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Chapter one

Introduction

1.1.1 Introduction of bank


On the modern time bank is one of the important financial institution dealing with
money credit and financial assets. In other words, it is an institution which deals with
money by accepting various types of deposits from the depositor under various deposit
schemes thereby allowing interest on them and also lending loans as mortgage to deficit
unit for productive use by charging interest bank accepts various types of deposits from
depositor which are repayable on demand on the short notice. Thus it helps in
mobilization of cash from saver groups to user groups.
Bank also encourage the use of various credit instruments such as cheque,
demand drafts, overdrafts and bills of exchange for safe and faster remittance of money
from one place to another.
"The bankers business is to take the debts of other people to offer his own in
exchange and thereby create money”.
"An organization whose principle operations are concerned with the accumulation
of the temporarily ideal money of the general public for the purpose of advancing to other
for expenditure."
"Any institution offering deposits subject to withdraw on demand and making
loans of a commercial or business nature is a bank."
"A commercial bank refers to such types of bank which deals with money
exchange, accepting deposits, advancing loans and commercial transaction except
specific banking related to co-operative agricultural and industry and other objective."
1.1.2 Banking scenario in Nepal
In Nepal the history of growth of organized banking sector is not old however
according to the historical document it can be said that as like as the other countries
banking services had been provided from very ancient period in Nepal by traditional
bankers like landlords, village merchants, Money lender, Goldsmith and others.
However, the modern banking has been started from the establishment of "Tejarath
Adda" in the period of Ranodip Singh in 1933 B.S. But Tejarath Adda was not the bank
in original sense because it did not collect deposit from public but give loans to
employees and public bullion. The first organized bank was established in Nepal only
after establishing Nepal Bank Limited on 1944 B.S. and started to work from 1 Baisakh
1944 B.S. Nepal Rastriya Bank started to provide its services as central bank in 2013 B.S.
to contribute on growth of financial sectors. After establishment of central bank
development becomes possible. Another commercial bank established in Magh 22, 2022
B.S. named as Rastriya Banijya Bank.
Till 2014 B.S. government adopted principle of protectisation to protect the
interest of national bank therefore the rate of development of banking sector is very slow
but government follows the principle of economic liberalization in 2042 B.S. and after
that they allowed the establishment of joint venture banks also with the co-operation of
foreign banks. In this series the first commercial bank was established in the name of
Nepal Arab Bank Limited in 2042.

1.1.3 Types of bank


Banks are of various types, which are explained below as:-
IV. Commercial bank: commercial banks are those banks which perform all
kinds of banking function as accepting deposits, advancing loans, credit
creation and agency function. In Nepal 18 commercial banks are
operating.
V. Development bank: Development banks are established for certain
sector. They collect funds from share capital, debenture and long term
deposit. They normally give long term loan and provide technical and
other advice as well.
VI. Saving bank: Saving banks help to promote small saving and mobilize
them. They have been very successful in Europe and other advice Asian
countries. Postal saving scheme is one of the types of saving bank in
Nepal.
VII.Central bank: - It is the apex bank in a country, which controls its
monetary and banking structure. It is owned by the government of the
country and operates in national interest. It regulates and an issues
currency, perform banking and agency services for the state, give cash
reserve of commercial
bank, keeps and manage international currency act as a clearance house, act as a lender of
last resort, etc. In Nepal, Nepal Rastriya bank is a central bank.

VIII.Co-operative banks: - Co-operative banks are those financial


institutions which are organized on principle of co-operation. They
provide short term loan to their members.

1.1.4 Functions of commercial banks


Modern commercial bank discharges various functions, local conditions, national
policy, structure of money market etc has impact upon function of commercial bank. The
functions of bank can be described by:
IX. Accepting deposit: This is the oldest function of bank. Bank accepts three kind of
deposit from its customer. Generally bank collects deposits in form of fixed
deposit, saving deposit and current deposit.
X. Advancing loan: This is the primary function of bank; banks provide loans
against the different securities like government securities, company's shares and
debenture, promissory notes, etc. Bank charge some interest which is greater than
that it provides on deposit to depositors.

XI. Credit creation: It is one of the most important functions of bank. Bank accepts
deposit and advance loan by keeping small cash in reserve for day to day
transaction. When a bank advances a loan, it opens an account in the name of the
customer and doesn't lend him in cash. But allows him to draw the money by
cheque according to his needs. By granting the loans bank create credit.
XII.Financing foreign trade: Bank finance foreign trade of its customers by
accepting foreign bill of exchange and collecting them from foreign bank.
XIII.Agency service: A bank act as an agent of its customers in collecting and paying
cheque, bills of exchange, draft, dividend, etc. it also buys and sales shares,
securities, etc. for its customers. Further it pays subscription, insurance premium,
rent, electrics, and water bills on behalf of its client. Bank charges fee on these.

1.1.5 Need and importance of commercial bank:


Banks plays an important role in the development of economic condition of
country. Economic condition can't be operated without the co-operation of the bank.
Bank's need and importance can be explained as bellows:
XIV.Formation of private investment: To increase the ratio of economic
improvement it is a must to use private investment scientifically
XV.Rapid economic development: Bank play vital role in rapid economic
development from the above duty. Bank provides different kinds of short term,
long term and middle term loan for agriculture, industries, trades, etc.
XVI.Capital formation: In the development of country's capital formation bank
plays vital role. It is very important because developing country suffers from
problem of liquid capital of common people. Industrial institutions use that
capital in production function and provide loan to government.
XVII.Mobilized capital: Banks collect scattered saving from the different part of
the country in the form of saving account, current account and fixed accounts.
Bank also provides some interest to depositor.

1.2 Introduction of the study


This study is undertaken to have a clear picture of RBB and resource mobilization
and utilization. It is very important to know the historical background of the RBB and
how RBB mobilizes resources and utilize them to research maker. For this study various
books are followed.

1.2.1 Historical development of RBB


The first bank established in Nepal was Nepal Bank Limited. Before
establishment of this bank Nepalese economy was facing and suffering from many
economic and banking problems in absence of modern banking institution. Those days
Nepalese economic was not in position to mobilize the saving scattered in small amounts
in nooks and corner of the country.
With the adoption of plan economic development program in Nepal, development
activities increased more and consequently both public as well as private sector felt the
dearth of resources. The existing banking system was not sufficient to meet the growing
need of the country. The only commercial bank, Nepal Bank Limited was not sufficient
to provide adequate banking facilities. The growing awareness emergence of some
industries and other development program, the need for modern banking facilities was
felt more and more important. Therefore, the need was felt for the establishment of
another commercial bank. And it was in the context that the Rastriya Banijya Bank was
established in Magh 10, 2022 B.S. under the Rastriya Banijya Bank act 2022 with the
explicit objectives of providing banking facilities to areas or regions of the country not
covered by Nepal Bank Limited. And making RBB activities more development oriented.
Nepal Rastriya Bank gives the new landmark to development of bank in Nepal.

1.2.2 Focus of the study


In the developing countries like Nepal there is always lack of financial resources because
of the available resources are not properly mobilized and are not fully utilized for the
productive purposes. The geographical structure of Nepal also cause problem in
collection of deposit and utilization of it. Although in terai region, the collection of
resource and its utilization is good but in hilly and mountainous region resource
mobilization is poor. There are the strong reasons for back-warded Nepalese economic
life. Most banking exports have pointed out that the financial help from abroad can do
only a little for the economic development of a developing country as compared to proper
utilization of domestic resources for the productive purpose.
As a matter of fact there are several financial problems in the Nepalese
economic context, which are hindering the economic upliftment of Nepalese people.
Important problems are absence of organized money and capital market, little opportunity
for profitable and productive investment, and lack of perfect entrepreneurship etc. To
sum up mobilization of domestic saving into productive uses is the control focal point in
the modern sphere of development.
Rastriya Banijay Bank, commercial Bank of Nepal deserves special importance in
the present study. Rastriya Banijya Bank (RBB) is playing vital role in the resource
mobilization and utilization for Nepal's economic development. The aim and objective of
RBB can be pointed out by following points:
XVIII.To accept deposit of any persons on interest and without interest.
XIX.To grant loans against Nepalese and foreign government securities share
debenture of the companies, bills of exchange and promissory notes.
XX.To purchase discount and issue bills of exchange promissory notes, cheque or
bonds etc.

RBB collecting dispersed small saving and utilization it in the national


investment. About 200 branches of RBB operate in different parts of the country.
Most of the branches operate in terai region while many branches of hilly region are
placed out because of Maoist. So the resource mobilization in hilly region is not on
proper way.
1.2.3 Research problem
XXI.The total amount of resource utilization is spread among different heads to
accord our true development.
XXII.Priority sectors have got a very little figure as compare to total loan and
advances.
XXIII.The resources are also not focused on the HMG securities.
XXIV.The main problem is how the total amount of resource utilization is spread
among different hands to accord our true development needs.

1.3 Rules and regulation adopted by RBB


Whenever bank offers credit facilities to the borrower, it is always subject to the
terms and condition stipulated in the sanction letter. Every loan sanctioned is subjected to
certain rules and regulation which can be lenient astringent depending upon the
bargaining capacity of the bank and borrower.
Generally bank sanctions loan to subject under all or any of the following
condition:
XXV.Interest rate
XXVI.Repayment frequency
XXVII.Disbursement frequency
XXVIII.Expiry of the facility
XXIX.Commitment Fee
XXX.Documentation
XXXI.Bank's right of inspection
XXXII.Bank's right to call bank the facilities

1.4.1 Importance of Resource Mobilization:


Mobilization of domestic resources holds great importance in the
economic development of underdeveloped countries like Nepal. Following are the main
importance of resource mobilization: -
XXXIII.Accumulation of small saving from different sectors can fulfill the needs of
fund for economic development.
XXXIV.Domestic resource mobilization is very important because underdeveloped
economics have growing needs of financial resources for development.
Resources are also used to finance the long term debts assets and government securities.

1.4.2 Management Techniques for Resource Mobilization


Obviously, it is known to all that, in the lack of clear vision and systematic
management, any business or project can't run well. A bank should keep its eyes on the
management aspect too, when it is going to mobilize its resources. Generally, in every
banks and institutions management techniques plays great role to divide section and
department of the project and to arrange special programme and evaluation for the
development of project. The study of management techniques for resources mobilization
can be done according to the following methods: -
XXXV.Technology: - A bank studies technological aspect too when it is going to
utilize its resources. How and what type of technology available in the market? Or
not? Is the technology good or bad? Is the technology suitable for the
management or not? Etc.
XXXVI.Efficiency of plant and equipment: - The bank should examine the plant
and equipment used in its management. What is the price of such equipment in
the market? Is there any possibility of repairing the damaged equipment again or
not?
XXXVII.Technical competence: - A bank should examine the technical capacity of
plants used by its management. The bank should see the competency of technician
and the capacity of machine.
XXXVIII.Experience: - Persons involved in management should be experienced.
Management can't competent without experienced persons. Such experienced
person run the management related to their sector, the management can surely get
success.

1.4.3 Economic feasibility of resource mobilization and its utilization


The general economic and market conditions decide the economic feasibility of any
project. Economic feasibility is to find the pulse of the economy and the market in terms
of demand, supply, competitions marketability, business environment etc. On the basis of
which the investment is returned safely and on time. In this aspect, the banker is most
concerned with sales which depend upon the demand and the economic price. Genuine
statistics in this regard must be sought by the bank as to come to the nearest point of
accuracy. Some of the factors to be examined are briefly explained as follows: -
XXXIX.Demand: - Demand for the product must be reconciled by the variables
like aggregate demand, population, standard of living, income level, consumer
preferences, export potential etc.
XL.Supply: - This is calculated on the basis of domestic production with the net
imports and exports of the product.
XLI.Price: - Consideration of tax, duties, rebates, discount concessions etc.
XLII.Economic policy: - Economic policy of the government likely to come in
future or present economic policies etc must be considered thoroughly.
XLIII.Market: - This depends upon the nature of the product, buyers packaging,
credit provision, perishable, durable consumer, seasonal and marketing
strategy.

1.5.1 Scope and objectives of deposit


It is important that a commercial banks deposit policy is the most essential policy
for its existence. The growth of bank depends primarily upon the growth of its deposits.
Thus, deposits are one of the aspects of bank liabilities that management has been
influencing through deliberate actions. The policy of the bank in respect of deposits is
shaped by its operation horizon. Bank policy in respect to deposits is clearly reflected in
the options exercised by customers in using retailer or whole sale market.
Thus importance factors that influence the deposits of bank are given
below: -
XLIV.Interest rates: - The basic factors that determine the deposits in a
particular bank is the earning from the deposits.
XLV.Types of customers: - The nature of customer is also the second factor
determining the volume of deposits.
XLVI.Physical facilities: - The physical facilities available in the bank in respect
to the depositors also decide the quantum of deposits in a bank.
XLVII.Management accessibility to customer's: - The management's capacities
to access the customer's especially large deposits such as telecommunication
Authority College etc. also decide the velocity of deposits.

1.5.2 Types of Deposits


Banks are innovating and offering new deposit plans and pricing scheme to win
the competition in challenging banking market. The deposits are collected under variety
of accounts. On the basis of nature and feature of deposits can be classified into three
types. The basis three types of deposit most common in modern banking market are: -
A) Demand deposits: - A demand deposit is a deposit that can be withdrawn on
demand at any time and in any amount up to the full amount of deposit. The most
common example of a demand deposit is a checking account (United States).
Checking accounts are also considered transactions accounts, in that payments can be
made to third parties that is to someone other than the depositor or the bank itself.
Demand deposits can be further classified into two categories namely: -

a) Non- interest bearing demand deposit:- In these deposits, banks provide the
account holders with the facilities of payment services, safekeeping funds record
keeping for any transaction carried out by cheque.
NIB demand deposit can be withdrawn without prior notice. So, it is the
most volatile and least predictable of a bank sources of funds, with the shortest potential
maturity.
XLVIII.Interest bearing demand deposit: - It is the interest bearing demand deposit
that allows cheque to be written against them. These deposits provide the
customer with payment services etc. It appears in the form of negotiable order of
withdrawal account.
XLIX.Saving deposits: - Saving account pay interest to the depositors, but have no
specific maturity date on which the funds need to be withdrawn or reinvested.
Any amount can be withdrawn from a saving account up to the amount
deposited. Withdrawals can also be made by using their Automated teller
machine (ATM) card.
L. Time deposits: - Time deposits are those deposits on which the depositor and the
bank agree that the money will not be withdrawn without substantial penalty to
the depositor before a specific date. These are frequently called certificate of
deposits. Because of a substantial early withdrawal penalty, time deposits are not
as liquid as demand or saving deposits nor can depositors write cheque against
them.

1.5.3 Loan management


Loan management is necessary for commercial bank while granting loan to its customers.
Bank determines the loan policy on the basis of its objective capacity. Bank must follow
the loan policy under the condition of country and central bank directives.
There is number of demand markets and suppliers of loan in money market.
Among them there is high complection for interest, service securities, etc. in this
condition bank requirement formulating good and capable loan policy. While formulating
loan policy bank consider in bank's liquidity, safety and profit etc. and interest in the
most profitable sector.

1.5.4 Loan Recovery


Bank must require collecting its loan from customer. Loan recovery is important function
of the bank that has the objective of profit maximization, therefore, banks loan
management department has to follow following function:
LI. Banks require collecting lump sum interest in short term loan and collecting
interest in installment in long term loan.
LII.Banks require getting repayment of loan according to deal with customer.
LIII.Banks require auditing the loan whether it is used in the predetermined objective
or not by loan taker.
LIV.All the document relating with interest recovery and loan recovery are kept
safely so that may be created in future.

1.5.5 Credit policy


A proper credit policy is very important in loan management of a commercial
bank. The credit policy is defined as a decision made by the bank management in
advance about the management of credit.
The main purpose of bank is to maximize the profit and shareholder wealth. For
bank this collect saving under different heading and invest them in productive sectors.
The interest obtained from granting loan is the main source of income for bank.
Therefore, bank requires formulating credit policy considering risk and return. They
provide term and medium term loan to their member.
Co-operative act was introduced in Nepal in 2048. Navajeevan co-operative
society limited is the first co-operative bank.

1.6 Objectives of the study


LV.To calculate the trend of resource mobilization of RBB.
LVI.To sketch the picture of loan diversification.
LVII.To calculate the area of mobilization of resources in compare to the need.
LVIII.To find out the over all utilization of the resource of RBB.
LIX.To utilize the resources in productive and needy areas.

1.7 Limitation of the study


This research work confines only to the resource mobilization and utilization of
RBB other than Nepal bank limited and other commercial bank of Nepal. The study has
been undergone through the data of last five year only. The time factor is also to be
considered as the limitation.

1.8 Research methodology


Research methodology is a way to systematically carry out the research.
“Research methodology refers to the various sequential steps adopted by researcher in
studying a problem with certain objectives with in view”. For writing a report, reliable
data play a great significance role. So we have to collect the adequate data from the
related organization and institute to make the report viable. At first, we have to fix the
subject mater of the report and then we should consult with the related staff of related
institute for data collection.

The various aspects of research methodology of data collection are as follows:


i) Research design ii) source of data
iii) Method of analysis iv) Tools used for analysis

1.8.1 Research design


“A research design is an arrangement of condition of collection and analysis of
data in a manner that aims to combine avalanche to the purpose with economy is
procedure”.
The project of the study is designing on “Resource Mobilization and its
Utilization” of Rastriya Banijya Bank, which consists of 3 chapters. Each chapter is
designed on different matters, which specifies different dealings of related chapters. Thus
chapter one is designed on Introduction, chapter two is on Presentation and Analysis of
data, chapter three on Summary, Conclusion and Recommendation.

1.8.2 Sources of data


This method used in preparing the report are based on these two types of data:
LX.Primary data:
Primary data is the data which is generally collected by the investors or researcher
directly by himself/herself. The data collected this way are the first hand data. Its
technique includes observation, survey, interview, questionnaires etc.

LXI.Secondary data :
Secondary data is the data is collected by someone else and had already been used by
other as well. It is the data that has been gathered not for the immediate study but for
some other propose. Secondary data can be obtained either from public or private
source. It is collected indirectly.
This study is connected on the basis of secondary data. The data relating to the Resource
Mobilization and its Utilization are directly obtained from official record of Rastriya
Banijya Bank, Maharajgunj Bank.

1.8.3 Methods of analysis


To achieve the objective of the study, the various and financial tools have been
used in the study. The analysis of data will be done according to the pattern of data
available some strong accounting tools has been used for the financial analysis.

1.8.4 Tools used (statistical)


1) Table
2) Line graph
3) Coefficient correlation

Chapter Two
Data Presentation and Analysis

2.1 Introduction
The present chapter deals with the presentation and analysis of data regarding
resource mobilization and utilization of RBB. Data concerning resources and their
utilization are tabulated separately on different heading on the resource side. We have
deposits; borrowing loans, etc.are resources side. Deposits are classified as current
deposit, fixed deposit, saving deposit, and miscellaneous deposit.
Likewise in the utilization side also the classification is made as such loan and
advances, investments in corporation and company priority sector, bills purchased, etc.

2.2 Deposit mobilization


RBB collects the deposit under different headings such as saving deposit, current
deposit, fixed deposit and miscellaneous deposit. These data are present in following
table.
Table no. 1 : Current deposit of RBB (Rs. in '000')
Amount of current
Year deposit % change
2061-62 46535 0
2062-63 45859 -1.45%
2063-64 60779 32.5%
2064-65 49219 -19.01%
2065-66 65658 33.39%

Deposits are most important resources of any commercial bank. Current deposit is
one among them. Current deposit doesn't provide fund for any specific term. The bank
doesn't rely on it for its resources needs. Yet it has got some importance in the sense that
it decreases a significant amount of fund as compared to other types of deposit.
Viewing to the above table the amount of current deposit is decreased in 2062-63
and it was increased in 2063-64 to Rs. 60779 by 32.5%.In year 2064-65 it was decreased
by 19.01% but in year 2065-66 it was increased to Rs. 65658 by 33.39%.

Graph showing current deposit

70000

60000

50000

40000

Amount of current deposit


30000
Percentage change

20000

10000

0
2061-62 2062-63 2063-64 2064-65 2065-66

-10000
Graph no.1

Table no.2: Saving deposit of RBB (Rs. in '000')


Amount of saving
Year deposit % change
2061-62 134799 0
2062-63 118614 -12%
2063-64 124131 4.65%
2064-65 131075 5.59%
2065-66 132514 1.09%

Above table shows the amount of saving deposits is increasing year by year except in
the year 2062-63.In year 2063-64 it was increased by 4.65% and it was further
increased in 2064-65 by 6.75%.The increase of deposits shows the expansion of
economic activities as well as success for mobilization of resource of the country. This
also shows that the saving habit is improving and even Nepalese people with lower
income are using banks for depositing their small savings.
.

Graph s how ing s aving deposit

160000

140000

120000

100000

80000
Amount of saving deposit
60000 percentage change

40000

20000

0
2061-62 2062-63 2063-64 2064-65 2065-66
-20000

Graph no.2
Table no.3: Fixed deposit of RBB (Rs. in '000')

Year Amount of Fixed deposit % change


2061-62 75796 0
2062-63 73478 -3.05%
2063-64 66444 -9.57%
2064-65 45447 -31.60%
2065-66 31338 -31.04%

Fixed deposit is one of the most important deposits as compared to other deposit. It
generally looked with large amount of fund as compared to other types of deposits. The
deposit mostly depends upon the rate of interest. If the rate is high deposit increases and
vice-versa.
Now the above table shows that the deposit is decreased from year to year. The
decline in deposit may be caused by the decline in interest rate compared to other banks.
In year 2061-62 the fixed deposit amount was high but in year it was decreased to
Rs.73478 by -3.05%. It was even more decrease in year 2064-65 to Rs. 45447 by
-31.60%. In year 2065-66 it was further decrease by -31.04%. Therefore, the people are
not interested in depositing their saving in bank.
Graph s how ing fixed deposit

80000

70000

60000

50000

40000
Amount of Fixed deposit
Percentage change
30000

20000

10000

0
2061-62 2062-63 2063-64 2064-65 2065-66
-10000

Graph no.3

Table no. 4: Miscellaneous deposit trend of RBB (Amount in '000')


Amount of Miscellaneous percentage
Year deposit change
2061-62 2243 0
2062-63 1213 -45.92%
2063-64 2068 70.48%
2064-65 2546 23.11%
2065-66 3246 27.49%

Miscellaneous deposit includes margin and cashier deposit. The table shows that
miscellaneous deposit is decreased in 2062-63. But in year 2063-64, 2064-65, 2065-66 it
was increased to Rs. 2068, 2546, and 3246.
The decrease in miscellaneous deposit may be due to bad economic condition of
the country.

Graph showing miscellaneous deposit

3500

3000

2500

2000
Amount of Miscellaneous
deposit
1500
percentage change

1000

500

0
2061-62 2062-63 2063-64 2064-65 2065-66
-500

Graph no. 4

Table no. 5: Total deposit trend of RBB (Amount in '000')

Year 2061-62 2062-63 2063-64 2064-65 2065-66


Deposit
Current 46535 45859 60779 49219 65658
Saving 134799 118614 124131 131075 132514
Fixed 75796 73478 66444 45447 31338
Miscellaneous 2243 1213 2068 2546 3246
Total 259373 239164 253422 228287 232756
% Change 0 -7.79% 5.96% -9.91% 1.95%
The total deposit shows the totals of current, saving, fixed, and miscellaneous
deposits. Deposits are the main source of the bank. In year 2062-63 it was decreased to
Rs. 239164 by -7.79% but in year 2063-64 total deposit was increased by 5.96%.
Similarly, in year 2064-65 it was decreased to Rs. 228287 by -9.91%. In year 2065-66 the
total deposit was increase to Rs. 232756 by 1.95%.

Graph showing total deposit trend of RBB

300000

250000

200000

2061-62
150000
2062-63
2063-64
2064-65
100000
2065-66

50000

0
us

e
nt

g
it

ag
ta
in

eo
os

e
re

ix

To
av

nt
ur
ep

n
F

ce
la
S
C
D

-50000
el

er
c

P
is
M

Graph no. 5

Table no. 6
Amount of fund transferred trend of RBB (Amount in '000')

Amount of fund
Year transferred % change
2061-62 1567515 0
2062-63 1487558 -5.10%
2063-64 1190000 -20%
2064-65 950000 -20.16%
2065-66 1050000 10.52%

In under developed country, there is always lack of capital to utilize for the development
purpose deposit is insufficient to fulfill the investment need. In such situation RBB
Maharajgunj branch got fund transferred from central office Kathmandu and other
branches of RBB. In RBB Maharajgunj branch fund transferred was decreased in year
2062-63, 2063-64, 2064-65 to Rs. 1487558, 1190000, 950000. But in year the fund
transferred was increased to Rs. 1050000 by 10.52%.

Graph show ing a mount of fund tra ns ferred of RBB

1800000

1600000

1400000

1200000

1000000
Amount of fund transferred
800000
Percentage change
600000

400000

200000

0
2061-62 2062-63 2063-64 2064-65 2065-66
-200000

Graph no. 6

Total resource available to RBB (Amount in '000')


Amount of Total resource Amount change per
Year available year % change
2061-62 1826888 0 0
2062-63 1726722 -100166 -5.48%
2063-64 1443422 -283300 -16.40%
2064-65 1178287 -265135 -18.36%
2065-66 1282756 104469 8.86%
Resources are the prime concern of RBB, without resources commercial bank cannot run
its daily performances well. Viewing above table the amount of total resources available
to RBB Maharajgunj branch was decreased in year 2062-63, 2063-64, and 2064-65. But
in year 2065-66 it was increased to Rs. 1282756 by 8.86%.

G ra p h sh o w in g to tal re so u rc es

2000000

1500000

A mount of T ot al res ourc e


1000000 availa ble
A mount c hange per ye ar

500000 % c hange

0
206 1-62 2062-63 2063-64 2064-65 2065-6 6

-500000

Graph no. 7
Table no.8: Loan granted by RBB (Amount in '000)
Year Amount of Granted Loan % change
2061-62 1225041 0
2062-63 1122369 -8.38%
2063-64 966053 -13.92%
2064-65 707835 -26.72%
2065-66 822164 16.15

The loan and advances accounts are the highest percentage of total utilization. In
following table, we can see that in year 2061-62 the amount of loan granted was
decreased by -8.38%. In year 2064-65 it was decreased highly by -26.72 but in year
2065-66 it was increased by 16.15%. The reason of this decreased in loan granting is due
the high interest rate charged by the bank. The data graph is shown as:
Gra p h sh o w in g L o an Grantin g

14000 00

12000 00

10000 00

8000 00

Am ount of Gran ted Loan


6000 00
Percent age cha nge

4000 00

2000 00

0
2061-62 2062-63 2063 -64 2064-65 2065 -66
-2000 00

Graph no. 8
2.3 Total utilization of resource:
The following table and graph shows the total utilization of resource

Table no. 9
Amount of total utilization trend of RBB (Amount in '000')
Amount of total Amount change per
Year utilization year %change
2061-62 1295807 0 0
2062-63 1148504 -147303 -11.36%
2063-64 981616 -166888 -14.5%
2064-65 718235 -263381 -26.83
2065-66 827317 109082 15.18

According to the above table total utilization of resource increases in year 2065-66 this is
good sign of development of RBB as well as the country. But in year 2062-63, 2063-64,
2064-65 it was decreased by -11.36%, -14.5% and -26.83%. The decrease in resource
utilization may be due to less available resources or due to the political situation of the
country.
G raph show ing total utilization

14000 00

12000 00

10000 00

8000 00

6000 00 Am ount of total utilization


Am ount chang e p er year
4000 00 % chang e

2000 00

0
2 061-62 2062-63 20 63-64 2064- 65 20 65-66
-2000 00

-4000 00

Graph no. 9

Table no. 10
Total resource available and utilization of RBB (amount in ‘000’)
Amount of Amount of % of
Year resource utilization Utilization
2053-54 1826888 1295807 70.92%
2054-55 1726722 1148504 66.51%
2055-56 1443422 981616 68.006%
2056-57 1178287 718235 60.95%
2057-58 1282756 827317 64.49%
7458075 4971479
Total 66.65%

By showing above table we can say that the RBB Maharajgunj branch average
utilization Percentage is 66.65% which is good but not so much.
Gra ph showing re sourc e a vailable and utiliz ation

8000000

7000000

6000000

5000000
Year
Amount of resource
4000000
Amount of utiliz ation
% of Utilization
3000000

2000000

1000000

0
1 2 3 4 5 6 7

Graph no. 10

2.4 Calculation of correlation coefficient between resource available and utilization:


X-Represent total resource available.
Y-Represent total utilization.

Table no.11 Amount in Rs.'0000000’


Year x X=x-144 X2 y Y=y-96 Y2 XY
2061-62 182 38 1444 122 26 676 988
2062-63 172 28 784 112 16 256 448
2063-64 144 0 0 96 0 0 0
2064-65 117 -27 729 70 -26 676 702
2065-66 118 -26 676 82 -14 196 364
N=5 X=13 X2=3633 Y=12 Y2=1804 XY=2502

Calculation of correlation coefficient:


r= XY-( X Y)/N
[ X2- ( X )2/N] [ Y2- ( Y )2 / N]

2502 – (13) (12)/5


r=
[3633 – (13)2/5] [1804 – (12)2/5]

2502 – 31.2
r=
[3633- 33.8] [1804- 28.8]

r= 2470.8
3599.2 x 1775.2

2470.8
r=
2527.7064

r= +0.977

In the above coefficient correlation is +0.625. Therefore, the resource collection


and utilization are positively correlated to each other. It clearly shows that utilization
depends upon resource availability. If the resource increases the utilization also increases
and if a resource decreases the utilization also decreases.

Chapter 3
Summary, conclusion and recommendation

3.1 Summary
Commercial bank plays an important role in the economic development of a
country. Banks are the most important financial institution for collecting and utilizing
resources for the economic development of the country. The economic conditions are
based on the financial institution and development of the country depends on the active
participation of the bank in different developmental activities in the country. RBB,
Maharajgunj branch has mobilized and utilized resources in different sectors. This branch
has also mobilized saving from the public and utilized then into productive sector.
The basic objective of the study is to assess the performance of RBB,
Maharajgunj branch in mobilizing and utilizing resources efficiently and effectively in
contributing for the economic development.
This study is undertaken to have a clear picture of trend and pattern of resources
mobilization and utilization of RBB, Maharajgunj branch. The study covers only RBB
Maharajgunj branch available data used are mostly secondary data.
In developing country like Nepal there is always shortage of capital for
investment, only the government cannot persuade economic development of the country.
Banks have to participate in this field too so they can collect small scattered saving and
accumulate them to make a big resource to be utilized in the country's development. RBB
Maharajgunj branch had a total resource of Rs. 1826888 thousand in 2061-62 which
decreased to Rs. 1181317 thousand in 2065-66, and this trend has been affected by
various factors operating in the country. The factors for decreasing resources may be
political instability, Rapid growth of other financial institutions and other commercial
banks and low interest rate in deposit.
As per the utilization is concerned it was reported to be Rs. 1295807 in 2061-62
which decreased in year 2062-63 to Rs. 1148504 thousand and it was even more
decreased in year 2065-66 to Rs. 718235 thousand but in year 2065-66 it was increased to
Rs. 827317 thousand.
In the above mentioned study, it has been revealed that the relation between
resource collection and its utilization is significantly associated. The increasing trend of
resource collection is accompanied by almost the same degree of increment in the
utilization also.
3.2 Conclusion
RBB Maharajgunj branch has been operating successfully in the banking field for
more than three decades till date. But this study covers only the major findings of the last
five fiscal years (2061-62 to 2065-66) and led to the conclusion of efficient mobilization
of resources by the bank.
RBB Maharajgunj branch has been able to utilize 65.5% of its total resources in
an average and this figure can be considered satisfactory. But yet there are rooms where
work can be done to achieve more collection and utilization. And for this, endeavors are
to be done on various notes as for e.g. suitable interest rate, economic development,
availability of various scope of utilization.

3.3 Recommendation
On the basis of the analysis done on resource mobilization and utilization
following recommendation can be made so as to ascertain better and improved resource
collection and utilization of RBB Maharajgunj branch:
LXII.The bank should provide attention towards the priority sectors to utilize idle
resources.
LXIII.Following points should be pondered over to increase resource collection :
v Facilities to the depositors.
v Enhanced publicity.
LXIV.Bank should encourage consumer's loan as well. This would help in buying
consumptions goods especially durable goods.
LXV.More attention for resource collection should be made by encouraging saving
habit and opening new methods to encourage from wide range of people.