INVESTMENT POLICY OF COMMERCIAL BANKS IN

NEPAL: A COMPARATIVE STUDY OF NABIL BANK

AND NEPAL BANK LTD.

A Project Work Report

Submitted By
Seizan Pandey
Caspian Valley College
T.U. Reg. No: 7-2-518-27-2020
Exam Roll No: 705180019
Campus Roll No: 19

Submitted To
The Faculty of Management
Tribhuvan University
Kathmandu, Nepal

In partial fulfillment of the requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Lalitpur, Nepal
June, 2025
 DECLARATION

I hereby declare that the project work entitled “INVESTMENT POLICY OF

COMMERCIAL BANKS IN NEPAL: A COMPARATIVE STUDY OF NABIL
BANK AND NEPAL BANK LTD.” submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision
of Mr. Shyam Kaji Khatri, faculty member, Caspian Valley College, Kumaripati,
Lalitpur and is submitted in partial fulfillment of the requirements for the award of 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.

………...........

Seizan Pandey
Caspian Valley College
TU. Regd. No: 7-2-518-27-2020
Exam Roll No: 705180019
Campus Roll No: 19

June, 2025

ii
 SUPERVISOR’S RECOMMENDATION

The project work report entitled “INVESTMENT POLICY OF COMMERCIAL

BANKS IN NEPAL: A COMPARATIVE STUDY OF NABIL BANK AND
NEPAL BANK LTD.” Submitted by SEIZAN PANDEY of CASPIAN VALLEY
COLLEGE, KUMARIPATI, LALITPUR 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 award of the degree of
Bachelor of Business Studies (BBS). I, therefore, recommend the project work report
for evaluation.

………………….……

Mr. Shyam Kaji Khatri

Head of Research Department
And Project Work Supervisor

June, 2025

iii
 ENDORSEMENT

We hereby endorse the project work report entitled “INVESTMENT POLICY OF

COMMERCIAL BANKS IN NEPAL: A COMPARATIVE STUDY OF NABIL
BANK AND NEPAL BANK LTD.” submitted by SEIZAN PANDEY of CASPIAN
VALLEY COLLEGE, KUMARIPATI, LALITPUR in partial fulfillment of the
requirements for award of the Bachelor of Business Studies (BBS) for external
evaluation.

……………… …….. ……………..

Mr. Shyam Kaji Khatri Mr Shukdev Chalise

Head of Research Department Principal
And Project Work Supervisor

June, 2025

iv
 ACKNOWLEDGEMENT

First and foremost, I would like to express my sincere gratitude to the Tribhuvan
University – Faculty of Management for providing me with the opportunity to
conduct this research as a partial fulfillment of the requirements for the Bachelor of
Business Studies (BBS) degree. This research titled “INVESTMENT POLICY OF
COMMERCIAL BANKS IN NEPAL: A COMPARATIVE STUDY OF NABIL
AND NEPAL BANK LTD.” has been a valuable academic journey filled with
learning, critical analysis, and growth.

I extend my heartfelt appreciation to my respected supervisor, Mr. Shyam Kaji Khatri,

Principal Mr. Shukdev Chalise, for their continuous support, insightful guidance, and
constructive feedback throughout the course of this research. Their encouragement
and professional mentorship helped me stay focused and committed to completing
this work on time.

I would also like to thank the officials and staff of NABIL Bank Ltd. and Nepal
Bank Ltd. for providing the necessary data and clarifications which were essential for
the successful completion of this study. I am also thankful to Nepal Rastra Bank
(NRB) for their publicly available reports and directives that significantly supported
the analytical framework of this research.

My gratitude also goes to my teachers, mentors, and friends who provided valuable
suggestions, academic support, and motivation during the various stages of the study.
I am especially thankful to my family for their unconditional love, understanding, and
continuous encouragement throughout my academic journey.

Finally, I acknowledge all the authors, researchers, and institutions whose works have
been referenced in this report. This study would not have been possible without the
contributions and support from all the individuals and organizations mentioned above.

Seizan Pandey
July 2025

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 TABLE OF CONTENTS

Title Page ........................................................................................................................ i

Declaration ....................................................................................................................ii

Supervisor’s Recommendation..................................................................................... iii

Endorsement ................................................................................................................. iv

Acknowledgement .......................................................................................................... v

Table of Contents .........................................................................................................vi

List of Tables ............................................................................................................... viii

List of Figures ............................................................................................................... ix

Abbreviations ................................................................................................................. x

Abstracts ........................................................................................................................ xi

CHAPTER I: INTRODUCTION ............................................................................... 1

1.1 Background of Study.............................................................................................. 1

1.2 Profile of the Organization ..................................................................................... 2

1.2.1 Nepal Bank Ltd ......................................................................................... 2

1.2.2 Nabil Bank Ltd ......................................................................................... 3

1.3 Statement of Problem ............................................................................................ 3

1.4 Objectives of the study ........................................................................................... 4

1.5 Rationale of the study............................................................................................. 4

1.6 Research Methodology........................................................................................... 5

1.6.1 Research Design .......................................................................................... 5

1.6.2 Population and Sample ................................................................................ 6

1.6.3 Sources of data............................................................................................. 6

1.6.4 Data Analysis ............................................................................................... 7

1.7 Related Literature Review...................................................................................... 9

1.7.1 Conceptual Review .................................................................................... 10

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 1.7.2 Review of Empirical Studies ..................................................................... 10

1.8 Limitations of Study.............................................................................................12

1.9 Chapter Plan ....................................................................................................12

CHAPTER II: RESULT AND ANALYSIS ............................................................. 14

2.1 Ratio Analysis ...................................................................................................... 14

2.1.1 Analysis of Liquidity Position of the Bank ............................................... 14

2.1.1.1 Cash in Vault to Total Deposit Ratio ......................................... 14

2.1.1.2 Balance Held with NRB ............................................................ 16

2.1.1.3 Cash and Bank Balance to Total Deposit Ratio ........................ 18

2.1.2 Activity or Performing Ratios ................................................................... 20

2.1.2.1 Non-Performing Loans to Total Loans and Advances Ratio ..... 20

2.1.2.2 Loan-loss Provision to Total Loans and Advances Ratio .......... 22

2.1.3 Capital Adequacy Ratio Analysis ................................................................ 24

2.1.4 Asset Management Ratios ........................................................................... 26

2.1.4.1 Loan & Advances to Total Deposit Ratio .................................. 26

2.1.4.2 Total Investments to Total Deposit Ratio .................................. 28

2.1.4.3 Investment in Shares and Securities to Paid-up capital Ratio.... 30

2.2 Trend Analysis of Total Investment ..................................................................... 32

2.3 Major Finding....................................................................................................... 33

CHAPTER III: SUMMARY AND CONCLUSIONS ............................................. 36

3.1 Summary .............................................................................................................. 36

3.2 Conclusion............................................................................................................ 37

REFERENCES ...............................................................................................................

APPENDIX .....................................................................................................................

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 LIST OF TABLES

Table No. Title Page No.

2.1 Cash in Vault to Total Deposit Ratio of NABIL and Nepal 14

Bank Ltd.
Balance Held with Nepal Rastra Bank (NRB) by NABIL 16
2.2
and Nepal Bank Ltd.
2.3 Cash and Bank Balance to Total Deposit Ratio 18
2.4 Non-Performing Loans to Total Loans and Advances Ratio 20
2.5 Loan Loss Provision to Total Loans and Advances Ratio 22
2.6 Capital Adequacy Ratio of NABIL and Nepal Bank Ltd. 24
2.7 Loan and Advances to Total Deposit Ratio 26
2.8 Total Investment to Total Deposit Ratio 28
Investment in Shares and Securities to Paid-Up Capital 30
2.9
Ratio
Trend Analysis of Total Investment of NABIL and Nepal 32
2.10
Bank Ltd.

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 LIST OF FIGURES

Figure No. Title Page No.

2.1 Cash in Vault to Total Deposit Ratio (Graphical Comparison 15

between NABIL and NBL)
2.2 Balance Held with NRB by NABIL and Nepal Bank Ltd. 17
2.3 Cash and Bank Balance to Total Deposit Ratio 19
2.4 Non-Performing Loans to Total Loans and Advances Ratio 21
2.5 Loan Loss Provision to Total Loans and Advances Ratio 23
2.6 Capital Adequacy Ratio of NABIL and Nepal Bank Ltd. 25
2.7 Loan and Advances to Total Deposit Ratio 27
2.8 Total Investment to Total Deposit Ratio 29
2.9 Investment in Shares and Securities to Paid-Up Capital Ratio 31
Trend Analysis of Total Investment of NABIL and Nepal Bank 33
2.10
Ltd.

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 ABBREVIATIONS

% : Percentage

A. D : Anno Domini

B.C : Before Christ

B. S : Bikram Sambat

B.S. : Bikram Sambat (Nepali Calendar Year)

BBS : Bachelor of Business Studies

CB : Commercial Bank

CBs : Commercial Banks

CAR : Capital Adequacy Ratio

F/Y : Fiscal Year

LTD : Limited

NBL : Nepal Bank Limited

No. : Number

NPL : Non performing loans

NRB : Nepal Rastra Bank

REG. NO. : Registration Number

Rs. : Rupees

SEC : Section

SCBNL : Standard Charted Bank Nepal Limited

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 ABSTRACTS

This study compares the investment policies and practices of Nabil Bank Ltd. (private
sector) and Nepal Bank Ltd. (Public sector) in Nepal. Using a mixed-method
approach, the research assesses liquidity management, credit risk exposure, capital
adequacy, asset allocation efficiency, and regulatory compliance over a period of five
years (2076/77–2080/81 B.S.). Data from annual reports, publications and financial
statements of the Nepal Rastra Bank (NRB) are analyzed by descriptive statistics,
financial ratios (liquidity, NPL, CAR, loan-to-deposit) and trend analysis. The main
findings reveal significant differences: the Nabil Bank maintained stable liquidity
reserves (the average ratio of cash-to-deposit: 2.49 per cent, CV: 28 per cent), lower
non-performing loans (the average NPL: 2.35 per cent), and strategic investment
growth (170%). In contrast, Nepal Bank had volatile liquidity management (average
cash-to-deposit ratio: 5.37%, CV: 68%), increasing NPL (which reached 4.33%), and
unusual investment patterns. Although both banks met NRB capital requirements,
Nabil showed a better alignment of investment policies with profitability and risk
diversification objectives. The study concluded that dynamic data-driven investment
strategies such as Nabil’s strengthen financial resilience and economic contributions,
while Nepal Bank requires institutional modernization to address operational
inconsistencies.

Keywords: Investment Policy, Commercial Banks, Nepal, Nabil Bank, Nepal Bank
Ltd., Financial Ratios, Liquidity Management, Non-Performing Loans (NPL), Capital
Adequacy, Comparative Analysis.

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