1

CHAPTER-ONE

INTRODUCTION

1.1 Background
The word bank only means to focus commercial bank. In short, we could say those
organizations whose transaction is money and credit said to be bank. The word bank is
said to have organized from the French word “Banque" and Italian word "Banca". Its
literal meaning is to lend cash, money and to exchange money sitting on the bench
respectively. In ancient time, goldsmith where exchanging money sitting on the bench.
Their branches used to be broken by the depositors when they were unable to meet their
liabilities. Gradually people started to keep their gold, metals and coins and other
valuable ornaments with goldsmith and moneylenders. It was observed that money was
not withdrawn at once. Hence they started lending on interest. They started to lend
deposited money for the short time period. They received is interest from their invested
amount. Later on that type of transaction were developed as banking transaction and the
bank is originated.

In other word, the bank is an institution whose essential operation is to take deposit from
public and to lend money. Banks accumulate idle money from general public by
providing attractive sound interest rate in their deposits and disburse the collected
deposits as a loan to business organizations, industrial, agriculture sector and needy
people etc. So we can say that the main task of commercial bank is to mobilize idle
sources in productive areas by collecting it from scattered sources and generating profit.
The bank plays an important role in our economy by providing effective service
efficiently towards the attainment of economic development.

Banking has come to present advanced form through various stages. Traditional form of
banking was traced during the civilization of Greek, Rome and Mesopotamia. But the
first modern banking institution was originated at Italy in 1157 A.D named as "The Bank
of Venice". "The Bank of England" was established in 1694 A.D as the first central bank;
add a strong brick on the development of banking sector. After this evolution, there came
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a remarkable change in the process of establishing the banking institution. This was a big
landmark in the history of banking development. The ideal of commercial banks rapidly
spread all over the world only after the foundation of this bank.

In Nepal, banking in true sense of term started with the inception of "Nepal Bank Ltd." on
30th Kartik, 1994 B.S. is carried out functions of commercial Bank. Having felt the need
of a central Bank," Nepal Rastra Bank" was established in 2013 B.S. under the Central
Bank Act, 2012 to fulfill the adequate services for increasing commercial activities in the
country. "Rastriya Banijya Bank (R.B.B)" was established in 2022 B.S. as a fully
government owned commercial bank. Now there are 17 commercial banks in total. ON
the other hand, there are 56 finance companies, 5 rural development banks, one
agriculture development banks and other many financial institutions.

1.2 Profile, Events and Activities of the organization

The history of banking dates back to sixteenth centuries. However, in Nepal formal
banking system was introduced only in November 1937 with the establishment of Nepal
Bank Ltd. (NBL) which is regarded as pioneer institution of modern banking system and
served as a sole financial institution of the country for nearly two decades. Prior to the
establishment of this bank, the banking needs of people were fulfilled to certain extend
only by the organized financial institution" The Tejarath Adda". However, the services it
offered were not sufficient. Actually, the formation of high committee board" Udhyog
Parisad" was indeed a landmark in opening new avenue in field of banking, industries and
commerce. Accordingly NBL was established in November 1997 under Nepal Bank Act
as joint venture between government and private sector and replaced the "Tejarath
Adda"by taking over its operation and overcoming its limitations.
Nabil Bank Limited is the first commercial joint venture bank of Nepalese banking
history, it was established in 1984, July 12 under the company all 1964. It was established
under a technical service agreement with Dubai Bank Limited, Dubai, which was later
merged with Emirates Bank Limited, Dubai.

Now its present shareholdings are distributed as follows:

• 50% is owned by N.B International Limited, Ireland.
• 20% by local financial institutions and
• 30% by Nepalese public.
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Nabil is amongst the most successful joint venture organization in Nepal registering
strong growth in balance footings as well as profits year after year. The initial capital of
Rs 30 million invested in 1984 has grown to Rs 1314 million as at 2019.

The bank provides a complete range of personal, Commercial, corporate banking and
related financial services through its 17 branches and 1 counters. The head office of Nabil
bank Ltd. is located at Nabil House, kamaladi, Kathmandu. Out of total branches 4
branches are in the Kathmandu valley and remaining branches are in Birgunj, Biratnagar,
Itahari, Parsa, Butwal, Rupandehi, Bhairahawa, Pokhara, Dharan and Nepalgunj. And
their counters are serving at Thamel, Kathmandu and Tribhuwan International Airport,
Kathmandu. The main function of head office is to check account of branches, control
their credit, suggest for operating accounting and other managerial function and it
handled a certain number of special customer of kamaladi branch having all commercial
functions.

1.3 Objective of the study

Since this report is entitled to "financial performance of Nabil Bank Ltd with special
reference to fixed deposit". Its objectives are based on that title (topic). The objective of
this study can be briefly specified as follows:

• To find out the co-relation between fixed deposit and total deposit.
• To find out the trend of fixed deposit and total deposit.

1.4 Rationale of the Study

Since this study concentrates on the financial performance of Nabil Bank with special
reference to fixed deposit, it will be helpful to those seeking information on the subject. It
will hope the readers to know more about the subject in particular sense. This enhances
the student of BBS 4th year to get knowledge about the practical aspect of this elective
course as well. This report shows the financial performance and position of the Bank.
This study will help the readers to know more about Nabil, its objectives and policies. It
also provides the data of total deposit fixed deposits, loan and advances, Investments,
cash and Bank balances etc during the recent years. It shows the ratios of various subjects
to total deposits and fixed deposits. This study also shows the strength, weakness,
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opportunities and threats of Nabil Bank Ltd. Similarly it can be a good asset of library
and it may help the bank because some suggestions have been provided.

1.5 Problem Statement

In every bank, there are many types of problems. In the context of this study following
problems are seen:

• Nabil Bank is not collecting fixed deposit by determining proper interest rates
and developing banking habits among the people.
• Ignorance of social responsibilities
• Improper utilization of there total deposit
• Due to maximum operating expenses.

1.6 LITERATURE REVIEW

This chapter includes the review of previous studies, articles, and conceptual framework
for the related studies. To present the real framework of the study, mere analysis is not
enough and review of some related materials should be dealt with to give the research a
clear vision. Past study knowledge provides foundation to the present study. So analyzing
and presenting the following parts define this chapter:

1.6.1. Conceptual/Theoretical review

1.6.2. Review of related Studies

1.6.1 Conceptual/Theoretical review

Functions of Commercial Bank

Commercial banks are the most important types of financial institution for the nation in
terms of aggregate assets. Traditional functions of commercial banks are only concerned
with accepting deposits & providing loans. But modern commercial banks work for overall
development of trade, commerce, services, & agriculture also. The business of banking is
very broad in modern business age. The number & variety of services provided by bank
will probably expand. Recent innovation in banking include the introduction of credit
cards, accounting services for business firms, factoring, leasing, participating in the Euro-
dollar market, & lock-box banking. The main functions of commercial banks are as
follows:
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i. Accepting Deposits: - It is fair deduction that no person or body, corporate or otherwise,

can be banker who does not take deposits, issue & pay cheques& collect cheques from his
customers. Here, all functions are related with the acceptance of deposits. Therefore,
accepting deposits by bank is the oldest function of bank. A bank accepts deposits in three
forms viz. saving, current & fixed. Saving deposit is one of the deposits collected from
small depositors & low-income depositors. The banks usually pay small interest to
depositors for their deposits. Current account is also known as demand deposits. Under
this, any amount may be deposited. There are no restrictions regarding number & amount
of withdrawals as contrary to saving account. The banks don’t pay any interest on such
account but charge small amount on the customers having current account. A fixed or time
deposit is one where customers are requested to keep a fixed amount in the bank for
specific period, generally by those who don’t need money for stipulated time. The bank
pays a higher interest on such deposits.
ii. Advancing Loans: - The second major function of a commercial bank is to provide
loans & advances from the money, which it receives by way of deposits for the
development of industry, trade, commerce, services, & agriculture. The main purpose of
commercial bank is to boost up the development pace of communities & the economy as
a whole.

iii. Agency Services: - The bank also performs number of services on behalf of the
customers. The following are the agency functions provided by the bank.

 dealing with the transaction of foreign exchange business

 serving as an agent of correspondent on behalf of the customers
 issuing letter of credit, circulate note, traveler’s cheques, etc.
 Purchasing & selling different kinds of securities & remitting funds
 keeping valuable article in safe custody
 providing financial advice to various persons & bodies whenever required

1.6.2 Review of Related Studies

When funds are plentiful, market rate generally tend to decline, banks seek an
aggressively and therefore lower their rates induce marginal borrower to come into the
market. When funds are scare, banks raise their rates and come potential borrowers may
differ the use of credit or seek it elsewhere (Crosse, 1963: 63).
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The writer stresses on the fulfillment of credit needs of various sectors, which insures
investment. The investment lending policy of commercial bank is based on the profit
maximization as well as the economic enhancement of the country (Shresha, 2058: 31-
32). The investment objective is to increase systematically the individual’s wealth defined
as assets minus liabilities. The higher the level of desired wealth the higher the return
must be received (Cheney & Moses, 1991: 23).

Pradhan (2053) in his article “Deposit mobilization, its problem and prospects” has
presented that deposit is the life-blood of every financial institution like commercial bank,
finance company, co-operative or non-government organization. He further adds consider
the most of banks and finance companies that the latest figure does produce a strong
feeling that serious review must be made on problems and prospects of deposit sector.
Leaving few joint venture banks, other organizations rely heavily on the business deposit
and credit disbursement.

1.6.3 Review of Literature

Karmacharya (1978) Conducted research on the topic of “A study on the deposit

mobilization of NBL” has tried to examine the role of NBL in the deposits accumulation
and to see how far the bank is able to utilize the collected deposits. This study covers 8
years data from the year 1970 to 1977 and based on secondary data. Correlation,
percentage and ratio analytical tools of statistics are used for the analysis and
interpretation of data.

The writer found that the deposit credit ratio is only 52% on average, which shows
unutilized resources are increasing. The security-marketing corporation, which is recent
established, can play an active role for utilization of unutilized resources. The writer
further found that NBL should not only concentrate in the extension of short-term credit
only. Bank should increase the level on priority sector and extent its branches to meet
growing needs of the country.

Shrestha (2042) Conducted research on the topics of “A study on deposit mobilization

and utilization of commercial banks with reference to NBL” with the objectives is:
1. To sketch the deposit mobilization of NBL.
2. To analyze the impact of interest rate in deposit mobilization.
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3. To analyze the impact of branch expansion on the deposit mobilization.

This study covers ten years data from the year 2031 B.S. to 2040 B.S. It is limited to
deposits and loans and advances only. The study is primary based on secondary data. In
this study, statistical tools like percentage changes, correlation test is done and to test its
significance analysis, probable error test is carried out.

On the theses, the writer found that NBL has been much sufficient in collection of
resources from the people in both urban and rural areas of the country, but in the process
of utilization, the bank is still behind. The interest rate has played important role in
mobilizing and utilizing the resources of the bank. So, the structure of interest rate should
be changed according to the need of nation. It is also suggested that to expand availability
of banking services, branch expansions policy should be continued to mobilize resources
as well as accelerate lending to productive sector.

Neupane (1986), Conducted research on the topic of “Deposit mobilization of commercial

banks in Nepal, comparative study of RBB and NBL, Kirtipur Branch” with the
objectives of:

1. To examine whether RBB, Kirtipur Branch is successful to complete with NBL,

Kirtipur branch in relation to deposit and loan advanced.
2. To examine how for RBB, Kirtipur Branch is successful to provide door-to-door
services to its customers in the collection of more deposits.
3. To examine how far the deposits of RBB, Kirtipur Branch have been efficiently
mobilized.

1.7 RESEARCH METHODOLOGY

Prior to conducting a study a definite plan steps and infrastructure should be prepared
and followed to design the report; to collect the data and to present and analyze them. The
success of the report in attaining its objectives depends upon the methodology it has
followed. This report is prepared to study and analyze the financial performance of Nabil
Bank Ltd. with special reference to fixed deposit." Considering the objectives the
methodologies used are:
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1.7.1 Research Design

This study is analytical in nature. A true research design is basically concerned with
various steps to collect the data for analysis and draw a relevant conclusion. The research
design allows the researchers to take an appropriate measure and direction towards the
predetermined goals and objectives.

“A research design is the arrangement of conditions for collection and analysis of data in
a manner that aims to combine relevance to the research purpose with economy in
procedure.”

The research examines the facts and postulates in certain frameworks on details and
supplies the important information on subject matter, summary of the study, major
findings of the study, recommendations, conclusion etc. are the most significant
information among them, they are derived with the help of some financial and statistical
tools were adapted to evaluate the fund mobilization of joint venture banks viz. SANIMA
and NIBL in consideration not only to research about them but also to facilitate among
them.

There are altogether 27 commercial banks functioning all over the kingdom and most of
their stocks are traded actively in the stock market. Among them nine are JVBs and
remaining are domestic commercial banks. Among all the banks only NABIL banks is
taken as a sample for study. These banks are compared as per fund mobilizing activities.
They are:

These two banks are compared as per fund mobilization procedure, that they are adopting
to mobilize their collected funds as well as own funds.

1.7.2 Sources of Data

The study is mainly based on secondary data. The secondary sources of data collections
are those that have been used from published on used by someone previously. The
secondary sources of data are Balance Sheet, Profit & Loss account and literature
publication of the concerned banks. The NEPSE report of the concerned bank has
furnished some important data to this research work. Some supplementary
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1.7.3 Nature of Data

In case of primary data, some personal views and ideas of individual’s respondent are
collected. But in case of entire study secondary data used are basically of the following
nature.
Most of the data taken for the analysis is collected in the form of published by the
concerned banks through their annual reports.
Since all the banks which are taken into account for the study are listed in NEPSE, the
figures are all most reliable and suitable too

1.7.4 Data Analysis Tools

Analysis and presentation of the data is the core of each and every research work. This
study requires some financial and statistical tools to accomplish the objective of the study.
The financial and statistical tools are most reliable. In this study various financial,
statistical and accounting tools have been used. These tools make the analysis more
effective, convenience, reliable and authentic.

The various results obtained with the help of financial, accounting and statistical tools are
tabulated under different headings. Then they are compared with each other to interpret
the results

1.8 Limitation of the study

This is not far from several limitations, which weaken the hearth of the study e.g.
inadequate coverage of time period taken, reliability of financial and statistical tools used
and other variations. The present study suffers from the following limitations:

This study is limited due to the following factors:-

 There are many parts of financial sector but the present study concern only on
CBs.
 There are 30 CBs in Nepal but this study covers only two such Banks. It has to be
assumed that these banks represent all Nepalese commercial bank.
 The secondary data is about 2018/19 to 2022/23.
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1.9 Report Structure

The report will be divided into 5 different chapters.

Chapter 1. Introduction

This chapter includes the basic aspect of the whole thesis. In this chapter we have
discussed about the objective of the study, problem faced while doing the study and also
the limitations while preparing the thesis.

In this chapter, focus has been made on the review of literature that is relevant to the
investment policy of commercial banks.

This chapter describes the methods and process applied in the entire subject of the study.

Chapter 2. Results and Findings

In this chapter, the data collected from different sources have been presented and
analyzed

Chapter 3. Discussion and Conclusion

Lastly, this chapter has made a summary of whole thesis and made some conclusion of
the study. Moreover the recommendations relating to the study have also been presented
in this section.
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CHAPTER TWO
RESULTS AND FINDINGS

2.1 Data Presentation

For the case study, we have to study various types of data. It is no doubt that any
commercial bank depends upon deposits collected from different sectors. Acceptance of
deposits is the first and important function of the commercial bank. Bank takes various
types of deposits from the public and intuitions and collects capital. By this, bank and
people both get benefit. By depositing people get some interest from the bank and also
their wealth become safe. On the other hand on the basis of receipt deposit bank create
credit and earn profit. Bank creates credit in the ratio of accepted deposit. So if the
deposit is more they can create credit and earn profit. Bank creates credit in the ratio of
accepted deposit. So if the deposit is more they can create more credit and can earn profit
in the same ratio and vise versa. So bank motives people to deposit in bank. If bank will
not be able to collect deposit, it will not be able to invest in various sectors like priority
sector. Deposit therefore is very useful tool for banks in its operations.

Current, saving and Fixed deposits are the three types of deposit accounts offered
traditionally by all the banks and represents the amount which the bank owes to the
account holder, its customer.

Cash and bank balance and total deposit:

Table – 1
Cash and bank balance and total deposit (Rs "000")
Fiscal years Cash and Bank balance Total deposits

2018/19 812906 15839008

2019/20 1051820 15506428
2020/21 1144767 13447661
2021/22 970486 14119032
2022/23 559380 14586608
Source: - Annual report of Nabil Bank Ltd
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Figure-1
Cash and Bank Balance and total deposit

16000000
14000000
12000000
10000000
cash and bank balance
8000000
total deposits
6000000
4000000
2000000
0
2018/19 2019/20 2020/21 2021/22 2022/23

The above table and figure show that Bank total deposit amount to 15839008 thousand .In
2018/19 cash and bank balance increase up to 1144767 thousand. In 2018/19 increase in
total deposit decreased to 13447661 thousand but in 2020/21 decrease in cash and bank
balance up to 559380.

Bank balance with NRB and total deposit:

Table-2
Fiscal year Balance with NRB Total Deposits
2018/19 512066 15839008
2019/20 506675 15506428
2020/21 892747 13447661
2021/22 606695 14119032
2022/23 389705 14586608
Balance with NRB and Total deposit (Rs "000")
Source: - Annual report of Nabil Bank Ltd
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Figure-2
Balance with NRB and Total deposit

16000000
14000000
12000000
10000000
8000000 Balance with NRB
Total Deposit
6000000
4000000
2000000
0
2018/19 2019/20 2020/21 2021/22 2022/23

The above table and figure show that Bank total deposit rises up to 15839008 thousand of
which 512066 thousand is balance with NRB. In 2020 increase in total deposit decreased
up to 13447661 thousand and in 2023 decrease in balance with NRB is 389705 thousand.

Liquid assets and total deposit:

Table – 3
Liquid Assets and total deposit (Rs "000")
Fiscal year Liquid Assets Total Deposits
2018/19 4068416 15839008
2019/20 5203483 15506428
2020/21 5403745 13447661
2021/22 5229464 14119032
2022/23 5225832 14586608
Source: - Annual report of Nabil Bank Ltd
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Figure-3
Liquid Assets and total deposit

16000000
14000000
12000000
10000000
8000000 Liquid Assets
Total Deposits
6000000
4000000
2000000
0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and figure it is clear that in 2018/19 the liquid assets of bank
amount to 4068416 thousand out of 15839008 thousand total deposit. Liquid assets were
increase but total deposit was decrease in 2021/2022.

Investment and total deposit:

Table – 4
Investment and total deposit (Rs "000")
Fiscal years Investment Total Deposit
2018/19 7704309 15839008
2019/20 8199515 15506428
2020/21 6031176 13447661
2021/22 5835948 14119032
2022/23 4267233 14586608
Source: - Annual report of Nabil Bank Ltd
From the above table it shows that the Bank has invested amount of Rs 7704309 thousand
out of total deposit Rs 15839008 thousand. In the same way Rs 8199515 thousand
investment out of Rs 15506428 thousand deposit, Rs 6031176 thousand investment
out of Rs 13447661 thousand deposit, Rs 5835948 thousand investment out of Rs
14119032 thousand deposit and Rs 4267233 thousand investment out of 14586608
thousand deposit during the periods in 2018/19, 2019/20, 2020/21 , 2021/22, 2022/23 and
respectively.
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Fixed deposit and total deposit:

Table-5
Fixed deposit and total deposit (Rs "000")
Fiscal year Fixed Deposit Total Deposit
2018/19 3719203 15839008
2019/20 2446846 15506428
2020/21 2252545 13447661
2021/22 2310572 14119032
2022/23 2078535 14586608
Source: - Annual report of Nabil Bank Ltd
Figure 5
Fixed deposit and total deposit

16000000
14000000
12000000
10000000
8000000 Fixed Deposit
Total Deposit
6000000
4000000
2000000
0
2018/19 2019/20 2020/21 2021/22 2022/23

The above figure and table shows that in 2018/19 Bank has fixed deposit amount Rs
3719203 thousand out of total deposit. In the same way Rs 2446846 thousand-fixed
deposit out of 15506428thousand total deposits, Rs 2252545 thousand-fixed deposit out
of 13447661 thousand total deposits Rs 2310572 thousand-fixed deposit out of Rs
14119032 thousands total deposit and the last Rs. 2078535 thousand-fixed deposit out of
14586608 thousand total deposits during the period in 2018/19 to 2022/23.
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2.2 DATA ANALYSIS:

Financial Analysis:
Cash reserve ration (CRR)
This ratio measures the availability of bank's liquid or immediate funds to meet its
unprecedented calls or demand on deposits (i.e. current, saving, fixed, call deposit and
others). Dividing cash and bank balance calculate this ratio by total deposit.

CRR =
Cash and Bank Balance
Total Deposits
Cash and Bank balance includes cash in hand, foreign cash in hand, cheques for clearing,
balance with NRB, Bank balance with other local Banks, Balance with foreign Banks.
Total deposits includes current, saving, fixed others margin.
Table-6
Cash and bank balance to total deposit ratio (Rs"000")

Fiscal years Cash and Bank balance Total deposits CRR (%)

2018/19 812906 15839008 5.13%

2019/20 1051820 15506428 6.78%
2020/21 1144767 13447661 8.51%
2021/22 970486 14119032 6.87%
2022/23 559380 14586608 3.83%
mean (x) 6.22%
S.d () 1.60%
C.V. 25.72%

Where;
X or CRR
Mean (x) =
N

S.D () = (X-X) 2

N

C.V=
x 100
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The above table shows that Bank has maximum CRR up to 8.51% in 2020/21 and
minimum up to 3.83% in 2022/23. The total deposit of Bank amount to 15839008
thousand and liquid fund (cash and Bank balance) amount to 812906 thousand in July
2019. In the same way total deposit increased to 15506428 thousand with deposit
increased to 15839008 thousand with liquid fund up to 1051820 thousand in July 2008
having CRR 6.78%. And in July 2020/21 CRR increased to 8.51%. In 2022 increase in
total deposits up to 14119032 thousand but decrease in liquid fund up to 970486 having
CRR 6.87% more than previous year. But it decrease to 3.83% in July 2022/23. Bank has
maintained mean of cash Reserve ratio for past five years is 6.22% and just Standard
deviation and co-efficient of variation (C.V) are 1.60% and 25.72% respectively.

Bank balance with NRB to total deposit ratio:

Commercial Banks have to maintain a balance of certain percentage of their total deposit
at NRB as Mandatory. This ratio is calculated by dividing balance with NRB with total
deposit.

Balance with NRB to total deposit ratio =

Balance with NRB
Total Deposits

Table-7
Balance with NRB to Total deposit ratio (Rs"000")
Fiscal year Balance with NRB Total Deposits Ratio (%)
2018/19 512066 15839008 3.23%
2019/20 506675 15506428 3.27%
2020/21 892747 13447661 6.64%
2021/22 606695 14119032 4.28%
2022/23 389705 14586608 2.67%
Mean(x) 4.02%
S.D() 1.41%
C.V 35.07%

The above table shows that Bank has maximum of 6.64% balance with NRB in 2020/21
of total deposit and minimum up to 2.67% in 2022/23. The total deposit in 2018/19 rises
up to 15839008 thousand of which 512066 thousand is balance with NRB. In the same
 18

way Bank has maintained 506675 thousand balances with NRB out of 15506428
thousand total deposits in 2019/20 having ratio 3.27%. Similarly, balance deposit
13447661, 14119032 and 14586608 having ratio 6.64%, 4.28% and 2.67% 2018/19,
2019/20, 2020/21 , 2021/22, 2022/23 respectively.

Liquid assets to total deposits ratio:

This ratio shows the liquid assets maintained out of total deposit. It is calculated dividing
liquid assets by total deposit.
Liquid Assets
Liquid assets to total deposit ratio =
Total Deposits

Liquid assets=Cash, Bank balance, Money at call, Treasury Bills, Development bonds
and National saving bonds.
Table-8
Liquid Assets to total deposits ratio (Rs "000")
Fiscal year Liquid Assets Total Deposits Ratio (%)
2018/19 4068416 15839008 26.69%
2019/20 5203483 15506428 33.56%
2020/21 5403745 13447661 40.18%
2021/22 5229464 14119032 37.04%
2022/23 5225832 14586608 35.83%
Mean(X) 34.66%

S.D() 4.52%
C.V. 13.04%

From the above table it is clear that Bank has maintained highest liquid assets up to
40.18% of total deposit in 2020/21. In 2019 the liquid assets of Bank amount to 4068416
thousand out of 15839008 thousand total deposit. In the same way liquid assets amounts
to 5203483 thousand i.e. 33.56% of total deposit 154506428 thousand in 2019/20 and
5203483 thousand out of 15506428 thousand in 2019/20. Similarly liquid assets were
increase but total deposit was decreased in 2018/19, 2019/20, 2020/21 , 2021/22, 2022/23
Bank has maintained 40.18%, 37.04%, 35.83% of liquid assets in ratio with total deposits.
 19

The average of last five years ratio is 34.66% and its Standard deviation and coefficient of
variation is 4.52% and 13.04% respectively.

Investment to total deposit ratio:

This ratio examines the efficiency of Banks investment management. This ratio indicates
the extent to which the Bank is successful in mobilizing its deposits in profitable
investment areas. It is calculated by dividing investment by total deposit.

Investment to total deposit ratio = Investment

Total Deposit
Investment = Government Securities, NCM mutual Fund, Company Shares.
Table-9
Investment to total deposit ratio (Rs "000")
Fiscal years Investment Total Deposit Ratio (%)
2018/19 7704309 15839008 48.64%
2019/20 8199515 15506428 52.88%
2020/21 6031176 13447661 44.85%
2021/22 5835948 14119032 41.33%
2022/23 4267233 14586608 29.25%
Mean (X) 43.39%
S.D () 8.05%
C.V. 18.55%

From the above table shows that the Bank has invested maximum up to 52.88% of total
deposit during the period 2019/20 and minimum up to 29.25% of total deposit during the
period 2022/23. In 2018/19 Bank has invested amount of Rs 7704309 thousand out of
total deposit Rs 15839008 thousand. In the same way Rs 8199515 thousand investment
out of Rs 15506428 thousand deposit, Rs 6031176 thousand investment out of Rs
13447661 thousand deposit, Rs 5835948 thousand investment out of Rs 14119032
thousand deposit and Rs 4267233 thousand investment out of 14586608 thousand deposit
during the periods in 2018/19, 2019/20, 2020/21 , 2021/22, 2022/23 respectively. The
Mean ratio during the period of five years is 43.39%and it’s S.D and C.V. is 8.05% and
18.55% respectively.
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Fixed deposit to total deposit ratio:

Fixed deposits are long-term deposits and Bank can mobilize them on investment, loan
and advances. Higher the proportion of fixed deposits lower will be the proportion of
current or short-term deposits in the total deposits. This ratio measures the percentage of
fixed deposit to total deposits management. It is calculated by dividing fixed deposits by
total deposit.

Fixed deposit to total deposit Ratio =

Fixed Deposit
Total Deposit
Table-10
Fixed deposit to total deposit ratio (Rs"000")
Fiscal year Fixed Deposit Total Deposit Ratio (%)
2018/19 3719203 15839008 23.48%
2019/20 2446846 15506428 15.78%
2020/21 2252545 13447661 16.75%
2021/22 2310572 14119032 16.36%
2022/23 2078535 14586608 14.25%
Mean(X) 17.32%

S.D() 3.19%

C.V. 18.42%

The above table show that fixed deposit to total deposit ratio. The bank has collected the
maximum fixed deposit up to 23.48% of the total deposit during the period 2019 and
minimum collected fixed deposit up to 14.25% of the total deposit during period 2023. In
2018/19 Bank has fixed deposit amount Rs 3719203 thousand out of total deposit. In the
same way Rs 2446846 thousand-fixed deposit out of 15506428thousand total deposits, Rs
2252545 thousand-fixed deposit out of 13447661 thousand total deposits Rs 2310572
thousand-fixed deposit out of Rs 14119032 thousands total deposit and the last Rs.
2078535 thousand-fixed deposit out of 14586608 thousand total deposits during the
period in 2020/21. If we take an average percentage ratio of last five years, it comes
around 17.32% and standard deviation 3.19% and co-efficient of variation 18.42%.
 21

Statistical Analysis:
Karl Pearson's Correlation Co-efficient:
Of the several mathematical method of measuring correlation, the Karl Pearson’s method,
popularly known as Pearson co-efficient of correlation is most widely used in practice.
The Pearson Co-efficient of correlation is denoted by symbol '' which shows the
relationship between the two variables. The value of '' always lies between -1 and +1
when =+1, it means there is perfectly positive correlation between two variables. When
=-1 there is perfectly negative correlation between two variables. When =0 it means
there is no relationship, however, in practice, such values of '' as +1,-1 and 0 are rare.
The formula for computing Pearson co-efficient of correlation is:

xy
 =
 x2y2
Where;
x=(X-X)
y=(Y-Y)
On the following table,
Let, Fixed deposit be "X"
Total deposit be "Y"
Table-11
Correlation between fixed deposit and total deposit (Rs in million)

X Y x=X- y=Y- x2 y2 xy
X Y
3719 15839 1157.4 1139.2 1339574.8 1297776.6 1318510.08

2447 15506 -114.6 806.2 13133.2 649958.4 -92390.52

2253 13448 -308.6 -1251.8 95034 1567003.2 386305.48

2311 14119 -250.6 -580.8 62800.4 337328.6 145548.48

2078 14587 -483.6 -112.8 233869 12723.8 534550.08

X=12808 Y=73499 x2= y2= xy=

1744411.4 3864790.6 1812523.6

Here,
X 12808
N
5
 22

X = = = 2561.6

Y 73499
Y = = = 14699.8

N 5
Now
 =
xy

= x2y2 = 0.698
1812523.6

From the above table, the co-efficientxof3864790.6

1744411.4 correlation () = 0.698, which lies between -1 to
+1. It indicates that there is high degree of positive correlation between fixed deposit and
total deposit.
Trend Analysis:
The statistical test used in this study, which describes the trend of any variables whether it
increase or decrease with passage of time. Here we use lease square method for trend
analysis. The formula of lease square method is:
y=a+bx
Where;
Y
a=

N
XY
b=

X2
 23

Table-12

Trend Analysis of Fixed deposit with passage of Time (Rs in million)

Fiscal Year(X) Fixed Trend Value(Yc)
2
dep. (Y) X=X-2002 x xy
2018/19 3719 -2 4 -7438 4041.6

2019/20 2447 -1 1 -2447 3301.6

2020/21 2253 0 0 0 2561.6

2021/22 2311 1 1 2311 1821.6

2022/23 2078 2 4 4156 1081.6

Y=12808 x=0 x2=10 xy=-3418 Yc=12808

Let the trend line be

y = a+bx--------- (i)
where,
x = X-middle year
Since,
x= 0,

Y 12808
a = = = 2561.6

N 5
XY
b = = -3418 = - 341.8
2
X 10
Now, putting the value of 'a' and 'b' in the equation (i) we get required trend line as;
Yc = 2561.6-740 x
Now,
Trend Value (Yc)
When,
x = -2 Yc = 2561.6-740(-2) = 4041.6
x = -1 Yc = 2561.6-740(-1) = 3301.6
x = 0 Yc = 2561.6-740(0) = 2561.6
x = 1 Yc = 2561.6-740(1) = 1821.6
 24

x = 2 Yc = 2561.6-740(2) = 1081.6
The graph of the above data is given below:
Linear trend by the method of least square
Figure-6
Trend analysis of fixed deposit

4500
4000
3500
3000
2500 Fixed Deposit
2000 Trend Value
1500
1000
500
0
2018/19 2019/20 2020/21 2021/22 2022/23

The above figure shows that when 'b' is negative the trend line is declining.

2.3 Major Findings

 The bank has collected the maximum fixed deposit up to 23.48% of the total
deposit during the period 2018/19 and minimum collected fixed deposit up to
14.25% of the total deposit during period 2022/23. In 2021/2022 Bank has fixed
deposit amount Rs 3719203 thousand out of total deposit. In the same way Rs
2446846 thousand-fixed deposit out of 15506428thousand total deposits, Rs
2252545 thousand-fixed deposit out of 13447661 thousand total deposits Rs
2310572 thousand-fixed deposit out of Rs 14119032 thousands total deposit and
the last Rs. 2078535 thousand-fixed deposit out of 14586608 thousand total
deposits during the period in 2022/23. If we take an average percentage ratio of
last five years, it comes around 17.32% and standard deviation 3.19% and co-
efficient of variation 18.42%.
 25

CHAPTER-THREE
DISCUSSION AND CONCLUSION

3.1 Discussion
The management of the joint venture Banks are mainly held by foreign banks. Because of
its qualitative managerial skills, international chain of branches, almost customer
satisfaction, advanced technology, electronic banking services, worldwide fund transfer
system, credit cards, tele banking, automatic teller machines etc. Joint venture Banks have
been able to meet their objectives within the short period.
This report attempts to examine and evaluate the financial performance of Nabil with
special reference to fixed deposit. Further, it attempts the deep evaluation for the role of
fixed deposit in total deposit. The financial statement of five years i.e. fiscal year to fiscal
year 2006/2004 has been taken into consideration for the purpose of this study which has
been first proceed and analyzed comparatively. This study is exploratory As well as
analytical to some extent.
Financial performance of the Bank seems to be petty sound and successful. From the
current situation the role of Bank is maintaining financial status and monetary standard is
satisfactory. The efficiency of Bank in managing its resources can be found by looking at
its activity ratios, which is also encouraging. The investment to total deposit ratio is
satisfactory because it is in increasing trend (i.e. 48.64%, 52.88%, 45.85% 41.33% etc).
The cash and bank balance to fixed deposit is also satisfactory which is shown by
increasing ratio (i.e. 20.62%, 21.86%, 42.99%, 50.82%, and 41.99%).

Fixed deposit of the bank has played and imperative role in collection of funds. But the
fixed deposit collection of Bank is not satisfactory. The decreasing trend line of fixed
deposit with passage of time tells the fixed deposit is not directly proportional to total
deposit in period for five years.
In the introduction part, general background, role functions and limitations of study have
been expressed. Some relevant review of literatures and research methodology are also
expressed in this section. In the analytical section, analysis of various ratios, correlation
and trend analysis are expressed.
Therefore, overall performance of Nabil resulted in the form of this report indicate that
bank should take corrective action to boost the fixed deposit.
 26

3.2 Conclusion
Nabil bank’s financial performance seems to be petty sound and successful. The current
situation tells us that the role of bank is managing financial status and monetary standards
is satisfactory. By observing at its activity ratios, we can found that the efficiency of bank
is managing its resources.
 The investment to total deposit ratio is satisfactory because it is in increasing
trend (i.e. 48.64%, 52.88%, 44.85%, 41.33% etc)
 Regarding the fixed deposit and trend value the decreasing trend value of fixed
deposit with passage of time tells that fixed deposit is not directly proportional
to total deposit in period for 5 yrs.
 Balance with NRB to total deposit is unsatisfactory because their ratio is
2018/19 i.e. 3.23% increasing till the year 2019/20 is automatically decreasing
to 4.28% and 2.67% in 2021/22 and 2022/23 respectively.
 Fixed deposit is a long term deposit which helps bank to mobilize them on
investment, loan and advances. According to study analysis position of fixed
deposit is declining which is unsatisfactory (i.e. 3719203, 2440846, 2202545,
2310572, and 2078535 with their respective years).
 There is positive correlation between fixed deposit and total deposit (i.e. 0.698
which lies between -1 to +1).

Implications
On the basis of findings mentioned above some recommendation have been derived as
follows:
 Nabil is not getting success to increase the proportion of fixed deposit in total
deposit. So, Nabil is suggested to increase the collection of fixed deposits by
determining proper interest rates and developing banking habits among the
people.
 Most of the joint venture Banks are established in the city areas ignoring the
social responsibilities. These banks are required to extend their banking facility
even in the rural areas providing social loans to the deprived and priority
sectors.
 Nabil is suggested to minimize their operating expenses as far as possible since
it contributes to increase the volume of profit.
 27

 The investment of Bank in current year has been decreased then in previous year
so to maintain the increasing trend of investment, Bank should increase its
investment amount considering its liquidity needs.
 Nabil is suggested to improve in utilization of its total deposits in extending loan
and advances.
 28

BIBLIOGRAPHY

Bajracharya, B.C, Basic Statistic", M.K. publishers and Distributor, Bhotahity.

Bhandari, Dilli Raj, Principle and Practice of Banking and Insurance, 3 rd edition 2060,
Aayush Publication Kathmandu.

Khadka, Shrejang and Singh, Harydaya Bir, 2066 B.S Edition, Banking and Insurance
Asia Publications, Kathmandu.
Pandey, IM, Financial Management, 1987 Edition, Vikas Publishing House Pvt Ltd.
New Delhi, India.

Vaidya, Shakespeare "Banking & Insurance management ", 3 rd edition 2010, Taleju
Prakashan, Ktm.

Westen & Brigham," Essential of Managerial Finance "Eleventh Edition".