Liquidity Analysis Of Nabil Bank Limited

LIQUIDITY ANALYSIS OF NABIL BANK LIMITED

A Project Work Report

By Abisek Nepal Symbol No:- 4840002 T.U. Registered Number 7-2-0484-0102-2015 Lincoln College, Kathmandu

Submitted to The Faculty of Management Tribhuvan University Kathmandu

In Partial Fulfillment of the Requirements for the Degree of BACHELOR OF BUSINESS STUDIES (BBS)

Kirtipur, Kathmandu May, 2019

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DECLARATION I hereby declare that the project work entitled “LIQUIDITY ANALYSIS OF NABIL BANK LIMITED” submitted to the Faculty of Management, Tribhuvan University, Kathmandu is an original piece of work under the supervision of Mr. Sandesh Thapa (supervisor), faculty member Lincoln College, Kathmandu, and is submitted in partial fulfillment of the requirements for the degree of Bachelor of Business Studies (BBS). This project work report has not been submitted to any other university or institution for the award of any degree or diploma.

___________ Abisek Nepal May, 2019

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SUPERVISOR’S RECOMMENDATION

The project work report entitled “LIQUIDITY ANALYSIS OF NABIL BANK LIMITED” submitted by Abisek Nepal of Lincoln College; Kathmandu is prepared under my supervision as per the procedure and format requirements laid by the Faculty of Management, Tribhuvan University, as partial fulfillment of the requirements for the degree of Bachelor of Business Studies (BBS). I, therefore, recommend the project work report for evaluation.

________________ Mr. Sandesh Thapa May, 2019

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ENDORSEMENT

We hereby endorse the project work report entitled A CASE STUDY ON LIQUIDITY ANALYSIS OF NABIL BANK LIMITED submitted by Abisek Nepal of Lincoln College, Kathmandu in partial fulfillment of the requirements for the degree of the Bachelor of Business Studies (BBS) for external evaluation.

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………………………..

Prakash Sharma Ghimire

Research Committee

Principal

May, 2019

May, 2019

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ACKNOWLEDGEMENTS

This report has been prepared to fulfill the partial requirements for the Degree of Bachelors of Business Studies (B.B.S), Tribhuvan University, Nepal. In the process of preparation of this Term Paper, I got a lot of inspiration, co-operation and suggestion from various persons. Firstly, I owe a debt of gratitude to my respected adviser Mr. Sandesh Thapa, Lectures of Lincoln College for his valuable support and suggestion in the process of preparation of this thesis. I am extremely indebted by their efforts despite of their busy schedule. I would like to thanks to my friend Mr. Shiva Shrestha who helps to prepare to this report for his valuable time for a editing the reports. Finally, I would like to thank all respondents and informants for providing me the required information in the process of data collection, and I never forget all those who were sharing their brotherly advice and materials.

Abisek Nepal

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TABLE OF CONTENTS Title Page

i

Declaration

ii

Endorsement

iii

Acknowledgements

iv

Table of Contents

vi

List of Tables

vii

List of Figures

viii

Abbreviations

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CHAPTER I INTRODUCTION 1.1. Background of the Study

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1.2. Introduction of Nabil Bank Limited.

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1.3. Statement of the Problems

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1.4. Objectives the Study

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1.5. Rationale of the Study

9

1.6 Review of Literature

9

1.7 Research Methodology

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1.8. Limitation of the Study

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CHAPTER II RESULTS AND ANALYSIS 2.1 Data Presentation

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2.1.1. Participation of the All the Deposit in the Total Deposit Liability

15

2.2 Major Finding

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CHAPTER III SUMMARY AND CONCLUSION 3.1. SUMMARY

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3.2. CONCLUSION

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BIBLOGRAPHY APPENDICES

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LIST OF TABLE 1. All the Deposit in the Total Deposit Liability………………………..………16 2. Saving Deposit to Total Deposit……………………………………………..17 3. Fixed Deposit to Total Deposit Ratio………………………………….…......18 4. Cash and Bank Balance to Current Deposit Ratio……………………….......19 5. Cash and Bank Balance to Total Deposit Ratio…………………….…..……20 6. Balance with NRB to current and Saving Deposit Ratio…………………….21 7. Balance With NRB to Fixed Deposit Ratio………………………………….22 8. Total Investment to Total Deposit Ratio……………………………………..23 9. Liquidity Assets to Total Deposit Ratio……………………………………..24

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LIST OF FIGURE 1. Total Deposit Liability……………………………………….………………16 2. Saving Deposit to Total Deposit Ratio……………………………….............17 3. Fixed Deposit to Total Deposit Ratio…………………………………….…..18 4. Cash and Bank Balance to Current Deposit Ratio………………………..….19 5. Cash and Bank Balance to Total Deposit Ratio…………………………...…20 6. Balance with NRB to Current and Saving Deposit Ratio…………………...21 7. Balance With NRB to Fixed Deposit Ratio………………………………....22 8. Total Investment to Total Deposit Ratio…………………………………….23 9. Liquidity Assets to Total Deposit Ratio…………………………………..…24

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ABBREVIATION ABBS

-

Any Branch Banking Service

SCT

- Smart Choice Technology

ATM

- Automatic Teller Machine

NRB

- Nepal Rastra Bank

NIC

- National Industrial Corporation

ADB

- Agricultural Development Bank

L.C.

-

Letter of Credit

NBL

-

Nepal Bank Limited

CDs

- Certificates of Deposits

GNP

- Gross National Product

B.B.S.

-

USD

- United States Dollar

NRs

-

Bachelor of Business Studies

Nepalese Rupees

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CHAPTER – 1 INTRODUCTION

1.1. Background of the Study Generally, bank is an institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, saving, and time deposit. There institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primary concerned with receiving deposits and lending to businesses. In an economy the bank is regarded as one of the economic backbone of the country for its development. Bank is a financial institution that deals in money. The basic function of bank is collecting deposit and granting the loans. It involves in credit creation that in related to creation of deposit and loan. In the economy, the banks collects small saving of general people, accumulative it and lends the productive sectors of the society for the overall economic development. Various writers have been defined the word “bank” in different ways. According to Scholars, “The bank is defined as factory of money for credit where it does not purchase goods and sells it rather produces credit inform of deposit and sells it inform of loans.” According to C.R. Crowther, ”A banks collects money from those who have it to spare or who are saving it out of their income and lends this money to those who required it.” Thus in conclusion, we can say that bank is an organization which deals with the monetary transactions for the mobilization of idle money or deposits in productive sectors, is essentially essential for the development of the whole net. And this study will be equally useful to the other readers, students of related subjects and other people who are concern with banking field.

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1.1.1. The Banking in Nepal In the context of Nepal, like as in other country the goldsmiths and landlord was the ancient banker. The Nepalese people were highly exploited by shahu mahajan by charging higher interest rate that is compound interest rate and even by manipulating the principle amounts. If we try to see the history of banking transaction in depth then evidence of money landing function are found in practice before 8th century in 780 B.S. Gunakamdev the ruler of Kathmandu reconstructed Kathmandu valley by borrowing dept from the people. In 14th century tankdhari system had been running in the period of ranodip shing in Kathmandu established and office called tejarath adda. From the office the government distributed salary to their employees and provided loan to government employment @5% of interest against the security gold, silver etc. Because of the development of economy activities in Nepal the above institutions could not be fulfilled the need of people. So in kartik 30, 1994 B.S. Nepal bank was established as one of the semi government commercial bank which had 10 million authorized capital and 842000 paid of capital. it has done the pioneering function in function spreading the banking habits among the people. Having felt a need of central bank to control and direct the commercial bank and help the government for making monitory polices Nepal Rastra bank was set up in 14 Baishakh, 2013 B.S. To fulfill the growing credit requirement of the country. The commercial bank i.e. Rastraya Banijya bank was establishes in 10th Bhadra 2022 B.S. this bank also provides facility for the economy welfare of the general public. Nepal is an agricultural country to develop agriculture system. Industry agriculture development bank and Nepal industrial development corporation was established in 2024 B.S. 2016 B.S. respectively. The initiation of the financial sector; liberalization policy by Nepal rastra bank, a board of joint venture banks entered with the view to accelerate the pace of development of nation. At present, there are many joint venture banks which are running successfully in a competitive environment. His majesty government deliberates policy of allowing foreign joint venture banks to operate in Nepal basically targeted, to encourage local tradition commercial bank to enhance their capacity through competitor’s efficiencies

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mechanization modernization prompt customer service. Nepal Arab bank ltd was established in 2041 as a first foreign joint venture bank. Now in our country there are 31 commercial bank, 87 development bank, 79 finance company and 21 micro credit development banks after mid July 2011(licensed by NRB)

1.1.2. List of Commercial Banks in Nepal: The history of financial and economic development in Nepal is not very old. It has gone through different stages, during the PM Ranodip shingh around 1972 A.D. “TEJARATH ADDA” was introduced, which brought a reform in economic and financial section. The main purpose of “TEJARATH ADDA” was to provide credit facilities to the general public at confessional rate. However the installment of “KHUSI KHANA” as a banking agency during the king Prithivi Narayan Shah could also be regarded as the first step towards banking in Nepal. After that the first commercial bank of Nepal, Nepal bank Limited (NBL) was lunched with the cooperation of imperial bank of India in November 1937. Holding 51% government equity. The second commercial bank, Rastriya Banijya bank come into existence in 1966 A.D. with 100% government ownership. In early 1980, to meet the need of health completion in the financial system, Nepal allowed to entry of foreign banks as joint ventures with up to maximum of 50% equity participation. Nepal Arab bank limited was the first joint venture bank which was established with the joint venture of Arab bank emirates in 1984. in 1986, Nepal grind lays bank limited (now chartered bank limited) entered in Nepali financial market as a joint venture with ANZGrind lays.

1.1.3.2 Functions of Commercial Banks: Although profit maximization is a major objective of commercial bank, to achieve this objectives commercial bank performs various functions under the mandatory rules and registrations and directives of NRB and commercial Bank Act 2031(1974) which are:

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Primary functions a)

Accepting Deposits:

Accepting deposits is the main function of commercial banks. Commercial banks collects money from those who want to deposit in different types of deposits accounts such as: ● Fixed deposit account ● Current deposit account ● Saving deposit account b)

Advancing of Loans:

Commercial banks provide the required loan or credit to various sectors of economy such as industry, trade, agriculture, business deprived sector etc. in this way bank creates facilities. It provides loans from various procedures in different form such as: ● Overdraft ● Cash credit ● Direct loan with collateral ● Discounting bill of exchange ● Loans of money at call and notice General Utility functions Commercial banks also form general utility functions such Issuing of letters of credit to customers ● Issuing of bank draft and travels cheque etc for transfer of funds from one place to another. ● Dealing in foreign exchange and financial foreign trade by accepting or collecting foreign bill of exchange. ● Underwriting loans to be raised public bodied and corporations. ● Providing safety vaults or lock for the safe custody of valuables and securities of the customers. ● Remittance of money

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Agency Functions Apart from the above function, commercial banks also perform agency functions for which they act as agent and claim commission on some facilities such as: ● Collection of customer’s money from other banks. ● Receipt and payment of dividend and interest. ● Security brokerage service ● Financial advisory services ● To underwrite the government and private securities.

1.2. Introduction of Nabil Bank Limited. Nabil, the first foreign joint venture bank of Nepal, started operations in July 7, 1984. Nabil was incorporated with the objective of extending international standard modern banking services to various sectors of the society. Nabil provides a range of commercial banking services through its 74 points of representation across the country and over 170 correspondent banks across the globe. It was earlier known as Nepal Arab Bank Ltd. It has its head office located at Nabil Center, Durbar marg, which is also a premium location of the capital. It has the largest staff among private commercial banks of Nepal. Pursuing its objective, Nabil provides a full range of commercial banking services through its 74 points of representation. In addition to this, Nabil has presence through over 1500 Nabil Remit agents throughout the nation. Nabil, 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. Operations of the bank including day-to-day operations and risk management are managed by highly qualified and experienced management team. Bank is fully equipped with modern technology which includes international standard banking software that supports the E-channels and E-transactions. Nabil is moving forward with a Mission to be “1st Choice Provider of Complete Financial Solutions” for all its stakeholders; Customers, Shareholders, Regulators,

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Communities and Staff. Nabil is determined in delivering excellence to its stakeholders in an array of avenues, not just one parameter like profitability or market share. It is reflected in its Brand Promise “Together Ahead”. Vision, Mission, Value and Ethics “Our Vision is to be the most preferred provider of Financial Services in Nepal” Mission Statement: To be the leading Nepali bank, delivering world class service through the blending of state-of-the-art technology and visionary management in partnership with competent and committed staff, to achieve sound financial health with sustainable value addition to all our stakeholders. We are committed to do this mission while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Core Values and Ethical Principles: Our core values tell us, our customers and the communities we serve, who we really are; what we are about; and the principles by which we pledge to conduct business. In essence, we believe that success can only be achieved by living our core values and principles: Customer Focus: At Nabils, our prime focus is to perfect our customer service. Customers are our first priority and driving force. We wish to gain customer confidence and be their trusted partner. ●

Quality: We believe a quality service experience is a paramount to our customers and we are strongly committed in fulfilling this ideal.

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Honesty and Integrity: We ensure the highest level of integrity to our customers, creating an ongoing relationship of trust and confidence. We treat our customers with honesty, fairness and respect.

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Belief in our people: We recognize that employees are our most valuable asset and our competitive strength. We respect the worth and dignity of individual employees who devote their careers for the progress of the Bank.

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Teamwork: We are a firm believer in team work and feel that loyal and motivated

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teams can produce extraordinary results. We are drived by a performance culture where recognition and rewards are based on individual merit and demonstrated track record. ●

Good Corporate Governance: Effective Corporate Governance procedures are essential to achieve and maintain public trust and confidence in any company, more so in a banking company. At Nabils, we are committed in following best practices resulting in good corporate governance.

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Corporate Social Responsibility: As a responsible corporate citizen, we consider it important to act in a responsible manner towards the environment and society. Our commitment has always been to behave ethically and contribute towards the improvement of quality of life of our people, the community and greatly the society, of which we are an integral part. 1.2.1. Strategies and Future Plans of the Nabil Bank. ● To develop a customer oriented service culture with special emphasis on customer care and convenience ● To increase our market share by following a disciplined growth strategy ● To leverage our technology platform and pen scalable systems to achieve costeffective operations, efficient MIS, improved delivery capability and high service standards ● To develop innovative products and services that attracts our targeted customers and market segments ● To continue to develop products and services that reduce our cost of funds ● To maintain a high quality assets portfolio to achieve strong and sustainable returns and to continuously build shareholders’ value ● To explore new avenues for growth and profitability

1.3. Statement of the Problems Liquidity is the status and part of the assets which can be used to meet the obligation. Liquidity can be viewed in term of liquidity stored in the balance sheet and in term of liquidity available through purchased fund. The degree of liquidity depends upon the

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relationship between cash assets plus those assets which can be quickly turned into cash and liability awaiting payments. Bank needs to maintenance some seasonable level of liquidity to fulfill different commitments such as provide money to depositors when they demand for administrative expenses, for maintaining cash reserve ratio in the central bank etc. so, liquidity is defined as the bank’s capacity to pay cash in exchange of deposits. Liquidity is crucial in the business like banking. Because if the bank has the high liquidity it can no on a desired profit and if the bank has the shortfall of the liquidity it cannot satisfy its customers. Inadequate liquidity may lead to collapse of the bank while excess liquidity is determinant to bank’s profitability in order to remove demerits associated with maintaining inadequate and excess liquidity, bank should maintained and optimum level of liquidity. This possible only when bank’s liquidity needs is correctly predicted. Prediction covers inflows and outflows of liquidity. If prediction shows more outflows, bank should be prepared to cover the shortfall by borrowing or by liquidating assets. If inflow is greater than outflows, bank should plan where to invest so that income can be increase. Banks attach great importance short terms and long terms predictions. Prediction of liquidity need should be in the form of primary and secondary reserve so that bank generates income and at the same time does not compromise to liquidity. Banks got failure because of wrongly analyzed liquidity position and wrongly predicated liquidity requirement and management policy of liquidity. Thus to gain the trust of the customers and be success on the operation, the bank should maintain and forecast the liquidity need for the period and optimum level of liquidity based on the past liquidity position. ● How to check the liquidity position of the Nabil’s? ● How to analyze the financial performance? ● How to check the Nabil bank’s profitability? ● How to suggest the liquidity management policies?

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1.4. Objectives the Study The main objective of the study is to analyze the Nabil Bank’s liquidity position. Based on the analyzed liquidity position, the study will suggest the liquidity need and its management for the current year. Objectives can be listed below: ● To check the liquidity position of the Nabil Bank ● To check the Nabil Bank’s profitability 1.5. Rationale of the Study This report is prepared to analyze the liquidity position of Nabil Bank. This report comprises the date from 2011 to 2016. This would help the bank to observe the trend of the liquidity position hold in those periods. Besides that, this study also evaluates the role of short term obligation and the bank ability to pay the currently maturity obligation. Moreover, the study will check the profitability of the bank. This will help the bank to take the corrective actions if there are any errors on the past performance and the study aims to recommend correcting the division if the standard has not been met. 1.6 Review of Literature This chapter deals with the theoretical aspects of the topic of financial analysis of Nabil Bank. in more detail and descriptive manner. For this study, journals, articles, and some research reports related with this topic have been reviewed. This study has to refer almost all books related with this topic published. Some of the prior reports by students of BBS regarding this topic have also been reviewed. 1.6.1. Conceptual framework One of the sensitive factor or element in the bank is liquidity. Liquidity refers to the convertibility assets into cash. It means how fast the assets can be change into cash. There are many assets which are easily converted into cash by the bank. Such as cash in hand, cash at bank, cash at central bank, investment in government securities. But some assets are difficult to get converted into cash such as loan and fixed assets. Liquidity is also defined as the position or capability of a bank to meet the current obligation of customers such as payment of cheque. Payment of demand drafts,

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disbursement of approved loan etc. Bank needs to maintain some reasonable level of liquidity to fulfill different commitments such as provide money to depositors when they demand for administrative expenses, for maintaining cash bank’s capacity to pay cash in exchange of deposits. Liquidity is crucial in the business like banking. Because if the bank has high liquidity, it can no earn a desire profit and if the bank has the shortfall of the liquidity it cannot satisfy its customers. Inadequate liquidity may lead to collapse of the banks while excess liquidity is detrimental to bank’s profitability. In order to remove demerits associated with maintaining inadequate and excess liquidity, banks should maintain an optimum level of liquidity. This possible only when bank’s liquidity needs is correctly predicted. Prediction covers in present outflows of liquidity. If prediction shows more outflows, bank should be prepared to cover the shortfall by borrowing or by liquidating assets. If inflow greater than outflow, bank should plan where to invest so that income can be increase. Banks attach great importance short term and long term predictions. Prediction of liquidity need should be in the firm of primary and secondary reserves so that bank generates income and at the same time does not compromise to liquidity. 1.6.1.1. Liquidity assets: The assets which can be converted into cash immediately with or without a nominal loss of value. Liquidity can be in the firm of treasury bills, investments in government securities, gold and silvers, inventories and marketable securities etc. 1.6.1.2. Cash reserve Ratio (CRR): Central banks the world over make banks maintains the certain level of liquidity to total deposit liabilities in the form of the cash and bank balance. This ratio is known as the cash reserve ratio or primary reserve. 1.6.1.3. Statutory liquidity ratio (SLR): Central bank orders to the banks to maintain the certain level of liquidity to total deposit liabilities in the form of the cash and bank balance and treasury bills and government securities and bonds. Such liquidity requirement is called the statutory liquidity ratio.

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1.6.1.4. Importance of liquidity for the bank: The liquidity is important for the bank for the motives cited as follow: ● Transaction motive ● Speculative motive ● Precautionary motive 1.6.1.5. Need of liquidity for the bank: ● To meet the expenses for the bank’s administrative works ● To pay all sorts of deposit on demand ● To repay the debt ● To provide the security to the bank 1.6.1.6. Demand for the liquidity: ● Withdrawal of customer deposit ● Acceptable loan request ● Repayment of non-deposit borrowing ● Payment of interest on deposit ● Payment of dividends ● Miscellaneous liabilities 1.6.1.7. Supply of bank liquidity: ● Capital issue ● Retained earning ● Borrowings ● Bond issue ● Repayments of loans ● Other incomes 1.6.1.8. Criteria of the measuring the bank liquidity: ● Criteria of measuring of the bank liquidity denotes ● attributes required being bank liquidity ● compliance test of liquidity requirement

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In words criteria area bank liquidity refers to: ● What conditions the assets have to meet to be bank liquidity? ● Whether CRR and SLR have been maintained as per instruction of the central bank? 21.6.1.9. Liquidity to be maintained with the central bank: Nepal Rastra Bank, as the central bank of Nepal, had made it mandatory for commercial bankers to maintain liquidity as under: Balance at Nepal Rastra bank – 7% current and saving deposit liabilities. 4.5% of

fixed

deposit liabilities. Cash in vault – 2 % of deposit liabilities 1.6.1.10. Penalty for non-compliance: Penalty will be levied for failing to maintain the adequate liquidity as above under any of the following conditions: ● In the case of shortfall in maintenance of balance with Nepal Rastra bank but maintenance of cash at vault more than 2%, then on such shortfall amount. ● In the case shortfall in maintenance of balance with Nepal Rastra bank but maintenance of cash at vault more than 2%, up to 1% excess cash of total deposit is added in the balance with NRB, than on such shortfall amount (after adding up to 1% excess) ● In the case of shortfall in maintenance of cash in vault as well as shortfall in balance held with Nepal Rastra bank, than on total shortfall amount. 1.6.1.11. Applicable penalty rates: 1. first time shortfall

Equivalent to bank rate/highest refinance (currently 5.5%)

2. for second time shortfall

Equivalent to 2 times of bank rate

3.for third time shortfall and all Equivalent to 3 times of bank rate. subsequent shortfalls The penalty is imposed on the shortfall amount on weekly basis.

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1.6.2 Review of Previous Research: In last 3 years prior to this thesis, some students of B.B.S. programme have been found conducting research about the Liquidity Analysis of Nabil Bank. Some of them which are supposed to be relevant have been reviewed and presented in this section. Rimal, Roshani, (2018) conducted a study in a topic of “Liquidity Analysis of Nabil Bank”. He collected the data of 5 year data in this bank. The study carried out with the following objectives; 

To analyzed the liquidity position of Nabil Bank Ltd.



To check the profitability of Nabil Bank.

Shrestha, Shiva (2017) conducted a study in topic of “Liquidity Analysis of Nabil Bank Ltd.” He studies on all the strength and threats on liquidity as well as profitability of Nabil Bank Ltd. and he carried out with some objectives which is list out following 

To analysis the liquidity of Nabil Bank.



To explain the changing situation of liquidity in the banks.

1.7 Research Methodology The method which is use in the research is called research methodology. How the data is collected and which source the research use for getting the data is under the research methodology. Research methodology covers the data analysis tools as well. 1.7.1. Research Design: A research design is the arrangement conditions, for the collection and analysis of data in a manner that aims to combined relevance to the research purpose with economy in procedures. This study aims on the financial analysis of the Nabil Bank. This study is mainly based on primary data and secondary data. The primary data, which are collected directly from the question answer, direct interview with customer and office staffs. The secondary data are collected from respective annual reports especially from the Nabil Bank’s web sites

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and various other journals and from security bond Nepal (SEBON) and Nepal stock exchange (NEPSE). 1.7.2 Population and Sample At present, there are 28 commercial banks operating in Nepal out of 161 financial institutions in 2018. Out of various bank functioning in the country, Nabil Bank Limited has been chosen as samples to conduct the research due to the time constraint. 1.7.3 Data Collection Method I went to the main office of Nabil Bank, Coprporate office, Darbarmarga, Kathmandu, and get the important information. I collected the main annual reports of this bank directly from the web site. And other various articles and journals from various publication and some others from the SEBON, NEPSE and previous field reports are also taken in to accounts. 1.7.4 Data Analysis Tools ● Financial Tools ● Statistical Tools

1.8. Limitation of the Study This study is simply conducted for the partial fulfillment of the requirement for the degree of the Bachelor in Business Studies (BBS). And only the secondary data is used and analyzed which could not disclose the actual result. And being the first endeavor, the report can comprise some mistakes which may cause to misinterpretation of the results. The other limitation of the study is listed below: ● Only five years observation covering from fiscal year 2013/14 to 2016/17 is analyzed. ● Analysis is based on the ratio and trend lines of the corresponding ratios only. ● For the forecast of the liquidity requirement, daily and monthly data is needed. But due to time and cost constraints, only the annual data is used for analysis. ● Only the secondary data is used.

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CHAPTER – 2 RESULTS AND ANALYSIS Presentation means the presentation of the collected data through table; figure etc. presentation is the process of understanding the study or the report and calculating the opinion. An analysis of a data means the process where the statement or the report gets resolve by breaking them into simple statement. Analysis means to find out something and give opinion about the presented data. 2.1 Data Presentation 2.1.1. Different segments of Deposits in Nabil Table No 1

All the Deposit in the Total Deposit Liability

Year Current deposit Saving deposit 2013/14 1,705,668,495 8,081,980,512 2014/15 2,175,020,657 10,742,331,625 2015/16 3,138,669,428 13,688,766,549 2016/17 3,756,570,350 17,066,252,467 2017/18 4,025,820,180 14,324,255,897 Source: - annual reports of Nabil Bank.

Fixed deposit 5,412,969,595 7,516,686,866 7,944,232,558 11,633,380,218 16,825,148,284

Total deposit 15,200,618,592 20,424,048,148 24,771,668,535 32,456,203,035 35,175,224,361

Fig No 1 Total Deposit Liability

2013/14 2014/15 2015/16 2016/17 2017/18

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In the above table and chart, we see that, in fiscal year 2013/14, the current deposit account occupied 11%, saving deposit account 53%, fixed deposit account 37%.in fiscal year 2014/15 the current deposit account occupied 10%, saving deposit account53%, fixed deposit account 36% occupied. In fiscal year 2015/16 the saving deposit account occupied 13%, saving deposit account 53%, fixed deposit account 37% occupied. In fiscal year 2016/17 the current deposit account occupied 13% saving deposit account55%, fixed deposit account32% occupied. In fiscal year 2017/18 the current deposit account occupied 11%, saving deposit account 42%, fixed deposit account occupied 48%. 2.1.2 Saving Deposit to Total Deposit Ratio: Table No 2 Saving Deposit to Total Deposit Ratio Fiscal year

Saving deposit

Total deposit

Ratio

2013/14

8,081,980,512

15,200,618,592

0.53

2014/15

1,074,233,1625

20,424,048,148

0.53

2015/16

13,688,766,549

24,771,668,535

0.55

2016/17

17,066,252,467

32,456,203,035

0.53

2017/18

14,324,255,897

35,175,224,361

0.41

Source: - annual reports of Nabil Bank. Fig No 2 Saving Deposit to Total Deposit Ratio Ratio, 2017/18, 0.41, 0.160784314

Ratio, 2013/14, 0.53, 0.207843137 2013/14 2014/15

Ratio, 2016/17, 0.53, 0.207843137

2015/16 Ratio, 2014/15, 0.53, 0.207843137

2016/17 2017/18

Ratio, 2015/16, 0.55, 0.215686275

From the above table and trend line chart, the ratio is fluctuating state. In the fiscal year 2013/14, the bank has the saving deposit of 0.53 times of total deposit liability. And 0.53,

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0.55, 0.53, 0.41 times of total deposit liability in fiscal year 2014/15, 2015/16, 2016/17 and 2017/18 respectively 2.1.3. Fixed Deposit To Total Deposit Ratio: Table No 3 Fixed Deposit to Total Deposit Ratio Fiscal year

Fixed deposit

Total deposit

Ratio

2013/14

5,412,969,595

15,200,618,592

0.36

2014/15

7,516,686,866

20,424,048,148

0.37

2015/16

7,944,232,558

24,771,668,535

0.32

2016/17

11,633,380,218

32,456,203,035

0.35

2017/18

16,825,148,284

35,175,224,361

0.48

Source:- annual report of Nabil Bank. Fig No 3 Fixed Deposit to Total Deposit Ratio

Ratio, 2017/18, 0.48, 0.255319149

Ratio, 2013/14, 0.36, 0.191489362

2013/14 2014/15 2015/16 Ratio, 2014/15, 0.37, 0.196808511

2016/17 2017/18

Ratio, 2016/17, 0.35, 0.186170213 Ratio, 2015/16, 0.32, 0.170212766

From the above table and trend line chart, the ratio is fluctuating in increasing and decreasing trend. The highest ratio is 0.48 times in year 2017/18 and lowest ratio is 0.32 times in fiscal year 2014/15. And 0.36 times, 0.37 times and 0.35 times in year 2013/14, 2015/16 and 2016/17 respectively.

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2.1.4 Cash and Bank Balance to Current Deposit Ratio: Table No 4 Cash and Bank Balance to Current Deposit Ratio Fiscal year

Cash and bank balance

Current deposit

Ratio

2013/14

81,0454,736

1,705,668,495

0.48

2014/15

106,0162,644

2,175,020,657

0.49

2015/16

1,934,935,533

3,138,669,428

0.62

2016/17

3,578,672,803

3,756,570,350

0.95

2017/18

3,506,870,807

4,025,820,180

0.87

Source:- annual report of Nabil Bank.

Fig No 4 Cash and Bank Balance to Current Deposit Ratio Ratio, 2013/14, 0.48, 0.140762463 Ratio, 2017/18, 0.87, 0.255131965

2013/14 Ratio, 2014/15, 0.49, 0.143695015

2014/15 2015/16 2016/17 2017/18

Ratio, 2016/17, 0.95, 0.278592375

Ratio, 2015/16, 0.62, 0.181818182

From the above table and trend line chart, the ratio is fluctuating in not normally. In fiscal year 2013/14, the bank has the liquidity against current deposit is 0.48 times. And the bank has the liquidity against current deposit are0.49, 0.62, 0.95, 0.87times in year 2014/15, 2015/16, 2016/17 and 2017/18 respectively.

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2.1.5. Cash and Bank Balance to Total Deposit Ratio: Table No 5 Cash and Bank Balance to Total Deposit Ratio Fiscal year

Cash and bank balance

Total deposit

Ratio

2013/14

810,454,736

15,200,618,592

0.05

2014/15

1,060,162,644

20,424,048,148

0.05

2015/16

1,934,935,533

24,771,668,535

0.08

2016/17

3,578,672,803

32,456,203,035

0.11

2017/18

3,506,870,807

35,175,224,361

0.10

Source:- annual report of Nabil Bank. Fig No 5 Cash and Bank Balance to Total Deposit Ratio

Ratio, 2016/17, 0.1, 0.256410256

Ratio, 2012/13, 0.05, 0.128205128

Ratio, 2013/14, 2012/13 0.05, 0.128205128 2013/14 2014/15 Ratio, 2015/16, 0.11, 0.282051282

2015/16 2016/17 Ratio, 2014/15, 0.08, 0.205128205

From the above table and trend line chart, the ratio is fluctuating. In fiscal year 2012/13, the bank has the liquidity for total deposit in the ratio of 0.05 times. And in fiscal year 2013/14, 2014/15, 2015/16, and 2016/17, the bank has the liquidity for the total deposit in ratio of 0.05, 0.08, 0.11 and 0.10 times respectively.

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2.1.6. Cash and Bank Balance to Total Deposit (Excluding Fixed Deposit) Ratio: Table No 6 Cash and Bank Balance to Total Deposit Ratio Fiscal year

Cash and bank balance

Total deposit

Ratio

2013/14

810,454,736

9,787,648,997

0.08

2014/15

1,060,162,644

12,917,361,282

0.08

2015/16

1,934,935,533

16,827,435,977

0.11

2016/17

3,578,672,803

20,822,822,817

0.17

2017/18

3,506,870,807

18,350,076,077

0.19

Source: - annual report of Nabil Bank. Fig No 6 Cash and Bank Balance to Total Deposit Ratio Ratio, 2012/13, 0.08, 0.126984127 Ratio, 2016/17, 0.19, 0.301587302 Ratio, 2013/14, 0.08, 0.126984127

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

Ratio, 2015/16, 0.17, 0.26984127

Ratio, 2014/15, 0.11, 0.174603175

From the above table and trend line chart, the ratio is fluctuating in increasing state. In fiscal year 2012/13, the bank has the liquidity against current and saving deposit account deposit account liability in the ratio of 0.08 times. And in fiscal year 2013/14, 2014/15, 2015/16, and 2016/17, the bank has the liquidity against current and saving deposit account liability in the ratio of 0.08 times, 0.11 times, 0.17 times and 0.19 times respectively.

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2.1.7. Balance with NRB to Current and Saving Deposit Ratio: Table No 7 Balance with NRB to Current and Saving Deposit Ratio Fiscal year

Balance with NRB

Current Saving

Ratio

2013/14

1,526,066,660

9,787,648,997

0.16

2014/15

1,381,351,556

12,917,361,282

0.11

2015/16

1,820,006,035

16,827,435,977

0.11

2016/17

4,411,133,083

20,822,822,817

0.16

2017/18

3,237,217,030

18,350,076,077

0.18

Source: - annual report of Nabil Bank.

Fig No 7 Balance with NRB to Current and Saving Deposit Ratio

Ratio 2013/14

2014/15

25%

2015/16

2016/17

2017/18

22%

16% 22% 15%

From the above table and trend line chart, the ratio has been maintained in fiscal year 2013/14 by 0.16 times. And the bank has been maintained its ratio in fiscal year 2014/15, 2015/16, 2016/17 and 2017/18 by 0.11 times, 0.11 times, 0.16 times and 0.18 times respectively.

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2.1.8. Balance With NRB To Fixed Deposit Ratio: Table No 8 Balance With NRB to Fixed Deposit Ratio Fiscal year

Balance with NRB

Fixed deposit

Ratio

2013/14

1,526,066,660

5,412,969,595

0.28

2014/15

1,381,351,556

7,516,686,866

0.18

2015/16

1,820,006,035

7,944,232,558

0.23

2016/17

4,411,133,083

11,633,380,218

0.38

2017/18

3,237,217,030

16,825,148,284

0.19

Source: - annual report of Nabil Bank.

Fig No 8 Balance with NRB to Fixed Deposit Ratio Ratio, 2016/17, 0.19, 0.150793651

Ratio, 2012/13, 0.28, 0.222222222 2012/13 2013/14

Ratio, 2015/16, 0.38, 0.301587302

2014/15 2015/16 Ratio, 2013/14, 0.18, 0.142857143 2016/17 Ratio, 2014/15, 0.23, 0.182539683

From the above table and trend line chart, the ratio is fluctuating. In fiscal year 2012/13, the bank has the balance with NRB against fixed deposit liability in the ratio of 0.28 times. And in fiscal year 2013/14, 2014/15, 2015/16, 2016/17, the bank has the balance with NRB against fixed deposit liability in the ratio of 0.18 times, 0.23 times, 0.38 times and 0.19 times respectively.

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2.1.9. Total Investment to Total Deposit Ratio: Table No 9 Total Investment to Total Deposit Ratio Fiscal year

Total investment

Total deposit

Ratio

2013/14

5,602,808,649

15,200,618,592

0.37

2014/15

6,505,679,987

20,424,048,148

0.32

2015/16

6,874,023,625

24,771,668,535

0.28

2016/17

7,399,811,700

32,456,203,035

0.23

2017/18

8,635,530,125

35,175,224,361

0.25

Source: - annual reports of Nabil Bank.

Fig No 9 Total Investment to Total Deposit Ratio Ratio, 2017/18, 0.25, 0.172413793

Ratio, 2013/14, 0.37, 0.255172414

2013/14 2014/15 Ratio, 2016/17, 0.23, 0.15862069

2015/16 2016/17 2017/18

Ratio, 2015/16, 0.28, 0.193103448

Ratio, 2014/15, 0.32, 0.220689655

From the above table and trend line chart, the ratio is fluctuating. In fiscal year 2012/13, the bank has invested 37% of the deposit in investment. In fiscal years 2013/14, 2014/15, 2015/16, 2016/17, the bank has invested 32%, 28%, 23% and 25% of the deposit in investment respectively.

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2.1.10. Liquidity Assets to Total Deposit Ratio: Table No 10 Liquidity Assets to Total Deposit Ratio Fiscal year

Liquidity assets

Total deposit

ratio

2013/14

4,068,425,766

15,200,618,592

0.26

2014/15

5,203,482,662

20,424,048,148

0.51

2015/16

5,403,444,347

24,771,668,535

0.51

2016/17

5,561,846,381

32,456,203,035

0.50

2017/18

5,683,996,571

35,175,224,361

0.48

Source: - annual report of Nabil Bank

Fig No 10 Liquidity Assets to Total Deposit Ratio Ratio, 2017/18, 0.48, 0.212389381

Ratio, 2013/14, 0.26, 0.115044248

2013/14

Ratio, 2016/17, 0.5, 0.221238938

Ratio, 2014/15, 0.51, 0.225663717

2014/15 2015/16 2016/17 2017/18

Ratio, 2015/16, 0.51, 0.225663717

From the above table and trend line chart, the ratio is fluctuating slightly except fiscal year 2012/13 in fiscal year 2012/13; the bank has invested 26% of the deposit in the liquid assets. In fiscal year 2013/14, the bank has invested 51% of deposit in liquid assets. In fiscal year 2014/15, 2015/16 and 2016/17, the bank has invested 51%, 50%, and 48% of the deposit in the liquid assets respectively.

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2.2 Major Finding ● Cash and bank balance to total deposit ratio is fluctuating. But the ratio is somehow satisfactory even though the ratio is higher than the central banks prescription. The ratio is moving around the between 0.05 times to 0.11 times. ● The balance with the NRB to fixed deposit ratio is fluctuating. It is moving around between 0.18 times to 0.39 times. ● The investment to total deposit ratio is fluctuating adversely. Since the ratio is fluctuating the bank has unsatisfactory result. However the investment from source of deposit is higher. It will give a higher return without risk only if the ratio is stabilized. ● The proportion of the saving deposit account is high in total deposit liability. So, it is recommended that the bank should utilize the amount collected from the saving deposit account carefully. It should be invested in the higher yielding areas. ● Balance with NRB to current plus saving deposit should be maintained at the below than 0.11 times. ● Bank should not spend too much in the fixed assets because it yields only a nominal portion, almost no yield.

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CHAPTER – 3 SUMMARY AND CONCLUSION 3.1. SUMMARY Nepal is one of the least developed countries of the world. For most of the developing process, it is financially depending upon the foreign countries. It is economically too weak. Thus, the economic condition of the people is weak. In Nepal 85% of the people are depended upon agricultural sector which is unable to provide full employment to the people. Nepal government has to activate people in the nation’s development through overall industrialization of nation. For this purpose, development of sound banking system is essential. In Nepalese banking sector, commercial banks including ventures banks are operating at present. In the absences of modern banking any country cannot develop the economic activity. Therefore, it is essential to find out whether or not the banks are serving an important contribution to develop sectors of economy. Liquidity is said to be general business of fund, which shows the bank ability to meet cash requirement. In this record, this study has been based upon the objective to evaluate the liquidity position of Nabils.

3.2. CONCLUSION ● The saving deposit account is nearly constant trend. The highest ratio is 0.55 times in fiscal year 2016/17 and the lowest ratio is 0.41 times in fiscal year 2017/18. But the ratio is not satisfactory due to the last year ratio was decline. ● Fixed deposit is fluctuated. The lowest ratio is 0.32 times and highest ratio is 0.48 times. It is decrease up to fiscal year 2015/16 and grows up then. And it is 0.48 times on 2017/18. It is satisfactory. Bank made good ratio after 2014/15. ● From the cash and bank balance to current deposit liability is fluctuating. The ratio is moving around between 0.48 times to 0.95 times. It is satisfactory.

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● Cash and bank balance to total deposit ratio is fluctuating. But the ratio is somehow satisfactory even though the ratio is higher than the central banks prescription. The ratio is moving around the between 0.05 times to 0.11 times. ● Cash and bank balance to total deposit (excluding fixed deposit) ratio is fluctuating in increasing state. The ratio is satisfactory. It is moving around between 0.08 times to 0.19 times. ● The ratio of balance with the NRB to current and saving deposit has been fluctuating. The ratio is declined in year 2013/14 and constant in 2014/15 and then it is grow up. So, the ratio is satisfactory. ● The balance with the NRB to fixed deposit ratio is fluctuating. It is moving around between 0.18 times to 0.39 times. ● The investment to total deposit ratio is fluctuating adversely. Since the ratio is fluctuating the bank has unsatisfactory result. However the investment from source of deposit is higher. It will give a higher return without risk only if the ratio is stabilized. ● The liquid assets to total deposit ratio is fluctuating slightly except fiscal year 2013/14. However the ratio is higher and somehow may be considered satisfactory.

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BIBLIOGRAPHY Anderson et al., (1992). Thesis and Assignment writing. Wiley Eartren Limited, New Delhi, ANNUAL REPORT. Himalayan Bank Limited Bajracharya, B.C. (2053), Business statistics & mathematics, M.K. publishers and Wistributors. Brigham, Weston, Essentials of Managerial Finance”, Eleventh Edition, University Publishers, USA. Kothari, C.R., Research Methodology”, Mc. Grow Hill Company, second Edition. INFO HIMALAYAN . Bimonthly newsletter of Himalayan Bank Limited. J. F. W. & E. F. Brigham, (2056). Essential of Managerial Finance. The Dryden Press. Harcount Brance Collage Publishers, U.S.A. Joshi, S. & H.P. Shrestha, (2056). "Principles of Banking and Insurance". Taleju Prakashan, Bhotahiti, Kathmandu. Shekhar and Shekhar “Banking Theory & Practice”, Eighteenth Revised Edition, 1996. Nepal Rastra Bank, Banking and Financial Statistics, Nabil Bank., “annual report 2012-2018

Websites http:// www.nrb.org.np http://www.nabilbank.com.np

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APPENDICES Appndix-1 List of Commercial Banks in Nepal Name

Operation Date (A.D.)

Head Office

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Nepal Bank Ltd. Agriculture Development Bank Ltd. Nabil Bank Ltd. Nepal Investment Bank Ltd. Standard Chartered Bank Nepal Ltd. Himalayan Bank Ltd. Nepal SBI Bank Ltd. Nepal Bangaladesh Bank Ltd. Everest Bank Ltd. Kumari Bank Ltd. Laxmi Bank Ltd. Citizens Bank International Ltd. Prime Commercial Bank Ltd. Sunrise Bank Ltd. Century Commercial Bank Ltd. Sanima Bank Ltd. Machhapuchhre Bank Ltd.

1937/11/15 1968/01/21 1984/07/12 1986/03/09 1987/02/28 1993/01/18 1993/07/07 1994/06/06 1994/10/18 2001/04/03 2002/04/03 2007/04/20 2007/09/24 2007/10/12 2011/03/10 2012/02/15 2012/7/9

Dharmapath,Kathmandu Ramshahpath, Kathmandu Beena Marg, Kathmandu Durbarmarg, Kathmandu Nayabaneshwor, Kathmandu Kamaladi, Kathmandu Kesharmahal, Kathmandu Kamaladi, Kathmandu Lazimpat , Kathmandu Durbarmarg, Kathmandu Hattisar, Kathmandu Narayanhitipath, Kathmandu Kamalpokhari, Kathmandu Gairidhara, Kathmandu Putalisadak , Kathmandu Nagpokhari, Kathmandu Lazimpat , Kathmandu

804.27 1393.79 804.32 1064.56 801.14 811.45 804.69 808.81 810.69 596.95 822.17 803.32 803.33 815.26 806.34 800.13 805.57

18

NIC Asia Bank Ltd.

2013/6/30

Thapathali, Kathmandu

803.11

19

Global IME Bank Ltd.

2014/4/9

Panipokhari, Kathmandu

888.84

20

NMB Bank Ltd.

2015/10/18

Babarmahal, Kathmandu

646.18

21

Prabhu Bank Ltd.

2016/2/12

Babarmahal, Kathmandu

800.13

22

Siddhartha Bank Ltd.

2016/7/21

Hattisar, Kathmandu

846.44

23

Bank of Kathmandu Ltd.

2016/7/14

Kamaladi, Kathmandu

624.54

24

Civil Bank Ltd.

2016/10/17

Kamaladi, Kathmandu

725.93

25

Nepal Credit and Commerce Bank Ltd.

2017/01/01

Bagbazar, Kathmandu

467.91

26

Janata Bank Nepal Ltd.

2017/04/07

Thapathali, Kathmandu

800.08

27

Rastriya Banijya Bank Ltd.

2018/05/02

Singhadurbarplaza, Ktm

900.48

28

Mega Bank Nepal Ltd.

2018/05/13

Kamaladi, Kathmandu

928.68

S. N.

Source: “https://www.nrb.org.np/bfr/bfi_list/List%20of%20BFIs_July2018.pdf”

Paid up Capital (Rs.in Crore)