Himalayan Bank Limited

By: Naresh Devkota Himalaya Higher Secondary School Koteshwor 35 Kathmandu HSEB Registration no:

A project Report Submitted to: Department of Marketing Higher Secondary Education Board

In the partial fulfillment of the requirement for the Practical Examination of HSEB Grade XII

RECOMMENDA
This is to certify that the project report submitted by: Naresh Devkota

Entitled: Himalayan Bank Limited

Has been prepared as approved by Himalaya Higher Secondary School in the prescribed format of the HSEB. This report is for warded for examination.

Internal Examiner Signature: Name: .

Letter of Approval

The examination committee has approved this report Himalayan Bank Limited

Submitted by Naresh Devkota for the requirement of practical examination of HSEB grade XII Internal Examiner External Examiner Name: . Name: . Principal/Head of Department Name: .

Acknowledgement Chapter 1 Introduction.. 1.1.1 Background of store 1.1.2 Objectives of the store 1.1.3 Significance of the study 1.1.4Limitation of the study 4

1.2 Review of literature 1.3 Methodology 1.3.1Nature and source of data 1.3.2Population and Sample 1.3.3 Data collection Technique Chapter 2 Data Analysis and Major Findings 2.1 Data presentation, Analysis and Interpretation 2.2 Major finding of the report Chapter 3 3.1 Conclusions 3.2 Recommendations Bibliography

1.1 Background of the study

The study reports are done for various purposes that help ascertaining the facts through proper scrutiny; therefore such study reports occupy importance of its own. In this study attempts have been made to scrutinise the organisation development covering 5 fiscal years by using various generally accepted and acknowledged statistical tools. Organisation development is one of the main aspects for its existence. This study on such aspect therefore will play a significant role to get through Knowledge. Generally once a loan application received by the bank, entered into loan application received by the bank, entered into loan application register than bank undertake a pre-loan , considering and enquiries of the pre-loan visit, loan visit, loan inspection . The appraisal report is prepared by the concerned official and also discuss in the "Loan Committee meeting headed by the bank manager. Then the committee makes decision whether to approve or disapprove the loan and what would be the terms and conditions for the disbursement of loan in the case of approval. In the dictionary the term "bank" has been defined as A place where money or other valuable material is deposited until required or an institution for the keeping landing exchanging etc of Money. Bank is a business establishment that safe-guards Peoples Money and uses it to make loan and investment. Banks promote the wider range of sale of goods and services. Money is safer at bank than in home. A current account (Cheque account) with a bank provides an easy way to pay bills. Bank also provide large amount of joints loans, with other banks for projects all over the world. As a result, banks can safely loan or invest a large percentage of the funds deposited with them. Chamber's Twentieth Century Dictionary defines a bank as on, institution for keeping, lending, exchanging etc of the money." According to Couther, "the bankers business it to take the debts of other people to offer his own in exchange and thereby create Money." According to Kent," A bank is on organisation whose principal operations are concerned with the general public for the purpose of advancing to other for expenditure." Therefore, a bank is an institution which accepts deposits from the public and in turn advances loans by creating credit. Therefore, it should be differentiate from other financial institutions as they cannot create credit though they accept deposits. Therefore, summarising the above, banks are those financial institution that offer the widest range of financial services.

1.1 Objectives of the study

Each & every task has its own objectives. Therefore, the following are the main objectives for this study. 1. 2. 3. 4. To analyse loan disbursement trend in the bank. To isolate the problems arising in loan disbursement trend & interpret them. To find out accurate loan disbursement volume To provide pragmatic suggestions regarding disbursement of the bank

1.7

Significance of the study

The study of LD has great significance. Loan plays a vital role in the development of the economic condition of nation & bank may also stand its reputation in competitive market by providing loan to good customers. Loan helps to various sectors for using new modern techniques to increment the productivity & quality of various sectors. For e.g. loan dispersing to farmer, industrialist & other needed person who is directly engaged in productive sector. So, ineffective loan back them to produce qualitative goods other products in low cost. Therefore the banks operational activities consists of business loan, industrial loan, consortium finance & social loan etc. Besides it has to be invested in deprived sector as an integral part of the total loan disbursement. So, study of loan disbursement has made me aware of things of great interest

1.6.

Limitation of the study

Every task has its own limitation. Beyond limitations or excess it won't be suitable, convenient or efficient. Limitation means not excess than required. If the study of any subject matter exceeds then its motive or the facts create improper scrutiny. Study of specific subject matter for scrutiny of both the positive & negative aspects without extending it should be done. I being the student related to this report have submitted strictly based on secondary data & it includes LD period of last five fiscal years from 2055/56 to 2059/60. The data has been collected from different source of publications, journal published in different data's, interview, conversing with the staff of the HBL. This report has been based only from the 'banking side' and is carried out as per the requirement of the course of study of BBS 3rd year under the faculty of management, Tribhuvan University. This study examines only the Loan Disbursement of HBL & much information was not available on the ground of privacy due to internal rules of the HBL, Thamel. And this study includes by far the latest data available to the general public i.e. 11 th Annual Report (1059/60)ss.

1.1.1 Introduction of Himalayan Bank Limited

HBL a joint venture with Habib Bank Ltd, Pakistan started its business from 18th January 1993. It was established with the authorized capital of 240 million divided into 1.2 million in shares of 100 each, out of which 60 million was paid from retained earning of the year 1994/1995. Share subscriptions of this company comprises of 51% by promotes shareholders, 20% by Habib Bank Ltd, Pakistan, 14% by finical Institutions ( Employees Provident Fund) & 15% by Nepalese public shareholders. HBL is the first commercial bank of Nepal with maximum share holding by the Nepalese Private Sector. It is one of the joint venture banks among nine joint ventures. The July 2003 edition of the book published in England named The Bankers Almanac has declared HBL as Nepals no. 1 bank and it has also been awarded National Excellence Award. Besides commercial activities, the bank also offers industrial & merchant banking. HBL has established 13 branches & they are in Thamel, New Road, Pulchowk, Maharajgunj, Bharatpur, Birgunj, Hetauda, Banepa, Pokhara, Bhaairahawa, Biratnager ( Liaison office), Nagarkot (Rural Branch) & Tandi (Rural branch). Also a banking counter has been established within the premises of the royal place. As a modern commercial bank, HBL has offered following services to their customers i. viii. Miscellaneous service a. Purchase & Sales of Traveller's cheque (TC) b. ii. c. Tele Banking Automatic Accepting Deposit: It accepts deposits from clients in a. Current Deposit A/c b. Saving Deposit A/c c. Fixed Deposit A/c d. Call Deposit A/c e. Margin Deposit A/c Lending: It provides loan & advances in various sectors like a. b. c. d. e. f. g. h. i. Overdraft Working Purchases Hire Purchase Export finance Loan against Bank guarantee/ Government Board Loan against fixed deposit receipt Priority sector loan Term loan Deprived sector loan

ii.

j. k. iii. iv. v. vi. vii.

Importers loan & Other commercial loans

Discount & collection of bills Investments Letter of credit (L.C) Remittance of fund Bank guarantee Teller Machine (ATM) d. e. Any branch banking Credit cards

f. 24 hrs banking g. Safe deposit lockers etc Providing above services HBL has helped their customer to experience different banking services.

1.4

Methodology of the study

Study of the specific subject matter for scrutiny of both the positive and negative aspects without extending it should be done. I have tried my level best to survey on the report on the study of loan disbursement on the Himalayan Bank Limited. The various sources like interviewing, conversing about data's collection, journals published in different publication with staffs and members has helped me in their best way of performance with the supportive advice has lead me to complete this report and beside this my teacher guided me to complete me this report. It's a submission report of loan disbursement on the Himalayan Bank Limited which consists of strictly based on secondary data & includes the period of time for last five fiscal years from 2055/56 to 2059/60.

Chapter 2
DATA PRESENTATION AND ANALYSIS

Nepal is one of the least developed country under the rank of poverty line. The bank in Nepal plays a primitive role for the economic development of Nepal under which no other organizations are likely to be substituted at all. Himalayan Bank limited has vitalized its economic activities to help the people who are anguished in extreme pair of need. Himalayan Bank Limited and other commercial bank advances, loans & undertake investment against gold and silver, companys shares and debentures bills of exchange, promissory notes etc. Bank branches that have been brought under intensive banking programs can provide loans on group guarantee without any security while issuing loans. Commercial bank are requested to maintain a minimum of cash balance or liquid balance interest is charged according to fixed rates on loans provided be commercial to depositors and interest paid by borrowers constitute banks earnings.

2.1 loan Disbursement

The report discusses the loan disbursement on Himalayan Bank Limited from the period of fiscal years 2055/56 to 2059/60 which relates basically to its economic activities obtained. Loan disbursement is mobilizing the loan in the form of credit. It has actively participated in the loan investment process. Himalayan Bank Limited disburses loan in order to promote enterprise development by investing in shares & debentures. It supports the countrys overall examined development process by financing in various ways.

2.1.1 Loans & Advance made by HBL in total figure

Table No. 4 Year 2057 2058 2059 2060 2061 Total Consolidated 7224727 9015347 9557137 10844599 13081713 49723523 Percentage 14.53 18.13 19.22 21.81 26.31

Contribution made by HBL in %

Figure no. 1

40 30 20 10 0 2057 2058 2059 2060 2061 Year Percentage

The above table clearly reveals the growing contribution of the whole NBL. In the year 2057, NBL has forwarded loan up to 14.53% & this percentage rise to 18.13% in the year 2058. The year 2059 observed the growths up to 19.22%, 21.81% & 26.31% respectively of advances are made by NBL respectively. Thus, it is clear that the role of NBL in the country is very appreciable because there is increment in advance of loan every year. This growing trend is presented in graph above.

2.1.2 Analyzing the loan Disbursement

The figure states the different obtaining gains, loans, pay outs & investments. It reveals from the study that the major part of total loan has been disbursed in various aspects. Composition of loans in % of table form for the year 2055/56

Table No. 5
Particular Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below loans poverty 38.08 15.82 21.63 5.92 3.77 1.91 3.59 2.49 1.14 line 3.75 % In degrees 137.08 56.95 77.868 21.312 13.572 6.876 12.924 8.964 4.104 13.5

Fixed deposit receipt 1.47 expenditure loan Credit card 0.43

5.292

1.548

Relatively to 1st figure some in 2nd year of 2053/54 has ups & downs in some loan pays out or disbursement. The higher percent rate is of overdraft (38.08)% then of long term (15.82) %, the more than it is import loan (21.63) % then comes working capital (5.92)% letter of credit (3.77)% , below poverty line loan (3.75)%, short term loan (3.59)%, pre- export loan (2.49)%, purchase & discount (1.91)%, Fixed deposited receipt expenditure loan (1.47)%, higher purchase (1.14)% and credit card consist of (0.43)% out of total 100% It can be shown in pie chart as below. Figure no. 2

Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card

1.14 2.49 3.77 5.92 21.63 1.91 3.59

3.75

1.47 0.43

38.08 15.82

Composition of loans in % of table form for the year of 2056/57

Table No. 6
Particular Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below loans poverty line 30.71 11.78 26.18 7.81 2.60 4.62 7.41 2.62 1.41 2.92 % In degrees 110.556 42.40 94.24 28.116 9.36 16.632 26.67 9.43 5.076 10.512

Fixed deposit receipt expenditure loan Credit card

1.63

5.86

0.31

1.116

Loan disbursement having related to different aspects & fields will have certain fluctuation in them. Over this period of year 2056/57 has highest percentage rate of overdraft (30.71)% then of long term (11.78) %, the more than it is import loan (26.18) % then comes working capital (7.81)% letter of credit (2.60)% , below poverty line loan (2.92)%, short term loan (7.41)%, preexport loan (2.62)%, purchase & discount (4.62)%, Fixed deposited receipt expenditure loan (1.63)%, higher purchase (1.41)% and credit card consist of (0.31)% out of total 100%

It can be shown in the pie- chart as below. Figure

Overdrafts

Long term loan

Figure no. 3
Import loan Working capital

Letter of credit

Purchase & discount

Short term loans

Pre- export loans

Higher purchase

Below poverty line loans

Fig: 3
Fixed deposit receipt expenditure loan Credit card

2.62 Composition of loans in % of table form for the2.92 of 2057/58 year 2.6 7.81 26.18 11.78 4.62 7.41 1.63 0.31

1.41

30.71

Table
Particular Overdrafts Long term loan Import loan Working capital Letter of credit Purchase discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card & 22.58 12.60 28.26 5.28 1.16 4.03 % In degrees 81.28 45.36 101.736 19.008 4.176 14.508

7.07 3.15 2.44 2.67

25.452 11.34 8.784 9.612

2.59

9.324

0.27

0.972

Loan disbursements consists of same aspects of fields of pays outs or disbursed or invest but the ups & downs always create. It doesnt become the monotonous increasing or decreasing.

The highest percentage rate in the year 2057/58 is of import loans 28.26% then that of overdraft 22.58% the least then it is long term loan 12.60% then comes short term loan 7.07%, working capital 5.28% purchase & discounts 4.03%, pre- export loans 3.15%, below poverty line loan 2.67%, fixed deposited receipt expenditure loan 2.59%, higher purchase 2.44%, letter of credit card 1.16% & credit card consist of 0.27% out of the total 100% .It can be shown in the Pie chart as below. Figure no.4
Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card

2.44 5.28 7.07 1.16 4.03 3.15

2.67 2.59 22.58 0.27

28.26

12.6

Composition of loans in % of table form for the year of 2058/59

Table No. 8
Particular Overdrafts Long term loan Import loan Working capital Letter of credit Purchase discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card & 22.64 12.60 24.25 7.14 1.19 2.74 % In degrees 81.50 45.36 87.3 25.70 4.284 9.864

9.74 3.06 2.01 2.16

35.064 11.016 7.236 7.776

3.18

11.448

0.25

0.9

Loan disbursements having related to different aspects & fields have certain fluctuation in them. Like is the year 2057/58 the highest percentage rate is of Import loan 24.25% then that of Overdraft 22.64% then least is long term 12.60% & then comes after short term loan 9.74% working capital 7.14% fixed deposited receipt expenditure loan 3.18% Pre- export loan 3.06%, Purchase 7 discount 2.74% Below poverty line loan 2.16%, Higher purchase 2.01% letter of credit 1.19% & credit card consists of 0.25% out of the total 100%. Ups and downs is always created. It can be shown in the pie- chart below.

Figure no.5

Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card

2.01
3.06 2.74 7.14 1.19 24.25 9.74 2.16 3.18 22.64 12.6 0.25

Fig: 5

Composition of loans in % of table form for the year of 2059/60

Table No.9
Particular Overdrafts Long term loan Import loan Working capital Letter of credit Purchase discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card & 24.61 12.99 24.76 8.45 2.83 2.81 % In degrees 88.6 46.76 89.14 30.42 10.19 10.12

7.79 2.06 3.94 2.42

28.04 7.42 14.19 8.71

1.94

6.98

0.32

1.15

As above Loan Disbursement consisting of different variables has fluctuation in different fields. Increase and decrease will always occur. Like in the year the highest percentage rate is of import loan i.e. (24.76)% then of overdraft (24.61)%, then it is long term loan (12.99)%, then comes working capital (8.45)%, short term loan (7.79)%, higher purchase (3.94)%, letter of credit (2.83)%, purchase & discount (2.81)%, below poverty line loans (2.42)%, pre- export loans (2.06)%, fixed deposit receipt expenses loan (1.94)% & credit card consists of (0.32)% of the total 100%. It can be shown in the pie chart as below.

Figure no. 6
Overdrafts Long term loan Import loan Working capital Letter of credit Purchase & discount Short term loans Pre- export loans Higher purchase Below poverty line loans Fixed deposit receipt expenditure loan Credit card
%

0.32% 1.94% 2.42% 2.06%

7.79% 2.81% 3.94% 2.83% 8.45% 24.76% 12.99% 24.61%

Comparison tables of loan structure is % from fiscal year 2055/56 to 2059/60

Table No. 10
Fiscal year Overdraft Long term loan Import loan Working capital Letter of credit Purchase discount bills 55/56 38.08 15.82 21.03 5.92 3.77 & 1.91 56/57 30.71 11.78 26.18 7.81 2.60 4.62 57/58 22.58 12.60 28.26 5.28 1.16 4.03 58/59 22.64 12.60 24.25 7.14 1.19 2.74 59/60 24.61 12.99 24.76 8.45 2.83 2.81

Short term loan Pre export loan Higher purchase

3.59 2.49 1.14

7.41 2.62 1.41 2.92

7.07 3.15 2.44 2.67

9.74 3.06 2.01 2.16

7.79 2.06 3.94 2.42

Below poverty 3.75 line loan Fixed deposited 1.47 expenditure loan Total credit card 0.43

1.63

2.59

3.18

1.94

0.31

0.27

0.25

0.32

In Overdraft section in HBL in first year 2055/56 it includes 38.08%then decrease to 30.71% in the year 2056/57 and again decreases to 22.58% in the year 2057/58. But, it slightly increases to 22.64% in the year 2058/59 and finally in the year 2059/60 it increases to 24.61% of total 100%. In long term loan segment fluctuation has been taken part i.e. at first it includes 15.82% in the year 2055/56 which means in decreasing percentage order then 11.78 % in the year 2056/57 and increases to 12.60% slightly in the year 2057/58 which remains constant in the fiscal year 2058/59 and slightly increases to 12.99% in the year 2059/60. Import loan includes 21.63% in the year 2055/56 then it started to increase or in a moving range to 26.18%, 28.26%, in the year 2056/57, 2057/58, respectively and decreases to 24.25% and recently it has reached to 24.76% in the year 2059/60. Working capital shows increment & decrement fluctuation in percentage out of 100% i.e. it has 5.92% in the year 2055/56 then it increases to 7.81% in the year 2056/57, then again decreases to 5.28% in the year 2057/58 and increases to the year 2058/59 to 7.14% and it has reached to 8.45% in the year 2059/60. The fluctuation in letter of credit has been found. 3.77% in the year 2055/56 and decreases to 2.60% & 1.16% in the year 2056/57 & 2057/58 respectively and increases to 1.19% slightly in the year 2058/59 and to 2.83% in the year 2059/60. Purchase & discount bills also sometimes fluctuate highly & sometimes slightly. It includes 1.91% in 2055/56, further increases to 4.62% in 2056/57 & slightly declines to 4.03% in 2057/58, declines at 2.74% in the year 2058/59 and increases to 2.81% in the year 2059/60. In another segment, short term loan has also got both orders i.e. increasing & decreasing. Sometimes slightly change has been occurred. In the year 2055/56 it has reached to 3.59% which again increases to 7.41% in the year 2056/57 with much difference. Then slightly decreases to 7.07% in the year 2057/58 and in the year 2057/58 it increases to 9.74% and has decreased to 7.79% in the year 2059/60 with much percentage out of total 100%. In pre export loan it has got alternate changes i.e. first in 2055/56 it is 2.49% and slightly decreases to 2.62% in the year 2056/57 and then increase to 3.15% in the year 2057/58, slightly decreases to 3.06% in the year 2058/59 and decreased to 2.06% in the year 2059/60 out of total 100%. Higher purchase segments include very least amount of percent in comparison to above mentioned segments. In the first year 2055/56 it is 1.14%, in 2056/57 1.41%, 2.44% in 2057/58, 2.01% in the year 2058/59 and at last 3.94% in the year 2059/60. The segment

below poverty line loan in the year 2055/56 includes 3.75% and then 2.92%, 2.67%, 2.16%& 2.42% in the year 2056/57, 2057/58, 2058/59 &2059/60 respectively out of total 100%. In the same way as above segments, fixed deposited receipt expenditure loan segment has included 1.47% in 2055/56, 1.63% in 2056/57, 2.59% in 2057/58, 3.18% in 2058/59 at last 1.94% in the year 2059/60 out of total 100% and the last the next segment total credit card includes 0.43% in the year 2055/56, 0.31% in the year 2056/57, 0.27% in the year 2057/58, 0.25% in the year 2058/59 and according to the recent data in the year 2059/60 it has reached up to 0.32% out of total 100%. Fluctuation has occurred in every segment as mentioned above.

Graphically,
Figure no.8

Increase/Decrease 120 100 80 60 40 20 0

Increase/ Decrease

56

57

58

59

20 55 /

20 56 /

20 57 /

20 58 /

Description: From the study of above table thoroughly, it is found out that the loan disbursement has a much fluctuation in increasing and decreasing ratio. At first in 2056/57 it has got 13.50% of base year with an increment ratio and decreases to 1.65% in year 2057/58 but in year 2058/59 it sharply

20 59 /

60

increased to 91.50% and in 2059/60 it reaches to 96.36%. The result shows that the bank has reached to its target objective of increasing disbursement volume constantly during the following years to fulfil its policy assignment. Therefore it revealed from the scrutiny that LD is at first growing then declining and then sharply increasing. This type of result pulls to pay and concrete serious attention towards loan disbursement while making any new plans, policies & strategies. LD average has reached to 26,73,744.

Loan Disbursement on the base of loan, spat and bills purchased

Table No.14
S.N. Fiscal years Loan Amount In NRs 000 Increase/ Decrease 1 2 3 4 5 2055/56 2056/57 2057/58 2058/59 2059/60 5245975 7224727 9015347 9557137 10844599 37.72 71.85 82.18 106.72

Base year = 5245975 Average = 8377557

Graphically,
Figure no. 9

Increase/ Decrease 120 100 80 60 40 20 0

Increase/ Decrease -

Description: While going through above table thoroughly, it is found out that the loan disbursement has got fluctuation slightly based on base year and haphazardly increasing in the trend line based on the base year. At first in 2056/57 it covers 37.72% then covers 71.85%,82.18% and 106.72% in the year 2057/58, 2058/59 and 2059/60 respectively. The trend line is based on the base year shows quite fast fluctuation of increment. The result shows that the bank has reached to its target objective of increasing disbursement volume constantly during the following years to fall it policy assignment but needs to overcome the shortcomings coming up to the bank related to its assignment. Some of the statistical tools has been used & might be effective to analysis it deeply. Even though the result is positive attention towards the more incensement then the above of the loan disbursement should be given to obtain new plans, policies & strategies. Loan Disbursement average has reached to 8377557.

20 56 /5 20 7 57 /5 20 8 58 /5 20 9 59 /6 0