STUDY ON WORKING CAPITAL MANAGEMENT OF

HIMALAYAN BANK LIMITED (HBL)

A Research Proposal

Submitted By:

Name: Bindu Thapa

TU Registration Number: 7-2-25-435-2020

Roll No: 1118

Nepal Commerce Campus

Submitted to:

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Minbhawan, Kathmandu

May, 2025

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 Table of Content
S. No. Page No.
1 Background of the study.............................................................................................1
2 Statement of the Problem............................................................................................2
3 Objective of the Study ...........................................................................................2
4 Rationale of study........................................................................................................3
5 Review of Literature....................................................................................................4
6 Research Gap ..............................................................................................................5
7 Research Methodology ...............................................................................................5
8 Limitation of The Study.............................................................................................5
9 Organization of the Study..........................................................................................5
10 Bibliography .............................................................................................................6

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1. Background of the study

Himalayan Bank Ltd was established in 1993 as a Joint Venture of Habib Bank Limited of
Pakistan has been successfully reigning the banking industry since its inception. The bank holds
the legacy of introducing various banking services for the first time in Nepal from the very
beginning. The bank started its journey from Employees Provident Fund Building, popularly
known as Sanchayakosh Building at Thamel, Kathmandu. However, now its Head & Corporate
Office has shifted to Kamaladi, Kathmandu.

Himalayan Bank Limited acquired Civil Bank Limited at 100:80.28 swap ratio (A shareholders
holding 100 scrips of CBL will get 80.28 scrips of HBL) and commenced the joint operation as
“Himalayan Bank Limited” from February 24, 2023. Currently, the Banks has been happily
serving its customers from total of 174 Branch Offices and 20 Extension Counters spread all
over Nepal.

The study is entitled as" A study on working capital management of Himalayan Bank
Limited" . The main focus of the study is to analyze working capital management of the
Bank. Working capital management involves managing a firm's short-term assets and liabilities
to ensure its operational efficiency and financial stability. For financial institutions, managing
working capital is vital to maintain liquidity and profitability, even though their assets are
primarily financial rather than physical. Working capital management refers to managing short-
term assets and liabilities to ensure a company maintains sufficient liquidity to carry out day-to-
day operations. In banking institutions, although most assets are financial, managing cash, short-
term investments, and liabilities such as current deposits are essential for stability.

Himalayan Bank Limited (HBL), established in 1993, is one of Nepal’s leading commercial
bank. This study focuses on how effectively HBL manages its working capital and its
implications on the bank’s profitability and liquidity. The basic purpose of working capital
management is to enable a firm to maintain the investment in current assets at optimum level that
maintains a proper trade –off between profitability and risk.

"Working capital management allows a business to be flexible in its operations," –

Working Capital management involves managing short-term assets and liabilities to ensure a
firm’s liquidity and operational efficiency (Pandey, 2021)

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2. Statement of the Problem

Himalayan Bank Ltd., as a prominent financial institution in Nepal, operates in a highly competitive and
dynamic banking environment. Efficient management of working capital—comprising current assets and
current liabilities—is essential for maintaining liquidity, ensuring smooth operational flow, and
maximizing profitability. Despite its growth and expansion, there is limited publicly available detailed
analysis of how effectively the bank manages its working capital components.

The key issues include whether the bank maintains optimal levels of cash, loans, deposits, and other
current assets, and how these impact its liquidity and profitability. Inefficient working capital
management can lead to liquidity shortages, increased borrowing costs, or idle assets, which ultimately
affect the bank’s financial health and customer service quality.

Therefore, the problem statement is:

This study aims to identify gaps, analyze current practices, and suggest improvements to strengthen the
bank’s financial stability and operational performance.
While Himalayan Bank Ltd. continues to expand, questions regarding the adequacy and efficiency of its
working capital management remain. The bank’s ability to optimize its current assets and liabilities
directly influences its profitability, liquidity, and risk management. The study aims to analyze the policies
and practices related to working capital management within the bank.

3. Objectives of the Study

Working capital plays a vital role behind success and failure of any organization. Working
capital has to be adequate. The excess or shortfall of the working capital is harmful for an
organization. The main objectives of the study are to examine the management of working
capital of Himalayan Bank Limited. The main objectives of the study are as follows.

i. To examine the current assets and current labilities and their impact on liquidity
profitability and financial performance of the bank.
ii. To analyze the working capital trend position of EBL.

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iii. To find out suggestions and recommendations on the basis of applied system and
financial position.

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4. Rationale of the Study

Working capital is needed for sustaining the enterprise in day to day operation. If the
organization does not maintain a satisfactory level of working capital, it is likely to become
insolvent and may even push into bankruptcy. So, working capital management helps to
manage the firm's current assets and current liabilities in such a way that a satisfactory
level of working capital is maintained.

The significances of the study are given below.

i. Helps the bank to understand and improve its short-term financial practices.
ii. Contributes to the academic understanding of working capital in the banking sector.
iii. Assists students and researchers studying financial management in Nepalese banks.
iv. Provides insight to stakeholders and policymakers for making informed decisions.
v. The study helps customers and stakeholders to identify overall position of bank.
vi. The study will be helpful for policy makers to formulate policy regarding commercial
banks
5. Review of Literature

Review of literature comprises upon the existing literature and research related to the present study
with a view to find out what had already been studied. According to Wolf & Pant “The purpose of
reviewing the literature is to develop some expertise in One’s area, to see what new contribution can
be made and to review some idea for Developing research design”. (Pant and Wolf; 1996:31-44).
This portion has been divided into three parts: -

a. Conceptual Framework
b. Review of Related Studies
c. Research gap

6. Research Gap

Despite the significant role of working capital management in ensuring the financial stability and
operational efficiency of banks, there is limited research specifically focused on the practices and
challenges faced by Himalayan Bank Ltd. in Nepal. Existing studies tend to address general
banking practices without delving into the detailed aspects of working capital management
within the Nepalese banking sector. Hence, through this study researcher attempt to analyze how
the working capital requirement of Himalayan Bank Ltd. has been maintained and managed.

7. Research Methodology

The basic objective of this study is to gain an insight into the working capital of Himalayan Bank
Limited. Research methodology refers to the systematic plan used to conduct the study. This
section outlines the approach, data sources, tools, and techniques used to evaluate the working
capital management practices of Himalayan Bank Limited (HBL) over a five-year period. This
Project focuses on following parts of methodology.
1. Research design
2. Population and Sample
3. Sources/types of data
4. Data collection tools
5. Data analysis tools

8. Limitation of The Study

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Limitations of the study are as follows.

i. As the study is partial fulfillment of BBS program the time assigned is limited.
Consequently, the study faces time and resource constraints.
ii. It is based only on secondary data published in the bank’s reports and NRB
documents.
iii. Time constraints and data availability may limit the depth of the study.
iv. The study is limited to Himalayan Bank Limited and may not represent the entire
banking sector.
v. The study only covers five fiscal years (2075/76 to 2080/81).

9. Organization of The Study

The Study was divided in the following three different chapters

Chapter I: Introduction

Chapter II: Data Presentation and Analysis

Chapter III: Summary, Conclusion and Recommendation

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BIBLIOGRAPHY:

i. Eljelly A.N.A (2004). International Journal of commerce and management 14(2),48-61