1

Chapter I

INTRODUCTION

1.1 Background

The word “Bank” is derived from the word “Banco” which means a bench. In the past, the
ancestor of modern banking system that was merchants, goldsmith and money lenders used
to perform the monetary task sitting on the bench not in the market. So, “Banco” was used
to denote monetary transactions.

Generally, the bank refers to that institution which are established under law for dealing
with monetary transactions. It means those institution are treated as banks which accept
the deposit of the public and grant loan to the needy person or businessmen or industrialist
against security deposits. A bank can generate revenue in a variety of different ways
including interest, transaction cost and financial advice. The main method is via charging
interest on capital it lends out of customers. The bank profits from the difference between
level of interest it pays for deposits and other sources of funds and level of interest it
charges in its lending activities. Besides this, bank is engaged in different types of activities
such as exchange of currency, joint venture, underwriting, bank guarantee, discounting bills
etc.

Different economists have given definition of Bank. Definition given by popular economists
is given below:
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According to Dr. H.L. Hart, “ A bank is the one who, in the ordinary of his business,
receives money which he pays by honoring cheque of persons from whom or whose
accounts receives.”

According to Kinsley, “Bank is an establishment to individuals, such advances of money as

may be required and safely made and to which individuals entrust money when not required
by them for use.”

According to U.S law, “Any Institution offering deposits subject to withdrawal on demand
and making loans of commercial or business nature is a bank.”

Therefore bank can be defined as a institution which deals with monetary transaction for the
mobilization of idle money or deposits into productive sector which is essential for the
development of whole nation.

1.1.2 An Introduction to Nepal Bangladesh Bank Ltd.

Nepal Bangladesh Bank is one of the leading “A” class bank licensed by Nepal Rastra
Bank. The Bank was incorporated in Nepal and registered with Office of Company
Registrar on the year 1994 January 14 as a public company limited by shares. The Bank was
established as joint venture bank with IFIC Bank Ltd., Bangladesh. Shares of the Bank are
listed in Nepal Stock Exchange Ltd. since 1995.

Presently Nepal Bangladesh bank ltd. is accepting deposit in following forms:

a) Saving Deposit
b) Call Deposit
c) Fixed Deposit
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1.2 Introduction to Deposit

It is important that a commercial bank deposit policy is the most essential policy for its
existence. The accommodation and utilization of deposit play a vital role for the
development of bank in any country. Thus it is necessary to know what a deposit is.

Commercial Bank Act 2031 defines deposit as the amounts deposited in a current, saving or
fixed a/c of bank.

In this regard the deposit position of NABIL Bank is good with comparison to other
commercial bank. It is able to collect deposit from the industrialists and other short period as
long as long period. The bank on other hand invests their deposits in the productive and
other sector at higher interest rate makes profit.

Commercial Bank usually accepts deposits from the public and institutions. Normally, they
are classified into two types. The following chart shows the types of deposits.

Figure 1.1 Types of Deposits

Deposit

Interest Bearing Deposit Non-Interest Bearing Deposit

Saving Fixed Call Recurring Current Margin

Deposit Deposit Deposit Deposit Deposit Deposit

Deposit Deposit Deposit Deposit Deposit Deposit

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1.3 Objectives

No Work is carried without the objectives. The following are the objectives of this report work
are :

1. To analyze the deposit scheme of Nepal Bangladesh Bank ltd.

2. To analyze the saving deposits and its interest rates.

3. To analyze the trend of saving and total deposits.

1.4 Rationale

As we know deposit facility is one of the important facilities provided by the bank. Deposit is the
lifeblood for any commercial banking institution. Effective Deposit Policy helps in proper
utilization of the available fund. Researcher has selected Nepal Bangladesh Bank ltd as the
subject of the study to study the effectiveness of current deposit policy of commercial bank.

This report has been prepared with the aim of showing the present picture of deposit status of
Nepal Bangladesh Bank ltd. , NRB guidelines for deposits, banks internal policy of deposits and
analysis of deposit pattern of the bank as a whole with specific reference to NB Bank.

 To know the comparative study of deposit trend of the bank

 To know existing saving deposit pattern and interest rate.
 To find the problem in existing performance.
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1.5 Review of Literature

1.5.1 Meaning of Literature Review

Literature Review is the act of reviewing or studying the previous research material on the
specific topic. To present the real framework of the research, only analysis of data is not
enough, review of some related materials are also essential to give the research a clear vision.
It covers the studies, which are conducted within or outside the country. Literature Review is
basically a stock taking of available literature in ones field of research.

This section basically concerns to the review of literature related to the deposits of N.B
Bank. It supports the researcher to explore the relevant and true facts for the reporting
purpose in the field of study. Every Possible effort has been made to grasp the knowledge
and information that is available from libraries, books, articles, journals, national and
international publications and other information bureaus.

1.5.2 Objectives of Literature Review

1. To know the research conducted in the chosen field

2. To identify the gap
3. To update on current issues
4. To develop research design
5. To know the research design
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1.5.3 Review of Related Study

Thapa (1991) conducted a thesis on “A comparative study on investment policy of

Nepal Bangladesh Bank ltd and other joint venture banks”.
The data were collected for five year period and the multiple regression methodology was
used. The study was conducted with the main objectives to find out whether the
commercial banks have been able to collect deposit from different sector, to find out
whether banks are to satisfy financial need of the economy, to find out the relationship
between deposits and loans.

The major findings of the study were that deposits are collected much more from
individuals and a deposit from organization is very low. They cannot utilize the deposit
properly. The researcher further found, there is positive relation between deposits and
loan.

Pradhan (1996 B.S) conducted a study on “Deposit mobilization its problem and
prospects in the context of Nepalese financial institutions.”
The study has presented that deposit is the life blood of every commercial banks and
other financial institution. The study further adds in consideration of most banks and
finance companies, the latest figure dopes produces a strong feeling that serious review
must be made of problems and prospects of deposit sector. Leaving few joint venture
banks, other organizations rely on the business deposit and credit disbursement.

The research has recommended for the prosperity of deposit mobilization by providing
sufficient institutional services in the rural areas, cultivating the habit of using rural
banking unit, adding services hour system to bank, organizing training programs to
develop skilled manpower by NRB, spreading co-operative it the rural areas for the
development of mini branch services to these backward areas.
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Bajracharya (1990) performed a study on monetary policy and deposit mobilization in

Nepal. Multiple Regression method was used for the research study. Primary and
secondary data were used for data collection. The study has found that mobilization of
domestic savings is one of the monetary policies in Nepal. For this purposes commercial
banks stood as the vital and active financial intermediary for generating resources in the
form of deposit of the private sector so proving credit to investor in different aspect of
economy.

1.6 Methods of Research

A systematic methodology is required to pick out an actual result for any special study.
Research means the search for knowledge. And methodology refers to the various sequential
steps that are adopted into the study. This study is undertaken to have a clear picture of trend
of deposits of N.B Bank. This study is based on analysis of 5 years data.

1.6.1 Meaning of Research

Research refers to the act of searching ne knowledge through a repetitive and systematic
process. Research is conducted for two purpose; one is to enhance the existing knowledge or
to develop a existing theory into the concerned field and second for identifying the problem
and searching the solution of such problem. Concisely, it can be said that research is a
systematic and organized study and analysis of an issue that helps to solve the problem or
develop new theory or add new knowledge in the existing theories or stock of knowledge.
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1.6.2 Research Design

Research design generally refers to the blue print of the research. It is the plan and structure
of investigation so conceived as to obtain answer to research questions. The plan is the
overall program of the research. It cycles from problem selection, data collection,
measurement and analysis and selection of methods of analysis of data, draw conclusion and
generalization of findings based on the availability of resource and tools.

There are generally 3 types of research design. They are:

1. Descriptive Research Design
2. Casual Comparative Research Design
3. Experimental Research Design

However, this report considers only with descriptive research design.

1.6.3 Nature and Sources of Data

There are generally 2 types of data. They are Primary Data and Secondary Data. Primary data
are those types of data which are collected for the first time. They are also known as first hand
data. And, secondary data refers to those data which have been collected before by the other
researchers, it also includes published and unpublished news, articles, etc

If the nature of data will be primary, source will also be primary such as respondents who give
the answer of the queries done by the researchers.

If the nature of the data is secondary, sources will also be secondary such as websites,
Organization’s brochures, Annul Reports.
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1.6.4 Decision of Sample

Sample refers to the group of item or people which are chosen out of the total population. There
are various sampling process such as Purposive sampling, cluster sampling, convenience
sampling, unit sampling. This report writing is based on Unit sampling as well as judgmental
sampling.

1.6.5 Data Collection Procedure

There are different ways through which data can be collected such as visiting organization,
getting approval, getting authorized information or by the help of websites of the organization,
published materials. This report writing is based on the data collected through published annual
reports and websites of the N.B Bank.

1.6.6 Presentation of Data

Data can be presented into various ways, only in the table, only in the graph, only through the
statistics calculation, or the combination of all of these. But this study follows the combination
of tables and figures to collect the data.

1.6.7 Data Analysis Tools

There are different tools by which data collected can be analyzed. If it is a financial data,
financial tools are used, if it is a statistical data, statistical tools are used. This Report
writing uses financial and statistical tools. Under financial tools such as such as ratio
analysis, interest rates of the banks are used. Under statistical tools such as coefficient of
variation, mean, standard deviation, trend line etc are used.
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1.7 Limitations

Although a great effort has been made in order to prepare a better design of report, it has
got some limitation. The limitation of the study is below:

 The study examines only the deposits condition of bank

 The study is mainly based on secondary data
 This report consists the data of the last 5 years from 2012/13-2016/17
 The time allocated for the completion of the report was limited.
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Chapter II

Results and Analysis

In this part, the data are presented and analyzed or studied. It is the major portion of the
report work that has been conducted. It relates to the objectives as well as relates the
methodology of the first chapter. By the use of various tools data are analyzed and
studied here and findings are derived. In this part of assignment the actual performance of
NB bank is analyzed.

2.1 Presentation of Data in Tables and Figures and their Analysis

Data Presentation is the main aspect of any fieldwork. Without an appropriate presentation of
data no fieldwork will be completed. Presentation of data have been made through the help of
pictures as well as tabular presentation in the report as it gives more attractive looks to the
collected data.

2.1.1 Saving Deposits Interest Rate

The amount charged, expressed as percentage of principal by a lender to a borrower for the use
of assets. Interest rates are typically noted on annual basis, known as the annual percentage rate
(APR). The assets borrowed could include, cash, consumer goods, large assets, such as vehicle,
land and building. When the borrower is a low risk party, interest rate charged will be low; if the
borrower is considered high risk, the interest rate charged will be higher.
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Table 1: Saving Deposits Interest Rate and Minimum Balance Requirement of NB Bank

S.N Particulars Interest Rate (P.A) Minimum Balance (NRS)

1 N.B Saral Bachat Khata 5.00% 100
2 Normal Saving 5.00% 1,000
3 NB Share Dhani Bachat khata 5.00% 100
4 Employee Saving Account 5.00% 500
5 NB Saving plus Account 5.00% 1,000
6 Grihini Bachat 5.00% 1,000
7 Bal Bachat Khata 5.00% 500
8 Anniversary Saving Accounts 5.25% 10,000
9 Social Security Deposit 5.00% Nil
10 Gaurav Bachat Katha 5.50% 15,000
11. Sambridhi Bachat khata 7.00% 25,000

Source: Annual Report 2073/74 of N.B Bank

The above table shows the interest rate given to the different deposits accounts as prescribed by
NB Bank. Different amount of minimum balance is prescribed by NB Bank to the different
saving accounts. The saving amounts are useful for the investment to the different sectors of the
economy by the bank.
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2.1.2 Total Deposit

Total Deposit of NB Bank during 2013-2017

Table 2: Total Deposit of NB Bank (Rs in millions)

Fiscal Year Total Deposit

2012/13 17845
2013/14 25706
2014/15 33832
2015/16 39874
2016/17 43713

( Source: Annual Report 2012/13 – 2016/17 of NB Bank)

The above table shows the total deposit made by the bank during the year 2012/13 to 2016/17. It
shows that the bank deposits have increased in the consecutive 5 years. Increase in deposit helps
to liquidate the money by the bank to general public in form of loan, investment in various
sectors.
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Total Deposit

Total Deposit

50000
43713
45000
39874
40000
33832
35000
30000
25706
25000
20000 17485
15000
10000
5000
0
2012/13 2013/14 2014/15 2015/16 2016/17

Fiscal Year

Figure 1: Total Deposit

This is the graphical representation of table 2. In x- axis we have fiscal year and in y-axis we
have total deposits. This bar diagram gives clear picture of increasing total deposits in every
fiscal year.
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Total Deposit

39

98
2012/13
58
2013/14
2014/15
2015/16
2016/17
76
89

Figure 2 : Total Deposit

The above pie chart shows that there is a slightly annual increment in total deposits in every
fiscal year from 2012/13-2013/14, but after that there is more increment in total deposit from
2015/16.
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2.1.3 Saving Deposit

Table 3: Saving Deposit of NB Bank (in millions)

Fiscal Year Saving Deposit

2012/13 5931
2013/14 7421
2014/15 9581
2015/16 11172
2016/17 9896
(Source: Annual Report 2012/13 to 2016/17 of NB Bank)

The above table shows that there is the increasing trend in the saving deposits of NB Bank
saving accounts has increased from 2012/13 to 2015/16 and has decreased in 2016/17.
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12000 11172

9896
10000 9581

8000 7421

5931
6000

4000

2000

0
2012/13 2013/14 2014/15 2015/16 2016/17

Figure 3: Saving Deposit of NB Bank

The above figure is the graphical representation of the table 3 which helps to give the clear view
of the saving account. We can see that saving deposits has increased in 4 years and has declined
in the year 2016/17.
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2.1.4 Saving Deposit to Total Deposit Ratio

It is the proportion of the two variables. It can be calculated as:

Saving to Total Deposit Ratio = Saving / Total Deposit × 100%

Table 4: Saving Deposit to Total Deposit Ratio

(Nrs. In millions)

Fiscal Year Saving Deposit Total Deposit Ratio

2012/13 5931 17845 33.92
2013/14 7421 25706 28.87
2014/15 9581 33832 28.32
2015/16 11172 39874 28.02
2016/17 9896 43713 22.63
Source: Annual Report of N.B Bank from the year 2012/13 to 2016/17

Here the above table shows the ratio of saving and total deposit of NB Bank which is in
decreasing trend since the last five years which are 33.92%, 28.87%, 28.32%, 28.32% and
22.63% in the year 2012/13, 2013/14, 2014/15, 2015/16 and 2016/17 respectively.
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Saving Deposit to Total Deposit Ratio

40

35

30

25

20

15

10

0
2012/13 2013/14 2014/15 2015/16 2016/17

Here, the above ratio trend line shows the ratio between saving and total deposit of NB Bank
from fiscal year 2012/13 to 2016/17. Saving to Total Deposit ratio has decreased in rapid manner
from the year 2012/13 to 2013/14, and has decreased slowly from the year 2013/14 to 2015/16
and it has again decreased in rapid manner from the year 2015/16 to 2016/17.
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2.1.5 Statistical Tools

Various Statistical tools are used to measure the accuracy of the collected data and information.
They are as follows:

1 .Mean

Mean or simply a “Arithmetic Mean” of set of observation is the sum of all the observations
divided by the number of observations. Arithmetic Mean is also known as arithmetic average. It
is calculated as:

x

X=

2. Standard Deviation

The standard deviation is the absolute measurement of dispersion in which drawbacks present in
other measure of dispersion are removed. It is said to be the best measure of dispersion as it
satisfies most of the requisites of a good measure of dispersion. Standard deviation is defined as
the positive square root of the mean of the square of the deviations taken from the arithmetic
mean. It is calculated as:

1
Standard deviation (σ) = √ Σ(X-𝑋̅)2
𝑁
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3. Coefficient of Variation (C.V)

It is a relative measure of risk. Coefficient of variation is the tools that measure the risk in terms
of per unit of return.

𝜎
Coefficient of Variation (C.V) = × 100
𝑥̅

2.1.6 Statistical Analysis

Table 5: Calculation of Standard Deviation, Mean, and co-variance

Fiscal Year Saving Total ̅) 𝟐

(𝐗 − 𝐗 ̅) 𝟐
(𝐘 − 𝐘
Deposit(X) Deposit(Y)
2012/13 5931 17845 8231161 214241769
2013/14 7421 25706 1901641 41165056
2014/15 9581 33832 604961 2924100
2015/16 11172 39874 5626384 60043504
2016/17 9896 43713 1201216 134351281
Total 44001 160610 17570363 452775710
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Calculation of Mean

𝛴𝑥
̅) =
Mean (𝒙
𝑛

44001
For Saving Deposit (𝑋̅)=
5

= 8800

160610
For Total Deposit (𝑦) =
5

= 32122

Calculation of Standard Deviation

Standard Deviation (σ) = √1/𝑛Σ(X-X)2

For Saving Deposit (σx) = √17570363/5

= 1874.59

For Total Deposit (σy) = √452775710/5

= 9516.05
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Calculation of Coefficient of Variation

𝝈
Coefficient of Variation (C.V) = ̅ × 100
𝑿

𝝈
For Saving Deposit (C.Vx) = ̅ × 100
𝑿

1874.59
=
8800

= 21.30%

𝝈
For Total Deposit (C.Vy) = ̅ × 100
𝑿

9516.05
=
32122

= 29.62%

Here, C.V of total deposit is greater in comparison to C.V of saving deposit. Hence, we can state
that the risk associated with total deposit s greater than saving deposit.
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2.2 Findings of Study

From the above presentation and analysis of data, the following findings can be drawn:

 The average deposit of total deposit is higher in comparison to total deposit.

 There is average rate of saving deposit out of its total deposits which increases from 5931
million in 2012/13 to 11172 million in 2015/16 and decreases to 9896 million in the year
2016/17 and the total deposits of bank is also increasing by its side in its every fiscal
year.

 The percentage increment in total deposit is decreasing year by year.

 Standard Deviation of total deposit is higher in comparison to C.V of saving deposit.

 Coefficient of Variation of total deposit is higher in comparison to saving deposit. This

shows that the there is greater risk in total deposit than saving deposit.
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Chapter III

Summary and Conclusion

3.1 Summary

The study of this project report was mainly conducted to analyze the deposit situation of Nepal
Bangladesh Bank Ltd. Deposit is the life blood for any commercial banks. Banks generally make
income from the amount deposited by the public by lending the amount of deposits to the needy
people by charging interest amount. Therefore, deposit plays a vital role and holds major
importance and is worth doing research works. Hence, the major objective of this study was to
analyze the deposit scheme of the bank, to analyze the saving deposit and its interest rate of the
bank and to analyze the trend of total deposit and saving deposits of Nepal Bangladesh Bank Ltd.
The data that were used were of last 5 years and suggestion of for betterment in the existing
position for partial fulfillment of getting Bachelors Degree in Bachelor of Business Studies
(BBS).

Nepal Bangladesh Bank is a leading “A” class bank licensed under Nepal Rastra bank. The bank
was incorporated in Nepal and registered with office of company registrar (50-050/051, dated
January14, 1994) as a public company limited by shares. The bank was established as joint
venture bank with IFIC Bank Ltd., Bangladesh. Shares of the bank are listed in Nepal Stock
Exchange Ltd. since 1995.

During Research period different research methods of research were used. The nature of report is
quantitative and the secondary sources of data were used. Secondary data were mainly collected
from the annual reports that the bank publishes on yearly basis and brochure of Nepal
Bangladesh Bank Ltd. and website of Nepal Bangladesh Bank Ltd.
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3.2 Conclusion

From the presentation and analysis of data relating to deposits of the bank we can conclude that
the trend of general public to open saving deposit account with Nepal Bangladesh Bank Ltd has
been increasing from the year 2013/13 to 2015/16 and has decreased in the year 2016/17 by
small margin. However, the bank has been able to maintain a good rate of saving deposit than its
competitors. Therefore, it shows that the bank has been able to maintain sound reputation among
its competitors.

The table 2.4 analyses shows that there is low rate of saving deposits out of its total deposits
which increases from 5931 million in 2012/13 to 11172 million in 2015/16 and decreases to
9896 million in 2016/17 and total deposit of the bank has also been increasing side by side in
every fiscal year. Here, the above ratio table no. 2.4 shows the ratio between saving and total
deposit of N.B Bank which has been decreased in every fiscal year which are 33.92%, 28.87%,
28.32%, 28.02% and 22.63% in 2012/13, 2013/14, 2014/15, 2015/16 and 2016/17 respectively.
The average saving deposit of NB Bank is 28.352 % .Though the saving to total deposit ratio of
N.B Bank is in decreasing trend, it has been performing well in the market in comparison to its
rival in case of saving deposit.

There is certain reason for existing customer of saving account of any bank to shift to another
bank. The level of service in terms of delivering whatever is promised fast response fast in case
of problems, is the most important benefit that the customer seek, from the bank where they have
their saving account. Most of the people were not aware about the product and service of N.B
Bank. Network reach and visibility of a bank is very important criteria for the customer while
opening a saving account.