b) Legal status of the borrower
c) Address
d)Qualification
e)Experience
f)Purpose
g)Profitability
h)Security
i) Business worth
2) Interview
3) Inspection
4) Enquiries
1.6.6 Loan administration:The administrative frame work for carrying out the
lending function is an integral part of loan policy .In other words,
loan policy making extends to the establishment of an effective
lending organizational structure and adoption of the necessary
procedures for the proper execution of the lending function so that
the issue of the loan and advances moves smoothly to maximize the
benefits to the bank. Moreover, the top executives of bank must
determine the organizational structure of the lending function, set

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Loan Management of Nabil Bank

procedure for the review of the loan application and identified the
steps to be taken when the borrower fails to meet contractual
responsibilities.
The lending administration is a long term
process. The administration of a particular loan ends when it is
recovered. But the process never ends until the bank exits.
Basically, we find the following functions as the part of loan
administration in a bank:1.6.7 Rules & Regulation of Loan Management:Following rules and regulation should be
implemented to manage the loan effectively:1) Asking for application and collectives
2) Conduct the interview
3) Credit analysis
4) To identify and investigate the personal character
5) To examine all things which are relating capacity for borrower
6) To examine the economic condition
7) It should not accept the proposal of loan from the proponent
8) Determination of depth structure
9) Forecast and risk rating system
10) Determination of written schedule
1.6.8 The management for providing Loan:The following functions fall under the
management for providing loan;1) Proposal for loan
2) Deed of loan
3) Securities
4) Granting loan on the basis of guarantee
5) Commitment deed
6) Contract of indemnity
7) Invoice

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Loan Management of Nabil Bank

1.6.9 The management for loan recovery
After loan is provided, there is mechanism to
recover interest and the principal. It is very necessary to know all
the function wise methods, which are to be followed after the grant
of loan .The following processes, are continued until its interest and
principal is recovered.:1) Audit of credit
2) Recovery of interest on loan
3)) Hand over of securities
4) Process of recovering the date expired loan
5) Maintenance of data
1.6.10 Collateral
In assessing the collateral aspect of loan request,
the loan officer must examine whether the posses the adequate net
worth or own a sufficient amount of quality assets or other items of
value to provide adequate support for the loan .The loan officer is
particularly sensitive to such features as the age ,condition and
degree of specialization of the borrowers assets .The security is also
viewed own economic growth, such as consideration of
marketability, valuation and other economic consideration. The
validity and enforceability of the security is also considered
primarily.
The borrowers collateral should be accepted
to the bank since it is the ultimate assets from which the bank
recovers its loan by converting these assets into cash if the
borrower defaults in making payment of the loan. The full set of
documents submitted by the customer to cover a loan is loan as the
security documents. The loan can be secured in two ways- Collateral
security and Primary security.
1.7Researchmethology
1.7.1) Research Design:The research design is less descriptive but more
prescriptive because the historical secondary date has been mainly
employed for analysis. For the conceptual framework and literature
part more practically observed books are followed as for basic
knowledge about this report. For the analytical purpose, some
questions have been asked to the concerned personnel, who are
considered as primary data and the secondary data includes the
annual reports published by the banks, financial statements of the
bands by NRB, review material collected form the different
concerned magazines, newspapers, library etc. Such datas
information has been processed through various processes like
auditing, tabulating and result have been interpreted in the form of
ratio percentage and different types of diagrams for clear view.

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Loan Management of Nabil Bank

Basically, this research design in prepared for the
student of Banking & Insurance practical fieldwork report of BBA 5 th
semester. Research can be done by the following ways;-

Conceptual framework

Preposition

Data analysis &

Interpretation

Hypothesis/
Research Question

Empirical
Observation

Data Collection Method

In the above figure, the researcher in the very

beginning of the task have developed the conceptual framework
which carries the theory and literature and in order to justify and
support the frame work some research question has been developed
by the researcher under hypothesis building, and to test the
hypothesis, the investigator collects the needed data monthly from
secondary and few from primary sources due to lack of time and
other reasons. After the data are collected then they are o be
analyzed and interpreted as well with due support from various
statistical tools such as pie-chart, bar diagram ,tables and so on
.After hypothesis building some imperial observation has been done
for the effective support which helps in the generation of proposition
(Reanimation & Suggestion to problem ) for testing the conceptual
framework.
In this ways research design is done by the researcher.

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Loan Management of Nabil Bank

1.8) Organization of study:The study has been organized into three

chapters as presented in the format to cover partial fulfillment of
BBA program.
The titles of the chapter are as follow:Chapter one
: Introduction
Chapter Two
: Presentation &
Analysis of Data
Chapter Three

: Summary &

Conclusion
The rational behind this kind of organization
is to follow a simple research methodology approach. The contests
of each of the chapter of this study are briefly mentioned here:
The beginning Introduction chapter deals
about the meaning and definition of bank .Their role, functions and
objectives towards the nation and customer .This chapter also
explain about the topic Loan Management, Its process, rules,
criteria, principle and many more. From this chapter we can
understand the objective, need and organization of study so this
chapter theoretically explains about the report.
The middle chapter Presentation and Analysis
of Data shows the performance of Nabil Bank by the help of table
and figure. In it, we can show the data of profit & Loss, Assets
distribution, Total Credit and many more things about Nabil Bank.
This chapter also shows the position of Nabil Bank by using Trend
analysis.
The last chapter Summary and Conclusion has explained
the whole report in briefly .Due to which anybody can understand
the report by reading this chapter.

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Loan Management of Nabil Bank

CHAPTER - 2
2.1 Presentation of Figure in
Table
2.2 Percentage of Shareholder of Nabil Bank:Table-1
percenta
Shareholders
ge
National
Bank
Of
Bangladesh
50%
Nepalese Public
30%
Financial Institution
20%

2.3 Credit from Nabil Bank:The creation of credit is one of the

most important function of commercial bank .Commercial bank
collects the saving from the public and advance loan on credit in
profitable enterprises therefore the purpose of investing all the
credit in the form of loans advances and investment are analyzed
and interpreted below:Table-2
Total Credit
Loan
&
Total
year
advance
Investment Credit=(L+I)
2061/62 7802
2063/63 8114
2063/64 8549

8199
6031
5835

16001
14145
14384

2064/65 10947

4267

15214

2065/66 13279

6181
- 17 --

19460

Loan Management of Nabil Bank

2.4) Assets

Fiscal Year
Distribution:Table-3
Assets Distribution
Particular

amount
67546818
Investment & Placement
98
33812626
Fixed Assets
2
Loan\Advance
&
Bills 81899928
Purchased
51
97048654
Cash & Bank Balance
3
49219908
Other Assets
4
16745486
Total
638

- 18 --

Percenta
ge
40%
2%
49%
6%
3%
100%

Loan Management of Nabil Bank

The above table and figure clearly shows that out

of the 100% of assets distribution 40% assets have been used in
investment and placement,2% in fixed assets ,49%in loan/advance
and bills purchased ,6% in cash and bank balance and 3% in other
assets .From that data we can understand that bank has distributed
its assets in loan and advance more than other assets so the bank
is in good position.
2.5 Deposit & Loan:-

Year
2061/6
2
2063/6
3
2063/6
4
2064/6
5
2065/6
6

Table-4
Loan & Deposit
Deposi
t
Loan
15509

7802

13448

8114

14119

8549

14587

10947

19347

13279

Deposit & Loan

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Loan Management of Nabil Bank

Fiscal Year
According to the above table and graphical figure,
we can understand that the deposit in the fiscal year 2061/62
deposit
increased
up
to
15509
million
and
loan
7802million.contineously in 2063/63, deposit was 13448 million and
loan was 8114million, in 2063/64, deposit was 14119million and
loan was 8549million and in 2064/65, deposit was 14587million and
loan was 10947million, and, finally in 2065/66, deposit is
19347million and the loan is13279 million. In above figure, we can
see that the deposit decreases upto fiscal year 2063/63 and loan
also decrease upto fiscal year 2063/63 and then after the deposit
and loan also started to increase upto fiscal year 262/63.
2.6 Profit & Loss:Table-5
Profit & Loss
year
2061/6
2
2063/6
3
2063/6
4
2064/6
5

Incom
e

Expenditur Operation profit

e
=
(IncomeExpenditure)

1411

764

647

1421

694

727

1426

614

812

1492

595

897

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Loan Management of Nabil Bank

2065/6
6
1500

550

950

Income& Expenditure

In above table and figure we can show that the

income, expenditure and operating profit of Nabil Bank. In fiscal
year 2061/62, 2063/63, 2063/64, 2064/65, and 2065/66 the income
are respectively in million 1540, 1411, 1421, 1426, 1492, and 1500.
Here as expenditure are also respectively in million 764,694, 614,
595 and 550 .The growth rate of income is higher than the growth
rate of expenditure of bank. After deducting the expenditure from
income the bank has been able to earn operating profit in increasing
rate .It has been shown in table that profit is respectively in
million676(1540-864) in fiscal year 2057/58,similarly in 2061/62 was
647,in 2063/63 was 727,in 2063/64 was 812 and in fiscal year
2064/65 was 897.
2.7 Profit after Tax:-

Year
2061/6
2
2063/6
3
2063/6
4

Table-6
Profit after Tax
Profit After Tax
272
416
455

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Loan Management of Nabil Bank

2064/6
5
2065/6
6

519
595
Profit after Tax

Fiscal Year
The above table and figure has been able to show
clearly about the position of profit after tax of bank. The bank has
been able to earn profit after deducting tax in fiscal year 2061/62
was 272million, in fiscal year 2063/63 was 416million, in fiscal year
2063/64 was 455million, in fiscal year 2064/65 was 519 million and
in fiscal year 2065/66 is Rs. 595 million. This table shows that the
bank earn profit after tax in decreases upto fiscal year 2061/62 and
then after it starts increases from fiscal year 2063/63 to 2065/66.

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Loan Management of Nabil Bank

2.8 Net worth:Table-7

Year
2061/6
2
2063/6
3
2063/6
4
2064/6
5
2065/6
6

Capit
al

Net Worth
Reserv Net
e
Worth=(C+R)

491

654

1145

491

822

1313

491

990

1481

491

1165

1658

491

1384

1875

Net Worth

Fiscal Year
The above table and diagram shows that the net worth
of Nabil Bank. In fiscal year2061/62,2063/63,2063/64 , 2064/65,and
2065/66the net worth of Nabil Bank after adding capital and reserve
are respectively 1145,1313,1481 and 1658,1875million.The position
of Net Worth of bank is in increasing rate so the bank is in
developing process.

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Loan Management of Nabil Bank

2.9 Return on Net Worth:Table-8
Return on Net Worth

Worth in %

Return on net worth in

Year
%
2061/6
2
26
2063/6
3
36
2063/6
4
31
2064/6
5
35
2065/6
6
38

Return on Net

Fiscal Year

The above table and graphical figure has shown the

return on net worth of Nabil Bank. The bank has got return from it s
net worth in fiscal year 2061/62was 26%,similarly in fiscal year
2063/63 was 36%,in fiscal year 2063/64 was 31% in fiscal year
2064/65 was 35% and in fiscal year2065/66 is 38% .

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Loan Management of Nabil Bank

2.10 Analysis of Data
2.10.1 Trend Analysis:The statistical tool used in this study is least
squared method. This statistical tool is used to describe the trend of
any variable whether it increase or decrease with the passage of
time .This method of statistical mostly used by Manager, Engineer,
Doctor, Professor, Controller, Projector to forces the future value
based on time components. The time components are years,
months, seasons, weeks, quarters, days, hours, etc.
The formula for least square method is:
YC=a+bx
When, a=Y/N
b=xy/x2
Here YC is used to designate the trend value to
distinguish for the actual value a is the Y intercept or the computed
trend figure of the trend line or the amount of change in Y variable
that is associated with a change of one unit on X variable. The Y
variable represents the time.
Trend Analysis of Loan
Year(T)
2063/6
4
2064/6
5
2065/6
6
Total

Loan Amount(Y)

X2

7755

C=2
t-c=x
-1

-7755

7487.66

8549

9083.66

10947

10947

10679.66

XY=319
2

YC=27250.
98

Y=27251

X=0 X2=2

XY

Here,
X=0
X2=2
Y=27251
XY=3192
N=3
So,
a=Y/N=27251/3
=9083.66
b=XY/X2=3192/2
=1596
Now,
Putting the value of a & b in tend equation time, i.e.
YC=a+bx
For 2063/64=9083.66+1596(-1) =7487.66
For 2064/65=9083.66+1596(0) =9083.66
For 2065/66=9083.66+1596(1) =10679.6

25

YC

Loan Management of Nabil Bank

26

Loan Management of Nabil Bank

Four Years Balance Sheet

Of
Nabil Bank Limited
Particulars

2006

2007

2008

2009

18777701
5
95699046
8
67020429
7
60311755
47
77559519
85
25191516
1
70861051
9
16562624
992

28688622
2
68360032
1
91873340
0
58359484
98
81899928
51
33812626
2
49219908
4
16745846
38

14635255
5
41302805
9
86842830
7
42672331
78
10586170
002
36123539
2
54388345
7
17186330
950

23781851
2
39242007
6
17349019
43
61785331
08
12922543
153
319086
142
54466813
9
22329971
078

49165440
0
82253305
6
96146115
3
13447661
064
10894355
1
73037176
8
16562624
992

49165440
0
99002490
3
22966000
0
14119032
115
17349928
7
74161293
3
16745486
638

49165440
0
11659839
08

49146544
00
13833400
17
17320171
0
19347399
440
11260673
6

Assets:Cash Balance
Bank Balance
Monetary at
notice

call

Investment
Loans,
Advance
purchased
Fixed assets
Other assets
Total Assets
Liabilities:Share Capital
Reserve funds
Borrowings
Deposits Accounts
Bills payable
Other Liabilities
Total Liabilities

&

short

&

bills

27

17062680
14586608
11975303
8
80526808
3
26143087
170

22329971
078

Loan Management of Nabil Bank

CHAPTER - 3
Summary, Conclusion & Recommendation
3.1 Summary:Commercial bank means a bank which operates
currency, exchanges transaction, accepts deposits, provide loan,
and perform dealing relating to commerce except the banks which
have been specified for the comparative agriculture, industry of
similar other specific objective.
Nabil Bank was the first investment bank of Nepal
under the commercial bank act 2031 and company act 2021 with
the permission of the central bank. Nabil Bank is amongst the most
successful joint venture organization in Nepal regarding strong
growth in balance sheet feting as well as profit year after year.
The initial capital of Rs. 30million invested in 1984 has
grown to Rs 1482million as at mid-July 2009.thus loan advance and
discount have increased this year than previous year which is the
good result of banking system to gain the interest income and in the
quality of Credit Loan has increased this year by Rs8549million than
previous year.
The accrued interest on Loan this year is Rs
174million and the previous year was Rs 178million thus it is
decreased by previous year. Principle indicators is being shown
decreasing trend in comparison to the previous year. (I.e. current
year principle indicator 9067 %< previous year principle indicator
9083%).
Total assets of current year are Rs 16745million and
total assets of previous year were Rs 16563million it shows that
there is increment in current years total assets.
Deposit and loan both have shown increasing trend
in current year in comparison to previous year.
Total income expenditure and operating profit of
current year (in million) is 1426, 614and 812 respectively where as
previous year had1421, 694 and 727 respectively.
The net worth of the current year Rs 1482million
and previous year was in Rs 1314million.In briefly we can say that
the bank is running from good position.
3.2 Conclusion:The role played by Nabil Bank Ltd to extend
bank branches is very useful to develop the economy of the country
this programmed is set up under banking promotion board .The
expansion on bank branches in the nook and corner of the country
could help the increase in saving and these saving are useful for the
productive inverters. Increase in production would increase the
national income of the country through crating awareness among
the general public about service providing by bank.

28

Loan Management of Nabil Bank

In order to develop industrial sector Nabil Bank
is participation in setting of NIDC, is basically established for
providing loans and giving instruction for industries. The cooperation lending to industries direct loans, guarantee for loans and
share participation. Development on industries means full
employment, which is very important for the tempo of developing of
the country. The Nabil Bank should set up an industrial credit
department of given directions to any carry out inspection of
financial institution concerned with industries.
Most of the people of our country are illiterate.
They dont have confidence upon the bank for deposits and loans .In
the absence of education the villagers live under the notion that if
they deposit their saving with the banks the bank will take away
their moneys, it is prime important to educate the illiterate people
by effective programmed advertisement lectures film shows etc.
The rule of Nabil Bank in the field of agriculture
credits and active one, it has been helping the agriculture sector in
different ways. However certain reforms are essential .Thus Nabil
Bank has directed to extend to medium and long term loans .The
Nabil Bank directs the ADMN to open branches in every nook and
corner of the country and should also raise it interest free loan to
ADBN.
Thus Bank provides loan to the needy customers
for productive purpose against the security of patent gold and
solver and other fixes property. It also provides loans for the
business customers to meet their working capital and long term
requirement.
To finance operation a company in addition to
selling securities can turn to middle man and various finance
institution for loans .Nabil Bank Ltd is established with the objective
of various types and business. It provides a complete range of the
personal, commercial and corporate banking and related financial
services.
3.3 Recommendation:On the basis of analysis, the following recommendations and
suggestions are made:
1. Lending procedures of banks must be easier. Tedious and complex
procedures should be eliminated.
2. The process should be updated from time to time according to
the situations.
3. Bank should give attentions to that problem which are arrogated
with the internal organizations and management, so that worst
system can be removed or improved.

29

Loan Management of Nabil Bank

4. Since staffs are the assets of the bank, they should be motivated
to increase their efficiency and creativity.
5. Training and promotion should be provided to the staffs. Right
man should be placed at right place according to their capacity and
willingness to work.
6. The interest rate should be low to the loaners and time durations
should be more according to the financial conditions of loaners.
7. To motivate the customers, effective schemes regarding loans
should be introduced to time to time.
8. The bank should check loan amount whether it is properly utilized
in respective sectors or not.
9. Bank should be capable to provide high satisfactions to its
customers which will encourage people to deposit their money to
borrow loans.

30