Hewlett-Packard

A Comparative Study of Deposits Pattern of Everest Bank Limited

Prepared By: Group 6 (KUSOM)

ACKNOWLEDGEMENTS

With due respect, we express our deep gratitude to our respected and learnt professor Mr. Rajendra Man Shrestha for his valuable help and guidance. We are thankful to him for the encouragement he has given us in completing this project work. We are also grateful to Everest Bank Ltd for their warm cooperation, motivating suggestions and helping assistance, also for providing valuable information and documents without which this project couldnt have been completed. We are thankful to all the library members of Kathmandu University School of Management who helped us by providing required books and information. We are also thankful to the other staff members of our department for their kind co-operation. We would like to express our deep appreciation towards our highly supportive and intensely motivating friends for providing us the much needed support and encouragement.

Group 6 Members

TABLE OF CONTENTS
CHAPTER I .................................................................................................................................................. 5 INTRODUCTION ............................................................................................................................................. 5 1.1. Background ................................................................................................................................. 5 History of Bank in Nepal .................................................................................................... 5 Commercial Bank ............................................................................................................... 6

1.1.1. 1.1.2. 1.2 1.3

Introduction of Everest Bank Limited(EBL) ........................................................................... 6 Types of Bank Account ............................................................................................................... 6 Saving account ..................................................................................................................... 6 Current account/checking account .................................................................................... 7 Fixed account ....................................................................................................................... 7

1.3.1 1.3.2 1.3.3 1.4

Statement of Problem: ................................................................................................................ 7

CHAPTER- II ............................................................................................................................................... 9 REVIEW OF LITERATURE .................................................................................................................... 9 CHAPTER III ............................................................................................................................................. 10 METHODOLOGY .......................................................................................................................................... 10 3.1 3.2 Data collection method: ............................................................................................................ 10 Statistical Data Analysis Tool: ................................................................................................. 10 Kolmogorov-Smirnov test ................................................... Error! Bookmark not defined. Analysis of variance (ANOVA) ........................................................................................ 10 Control chart ........................................................................ Error! Bookmark not defined.

3.2.1 3.2.2 3.2.3

Common Types of Charts ....................................................................... Error! Bookmark not defined. X-Bar & Range Charts ................................................................................... Error! Bookmark not defined. CHAPTER IV ............................................................................................................................................. 11 DATA PRESENTATION AND DATA ANALYSIS ............................................................................................... 11 4.1 4.2 Introduction: ............................................................................................................................. 11 Kolmogorov-Smirnov Test .......................................................... Error! Bookmark not defined. K-S Test for Current Account ............................................ Error! Bookmark not defined. K-S Test for Savings Account ............................................. Error! Bookmark not defined. K-S Test for Fixed Account ................................................. Error! Bookmark not defined.

4.2.1 4.2.2 4.2.3

4.3 4.4

Analysis of Variance (ANOVA) ............................................................................................... 11 Quality Control X chart and R chart ......................................... Error! Bookmark not defined. Current Account .................................................................. Error! Bookmark not defined. X Chart for Current Account: ............................................ Error! Bookmark not defined. R Chart for Current Account ............................................. Error! Bookmark not defined. Saving Account ..................................................................... Error! Bookmark not defined. X Chart for Savings Account .............................................. Error! Bookmark not defined. R Chart for Savings Account .............................................. Error! Bookmark not defined. Fixed Deposit Account ......................................................... Error! Bookmark not defined. R Chart for Fixed Deposit Account .................................... Error! Bookmark not defined. R Chart for Fixed Deposit Account .................................... Error! Bookmark not defined.

4.4.1 4.4.1.1 4.4.1.2 4.4.2 4.4.2.1 4.4.2.2 4.4.3 4.4.3.1 4.4.3.2 4.5

Summary.................................................................................................................................... 15

CHAPTER V .............................................................................................................................................. 15 CONCLUSION AND RECOMMENDATIONS................................................................................................... 15 5.1 5.2 Conclusion ................................................................................................................................. 15 Recommendations ..................................................................................................................... 15

REFERENCES ............................................................................................. Error! Bookmark not defined.

CHAPTER I

INTRODUCTION
1.1. Background
Banks are the institutions which accept the deposits of people and grant loans to the needy people, businessmen and industrialists against security deposits. In simple words, bank is a financial institution which deals with deposited money and credit lent. Bank can be defined as a financial supermarket, which renders a host of financial services besides taking deposits and giving loans which are necessary for industrialization and economic development of the country. At present, banks are also engaged in different functions like remittance, exchange currency, joint venture and the guarantee etc. Thus, banks play an important role for the countrys economic development. 1.1.1. History of Bank in Nepal In the context of Nepal, the goldsmiths and landlords were the ancient bankers. Nepalese people were highly exploited by Sahu Mahajans by charging higher interest rate, compound interest rate and even by manipulating the principal amount. Introduction of Tejarath Adda during the tenure of the Prime Minister Ranoddip Singh (1993B.S.) was the first step towards the institutional development of banking in Nepal. The first commercial bank Nepal Bank Limited was established on 30th Kartik 1994 B.S. With the realization of central bank to develop monetary policy as well as to have proper control over commercial banks and banking sectors, Nepal Rastra Bank was established on 14th Baishak 2014 B.S. under Nepal Rastra Bank Act 2012. Likewise, Rastra Banijya Bank was established on Magh 2022 as per Rastra Banijya Bank Act 2012 B.S. under the full ownership of government. The growth of the banks accelerated only after the adoption of liberal economic policy by Nepal Government. This has attracted many investors and encouraged joint ventures with foreign banks. Nepal Arab Bank was established on 29th Ashad 2041 B.S. as the first modern bank with the joint venture of Dubai Bank Ltd., U.A.E. Nepal Grinlands Bank England was established on 16thMarg 2043 B.S.in joint venture with Grinlands Bank England. Himalayan Bank Ltd was established on 5th Marg 2049 B.S. in the joint venture with Habib Bank of Pakistan. Nepal SBI Bank Ltd. was started on 28th Ashad 2050 B.S. in joint venture with State Bank of India. Similarly, Nepal Bangladesh Bank Ltd. was established on 28thJestha, 2050B.S. in joint venture with International Finance Investment; Everest Bank Ltd. on 1st Kartik 2051 B.S. in joint venture with Punjab National Bank Ltd; and Bank of Kathmandu on 28thFalgun 2051B.S. in joint venture with the Siam Commercial Bank, Thailand. Today, there are 23 commercial banks with 483 bank branches and 318 rural branches along with 45 financial companies and 5 Rural Development Banks.

1.1.2. Commercial Bank A commercial bank is a financial institution which collects money from general public and other institutions, and provides credit or loan facility to different industrial and commercial business. Commercial banking business consists of changing cash into bank deposit and bank deposit into cash, transferring bank deposit from one person or institution to other, giving bank deposit in exchange for cheques, bills of exchange, government securities etc. Nepal Bank Limited established in 1994 BS is the first commercial bank in Nepal. Commercial banks perform various functions. Among them, accepting various types of deposit is the main function of commercial banks.

1.2 Introduction of Everest Bank Limited(EBL)

Everest Bank Limited (EBL) started its operations in 1994 with a goal and objective of extending professionalized and efficient banking services to various segments of the society. The bank provides customer-friendly services through its Branch Network. All the branches of the bank are connected through Anywhere Branch Banking System (ABBS), which enables customers for operational transactions from any branches. With an aim to help Nepalese citizens working abroad, the bank has entered into arrangements with banks and finance companies in different countries, which enable quick remittance of funds by the Nepalese citizens in countries like UAE, Kuwait, Bahrain, Qatar, Saudi Arabia, Malaysia, Singapore and U K. Bank has set up its representative offices at New Delhi (India) to support Nepalese citizen remitting money and advising banking related services. Punjab National Bank (PNB), the joint venture partner (holding 20% equity in the bank) is the largest nationalized bank in India. With its presence virtually in all the important centers at India, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Major clients of the bank are Indian conglomerates, medium and small industrial units, exporters, non-resident Indians and multinational companies. The large presence and vast resource base has helped Punjab National Bank to build strong links with trade and industry.

1.3 Types of Bank Account

1.3.1 Saving account

Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money (for example, by writing a cheque). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. Some savings accounts require funds to be kept on deposit for a minimum length of time, but most permit unlimited access to funds. In US, Regulation D, 12 CFR 204.2(d)(2) limits the withdrawals, payments, and transfers that a savings account may perform. Banks comply with these regulations differently; some will immediately prevent the transfer from happening, while others will allow the transfer to occur but will notify the account holder upon violation of the regulation. True savings accounts do not offer cheque-

writing privileges, although many institutions will call their higher-interest demand accounts or money market accounts as "saving accounts." All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement. 1.3.2 Current account/checking account

A checking account is a bank account that uses cheque as the primary instrument for withdrawing money. With a checking account, you can make purchases, pay bills, and give or loan money to anyone you choose. You can also use a cheque to transfer money from your checking account to a bank account at a different financial institution. Usually, financial institutions allow account holders to make as many deposits and withdrawals as they wish. Many allow account holders to make withdrawals and deposits through automatic teller machines (ATM) as well. 1.3.3 Fixed account

Fixed accounts, frequently referred to as time deposit or certificates of deposit (CDs), are bank accounts that require the account holder to make a deposit and agree to leave funds in the account for a specific amount of time. In return for this agreement, the financial institution pays interest to the account. Often, the interest paid on a CD is higher than the rate paid on other types of bank account. The account holder is required to keep his or her money in the account until the specified term is over. However, some financial institutions allow account holders to withdraw interest, without affecting the principal. In some cases, account holders may be allowed to withdraw their principal funds before their CD matures, but a penalty is typically charged.

1.4 Statement of Problem:

The main objectives of banks are to mobilize ideal resources for productive use after collecting them from scattered resources. They pool scattered fund and channel them into productive use. They collect deposits under the name of various accounts like current account, savings account, fixed accounts etc. A banks main function is to act as middleman between the surplus and deficit units in the economy and like any other firm in business to make profit for its shareholders. Deposit collection is the major function of all commercial banks, which helps to carry out almost all transaction of the bank. Mostly among the various deposit features provided by commercial banks, fixed and saving deposit are considered to be more important. In the case of term-deposit although the banker pay interest (longer the period higher the interest) the funds are committed for longer periods, which can safely be lent for long-term project. But in the case of current-deposits, although no interest is payable, these deposits are repayable at demand and therefore banker must be cautious in lending such deposits. Fixed and saving deposits are considered to be more suitable because this deposit can be invested in short term loans with higher rate of return (interest) and hence it helps to earn high profits.

So the deposits in the commercial banks have a good contribution to the country economy. If deposits are well collected and well mobilized, the depositor, the bank and ultimately the country can benefit from it. This study however intends to give general information regarding banking, deposits and prospects of the deposit and its mobilization in the country, which may give the general idea about banking and deposits. The study will focus on the following problems related to the subject chosen: Deposits pattern under Current, Saving and Fixed Deposit Accounts in Everest Bank Ltd., Pulchowk branch. The most consistent account out of the three accounts studied.

CHAPTER- II

REVIEW OF LITERATURE

This chapter deals with the literature, relevant to this study. This part of thesis is essential to know about the findings of other researchers which are appropriate to the study. The first part consists of conceptual framework and the remaining parts consists the review of reports, articles, journals and dissertation. Deposit Analysis of Nabil Bank was referred to in course of the preparation of this report. In the thesis, the author, Suman Babu Panta, analyzed deposits collected in NABIL Bank. The study intends to present a brief and clear picture of deposits and their utilization. The study highlights deposit trend of NABIL bank, its deposit mix, its cost of deposit as well as whether the deposits are being properly utilized or not. The study revealed that the deposit of NABIL Bank is in increasing trend. The share of fixed deposit is more than that of savings, current, margin and other deposits in the deposit mix of NABIL. The trend of interest bearing deposit has been gradually increasing but there has been more fluctuation in non-interest bearing deposits, similarly, there is also more fluctuation in interest expenses on total deposits. The thesis report tells that the bank is being able in satisfying its customers and in providing higher quality and newer services to them. Interest expenses on deposit of NABIL bank during the year 2000 are also quite high but there has been a decreasing trend of interest expenses till the year 2005. Similarly, the cost of deposit during the year 2000 is also quite high but there has been decreasing trend in the later year. So, it helps to increase the efficiency to bank. The author concluded that the bank is able to utilize its deposits a greater extent and the banks performance is effective in profitability and towards the customers and may attract more customers.

CHAPTER III

METHODOLOGY
3.1 Data collection method:
The required sample data for the study was collected from the Customer Service Department of Pulchowk branch of Everest Bank Limited. The data obtained was secondary data, the primary being the one recorded in the accounting system of the bank. The data was randomly given by the customer service personnel of the bank of the latest 100 transactions per account. We also carried out scheduled and direct oral interview method to have a general idea about deposit pattern under various accounts in the Pulchowk branch. Location: We selected the Pulchowk Branch of Everest Bank for the data collection purpose.

3.2 Statistical Data Analysis Tool:

The various statistical data analysis tool used for the computation purpose were:

3.2.1 Analysis of variance (ANOVA) In statistics, analysis of variance (ANOVA) is a collection of statistical models, and their associated procedures, in which the observed variance is partitioned into components due to different sources of variation. In its simplest form ANOVA provides a statistical test of whether or not the means of several groups are all equal, and therefore generalizes two-sample t-test to more than two groups. ANOVAs are helpful because they possess a certain advantage over a two-sample t-test. Doing multiple two-sample t-tests would result in a largely increased chance of committing a type I error. For this reason, ANOVAs are useful in comparing three or more means.

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CHAPTER IV

DATA PRESENTATION AND DATA ANALYSIS

4.1 Introduction:
This chapter deals with the analysis and interpretation of the data collected from various sources and research methodology. In the course of analysis, data gathered from the various sources have been presented in tabular form. Data has been analyzed by using financial and statistical tools.

4.2 Analysis of Variance (ANOVA)

Current 20000 30000 42000 63000 59000 75250 17100.21 53651.27 134796.7 274968.5 5000000 2657137 47619.89 389751.4 300000.6 3150 350000 131500 900000 25000.71 125000 100057 250000 75000 60000 45123 210000 160000.8 79576 5760 31000 30000 Saving 100000 21000 1017 5000 11900 21202.2 14500 22000 16500 67920 3333.33 14892 500134.8 55600 572679 44327 98095 98795 17676 176488 846977 98411 27535 12555 286639 55764 12000 15000 21000 35000 20000 5000 Fixed 10000 15000 32000 10000 16000 70000 150000 90000 60000 14000 30500 29000 150000 500000 80000 120000 110000 140000 290000 50000 1000000 380000 442400 330000 25000 17100 20000 30000 42000 63000 59000 1000000

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25500 75675 78000 55000.5 120000 125000 34879 63271 132300 5460 3600 5000 8000 115000 231800 3560000 45000 4560 33000 34000.25 6300.5 124300 118000 7260 56000 47240 28000 14000 34578.6 43210 600000 55000 400000 2300000 8500000 29786.5 123400 5568.7 3200000 14000 35400 21476.2 46335 83556.7 25479.1 42300 48760 21000

6000 9500 34000 32100 43600 50000 2500 8600 100000 55000.5 21680 34567 27689.5 134560 12354 65760 464600 46900 38644.3 27800.7 12000 24000 4800 96000 5540 29750 154558 44668 43448 34600 35559 34876 35589 43790 73280 5467 33800 43569.3 43568.8 77768 124300 6578 55758 65558 5834.7 9900 16440 10000

55500 8000 24000 32000 76000 67500 55400 34500 21800 47000 10000 12000 127000 240600 18000 17800 45000 34000 84800 23000 54000 12300 6500 9000 6800 42300 28700 31800 500000 256000 4000000 756400 564590 46360 535000 250900 25000 45000 28000 15000 700000 480000 80000 90000 45000 26500 99990 83400

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234335 12005 13600 76090 45210 35500.5 28655.2 143098.6 660000 5600 98700 23550.8 47920.4 21500 46000 220000 58000 3000000 3450.9 380000

5000 35000 5490.7 68575.8 14680 45880 24300 8657.8 34700 25000 12000 18500 6990 180000 97000 48000 36639.5 88542 76500 26000

222000 680000 350000 550500 200000 100000 50000 70000 65000 165000 376000 34000 46000 125000 7500 300000 24000 76500 83420 597800

Research Problem: To determine whether the deposits in in current, savings and fixed deposit account of Everest Bank, Pulchowk Branch are uniformly distributed or not. Make-up Hypothesis: H0 : There is no significant difference in the deposits in current, savings and fixed deposit accounts. H1 : There is significant difference in the deposits in current, savings and fixed deposit accounts. Calculation:
One way Anova SUMMARY Groups Current Account Saving Account Fixed Account

Count 100 100 100

Sum 37684656.19 6543251.89 19350160

Average 376846.5619 65432.5189 193501.6

Variance 1.3158E+12 14747817443 1.94428E+11

ANOVA Source of Variation Between Groups

SS 4.89986E+12

df 2

MS 2.44993E+12

Fcal 4.819607381

P-value 0.008712046

F crit 3.026153369

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Within Groups Total

1.50973E+14 1.55873E+14

297 299

5.08326E+11

Decision: Fcal =4.82> Ftab =3.02, Hence the null hypothesis is rejected and the alternative hypothesis is accepted. Thus, there is significant difference in the deposits in current, savings and fixed deposit accounts.

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4.3 Summary Analysis of Variance (ANOVA) From ANOVA it was found that the null hypothesis is rejected and the alternative hypothesis is accepted. Thus, there is significant difference in the deposits in current, savings and fixed deposit accounts. CHAPTER V

CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion
From the above analysis of the data using, Analysis of Variance (ANOVA), it is found that on the overall, deposits in current, savings and fixed deposit account have are significantly different, and there exists considerable variation among deposits in the respective accounts. ANOVA showed that there exists significant difference in deposits in current, savings and fixed deposit account.

5.2 Recommendations
With non-uniformly distributed deposits in each account, significant difference in deposits in each account and with most of the processes out of control it is tough for the Pulchowk branch to decide on various issues, like the liquidity to be maintained by the branch, the loan to be given, etc. So, the branch must take various measures, like introduce deposit schemes that help to maintain the uniformity in the deposits. The branch can come up with deposit schemes like free gifts, free debit cards, bank assurance, etc. for customers maintaining deposits within a certain range to incite the customer to maintain the deposit within the control limits that will facilitate the branch on making decisions relating the liquidity requirement, the loan to be given, etc.

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