CHAPTER1

INTRODUCTION
1.1 ORGANIZATION PROFILE
Nabil Bank Limited is Nepal's first major joint venture Bank, which commenced operation
on 12th July 1984. Dubai Bank Limited was the initial foreign joint venture partner with 50%
equity investment. The shares owned by Dubai Bank Limited were transferred to Emirates
Bank International Limited, Dubai by virtue of its annexation with the latter. Later on,
Emirates Bank International Limited sold its entire 50% equity holding to National Bank
Limited, Bangladesh. Nabil Bank was initially established under the name of Nepal Arab
Bank Limited. However, later on with the help of special resolution passed on the Annual
General Meeting, the name Nepal Arab Bank Limited had been changed to Nabil Bank
Limited on December 31st, 2001. Nabil was incorporated with the objective of extending
International Standard modern banking services to various sectors of the society. Pursuing its
objective, Nabil provides a full range of commercial banking services through its 43 points of
representation across the kingdom and over 170 reputed correspondent banks across the
globe. Nabil Bank has a history and culture of its own of setting standard of operations and
providing services. It provides international quality of services to its customers and some
invaluable advices to its clients with the help of professionals hired by the bank.
Nabil Bank, as a pioneer in introducing many innovative products and marketing concepts in
the domestic banking sector, represents a milestone in the banking history of Nepal as it
started an era of modern banking with customer satisfaction measured as a focal objective
while doing business. It provides international quality of services to its customers and some
invaluable advices to its clients with the help of professionals hired by the bank. Nabil Bank
has expanded its size and volume of transactions and it gives employment to more than 900
staff members who are dedicated professionals workers
There are total 50 branches and 77 ATMs lounges launched by Nabil Bank to provide intense
facilities to their customers.(See Annex I for the list of Branches of Nabil Bank)
Today Nabil Bank holds one of the strongest networks in and outside Nepal compared to
other financial institutions of Nepal. Nabil Bank today can be termed as a full service bank in
every sense, which is able to meet entire range of financial requirements and services of its
customers and clients. It is the pioneer commercial bank of Nepalese economy, which sets

1 | Page

the benchmark for the industry. The management and the board members are the true assets
of the organization who have made it what it is today.

1.1.1 OBJECTIVE OF STUDY

The primary objective of this study is to get a better understanding of Centralized Trade
Operation in commercial bank and the operational procedure of different administrative
departments of CTO. Following are the objective of study broken down into specific and general
objectives.
General:

To understand overall activities of Central Trade Operation department of Nabil Bank

Head office, Teendhara.

Specific:

To understand mechanism and processes regarding Letter of Credit.

To understand different department functions and structure of CTO department
To understand different issues and challenges of CTO department

1.1.2 SCOPE OF THE STUDY

This internship report will help individuals to understand the operational processes of CTO
department of Nabil Bank Ltd which discusses the mechanism of LC. This report involves
methodology used under the study and hints candidates for their future internship.
As far as possible, every effort has been made to ensure that all available data are included and
reported without any systematic or natural biasness.

1.1.3 LIMITATION OF THE STUDY

As this research was conducted along with the internship and other semester course, adequate
detail effort that these researches require could not be devoted. Secondly, the source of
information is very limited as it is based on the observation; mentors quotes and literature
review and is in comply with some limited boundary of objectives. This report is carried out for
the academic reason and does not contain the crucial information. So, the outcome may differ if
carried out for other reasons by experts. Some other limitations are as follows:
2 | Page

Repetitive types of activities were specialized and assigned as specific and given
importance too.
So, had to wait for some chance like old intern absenteeism to learn new things like
preparing Bi.Bi.Ni, check filling, recording in DBMS etc.
Busy schedule of employees and mentor was limitations on getting replies to the
questions spontaneously.
Softcopy note provided by the banks mentor to my mail id was strictly prohibited by
Nabils authority and was unable to get access to the files for more beneficial references.
The report is mainly focused on particular sector i.e. Letter of Credit, so it fails to cover
up the other aspects of the banking system

2. LITERATURE REVIEW

3 | Page

CENTRAL TRADE OPERATION: central trade operation is simply the centralized version of
trade operations of different branches of Nabil Bank at its head office. It deals with the different
mechanism of trade finance like import letter of credit, export letter of credit, forward contract,
bid bond, performance bond, counter guarantee, advance payment guarantee and shipping
indemnity.
2.1 MEANING AND DEFINITION OF LETTER OF CREDIT
Documentary Credit (DC), popularly known as letter of credit is the safest and convenient means
of paying for exports among all other existing methods of payment. It is widely used to effect
payments in domestic and international trade. A written undertaking is issued by a bank (usually
referred to as the issuing bank) on the instructions of the buyer of goods to the seller. The
payment is made under conditions stated in the undertaking. Payments are always up to a stated
limit and against stipulated documents. As per the definition of International Chamber of
Commerce (ICC) "documentary credit is any arrangement however named or described whereby
a bank, (the issuing bank) acting at the request and in accordance with the instructions of a
customer (the applicant), is to make payment to or to the order of a third party (the beneficiary)
or is to pay, accept or negotiate bill of exchange (drafts) drawn by the beneficiary, or authorise
such payments to be made or such drafts to be paid, accepted or negotiated by a other bank
against stipulated documents in compliance with stipulated terms and conditions."
2.2 IMPORTANCE/ADVANTAGE OF LETTER OF CREDIT
The importance/Advantages of LC (mentors hands out) are :
To the Buyer

Assurance his bank will refuse payment to seller unless terms and condition given by him
to his bank as stipulated in the credit are met.
Extended terms of payment which in any other form of payments would not be available.
Refinance of goods until they are marketed.

To the Seller

Relies more on the credit extending bank or the confirming bank rather than on the buyer.
Less apprehensive that payment for goods might be delayed or jeopardized by political
acts or other problems in the buyers country.
Enable to obtain loan from banks to prepare goods for shipment prior to making a
shipment or just after the shipment.

2.3 TYPES OF LC

4 | Page

The various types of letter of credit are as follows:

1. Revocable LC: These are the LCS that maybe amended/cancelled at anytime by the buyer
without the approval of the seller. Thus, it does not provide any sort of protection to the seller
and is not much in use these days
2. Irrevocable LC: This type of LC cannot be cancelled or amended without the agreement of
all the parties including the exporter. The issuing bank provides a binding undertaking to the
beneficiary given that all the terms and conditions have been met. Irrevocable LC provides
assurance to the beneficiary that the payment for his goods or services will be received as soon
as the LC process comes to an end. Under UCPDC all letters of credit are irrevocable.
3. Unconfirmed LC: It is that Letter of Credit that is forwarded by the advising bank to the
beneficiary (exporter) without adding its own undertaking to make a payment at a future date but
confirms the authenticity of the credit.

4. Confirmed LC: This is type of LC where a bank usually in exporters country adds
confirmation to the LC where confirming bank must make the payment to beneficiary if the
complaint documents are presented at their counter. Also, if the issuing bank or the applicant
fails to make the payment ,confirming bank holds this commitment. In such LC confirmation is
added to the LC for the beneficiary on the request of the beneficiarys bank. The Confirmation
LC gives a sense of security in the case when the issuing bank is unknown or the
economic/political scenario is unsuitable. A bank will make an additional charge for confirming a
LC. Countries that is considered high risk the cost lies between 2%-8%
5. Revolving LC: The Revolving LC is used in the case of regular shipment of the same
commodity between the same exporter and importer. The credit must show that it is a revolving
LC. The LC may revolve automatically or under some provisions. It helps to avoid the
repetitious task of opening/amending the letter of credit.
6.Transferable LC: Under the Transferable LC, the exporter can make a request to the
paying/negotiating bank to make partial/full payment of the credit value that is available to the
third parties.
5 | Page

7. Back to back LC: Back to back LC can be used as a substitute to the transferable LC. In this
type of LC, one LC is used as a security to open a second LC that is issued by the advising bank
in favor of the exporters goods supplier rather than handing over the original LC to the supplier.
Most of the banks are reluctant to issue this type of letter of credit due to the high degree of risk
involved in it.
8. Sight LC: The payment needs to be made at sight i.e., within 5 working days in sight LC after
receiving the original documents of the credit complaint by the issuing bank.
9. Time LC (Usance): In the Time LC, the payment needs to be made at the maturity after
receiving the original documents of the credit complaint by the issuing bank.
10. Standby LC: The standby letter of credit is different from the documentary letter of credit.
The documentary letter of credit is the primary payment mechanism whereas the standby letter of
credit acts as the secondary payment mechanism. This type of guarantee provides guarantee to
the beneficiary regarding the performance of the applicants obligations.

2.4 TERMS AND CONDITIONS IN LC

Banks deal in documents not with the goods

Non documentary conditions should thus be avoided
Banks will ignore any non documentary conditions mentioned in the LC
Terms and conditions mentioned in the LC should be precise
Terms and conditions requiring documentary evidence should clearly mention the assures
of such documents
Conditions put in the LC should be practically feasible
Unusual terms and conditions should be avoided
Regulatory conditions to be ensured
Any other specific conditions

2.5 MAIN CONTENTS AND FIELDS OF LC

INCOTERMS: The word Inco term is the abbreviation of International Commercial Terms.
Incoterms are the price terms used to define the responsibilities of the buyer and seller as to

6 | Page

the cost, insurance, freight, export and import clearance and other charges incurred during the
shipment of goods from the sellers warehouse to buyers place.
The INCOTERMS was first published in 1936 and it is revised periodically to keep up with
changes in the international trade needs. The complete definition of each term is available
from the current publication---INCOTERMS 2010.
The seven rules defined by incoterms 2010 for any modes of transportation are:
EXW- Ex works (named place of delivery)
The seller makes the goods available at its premises. This term places the maximum
obligation on the buyer and minimum obligation on the seller. The Ex works term is often
used when making an initial quotation for the sale of goods without any costs included. EXW
means that a seller has the goods ready for the collectioin at his premises (works, factory,
warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also
bears the risks for bringing the goods to their final destination. The seller doesnt load the
goods on collecting vehicles and doesnt clear them for export. If the seller does load the
good, he does so at buyers risk and cost. If parties wish seller to be responsible for the
loading of the goods on departure and to bear the risk and all costs of such loading, this must
be made clear by adding explicit working to this effect in the contract of sale.
FCA- Free Carrier (named place of delivery)
The seller hands over the goods, cleared for export, into the disposal of the first carrier
(named by the buyer) at the named place. The seller pays for carriage to the named point of
delivery, and risk passes when the goods are handed over to the first carrier.
CPT- Carriage Paid To (named place of destinatioin)
The seller pays for carriage. Risk transfers to buyers upon handing goods over to the first
carrier.
CIP- Carriage and Insurance Paid to (named place of destination)
CIP is the containerized transport/multimodal equivalent of CIF. Seller pays for carriage and
insurance to the named destination point, but risk passes when the goods are handed over to
the first carrier.

DAT- Delivered at Terminal (named terminal at port or place of destination)

Seller pays for carriage to the terminal, except for costs related to import clearance, and
assumes all risk up to the point that the goods are unloaded at the terminal.
7 | Page

DAP- Delivered at Place (named place of destination)

Seller pays for carriage to the named place, except for costs related to import clearance, and
assumes all risks prior to the point that the goods are ready for unloading by the buyer.
DDP- Delivered Duty Paid (named place of destination)
Seller is responsible for delivering the goods to the named place in the country of the buyer,
and pays all costs in bringing the goods to the destination including import duties and taxes.
This term places the maximum obligations on the seller and minimum obligation on the
buyer.

PROFORMA INVOICE/SALES CONTRACT: Proforma invoice includes name of the

contracting parties; the seller and the buyer. It should be signed and stamped by both the
parties. It should include Tenor(sight, usance or otherwise), description of imported Goods,
eight digit Harmonic code that denotes the imported goods, proper incoterm in the proforma
invoice, proper country of origin, validity of contract and unit price and total amount.
SWIFT: SWIFT refers to Society for Worldwide Interbank Financial Telecommunication. It
is the fastest and most secured mode of transmission of financial messages. Specific message
types (MTs) as per the nature of the transaction is indicated. Pre-formatted template, require
specific values in each field, conditional values as well in some fields. Certain characters are
not allowed e.g!,@,#,$,%,&,*etc.

2.6 MAJOR RULE OF NRB IN DC OPERATION:

No DC is required for import of goods worth USD 35000or equivalent. The importer can
send advance payment to the supplier. This is valid for import from third countries other than
India.

2.7 AMENDMENT OF LC
Seller may ask for amendment if any of the conditions mentioned in the LC is practically not
possible for him to comply with. LC will also be amended if the underlying contract between
8 | Page

the seller and he buyer is amended. An irrevocable LC can be amended only by the consent
of the all the concerned parties, viz the buyer, the seller, the issuing bank and the confirming
bank (if any). Further amendment must be advised to the same bank to which the original LC
is advised.

CHAPTER 3
METHODS AND METHODOLOGY
9 | Page

According to the designed patterned of this program, students need to complete internship for
the period of 8 weeks and prepare the report. The report is prepared by using the information
that is obtained from different sources like booklet, websites, and report from the Nabil bank.
Some of the methods followed to successfully accomplish this internship are as follows:
3.1 Organization selection
Being a BDFin student specializing in Finance, doing an internship in a reputed financial
institution is always in a top priority. Nevertheless, selecting an organization has been a
tough job because of the numbers of alternatives available in the market and of all the
dilemmas regarding the top bank with hunger of ample of work experience lead to one.
Internship from a reputed financial institution helps to build career by creating bond between
classroom knowledge and practical business world experiences. So, Nabil Bank Limited
came as preference for the internship program so that the intern can mould his class room
knowledge into real life working experience. The recommendation letter provided by the
college was dropped in the head office, Durbar Marg, along with the CV. Then and there, the
intern was informed that he was selected and was asked to commence the internship period at
the head office itself in Central Trade Operation department. Finally, the intern began the
internship with Nabil Bank with effect from 5th November and continued till 4th January ,
completing the stipulated 8 weeks of internship.
3.2 Placement
Regarding the placement, intern was placed at Head Office, Durbar Marg in Central Trade
Operation(CTO) department under the supervision of the CTO chief Mr. Jyoti Bahadur KC
and CTO supervisor Mr. Manish Raj Maharjan along with my mentor Mr. Rabi
Acharya(CTO-officer) and other various department staffs as well. The intern worked under
the supervision of staffs and performed each and every task efficiently to meet their
expectations. During the period, intern got an opportunity to learn about working procedures
and, get familiar organizational culture and working environment most specifically related to
letter of credit. During the period, the student got full support and cooperation from the staff
members and maintained working environment with each of them.

Department Placed
Central Trade Operation

10 | P a g e

Supervisor
Mr. Manish Raj Maharjan

Mentor
Mr. Rabi Acharya

Table 1.1: Department Placed and Supervisor and Mentor.

3.3 Duration of Internship
As per the TU curriculum intern has eight weeks to learn about the organization functions and
its operation. During the duration of eight weeks intern was only placed at CTO. Even though
intern was placed in CTO for eight weeks, it was ample for anyone as even the eight weeks
looked lesser to work and know all the process of the department. As per the curriculum intern
worked in Nabil bank corporate office from 5th November, 2014 to 4th January, 2015.
WEEKS

Central
Trade
Operation

Table 1.2: Duration of Internship

3.4 Methods used

Nabil Bank has its CTO department as competitive advantage in compare to other very few
trade operations of commercial banks that operate its CTO. Nabil Banks CTO department
facilitates trade operation by saving the cost of hiring employees at different branches for
trade operations. The followings are few general function of CTO department, where it was
allowed to participate and learn during the internship period. The general functions of CTO
department were classified mainly on the basic of Import LC, Export LC and settlement of
LC. The methods used for the preparation of LC are based on:
1. Observation: Observation method is concerned with watching rather than taking part
in the context. Observation method helped me to get familiarize with the
organizational environment and its behavior and be proactive in the nature of my
work. This method is useful in understanding different emerging issues in
organization and how organization solves it.
2.

Interaction with mentors: Confusion and an urge for good understanding in the
context of my activities had stimulated me to a situation of Interaction with mentors.

11 | P a g e

Interaction with mentors is helpful in understanding the moral of employees,

organization behavior, reflecting importance of effective communication and
understanding linkage between different activities of CTO department.
3. Learning by doing: This method involves observation as well as interaction with
mentor. In this method personal attitude and efficacy are important personal factors.
This factor synergizes the organizational performances.
3.5 SOURCES OF DATA
For the report the data are collected from primary source and secondary source. They are as
follows:
Primary Data
Primary Data refers to the raw data that has neither been processed nor manipulated. It is the data
that has been collected to carry out a specific task and they are mainly the first-

hand data.

While studying about the project I came across primary data from different sources which are as
follows:
Direct formal and informal interaction with the staff
Informal questionnaire responses the knowledge on that specific department.
Scrutiny of working environment of bank
Observation of various departments of banks

Secondary Data:
The secondary sources of data include the data that have been prepared by others , for their use
which are not original .They are the readily available data that can be used for reference although

12 | P a g e

they may not be as accurate as the primary data. The main sources of secondary data are as
follows:

Annual Reports of Nabil Bank

Brochures
Policy Manuals
Articles published in different newspapers about LC operations
Banks website
Paper documents used by the bank like LC application, checklist, etc
NRB Directives and Circulars on commercial banks
reports on the internet, etc

CHAPTER 4
RESULTS
The results are in form of description of understanding, the operation of the department, and
general overview of CTO department, which came out of the study upon use of methods and
methodology stated in previous chapter.
13 | P a g e

The results are process oriented and the necessary discussions are included consecutively to
better describe the results. This has resulted in merger of the two sections of the report; result and
discussions. The results of LC operation are discussed as:

4.1 LETTER OF CREDIT FLOW

Letter of credit flow at Nabil Bank Limited:
Part-1
1. At first the credit worthiness of customer is checked and on the basis of collateral, cash
deposits of customer, they are issued a certain line of credit .
2. Customers fills LC Application form at the Nabil Bank which is made as per current
version of UCPDC600
3. Customers should submit proforma invoice/sales contract (which should be signed and
stamped by both the parties) along with LC application form which should clearly
mention the name of contracting parties i.e. buyer and seller, tenor (sight, usance or
otherwise),Harmonic code number(should be of 8 digits), Incoterm, country of origin,
expiry of contract, unit price and total amount.
4. Customer attaches the important documents such as Insurance Certificate, Firm
registration certificate and Bi Bi Ni Form-3 along with proforma Invoice.
5. After the above steps are completed by applicant , employees of Nabil Bank checks
whether the Goods that are being imported are not prohibited by the central bank
or other regulatory authorities, application submitted by customer is free of error or not,
Permission of the concerned authority is obtained wherever applicable or not.
6. Then employees create LC through after doing necessary entry in software known as
Finacle.
7. The advising/confirming bank is informed about the LC . These banks are communicated
with the help of SWIFT.
Part-2
8. After the confirming bank have received LC they check and inform the beneficiary so as
to get the goods ready.
9. Then the beneficiary goes to the transport company and shipping company generates
transport documents and hand it over to beneficiary. The shipping company ships the

14 | P a g e

goods to the destination port and after which the transport documents along
with other documents are submitted to the advising/confirming bank by the beneficiary.
10. The documents are send to the issuing bank i.e. Nabil bank Limited after rechecking the
documents by the advising/confirming bank.
11. Nabil Bank re-checks the received documents whether they are in accordance with the
LC terms and conditions, if they find any discrepancies applicant is informed about the
discrepant documents but if the document is clean it gives the documents to the applicant
and forwards the payment to the advising Bank.
12. The applicant then uses the transport documents to release the goods from the bank to the
destination port. Then he comes to the bank and takes the BiBiNi 4 form to clear the
goods through the custom office and get the duty clearing certificate.
13. Then all the remaining documents are send to Nabil Bank along with duty clearing
certificate.
14. Bank then examines all the documents received from applicant and closes the file.

In this way, LC process at Nabil Bank is completed. There are total 14 employees in Import LC
section who perform all their tasks in a given manner.

4.2

Major Documents required for LC:

Commercial Invoice: A commercial invoice must contain description of the goods that has been
shipped like the description of the items, cost of items per unit, number of items supplied,
various transport charges and fees, date of shipment and mode of transport, prices, discounts as
well as the delivery and payment terms and must be issued by the beneficiary made out in the
name of the applicant.
Transport document: They are the rail/truck receipt, parcel post receipt, inland waterway bill
of lading (canal, river, etc), airway bill, etc. Some transport documents such as Bill of lading is
negotiable if it transfers title to goods. A bank will only accept a clean transport document.
15 | P a g e

Bill of lading: It is a document used in foreign trade. It is a contract for delivery from the port of
shipment to the port of destination. A bill of lading must indicate the name of the carrier and also
must indicate that the goods that has been shipped. Moreover, it also must show shipment from
the port of loading to the port of discharge stated in the credit.
Insurance Policy: It is the document that is given by the insurance company if the exporter is
responsible for arranging insurance and minimum insurance should be 110% of invoice value. It
shows the important provisions of the insurance contract. Insurance policy generally covers all
risks excluding risks such as war, strikes and riots.
Bill of Exchange: It is an unconditional demand for the payment made by one party to another.
It must be in written form and must be signed as well as dated. A bill of exchange is also called a
draft.
Certificate of Origin: This document must state that the goods in a particular shipment have
been wholly produced/manufactured or processed in a particular country. And may provide
importer with preferential duty rate. It is in a printed form that is completed by the exporter and
is certified by the issuing body. Normally, it is issued by the Chamber of Commerce.
Packing List: It is the list of packing of goods being sent that is usually included in each
shipping package and gives the information about the quantity and weights. It is prepared by the
shipper and is sent to the consignee for the accurate tallying of the goods that has been delivered.
Inspection Certificate: It is requested by an agent of the applicant to ensure quality of goods.
Weight list: It is a document stating weight of goods.

4.3 DOCUMENTS REQUIRED FOR ISSUANCE OF LC IN Nabil Bank Limited:

For issuing a LC, at first applicant needs to have approved credit limits sanctioned by the bank.
According to Central bank(Nepal Rastra Bank ) regulations, following documents should be
presented by applicant along with the LC Application form :

Proforma Invoice/sales contract containing the following:

- Harmonic Code number of the goods that is being imported. Harmonic code should be of at
least 8 digits.
- Country of origin
16 | P a g e

- Payment term

PAN (Permanent Account number) Certificate

Company Registration Certificate

Nabil offers various products to finance the trade, it offers Import loan and import bill
discounting for the importers.
4.4 REGULATORY REQUIREMENTS:
All the LCs that are opened are reported next day to The Central Bank. Also, as a result of the
restrictions on for ex trading imposed by Nepal Rastra Bank (Central Bank) all the transactions
in currencies other than the Indian currency (INR) has to be reported. The applicant availing to
the LC facility need to fill the forms on Foreign Exchange Regulations called Bi. Bi. Ni. 3 which
the bank need to submit to the central bank for recording. Bi.Bi.Ni. 3 is divided into two halves
among which 1st half is filled by applicant itself and second half is filled by issuing bank.(Refer
to the Appendix 2 for the Bi.Bi. Ni. 3 format).

4.5 PROCESSES FOR LC

The use of DBMS and Finacle has gained popularity. Original documents are managed in a file
with LC number and Applicants on the cover page. There are many files in a proper order
managed on the storage box. The use of DBMS and Finacle are for the accountability and
conveniences of employees in data management. There are many LC files in CTO department,
and as an intern it was my basic duty to manage the necessary LC file in proper place and submit
it to the mentor when it was necessary. I was also engaged in the recording information in
DBMS.
The major activities that were performed as an intern in the CTO division are listed below:

Assist department staffs in making a LC file.

Helped in the proper handling and storing of the respective files.

17 | P a g e

Served as a helping hand in the filling of the LC file and application.

Helped in the checking of the files like: amount, date, information mentioned.
Helped in tallying the different documents provided by the respective parties involved in

the LC to approve the documents are legitimate.

Helped in keeping tracks of the documents arrival and copy documents.
Helped in keeping records of the files through the software WDMS used by the
department.

4.6 Risks Associated with Letter of Credit:

The risks associated with import LCs can be broadly classified into:

Financial standing of the importer: He should be in a position to arrange for funds

required at the time of retirement of bills under LC. This involves an appraisal of the

credit worthiness of the importer as a borrower.

Acceptability and sale ability of the goods: This is a generic risk associated with all
modes of international trade, and may affect the importers ability to pay for his

consignment.
Status of the exporter (or beneficiary of the LC): This is the risk inherent in a situation

that an errant may ship substandard goods.

Country Risk: This includes risk elements like the political and economic stability of a
country and exchange controls etc. Country risk is, however more pertinent for exporters

rather than importer of goods.

Foreign exchange risk: A depreciation in the local currency i.e. the transaction currency
may lead the importer to pay more for the consignment than originally envisaged. This
may render the LC account irregular from the very beginning.

18 | P a g e

CHAPTER 5
DISCUSSIONS
5.1 ISSUES OF CTO DEPARTMENT
Sometimes during the processes of LC it was found that proper communication between different
departments was at utmost necessity. The conflicting situations regarding documents may arise
and be solved by discussions with the head officer and managers. Monitoring and evaluation was
done by CTO head.Mr. Jyoti Bahadur karki was head of CTO department. Further activities of
CTO head was to check, verify and correct documents, monitoring and assuring corrections for
the mistakes of employees and assigning important work to employees. Hence this reflected as
knowledge to me for the importance of monitoring and evaluation

The numbers of LC opened on an average were 20 per day. After 3pm bank does not accept any
LCs request. LC which yields in USD amount and INR were the most frequent cases then
followed by EUR, NPR, JPY and others respectively. Birgunj customs, Trivuwan International
Airport customs, Bhairahawa Customs and Biratnagar Customs are the places through which the

19 | P a g e

goods are received by applicant. NCELL and Nepal Telecom are found to be among the applicant
who orders goods with high amount figure.

CHAPTER6
CONCLUSION AND RECOMMENDATION
6.1 Conclusions
During whole period of internship and the preparation of this report, intern learnt a lot about the
banking operations, about Nabil Bank in particular. The internship has been fruitful in many
ways to the intern. Before, the intern knew only a little about the banking sector but internship
helped her to analyze and examine the banking system and the operations raising different
questions in the mind.
The growth of financial sector in Nepal is much better compared to other sectors in the country.
The economic reform initiated by the government more than one and half year decade ago have
changed the landscape of several sectors of the Nepalese economy including financial sector.
Despite the decades long conflict and political insurgency, this sector has continued to grow. As
the Nepalese financial market witnesses the domination of banking sector, it is necessary to
20 | P a g e

monitor the banking system properly and enhance competitiveness with a strong and credible
regulatory.
Nabil bank is the first joint venture which aims to serve valued customers through quality and
advancement of services throughout the nation and widely providing its product and services
through the largely extended network. It represents a milestone in the banking history of Nepal
by introducing many innovative products and marketing concept in the domestic banking sector
and measures customer satisfaction as a focal objective of doing business. Nabil services reach
the extreme of the country to facilitate its customer and build the trust of individual and business
houses for the commercial banking industry. The recuperation of the bank in terms of its
financial position, its adjustment to technological advancement and customer faith and trust
shows that the bank at present and in future touches the sky in banking performance.
During the internship period, intern got an opportunity to learn a lot about the banking sector and
analyze its various aspects. Intern has worked in the areas of Letter of Credit in the CTO
department. This department has helped the intern to gain knowledge about SWIFT messages,
procedures of issuing letter of credit, process of how trade operations actually takes place among
the importer and exporter, the legitimate documents required, filling of forms like application
checklist, copy document checklist, BI BI NI forms, cheque writing etc. The activities that are
performed in these departments include making a new LC file, recording the entry of document
arrival in wdms software as used by the department employees, filing, verifying the copy docs
with original ones etc. Intern worked in the department to learn about the process of how LC is
used and plays a major role in the trade business as we know.
The internship at Nabil Bank helped intern to gain in-depth knowledge about real working
environment, interpersonal and communication skills, organizational culture and behavior,
professional qualities and team building spirit as well as working principles of commercial
banks. Besides, observing and learning the various activities in the department, intern performed
the various task. During that period, intern found that costumers are the key focus and greatest
asset of the bank and time management was everything. Thus, the bank always focused to
maintain long term relationship with customer and retain them by providing better services and
completing its aligned task in time. Similarly, proper coordination and cooperation among the
entire department is needed for growth of organization.
21 | P a g e

6.2 Recommendation
If the three most important things in the Real Estate are location, location, location, the three
most important things in commercial and standby credits are documents, documents, documents.
Hence for the operation of Letter of Credits or Documentary credits one should educate
themselves on the rules incorporated by UCP and UCC Article 5. Parties involving in LC should
be able to control the process from the start by limiting the number and complexity of documents
required under the credit. One should not permit the documents which are contingent upon the
approval of buyer, and do not allow documentary requirements which are impossible to fulfill.
One should be disciplined in their presentation of documents. One should request the confirming
bank if they are uncertain of the Issuing Banks ability to pay. Competent counsel can also be
instrumental in helping you to handle technical issues involved in commercial credits.
Likewise recommendation to the organization would be that, the behavior of organization
depends upon the surroundings of working place in organization. Hence proper resources and
positive attitude is most for organizational growth. It was found that the furniture to keep the file
is on its expiry date which created limitation on maintenance of file. Therefore I would like to
recommend the organization to procure new furniture.

REFERENCES
WEBSITES:

http://www.hg.org/article.asp?id=28956
http://www.osec.doc.gov/ogc/occic/letcred.html
http://www.nabilbank.com/ImportLC/16/
http://en.wikipedia.org/wiki/Letter_of_credit
http://www.tradev.net/downloads/tools/guide2lc.pdf

Books:
Saunders, A., & Cornett, M. M. (2007). Financial Market and Institution. New Delhi: The
McGraw-Hill Companies.
Shrestha, M. K., & Bahadur, B. D. (2007). Financial Market & Institutions. Kathmandu: Asmita
Publication.

22 | P a g e

Thapa, K. (2011). Fundamentals of investments . Kathmandu: Asmita Books Publications Pvt.

Limited.

APPENDIX
Appendix II: Nabil Branches
SN.
1

Branches
Teendhara Branch

Location
Durbarmargh, Kathmandu

Nabil House

Kamaladi, kathmandu

Kantipath Branch

Kantipath, Kathmandu

Tripureshwor Branch

Tripureshwor

Newroad Branch

Newroad, Kathmandu

Jorpati Branch

Jorpati, Kathmandu

Birjung Branch

Adarsh Nagar, birjung

PHC Branch

Powerhouse Chowk, Birjung

23 | P a g e

Biratnagar Branch

Goswara road, Biratnagar

10

Lalitpur Branch

Kupondal, lalitpur

11

Itahari Branch

Main road, Itahari

12

Butwal Branch

Main road Butwal

13

Pokhara Branch

Newroad, Pokhara

14

Bhairahawa Branch

Nayapath, Bhairahawa

15

Nepalgunj Branch

Dhamboji, Nepalgunj

16

Lakeside Branch

Lake Side, Pokhara

17

Exchange Counter

Tribhuvan International Airport, Kathmandu

18

Dharan Branch

Mahendra Chowk, Dharan

19

Bhalwadi Branch

Bhalwadi, Rupandehi

20

Maharajgunj Branch

Maharajgunj, Kathmandu

21

Birtamod Branch

Birtamode, Jhapa

22

Damak Branch

Damak, Jhapa

23

Hetauda Branch

Bank Road, Hetauda 4, Makawanpur

24

Narayangadh Branch

Sahid Chock ,Narayangadh, Chitwan

25

Baglung Branch

Mahendrapath, Baglung

26

. Tulsipur Branch

Shitalpur Road, Tulsipur

27

Ghorahi Branch

Ghorahi, Dang

28

Dhangadhi Branch

Main Road, Ward 4, Dhangadhi

29

Mahendranagar Branch

Mahendranagar, Kanchanpur

30

New Baneshwor Branch

New Baneshwor, Kathamandu

31

Halchowk Branch

Halchowk, Swoyambhu

24 | P a g e

32

Thamel Branch

Thamel, Kathmandu

33

Kaushaltar Branch

Kaushaltar, Bhaktapur

34

Chabhil Branch

Chabhil, Kathmandu

35

Maitidevi Branch

Maitidevi, Kathmandu

36

Satdobato Branch

Satdobato, Lalitpur

37

Balaju Branch

Balaju, Kathmandu

38

Kuleshwor Branch

Kalimati, Kathmandu

39

Khandbari Branch

Khandbari, Shankhuwashabha

40

Charikot Branch

Charikot, Dolakha

41

Dhulikhel Branch

Dhulikhel, Kavre

42

Gorkha Branch

Gorkha Municipality, Gorkha

43

Besisahar Branch

Besisahar, Lamjung

44

Chandragadhi Branch

Chandragadhi, Jhapa

45

Dhapashi Branch

Dhapshi, Kathmandu

46

Anamnagar Branch

Anamnagar, Kathmandu

47

Sinamangal Branch

KathmanduMetropolitan city, Sinamangal

48

Gwarko Branch

Gwarko, Balkumari

49

Attarkhel Branch

Jorpati,Attarkhel, Kathmandu

50

Janakpur Branch

Janakpur Dham, Dhanusha

(Source: www.nabilbank.com)

25 | P a g e

Appendix II: List of Commercials Banks in Nepal

S.No
N
Name

Operation Date (A.D.)

Head Office

Nepal Bank Limited

1937/11/15

Kathmandu

Rastriya Banijya Bank

1966/01/23

Kathmandu

Agriculture Development Bank Ltd.

1968/01/02

NABIL Bank Limited

1984/07/16

Kathmandu

Nepal Investment Bank Limited

1986/02/27

Kathmandu

Standard

1987/01/30

Kathmandu

Chartered

Bank

Nepal

Kathmandu

Limited.
7

Himalayan Bank Limited

1993/01/18

Kathmandu

Nepal SBI Bank Limited

1993/07/07

Kathmandu

Nepal Bangladesh Bank Limited

05/06/1994

Kathmandu

10

Everest Bank Limited

1994/10/18

Kathmandu

11

Bank of Kathmandu Limited

1995/03/12

Kathmandu

12

Nepal Credit and Commerce Bank

1996/10/14

Rupendehi

1998/07/17

Chitwan

1998/07/21

Morang

Limited
13
14

Lumbini Bank Limited

Nepal Industrial & Commercial Bank
Ltd

15

Machhapuchhre Bank Limited

2000/10/03

Pokhara

16

Kumari Bank Limited

2001/04/03

Kathmandu

17

Laxmi Bank Limited

2002/04/03

Birgunj, Parsa

18

Siddhartha Bank Limited

2002/12/24

Kathmandu

19

Global IME Bank Ltd.

2007/01/02

Birgunj, Parsa

20

Citizens Bank International Ltd.

2007/6/21

Kathmandu

21

Prime Commercial Bank Ltd

2007/9/24

Kathmandu

22

Sunrise Bank Ltd.

2007/10/12

Kathmandu

23

Bank of Asia Nepal Ltd.

2007/10/12

Kathmandu

26 | P a g e

24

Grand Bank Nepal

2008/05/25

Kamaladi

25

NMB Bank Ltd

1996/11/26

Babarmahal

26

Kist Merchant Banking & Finance Ltd.

2003/02/21

Kamalpokhari,

27

Janata Bank Nepal Ltd

2010/04/28

New
Baneshwor

28

Mega Bank Nepal Limited

2010/07/23

Kantipath,Ktm

29

Commerz & Trust Bank

2010/09/20

Kamaladi

30

Civil Bank Ltd

2010/11/26

Kamaladi

31

Century Bank Ltd

2011/03/10

Putalisadak

32

Sanima Bank

Naxal
(Source: www.nabilbank.com)

27 | P a g e