Overview of Banking Depts of NBL Dinesh Gautam

CHAPTER ONE-1

INTRODUCTION

1.1 Background of the Internship Report

Today’s global world is becoming very competitive. Every sector of the economy has various
opportunities and threats to the general people. It’s because of this various educational system
is upgrading in Nepal. One of them is Bachelors in Business Administration BBA. It’s a four
year semester system imparting knowledge of management field. So at our eighth (last)
semester, we are assigned to prepare an internship report by working any financial institution
to know and implement theoretical knowledge in practical field.

Thus internship report is the first ladder of any graduating student that makes him/her eligible
to compete in real world. This internship report covers an overview of general banking
procedures of Nepal Bank Limited. Here focus is made in knowing the framework and
guidelines of various departments and their working process. The study is at its layer
covering major six departments. They are remittance, bills/clearance, customer care,
credit/loan, deposits, loan against gold/silver, and cash management.

This internship report covers all the activities learnt and contributed while tenured in between
the two months. All departments’ activities, procedures and processes are presented
sequentially. Here I have come up with the recommendations and conclusions that I thought
are lacking in this bank which is described in last chapter. Similarly, history of banking sector
(global and Nepalese perspective), current scenario of banking sector, and major services of
NBL is also described in upcoming chapters.

1.2 Objective of the study

The main purpose of my internship is to assess information about overall banking procedure
of various departments of Nepal Bank Ltd.

Besides this, the internship report has been prepared for the partial fulfillment of BBA course
in Tribhuvan University.

Putting it all together, the objectives of my study have been shown as below:

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1.2.1 General Objectives:

 To incorporate theoretical knowledge into practice.

 To understand the nature of real life problems arising in the organizational setting.

 To develop real managerial skills to become a full fledged manager.

 To gain an experience to work independently to formulate projects.

 To be acquainted with overall organizational environment in Nepal Bank Ltd

(commercial bank).

1.2.2. Specific Objectives:

 To have a knowledge of overall banking procedure of commercial banks and their

impact on banks productivity and profitability.

 To know the level of activities essential in generating profit in bank.

 To assess the similarities and differences of different banks performance.

 To study how supervision and monitoring of activities are done in NBL.

 To suggest better means of managing activities with small changes and up gradation.

 To visualize the quantitative and qualitative aspects of NBL.

1.3 Methodology of Study

My study is completely based on observation and learning that I got in various departments
of NBL as an intern for the period of two months. During this period I learnt about the
procedures inside and outside the department and how they are managed. However, for the
purpose of project report preparation both the primary and secondary data are used equally.
This supported in making my report effective.

1.3.1 Sources of Data

Primary Source: I collected first hand data from Nepal Bank Limited as follows:

 My Notes,

 Guidelines,

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 Feedback Of Customers,

 Discussion With The Bank Officers And

 Personal Observation.

Secondary Source: Certain secondary data are collected from:

 Annual report of the Bank.

 Brochures, magazines and leaflets of bank.
 Different Statements.
 Files, Balance sheet and various documents.
 Websites of NRB and NBL.

Data Processing: Collected information is processed by the use of computer system.

Detailed analysis, working variables and working definitions embodied in the report.

1.3.2 Organizational Selection

Organizational selection was really a hectic task to do. I had approached a lot of organization
in Nepal. Finally, I got the acceptance letter from Nepal Bank Limited. In searching
organization the recommendation letter provided by college was a great help.

After having been given the acceptance letter I was provided to seat in various departments
on weekly basis.

1.3.3 Placement

After knowing about my area of interest for internship and the objectives of my study I was
being sent to various departments viz. remittance, deposit, bill/clearance, customer care,
credit/loan, loan against gold/silver, cash management.

During two months of internship period I got familiar to the working environment of NBL
and also to the various functions of each department.

1.3.4 Duration

As prescribed by Tribhuvan University I joined in Nepal Bank Limited, Dharmapath and

completed my two months internship. It really helped me to develop my managerial and

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interpersonal skills. I was able to learn banks’ culture, work environment, and procedures
during the period. I spent whole two months of my study in all departments as I was assigned.

1.4. Limitations of the study

The limitations of study are listed as below:

i. Time constraint: Two months of internship program is not enough for learning
overall functioning of each Department at its core depth.

ii. Organizational regulations: Organizational regulation and secrecy norms did not
allow accessing required data as to prepare and know in depth about bank.

iii. Confined to single organization: Since the internship is conducted in a single

organization, cross-sectional analysis and comparative study of different
organizations of the industry is not possible and the presentation is based only in trend
analysis.

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CHAPTER TWO-2

INTRODUCTION OF THE BANKING INDUSTRY

2.1 World’s Banking History

The term bank is derived from the Latin word ‘bancus’, Italian word ‘banca’ and French
word ‘banque’ all of which mean ‘a bench’. At ancient times there used to be some
moneylenders who sat in the bench for keeping, lending and exchanging of money in the
market place. That was the origin of commercial bank.

The origin of commercial bank can hence be traced back to the early times of human history.
As early as 2000 BC some people had developed a system of banking in Babylonia. In
ancient Greece and Rome, the practice of granting credit was widely prevalent. At the same
time, some rich people used to practice storing of precious metals and coins at safe places and
loaning out money for public and private purposes on interest.

According to Crowther, modern banking has three ancestors. They are the merchants,
goldsmiths and moneylenders.

The merchants or traders are entitled as the ancestors of the bank. As trading require
remittance of money from one place to another it involved the theft of metallic coins during
transportation. So traders in those days began to issue documents which were taken as title of
money. This gave rise to hundi which is the letter of transfer of money. It included the
direction from one banker to another to pay the bearer of hundi the specified amount of
money and debit the amount against the drawer. Thus in this way merchant banker form the
earliest stage in the evolution of modern banking.

The goldsmiths dealt with precious metals. In the period when money consisted of gold and
silver, people largely, because of the danger of theft, started leaving their precious money in
the custody of goldsmiths. As the practice of safeguarding others’ money became
widespread, the goldsmiths became in charge for the safekeeping service.

Performing the safekeeping duty, goldsmiths issued the receipt for deposits to the customer.
Later such receipt for deposits with the goldsmiths began to be used as a means of payment.
Then people started keeping gold, silver and coins with goldsmiths in exchange for receipts,

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which is called goldsmith note. It is the writer claims against the deposits. These receipts
became a good medium of exchange and a means of payment.

The next step in the development of banking arose when the goldsmiths became the
moneylender. This development was based on the goldsmiths’ discovery that it was not
necessary to hold hundred percent of the coins deposited with them. The goldsmiths soon
realized that, on average, daily withdrawals were equal to daily deposits and only a
contingency reserve was required for the period when withdrawals exceeded deposits.

After keeping the contingency reserve, the goldsmiths loaned out the remaining deposits on
interest. In this way, the system of fractional reserve banking was born. Thus, goldsmith
becomes a banker. They started to perform the two major functions of a bank:

 Receiving deposits

 Advancing loans

During the above discussed period, private individuals did the banking business. As public
enterprise, banking made its appearance in Italy in 1157 AD when the ‘Bank of Venice’ was
established. History shows the existence of the ‘Monte’ in Florence in 1336. The meaning of
Monte is given in the Italian dictionary as a standing bank. During early 1349, the shopkeeper
of Barcelona carried on the banking business. Meanwhile, the local government restricted the
shopkeepers to operate this business they had given sufficient security. During 1401, a public
bank was established in Barcelona. It used to exchange money, receive deposits and discount
bills of exchange.

The bank of Amsterdam was established in 1609 to meet the needs of the merchants of the
city. It accepted all kinds of precious metals, coins and currencies on deposits. These deposits
could be withdrawn on demand. The facility of transferring the deposits from one account to
another was also available their. The bank also provided the certificate of the deposits to
withdraw within six months. Later, this came to be used in the same manner as the modern
check.

The beginning of the English banking may correctly be attributed to the London Goldsmiths.
They marked a turning point in the history of English banking and lead to the growth of
private banking with the establishment of the ‘Bank of England’ in 1694. Many of today’s
banking services were practiced in ancient Lydia, Phoenicia, China, and Greece, where trade

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and commerce flourished. The temple in Babylonia made loans from their treasuries as early
as 2000BC. The temples of ancient Greece served as safe-deposit vaults for the valuables of
worshippers. The Greeks also coined money and developed a system of credit. The Roman
Empire had a highly developed banking system, and its bankers accepted deposits of money,
made loans, and purchased mortgages. Shortly after the fall of Rome in 476 AD, banking
declined in Europe.

The increase of trade in 13th century Italy prompted the revival of banking. The
moneychangers of Italian states developed facilities for exchanging local and foreign
currency. Soon merchants demanded for other services, such as lending money and gradually
banking services were expanded.

The first bank to offer most of the basic banking functions known today was the Bank of
Barcelona in Spain. Founded by merchants in 1401, this bank held deposits, exchanged
currencies, and carried out lending operations. This bank is also believed to have introduced
the bank check. Three other early banks that were managed by a committee of city officials
were the Bank of Amsterdam (1609), the Bank of Venice (1587), and the bank of Hamburg
(1619). These institutions laid the foundation for modern banks of deposits and transaction.

For more than 300 years, banking on the European continent was in the hands of powerful
statesman and wealthy private banker, such as the Medici family in Florence and the Fugger’s
in Germany. During the 19th century, members of the Rothschild family became the most
influential bankers in all Europe and probably in the world. This international banking family
was founded by German financier Mayer Amschel Rothschild [1743-82], but soon spread to
all the major European financial capitals.

The Bank of France was organized in 1800 by Napoleon. The bank had become the dominant
financial institution in France by the mid-1800s .in Germany; banking experienced a rapid
development about the middle of the 19th century with the establishment of several issuing, or
publicly owned banks.

Banking in the British Isles originated in with the London goldsmiths of the 16 th century.
These men made loans and held valuables for safekeeping. By the 17 th century English
goldsmiths created the model for today’s modern fractional reserve banking- that is, the
practice of keeping a fraction of depositors’ money in reserve while extending the remainder
to burrowers in the form of loans. Customers deposited gold and silver with the goldsmiths

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for safekeeping and were given deposit receipts verifying their ownership of the gold. These
receipts could be used as money as they were backed by gold. But the goldsmiths soon
discovered that they could take a chance and issue additional receipts against the other people
who needed to burrow money. This worked as long as the original depositors did not
withdraw all their gold at one time. Hence, the amount of receipts or claims on the gold
frequently exceeded the actual amount of the gold, and the idea that bankers could create
money.

In early India, the religious book namely ‘Manu’ contains references regarding deposits,
pledges, policy of loan and the rates of interest. The banking service in those days largely
meant only money lending as the complicated mechanism of modern banking was not known
to people then.

2.2 Evolution of Banking Industry in Nepal

The history of modern commercial banking industry dates back to 1937 AD in which Nepal
Bank Limited was incorporated. The government owned 51 percent of the shares in the bank
and controlled its operations to a large extent. It was headquartered in Kathmandu and had
branches in other parts of the country as well.

In order to regulate the economy and the unregulated use of money Nepal Rastra Bank was
created in 1956 as the central bank. Its function was to supervise commercial banks and to
guide the basic monetary policy of the nation. Its major aims were to regulate the issue of
paper money; secure countrywide circulation of Nepalese currency and achieve stability in its
exchange rates; mobilize capital for economic development and for trade and industry
growth; develop the banking system in the country, thereby ensuring the existence of banking
facilities; and maintain the economic interests of the general public. Nepal Rastra Bank also
was to oversee foreign exchange rates and foreign exchange reserves.

After almost 30 years another state owned commercial bank Rastriya Banijya Bank (National
Commercial Bank, was established in 1966. The Land Reform Savings Corporation was also
established in the same year to deal with finances related to land reforms. During 1967AD the
Agricultural Development Bank was also established. Almost 75 percent of the bank was
state owned; 21 percent was owned by the Nepal Rastra Bank and 5 percent by cooperatives
and private individuals. Hence it is clear that since the 1960s; both commercial and

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specialized banks have expanded. More businesses and households had better access to the
credit market although the credit market had not expanded.

However, the decade of 1980s can be considered as the landmark in the modern banking
history for Nepal. It was only in this decade government allowed the excess to foreign joint
venture banks to be the part of the Nepalese banking business. During this period, three
foreign commercial banks opened branches in Nepal. The first was Nepal Arab Bank
established in 1984 AD. It was co-owned by the Emirates Bank International Limited
(Dubai), the Nepalese government, and the Nepalese public. After that in 1984 came Nepal
Indosuez Bank (currently Nepal Investment Bank) which was jointly owned by the Credit
Agricola Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan (National Insurance
Corporation), and the Nepalese public. Then Nepal Grind lays Bank was the third foreign
joint venture to be established in Nepal which was co-owned by a British firm called Grind
lays Bank, local financial interests, and the Nepalese public.

Although government had started the liberalization of financial sector during the decade of
80s but this process speeded up only in early 1990s. In fact private sector rushed into the
banking and financial industry after the restoration of democracy in 1990. Many commercial
banks like Himalayan Bank, Everest bank, etc were established during this decade. After the
period till date twenty eight commercial banks have been established in Nepal.

The lists of all commercial banks in Nepal are given below:

Table 2.1 List of Commercial Banks of Nepal

S. No Commercial banks Operation date

1 Nepal Bank Limited 1937/11/15

2 Rastra Banijya Bank 1966/01/23
3 NABIL Bank Limited 1984/07/16
4 Nepal Investment Bank Limited 1986/02/27
5 Standard Chartered Bank Nepal 1987/01/30
6 Himalayan Bank Limited 1993/01/18
7 Nepal SBI Bank Limited 1993/07/07
8 Nepal Bangladesh Bank Limited 1993/06/05
9 Everest Bank Limited 1994/10/18

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10 Bank of Kathmandu Limited 1995/03/12

11 Nepal Credit and Commerce Bank Limited 1996/10/14
12 Lumbini bank Limited 1998/07/17
13 Nepal Industrial and Commercial Bank Limited 1998/07/21
14 Machhapuchhre Bank Limited 2000/10/03
15 Kumari Bank Limited 2001/04/03
16 Laxmi Bank Limited 2002/04/03

17 Siddhartha Bank Limited 2002/12/24

18 Agriculture Development Bank Limited 2006/03/16
19 Global Bank Limited 2007/03/16
20 Citizen Investment Bank Limited 2007/04/20
21 Prime Commercial Bank Ltd.

22 Bank of Asia Nepal Ltd.

23 Sunrise Bank Ltd.
24 Development Credit Bank Ltd.
25 KIST Bank Ltd. 2009
26 NMB Bank Limited 2009
27 Janata Bank Nepal Limted 2010
Furthermore there are other 4 banks that are in process to operate in 2010. Megha Bank
Limited will be the highest authorized share capital with 2 Arab and 11 Lakhs that has
announced to open 4 branches at its inauguration.

2.3 Current Scenario of Banking

Currently the banking sector is evolving to be very competitive and challenging. The fastest
growing and emerging industrial sector today is not other than banking. It is flourishing and
upgrading day by day. Talking about its life cycle it is at its saturation point. Band-wagon is
prevailing in the market with lots of new ideas and techniques to attract the customers. Banks
are using various new technological advancements to provide timely, fastest and economical
services to the customers.

Banks with the collaboration of other financial institutions, IT’s and other organization they
always try to attract the customers. The different ages of banking sector clarifies the
improving current scenario of banking. It can be summarized as in following points:

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a. Shift from traditional book keeping system to computerized system for keeping
records.

b. Use of various financial tools and software like NEWTON, PUMORI, for record
keeping and networking.

c. Emergence of MIS in banks for database, financial analysis, research and so on.

d. Use of electronic tools for banking like ATM cards, Credit cards, ABBS, web remit,
swifts, e-banking, mobile banking and etc.

e. Shift to real estate investment, housing and other various schemes. But with the
tightened policy of central bank, it is slowed down.

f. Due to financial crisis occurred recently, banks are suffering from liquidity problem,
inter bank loan, lower profitability etc, and slowly upcoming from it.

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CHAPTER THREE-3

INTRODUCTION OF THE ORGANIZATION

3.1 Nepal Bank Limited: An Overview

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King Tribhuvan inaugurated Nepal Bank

Limited in November 13, 1937. This
marked the beginning of an era of formal
banking in Nepal. In that era, very few
understood or had confidence in this new
concept of formal banking. Rising equity shares were not easy and mobilization of deposits
even more difficult. This was evident when the bank floated equity shares worth NRs.
2,500,000, but was successful only in raising NRs. 842,000.
The total deposits for the first year was NRs. 17,02,025 where current deposits was about
NRs. 12,98,898 fixed was about NRs. 3,88,964 and saving was NRs. 14,163. Loan disbursed
and outstanding at the end of the first year was NRs. 1,985,000.

From the very conception and its creation, Nepal Bank Ltd, was as joint venture between the
government and the private sector. Out of 2500 equity shares of NRs. 100 face value, 40%
was subscribed by the government and the balanced i.e. 60% was offered for the sale to
private sector.

Since its establishment the bank has been providing banking through its branch offices in the
different geographical locations of the country. However during the beginning of 2000, NBL
was experiencing difficulty in terms of unpaid loan and decreasing profits. Nepal Rastra Bank
in its diagnostic review of the bank concluded that the bank is in need of complete
restructuring. Government of Nepal, in consultation and agreement with the World Bank
came forward to restructure the bank and reform its profitability. The bank was put under
control of Nepal Rastra Bank and hired the services of "The Bank of Scotland (Ireland) Ltd".,
ICC Consulting effective from July 22, 2002 for the management of the bank for an initial
period of 2 years. The contract was renewed up to July 2007. In its effort to restructure the
bank, the ICC team was successful in providing leadership to return the bank to its former
position of financial leadership within the country. Numerous systems in every functional
area of bank management e.g. Credit, Accounting, Human Resources, Internal Audit, and
Treasury were modernized. Voluntary Retirement schemes were successfully launched
reducing the staff size by almost half. Large numbers of employees were trained in various
disciplines. Online computerization of 44 bank branches was completed. Sustainable
profitability was restored.

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After the restructuring process, it has 108 branches in different parts of the country, out of
which about 50 are fully computerized and rest of them are in single computer networks. The
branch network in five different regions of the country is given below.

3.2 NBL Network Overview: The table below shows the number of different branches of
NBL located all over the country.

Table 3.1 Branches of NBL

Kathmandu Region 27
Biratnagar Region 28
Birgunj Region 17
Pokhara Region 20
Nepalgunj Region 16
Total no of Branches* 108

Currently, NBL employs 2200 number of employees out of which 1700 employees are
permanent and the remaining 500 employees are hired on contract basis.

3.3 Composition of Board of Directors

The bank is under the control of Central Bank of Nepal, Nepal Rastra Bank (NRB). NRB has
appointed a four members management committee. This management committee performs all
the functions as the board of directors of the bank.

3.4 Management Team

The bank is running under the leadership of Nepal Rastra Bank (NRB) appointed Chief
Executive Officer and Director of NRB. The vision statement, mission statement and the
objectives of Nepal Bank Limited are given below:

3.5 Vision Statement:

“To remain the leading financial institution of the country”

3.6 Mission Statement:

Nepal Bank Limited seeks to provide an environment within which the bank can bring
unique financial value and services to all customers. It will be a sound institution where

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depositors continue to have faith in the security of their funds and receive reasonable returns;
borrowers are assured of appropriate credit facilities at reasonable prices; other service-
seekers receive prompt and attentive service at reasonable cost; employees are paid adequate
compensation with professional career growth opportunities and stockholders receive
satisfactory return for their investment.

3.7 Objectives of NBL

Nepal Bank Limited has the following objectives

 Continue to maintain leading share of banking sector with a significant presence in all
major geographical areas in the country.
 Provide competitive and customer oriented banking services to all customers through
competent and professional staff.
 Reclaim leadership within the national financial community.

3.8 Shareholding Composition

Table 3.2 Shareholding Composition of NBL

S. Ownership Percent
N
1 Government of Nepal 40.49
2 'A' Class Financial Institutions 4.92
3 NRB Licensed Financial Institutions 3.42
4 Other Institutions 0.52
5 General Public 49.94
6 Others 0.71
Total 100

3.9. Products and Services of NBL

Figure 3.1 Products and Services of NBL

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The above figure is categorized according to four major types of services that any
commercial bank provides. They are further categorized in sub-types that might constitute a
separate department or separate service. There might other services that may fall under these
categories. But the major types of product/services provided by NBL are as shown above.
Likewise, some services like loan against gold/silver, customer care, customer inquiries,
payroll of other organization are not mentioned in the figure.

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CHAPTER FOUR-4

LEARNINGS AND CONTRIBUTIONS

4.1 Learning and Contributions

As my internship was for two months, I was posted in various departments. So accordingly, I
prepared my contribution and learning in the following manner. The department I worked
was in total six namely remittance, credit/loan, deposit, bills/clearance, gold/silver loan and
cash management, and last but not the least customer care. My two months passed on
learning and contributing these six departments. The details of each department are presented
below:

4.1.1DEPARTMENT-1: REMMITANCE [28 March- 6 April]

Contributions

Sodh Bharna Desk

 Preparing schedules (sodh bharna) and journals for outward remittance.

 Entry and readied the scheduled for dispatch schedules to respective branch of
NBL.

 Checking of amount and schedule number of dispatched schedules either found in

the entry reports or not.

 Debited the amount of outward remittance relative to fax, web or draft with code
2, 10, and 5.

 Entry of dispatched schedules in DAK registers.

 Typed the voucher schedule for faxing to outward remittance.

 Faxed the voucher to the respective branch by printing the test key code.

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Web Remit Desk

 Inward remittance of various customers through web is extracted.

 Entry in excel sheet and submitted the form for print after verifying the respective
customer.

 Customers who brought the secret key for money was verified (passport,
citizenship card, license as asked) as the authorized person and fulfilled the form
for payment.

 Customers whose a/c was not in NBL but who endorsed the check of NBL were
paid through check draft and verification of check.

 Prepared commission vouchers, journal vouchers with respective account and

customer name for web payment that are the a/c holder of other branch of NBL.

 Big organizational web amount is extracted, preparing a journal and printed for
the deposit in their respective account.

 Sent OBC checks through web.

Learning

 How to fill up the forms of web, fax, and draft.

 How to enter the web information in web using s/w of NBL i.e. Web Remit.

 Learnt to check if the a/c number is right or wrong using NBL s/w i.e. NEWTON.

 Learnt to prepare schedules (sodh bharna), DAK registers, and journals.

 Learnt briefly about SWIFT procedure for payment and sending which included
major parts like SWIFT code, reference number, beneficiary’s name, payee and
payer bank’s name.

 Learnt the processes involved in backward after a consumer deposits the money or
withdraws the money from remittance i.e. debit and credit process.

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4.1.2 DEPARTMENT-2: CREDIT/LOAN [7 April-16 April]

Contributions

 Posted names, EMI amounts, a/c number, date of expiration, and other limits and
valuation of loan, type of loan that is shifted from old register to the new one.

 Calculated the interest amount of respective (auto loan, housing loan, overdraft,
and margin lending) loan as per declared (quarterly, monthly using the days of
either 79, 83 as months indicates).

 Calculated penalty interest and compound interest whose time for payment was
crossed over or become due.

 Posted the calculated interest in respective loan holder’s a/c number.

 Checked the balance in current a/c or saving a/c of the loan holder to withdraw the
equal amount of installment or interest payment at due date with prior notice to
the a/c holder. If sufficient, their interest/installment amount was withdrawn and
posted.

 Prepared vouchers when payment of installment/interest amount is paid by the

loan holder to post in their account.

 Prepared load statement in excel sheet for the month as required by the customer.

 Checked either the available documents presented by the loan applicant is fulfilled
as per the requirement by the bank with their cross checks, ex- auto loan
documentation have cross check through chassis no, and license no.

 Helped consumers who wanted to know their amount of loan, interest/installment

amount that they need to pay. Similarly, solved other queries like due date for
payment, new interest rates applicable, benefts of early payment.

 Briefed consumers who wanted to know the information regarding loan and their
types (basically focusing consumer loans).

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Learning

 About the requirements of documents for applying for various types of loans.

 About how valuation of land, building, shares, jewels were made with the
contingency features like margins, insurance and limits

 Learnt how entries are made for posting the entries of interest, installments, loan
clearing in the loan holder’s register.

 How to calculate interest for different types of accounts with their given criteria of
SI, CI and penalty charge.

 How to prepare loan statement in excel sheet consisting various columns of date,
amount, interest charge and balance.

 Learnt to check the balance amount, name of a/c holder from relative s/w i.e.
NEWTON using code 1250, 210, and 1450.

 Learnt to write vouchers for payment made by loan holders.

4.1.3 DEPARTMENT-3: DEPOSIT [18-23 April]

Contributions

 Prepared vouchers, schedules of customer’s who deposited amount in their a/c.

 Posted the installment amount of the loan taken by the employees for medical and
other accidental case.
 Entry made in ledger for the records and circulated the schedules and voucher to
the officer level sir/madam for cross check and verification
 Filed the posted schedules to their respective files for future reference.

Learning

 Procedures of opening a fixed deposit account.

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4.1.4 DEPARTMENT-4: BILLS/CLEARANCE [25 April- 8 May]

Contributions

Bills Desk

 Accepted other bank’s checks for the clearance and deposit in their respective
accounts.

 Verified the check with the slip of deposit consisting check no, a/c name, amount,
name of bank, and a/c number.

 Checked either endorsement in the backside of check is done or not, if it’s the
check of any organization stamp of the relative organization is present or not.

 Stamped with for clearance and authorized sign in slip and check both.

 Entry made in the register consisting clearing number, name of a/c holder, a/c
number, check number, bank’s name, and relative amount.

 Provided the cutting slip with clearing number to the customer.

 The check then entered in the computer s/w for an entry report according to the
respective bank is done fulfilling the required fields.

 Prepared H.O. 10 voucher for check to send for clearing that comes through OBC
of various other NBL branches, similar entries made in the ledger and computer as
of above mentioned.

 The checks that were of currencies like dollar, and IC were also posted
accordingly.

 Printed the entry report of checks after 3 p.m. and presented to the senior
Sir/Madam for cross check.

 If any wrong entries were made they were corrected and edited accordingly.

 After all checking, final report is printed consisting of each bank having three
copies. One for clearing, one for attachment to bank, and one for NRB.

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 Detached all the checks and slips and re-attached the respective checks with their
copy of final report.

Clearance Desk at Bank [3 p.m. onwards]

 Checks that were printed as final report are again entered in the excel sheet
debiting the respective bank and crediting the Rastra bank for inward clearing and
for outward clearing vice-versa.

 Entered the check no, check amount in the column of individual bank as required.

 After entry the balance of total and final print of entry report is matched.

 Gave for cross checking to the senior sir/madam.

 Final print after cross checking showing the debit amount of inward clearing is
made and readied for the next day’s clearance to NRB.

Clearance at Central Bank [NRB at 11 a.m.]

 Stamped signed with ‘clearance’ in front of all checks of NBL that were came for
clearing from other banks.

 Returned the earlier day’s checks similar to ours’ for clearing to other banks as per
checks indication.

 Returned dishonored checks were cancelled and the relative amount is deducted
from NRB’s advice report.

 Took the advice of NRs and dollar $ from NRB and matched the debited amount
of respective banks with the credit amount of NRB.

 Detached NBL checks and differentiated them according to KBO checks and NBL
branch checks.

 Advice of the respective bank (as was 3 copies) detached two to NBL branch
bank, and one for KBO branch with attachment of checks. One copy submitted to
NRB representing NBL name and date of clearance.

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After 3 p.m.

 Collected the dishonored checks and returned.

Clearance desk in Bank after Returning from Central Bank [at 12:30-3 p.m.]

 All the checks that were cleared either of other branches or KBO were returned to
respective branch representatives.

 Debited the NBL checks amount from respective a/c holder’s name, and account
number and credited the central bank. Similar entries were made by crediting
other bank’s check amount after clearance and debited central bank.

 If any inward checks were dishonored, they were entered in excel sheet and
returned to respective branch or person.

Learning

Bills Desk

 The procedures of depositing the checks by customer for clearance.

 Procedures of entering in registers and computer software for future reference and
print of entry report.

 Editing of entries that were mistaken.

 Preparing vouchers and journals for OBC checks to send them through web, fax or
draft.

Clearance

 Debit and credit process of NRB

 Clearing process of checks of outward and inward.

 How rectification of errors is identified through the entry in excel-sheet, and cross
checks.

 How dishonored checks are retreated for clearance with charges.

 How debit and credit of bank is matched in.

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4.1.5 DEPARTMENT-5: LOAN AGAINST GOLD/SILVER, CASH INVENTORY

AND MANAGEMENT [9-14 May]

Contributions

Gold/Silver Loan Desk

 Prepared letter of demand for the payment of loan and or interest of the customers
whose date of loan/interest payment is about to expire.

 Telephoned the customers informing their action towards loan agreement and
contact the bank as soon as possible.

 Calculated interest of the customers’ loan against gold/silver on three months

installment basis.

 Posted interest in their respective account.

 Weighed gold/silver to calculate their valuation and amount of loan they will get.

 Recorded new loan holder’s name in daily register and filed their contract
agreement accordingly.

 Helped in finding the loan agreement paper of those customers who have come to
either renew or repay their loan amount.

 Provided the terms and conditions to the customers who came for the information
regarding loan and also gave them the form and contract paper for fulfillment.

ATM Management Desk

 Provided the ATM card to those customers whose card has been captured in ATM
machine due to either late emission, or wrong pin by fulfilling a slip and
authorized signature.

 Helped in keeping cash management in ATM machine on daily basis in an

average of NRs.1 million that contained the notes of 500 and 1000.

 Separated the old, tore, and new, fair notes from the bundles of notes to insert in
ATM machine.

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 Checked the rolls of ATM receipts recording number of transaction each day.

Cash Management Desk

 Counted bundles of notes (500 and 1000) with hand and machine both,
approximately NRs.5 million.

 Recorded the amount that was provided to other departments like remittance,
deposit, withdrawal.

 Bundled the counted note in terms of 100 notes each and covered with a slip and
punched it.

 Checked the IC notes and NC notes with Note Detection Machine for note’s
originality verification.

Learning

 The process of applying loan from collateral of gold/silver.

 Process of valuation of gold/silver on the basis of weightage of market rate and

bank rate.

 How to calculate the actual amount a loan holder will receive from after deducting
margin, insurance and cut off rates.

 How gold is weighed in the weighing machine and how probable weight is
determined.

 How notes are counted using hand and finger as well as machine.

 How fake notes are checked using note detection machine.

 How cash is kept in ATM, how captured card is protected from lost, how cash is
arranged in ATM boxes and so on.

 How ATM generally works.

 How gold is inventoried in vault.

 How contract is made between bank and the loan holder.

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4.1.6 DEPARTMENT-6: CUSTOMER CARE [16-28 April]

Contributions

 Print out the bank statement of the customers who brought their statement form or
check book or authorized sign on a slip generally for three months. The statement
of organization like HIMAL REMIT, IME, HULAS were very long and so printed
cautiously.

 Checked balance of those customers who wanted to know their amount in their
account, usually to check the deposit of remit amount.

 Received the slip for requirement of new check.

 Verified the sign, a/c number, a/c name of the customer before providing a new
check.

 Entries made in NEWTON for the issuance of new checks, and command it for
check print. The checks of current and saving a/c were different so they need to be
changed in printer.

 Entered the name, a/c number, check number (range) and date of issuance in the
register.

 Binding and wrote the name, a/c number, and date of issuance in the slip of new
check and in cover of check.

 Presented to senior sir/madam for verification and signature.

 Helped old aged customers in fulfilling the new forms, or closing the account.

 Informed customers about the documents required for new account, new interest
rates, and new schemes.

 Distributed ATM cards to the customers whose ATM was available after
verification and entry in the register.

 Entry made in computer of new customers, ATM holders, and closing of account
as per required in fields.

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Learning

 Procedures for form’s fulfillment of new account, closing a/c and or for ATM
card.

 About the requirements of documents needed for opening, closing and applying
for ATM card.

 Knew how balance of customers is checked and how balance statement is printed.

 Knew how a/c verification from old a/c number is done and how printing of
checks is done.

 To use scanner for scanning a/c holders photo, a/c number, phone number and
authorized signature.

 In developing good interpersonal skill, patience, requirement of displayed

emotion, and harmonious relationship with customers.

 Build up confidence in dealing with the customers efficiently.

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CHAPTER FIVE-5

CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

After analyzing and interning in NBL, conclusions can be made on various grounds.
Commercial banks are the pillars for the development of any country. In Nepal the first stone
of the pillar was put when NBL was established on November 13, 1937.However, due to its
old management practices and internal inefficiency the bank was declared technically
bankrupt on 2000. Then NRB took over the control of the bank and was handed over to Bank
of Scotland (Ireland), ICC Consulting group on July, 2002 and remained until July 2007.The
new management changed the face NBL. Once declared bankrupt, NBL earned a net profit of
239,214,010 during the year 2007-08. The management changed the overall structure of the
bank, downsized it from 214 branched to 108 branches. Computerized the bank, hired
efficient staffs and laid off the inefficient under different schemes. Currently it employs
around 2200 people.

During the period the most considerable thing foreign management did was the recovery of
NPA of NBL. It was because of the aggressive NPA recovery that NBL was able to take itself
into profit. The NPA level declined from 56.3% in 2002 to just 14.8% in 2007. It is just
around 11% in April 2009. NPA of NBL is handled by RMD consisting of four division viz.,
cash recovery, and priority sector, legal and administrative, and
consortium/corporate/restructuring. These divisions of RMD handled different NPA as per
the directives of NRB. While RMD handles the NPA whole credit department and different
branches are equally working on preventing loan from becoming NPA by following a well
defined credit procedure and the requirements as per NRB directions.

Similarly, NBL has recently increased its interest rates on various deposit schemes. It has also
come up with various promotional and advertisement strategies. Launch of ATM card, web
remit, branches in every district of Nepal is also its strength point. Every department consists
of both young and old aged people, among which dissatisfaction is still exists. The weakness
of banking performance is the existence of various political groups that only seek their own
welfare in spite of banks future prospects. On the other side, NBL is providing various
motivational schemes to its employees both young and old aged like distribution of bonuses,
bringing Voluntary Retirement Scheme (VRS) and so on.

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5.2 Recommendations

NBL is a good success story in the Nepalese banking history being first bank and also being
able to revive itself once again into profitability from the state of bankruptcy. However, NBL
have a long way to go. After my study and stay in the bank for 6 weeks as an intern I have
found that NBL can consider following things for further improvement:

i. Similar size of bank like Nepal Banijya Bank employs only 2000 no of people and
is able to perform well. So 2200 is still a huge number for NBL and it is over-
staffed.

ii. NBL is lagging behind in training its manpower. Many employees due to the lack of
proper training are not able to perform their job efficiently especially the old staffs.

iii. Political unions in the form of unionization must be discouraged by management.

This hampers the working of bank and decreases the moral of employees. But still
in NBL there exist about five political unions.

iv. NBL is recovering its NPA at a faster pace but in order to reduce the number of
NPAs in future proper recording and documentation of each and every loan account
must be done. It has been seen that important documents related to many NPAs are
missing. So, proper documentation must be done.

v. NBL must look into boosting up the moral of its employees as in few cases
employees too are responsible for an asset to turn into NPA. So NBL must focus on
motivational techniques as well.

vi. NBL must be efficient enough to identify early signs of non-performance of asset
and must be able to take quick decisions.

vii. In such type of old organization due to the organizational structure itself is a
common problem. So decision making must be fast. For that delegation of certain
authority can also be done with modification of hierarchical structure.

viii. As every department is very crucial department for the organization, some special
facility (monetary and non-monetary) must be provided to the staffs of the
department.

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ix. When we look into the figures we find that KBO has the highest percentage of
NPA among other branches. So, assets of KBO must be handled more efficiently.
Efficient staffs must be placed in credit department of that branch.

x. Small sizes of loans are seen to occupy the largest percentage share of NPA so
proper care must be taken care regarding such assets. Waiver facility could be given
to facilitate payment.

xi. The software and equipments used in KBO are very older and is not compatible
with other changes that may arise in future. So they must be checked properly and
should be maintained in good condition.

xii. Efficient and effective IT management is also lacks in KBO. It has become integral
part in operation of activities. Thus, IT department must focus on such loops and
holes.

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