LOAN LENDING PROCESS OF SANIMA BANK LIMITED

A Project Work Report

By

Naina Subedi

Exam Roll No.:705420079

T.U Registration No.:7-2-542-95-2019

Mark International College

Submitted to

The Faculty of Management

Tribhuvan University

Kathmandu

In partial fulfillment of the requirement for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Ghorahi, Dang

July, 2024
 Declaration

I hereby declare that the project work entitled "LOAN LENDING PROCESS OF
SANIMA BANK LIMITED" submitted by Naina Subedi to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision of Mr.
Khadananda Khanal, faculty member, Mark International College, Ghorahi Dang, and is
submitted in partial fulfillment of the requirements for the degree of Bachelor of Business
Studies (BBS). This project work report has not been submitted to any other university or
institution for the award of any degree or diploma.

Signature:

Naina Subedi

July, 2024
 Supervisor's Recommendation

The project work report entitled "LOAN LENDING PROCESS OF SANIMA BANK
LIMITED" submitted by Naina Subedi Mark International College, Ghorahi Dang, is
prepared under my supervision as per the procedure and format requirements laid by the
Faculty of Management, Tribhuvan University, as partial fulfillment of the requirements for
the degree of Bachelor of Business Studies (BBS). I therefore, recommend the project work
report for evaluation.

Signature:

Khadananda Khanal

Date: July, 2024

 Endorsement

We hereby endorse the project work report "LOAN LENDING PROCESS OF SANIMA
BANK LIMITED" submitted by Naina Subedi of Mark International College, Ghorahi, Dang
in partial fulfillment of the requirements for the degree of Bachelor of Business Studies
(BBS) for external evaluation.

Signature: Signature:

Mr. Naula Bahadur Khadka Mr. Lalmani Basel

Chairman, Research Committee Campus Chief

July, 2024 July, 2024

 Acknowledgment

This report has been prepared in partial fulfillment of the requirement for the Bachelor of
Business Studies. It is strictly based on the syllabus forwarded by T.U. in partial fulfillment
of the requirement for the Bachelor of Business Studies. I have tried to attempt every chapter
simple and precise. A detail of list of authors and the Books, which were used as inputs in
course of the preparation of the reports, have been included in the bibliography.

I would like to extend my heartiest gratitude to supervisor Mr. Khadananda Khanal chairman
of research committee Mr. Naula Bahadur Khadka, campus chief Mr. Lalmani Basel under
whose guidance this work has been successfully completed.

Further, I would like to give special thanks to the SANIMA Bank Limited, Ghorahi Branch
for their kind support and cooperation.

And finally, I would like to express my deep appreciation to all who helped me in preparing
this report. Without their help this report would not have been completed.

Naina Subedi

Mark International College

Date: July, 2024

Table of Contents

Title Page…………………………………………………………………………………..............i
Declaration......................................................................................................................................ii

Supervisor's Recommendation.......................................................................................................iii

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

Acknowledgment..............................................................................................................................v

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

List of table....................................................................................................................................vii

List of Figures...............................................................................................................................viii

Abbreviation....................................................................................................................................ix

CHAPTER I.................................................................................................................................10

INTRODUCTION.......................................................................................................................10

1.1 Background of the Study.............................................................................................................10

1.2 Statement of the Problem...............................................................................................................5

1.3 Objectives of the study...................................................................................................................5

1.4 Rationale..........................................................................................................................................5

1.5 Review of literature........................................................................................................................6

1.6 Methodology used..........................................................................................................................9

1.7 Limitation of the study.................................................................................................................13

CHAPTER II................................................................................................................................14

RESULT AND ANALYSIS........................................................................................................14

2.1 Data Presentation..........................................................................................................................15

2.2 Analysis of Data............................................................................................................................21

2.3 Major findings...............................................................................................................................22

CHAPTER III..............................................................................................................................23

SUMMARY AND CONCLUSION............................................................................................23

3.1 Summary........................................................................................................................................23

3.2 Conclusion.....................................................................................................................................24

Bibliography.................................................................................................................................25
APPENDIX...................................................................................................................................26

List of table

Table 2.1: Total Loan Lending………………………………………………….15

Table 2.2: Loan Lending Individual…………………………………………......17

List of Figures

Figure 2.1: Total Loan Lending ………………………………………………….16

Figure 2.2: Loan lending individual ……………………………………………..18

Figure 2.3: Annual Loan Lending 2018/19 ………………………………………19

Figure 2.4: Annual Loan Lending 2019/20 ………………………………………19

Figure 2.5: Annual Loan Lending 2020/21………………………………………20

Figure 2.6: Annual Loan Lending 2021/22………………………………………20

Figure 2.7: Annual Loan Lending 2022/23 ………………………………………21

Abbreviation

ADB: Agricultural Development Bank

AGM: Annual General Meeting

BOK: Bank of Kathmandu Limited

BPS: Book-value Per Share

BS: Bikram Sambat (Abbreviation of Bikram Era)

CEO: Chief Executives Officer

CV: Coefficient of Variation

DPS: Dividend per Share

EPS: Earning Per Share

GDP: Gross Domestic Product

HBL: Himalayan Bank Limited

G/N: Government of Nepal

IMF: International Monetary Fund

MBL: Machhapuchre Bank Limited

MPS Market Price of Share

CHAPTER I

INTRODUCTION

1.1 Background of the Study

The history of banking dates back to ancient times, with its origins in Mesopotamia, where
the first prototypes of modern banks were established. Early banking activities began around
2000 BCE with the temple priests and merchants who offered loans to farmers and traders. In
ancient Greece and Rome, bankers, known as "trapezitai" in Greece and "argentarii" in
Rome, operated from temples and markets, facilitating trade and lending money. The concept
of banking evolved significantly during the medieval period in Europe, particularly in Italy,
where the first banking houses emerged in cities like Venice, Florence, and Genoa. The
Medici family of Florence, renowned bankers, played a pivotal role in the development of
modern banking practices, including the use of letters of credit and double-entry book
keeping. The 17th century saw the establishment of the first official banks, such as the Bank
of England in 1694, which introduced the concept of central banking. Over time, banking
systems expanded globally, adapting to technological advancements and economic changes.
Today, banks are integral to the global financial system, offering a wide range of services
beyond simple deposit and lending, including investment, insurance, and wealth
management, reflecting centuries of evolution and innovation in the banking industry.

The initiation of formal banking system in Nepal commenced with the establishment in 1937
of Nepal Bank Limited (NBL), the first Nepalese commercial bank. The country's central
bank, Nepal Rastra Bank (NRB) was established in 1956 by Act of 1955, after nearly two
decades of NBL having been in existence. A decade after the establishment of NRB, Rastriya
Banijya Bank (RBB), a commercial bank under the ownership of His Majesty's Government
of Nepal (HMG/N) was established. Thereafter, 1-IMG/N adopted 2 open and liberalized
policies in the mid-1980s reflected by the structural adjustment process, which included
privatization, tariff adjustments, liberalization of industrial licensing, easing of terms of
foreign investment and more herbal trade and foreign exchange regime was initiated. With
the adoption of liberalization policy, there has been rapid development of the domestic
financial system both in terms of number of financial institutions and as ratio of financial
assets to the GDP. As of July 2005, the number of commercial banks has reached 17 and their
branches numbered 375. A total of 60 finance companies and other Development Banks and
numerous credit cooperatives have also been established. Total financial assets in 2004/2005
reached around 54.09 percent of GDP and the M2/GDP ratio, which shows the financial
sector development or financial deepening increased from in 12.4 percent in 1975 to 50.9
percent in 2000

In the context of banking development, the 1980s saw a major structural change in financial
sector policies, regulations and institutional developments. HMG/N emphasized the role of
the private sector for the investment in the financial sector. The financial sector liberalization,
started already in the early eighties with the liberalization of the interest rates, encompassed
further deregulation of interest rates, relaxation of entry barriers for domestic and foreign
banks, restructuring of public sector commercial banks and withdrawal of central bank
control over their portfolio management (Acharya et al, 2003), These policies opened the
doors for foreigners to enter into banking sector under joint venture. Consequently, the third
commercial bank in Nepal, or the first foreign joint venture bank, was set up as Nepal Arab
Bank Ltd (now called as NABIL Bank Ltd) in 1984.

Thereafter, two foreign joint venture banks, Nepal Indosuez Bank Ltd. (now called as Nepal
Investment Bank) and Nepal Grind lays Bank Ltd (now called as Standard Chartered Bank
Nepal Ltd.) was established in 1986 and 1987 respectively. Thereafter, another 12
commercial banks have been established within the period of 12 years. Nepalese banking
system has now a wide geographic reach and institutional diversification. Although, Nepalese
financial sector is dynamic, a lot of scope for development of this sector exists. This is
because the banking and non-banking sectors have not been able to capture all the
potentialities of business till this time. It is evident from the Rural Credit Survey Report that
the majority of rural credit is supplied by the unorganized sector at a very high cost perhaps
being at two or three time of the formal sector suggesting that the financial sector is still in
the path of gradual development sector suggesting that the financial sector is still in the path
of gradual development. Overdue loans and inefficiency of the older and the larger of
commercial banka have aggravated and have been made to compete with the new trim banks
with no only operations. Also, the commercial banka, domestic or joint venture have shown
little Innovation and positive attitude in identifying new areas of saving and investment
opportunities. Following table reflects the present development of commercial banking
Institutions in Nepal, as survival development prosperity of any organization depend on
under of factors. Every organization should give prime concern to those factors. However,
one of the major determinants for effective running of a business entity is its financial
operation system.

Optimum utilization of the organizations financial resources, leads the organizations to the
ultimate target fulfillment so it is very important to analyze the accounting and Financial
statements to know whether the financial position is sound and what kind of measures be
applied. In recent years due to the liberal economic policy of the government many private
banks are coming into operations. The foreign joint venture banks are enjoying competitive
advantageous factors likely highly skilled personnel, modern and advanced banking
technology, customer oriented banking services, management expertise and global
banking network.
The function of banks are not only accepting deposits and granting found but also, including
wide range of services to the different stage of the society, to facilitate the growth of the
economy. In the absence and insufficiency of banking and finance facilities, the growth of the
economy development becomes slow. However, bank is a resource for economy
development, which maintains the self-confident of various segment of society and advances
credits to the people. "Bank is the establishment for keeping money, valuable etc., and safety
the money being paid out on the customer's order (by means off cheques)". Similarly, a
definition given in encyclopedia that a bank is a business organization that receives and hold
deposits of funds from others and makes loans, extends credits and transfers funds by written
order of deposit. "Banks are financial institutions that fund in the form of deposits, repayable
on demand or in short notice."

World Bank is a financial institution, which provides financial services that may be in the
form of accepting deposits, advancing loans, providing necessary technical advices, dealing
over foreign currencies, remitting funds etc Nepal Rastra Bank Act 2002) Bank in general
means an institution that deals with money. Concept of banking had developed from the
ancient history us with the effort of ancient history with the effort of ancient Goldsmith who
practiced storing people's gold and valuables. "Bank" was originated from French word
"Banque". In developing countries like Nepal, banks play vital role for domestic resources
mobilization and economic development of country. The first commercial bank was "Bank of
England (1694), central bank of Britain. The first commercial bank of Nepal is Nepal Bank
Limited, which was, established in 1937 A.D. Commercial banks are the supplies of finance
for trade and industry and play a vital role in the economic and financial life of the country.
By investing the saving in the productive areas they help in capital formation.

According to Gillian and Soul, "A sound banking system is important because of the key
roles it plays in economy intermediation, maturity, transformation, facilitating payment
flows, credit allocation and maintaining financial discipline among borrowers. Banks provide
important positive externalities as gathering of saving, allocation of resources and providers
of liquidity and payment services"

Commercial banks play the vital role in economic development of any nation. Capital is the
most important factor and foundation for not only the economic development but also for the
overall growth and prosperity of the nation.
1.2 Statement of the Problem

The loan lending process at Sanima Bank faces significant challenges that hinder efficiency
and customer satisfaction. Despite efforts to streamline operations, there are persistent issues
related to lengthy approval times, complex documentation requirements, and inconsistent
customer service experiences. These factors contribute to delays in loan disbursements,
increased customer dissatisfaction, and potentially higher operational costs. Addressing these
challenges is crucial to enhancing the bank's competitiveness, improving service delivery,
and ensuring a seamless experience for borrowers. This research aims to identify the root
causes of these issues and propose effective solutions to optimize the loan lending process at
Sanima Bank.
The following research questions are developed in light of the problem statement
described above:
1. What factors are contributing to the declining customer satisfaction levels at Sanima
Bank?
2. How has the inefficiency in loan processing affected Sanima Bank's customer retention
rates?
3. What measures can be implemented to improve the operational efficiency of Sanima
Bank's branch network?

1.3 Objectives of the study

The focus of this study is to find out bank loan lending process of Sanima Bank Limited.

1. To analyze loan lending process of Sanima Bank Limited.

2. A study of loan investment process of Sanima Bank Limited.

3. An investigation into the interest rate in different sectors of Sanima Bank Limited.

1.4 Rationale

The issue of loan lending procedures used by banks in Nepal (Sanima Bank Limited) was
examined by several studies. To the best of the researcher's knowledge, no one study has
addressed Nepal's banking sector, though. As a result, this study will be very important in
closing the knowledge gap about the loan lending procedure of (Sanima Bank Limited.) bank
in Nepal. This kind of information is crucial since it gives bank managers practical
knowledge of the loan lending procedure. Since a suitable loan is essential to every industry,
including real estate, business, education, housing, and agriculture, and since financial
transactions are necessary and boost GDP growth.

1.5 Review of literature

A literature review is a comprehensive summary and critical analysis of the existing research
and scholarship on a particular topic. It involves systematically searching for, evaluating, and
synthesizing the findings and arguments presented in academic sources such as journal
articles, books, and dissertations. The purpose of a literature review is to provide a clear
understanding of the current state of knowledge, identify gaps and inconsistencies in the
literature, and establish a context for new research. It helps to situate a research project within
the existing body of work, demonstrating how it builds upon or diverges from previous
studies and highlighting its significance and contribution to the field.

Bank is an institution which deals in money and credit. Banks are the institution which acts as
an intermediary between different kinds of people and institutions who are in need of money
and who can supply money at certain rate of interest. A bank simply carries out the work of
exchanging money, providing loan, accepting deposits and transferring the money.

Bank is a financial institution licensed to accept deposits, make loans, and provide a wide
array of financial services to individuals, businesses, and governments Olausi, A., (2014).

Kent defines bank as A Bank is an organization whose principal operations are concerned
with the accumulation of the temporarily idle money of the general public for the purpose of
advancing to other for expenditure. (Bhuvan Dahal A Handbook to Banking, Asmita Books
and Stationery, 2002 P7)

Commercial Bank means a bank which operates currency exchanges transactions, accepts
deposits, provides loans, perform dealing, relating to commerce except the banks which has
been specified for the co-operative agricultural industry of similar other specific objectives.
((Section 2(a) Commercial Bank Act 2031(1974))

In this section, the effort has been made in this present section to examine and review the
some related articles published in different related books, economic journals, bulletins,
magazines and newspapers. Dilli Raj Bhandari in the book Banking & insurance (Principle &
Practice), People in general deposit, the businessman, industrialists and other individuals
deposit money in a bank. Actually, such amount is the main sources o capital for the
commercial bank. Banks flows such amount as loan and advances and invests in different
sectors to earn profit. Usually a bank accepts three types of deposit. They are current, saving
and fixed deposits (Banking & Insurance (Principle & Practice)", Aayush publication,
Kathmandu, 2002)

Bhuvan Dahal & Sarita Dahal in the book "A Hand book to Banking. A bank takes various
types of deposits from individuals, business organization and other types of institutions:
Normally they are classified into two types: Interest Bearing Deposit and Interest Free
Deposit. Loan and advances dominate the assets side of the balance sheet of any bank
Similarly earnings from such loan and advances occupy a major space in income statement of
the bank. Lending can be said to be the raison d' etre of the bank. (A Handbook to Banking,
Asmita Books and Stationery. (2002). This section of the project work report tries to describe
the conceptual framework, concept of financial position measurement tools as theoretical
review and review of previous report. Research gap also has mentioned in this section Madhu
Sundar Shrestha in the book "Fundamentals of Banking, Banks open various types of
accounts having different features. Broadly speaking all accounts can be classified into
interest bearing and non-interest bearing accounts. The accounts differ depending on the
customer's constitution. One of the basic function of commercial banks is to provide credit.
Out of total income on an average 60- 70% of income consists from lending activities.
(Fundamenrals of Banking, Buddha Academic Publishers and Dustributers Pvt Ltd,
Kathmandu, 2007) Ratna Man Dangol and Keshab Prasad Prajapati in the book Accounting
for financial Analysis and planning mention the use of Ratio Analysis as follows,

 For expressing trend

 For showing changes in financial statement
 For explaining plan for future For setting standard

(Accounting for financial Analysis planning, Taleju Publication, Kathmandu, 2058) In an

interview Jyoti Pandey, Managing Director of Nepal Investment Bank Clarified the question
of Annapurna Post that competition among commercial banks has increased to attract deposit.
Banks has risen the interest rate of attract deposit to them. This has led to the decrease in the
decrease in the difference of interest rate between deposits and investment (Annapurna
Post,22 Sep 2008)
"Many researchers have been done on the topic of loan lending process of bank. I have read
some research report but did not find any one useful for this report.

Abdullah, N.M., & Jahan N. (2014). examined effects of risk parameters (credit. operational,
liquidity and market risk) on banking system efficiency (studying 15 top banks in Iran)
recognizing the importance of efficiency and risk as two fundamental important categories in
banking industry, seeks to review the effectiveness of two popular models: parametric (SFA)
method with economic basis and nonparametric (MEA) method with mathematical
optimization basis to evaluate bank efficiency and rank and select an optimal model and also
to identify the impact of credit, operational, market and liquidity risks on banking system
efficiency. The 15 banks were selected as statistical research community over the last six
years Aboila, M. and Olausi, A., (2014). Using average performance provided by the above
two methods, banks were ranked with Deap and Frontier software, and then to examine the
presence or absence of significant correlation between the rankings provided by these two
methods, the Pearson correlation coefficient was used. The results suggest differences in the
two methods with regard to performance evaluation and ranking of banks, and show a
relative superiority of SFA method, compared to MEA method. In addition, to examine the
impact of efficiency on risk, for the four studied risks based on selected indicators, four
models were estimated using econometric methods and the ordinary least squares.

By Crisco fendront, (2008) Loan lending is the process through which a financial institution,
such as a bank or credit union, provides funds to individuals or businesses with the agreement
that the borrowed amount will be repaid over a specified period, typically with interest. This
arrangement enables borrowers to access capital for various purposes, such as purchasing a
home, financing education, starting or expanding a business, or managing unexpected
expenses. The terms of the loan, including the interest rate, repayment schedule, and any
collateral requirements, are outlined in a formal agreement between the lender and the
borrower. Loan lending plays a critical role in the economy by facilitating investment,
consumer spending, and economic development, while also generating income for lenders
through the interest charged on the borrowed funds.

By foppy k. (2006) Lending and borrowing transactions are characterized by time factors,
costs, and risk considerations, all three are closely related. Term loans are classified by the
length of time for which money is lent. Loans come in short-term, intermediate-, and long-
term forms. Revolving credit and perpetual debt, however, have no fixed retirement dates.
Revolving credit, better known as a "line of credit," provides a sum of money which the
borrower draws down and then pays back. Borrowing again when funds are needed again.
Interest is paid only when funds are being used. Brokerage houses that extend margin credit
for customers on certain securities work the same way. The holder of a perpetual loan,
usually issued through a registered offering, only pays interest on the money and decides in
his or her own time when to retire the principal.

Khadka (2008): lending offers Manageable loan services, diverse lending products for
Commercial and Private Ventures including Equity Partners, SBLC-BG and quantifiable
knowledge that is flexible, usable and creates value in Commercial Real Estate Matters Loan
lending utilizes Private Placement Programs through the U.S. Federal Security & Exchange
Commission (SEC) 540, 505 and 506 filings for Raising Capital to diversify our portfolio just
to name a few. Loan lending also associates with other Insurance and Investment
Professionals in expanding our client's ability to receive industry advice and products with
Financial Planning. Consultation, Investment Products, Market Investments, Life Insurance,
Business, and Protection Products from other producers licensed and regulated in these fields
of industry.

This section of the project work report tries to describe the conceptual frame work, concept of
financial position measurement tools as theoretical review and review of previous report.
Research gap also has mentioned in this section.

1.6 Methodology used

Research methodology refers to the systematic, theoretical analysis of the methods applied to
a field of study. It encompasses the principles and procedures by which researchers approach
and conduct their inquiries, ensuring the reliability and validity of their findings. This
framework guides researchers in selecting appropriate techniques for data collection,
analysis, and interpretation, tailored to the specific nature of their research questions. It
includes qualitative methods, such as interviews and observations, and quantitative methods,
such as surveys and experiments. Effective research methodology underpins the scientific
rigor of a study, providing a structured pathway to contribute new knowledge or insights
within a discipline.

1.6.1 Sources/Types of Data

This research is done from primary data as well as secondary data.

Primary Data:

Primary data is an original data collected by me for the research project. It is collected for
meeting the specific objectives of the study. These data can be obtained in both form that is
quantities and qualitative. This research has collected by me not by coping by others so, this
study is primary data. As the research design obtained as based mainly on the exploratory
design, primary data was one of vital sources for data collection methods from primarily
sources mainly were structure interviews questionnaire and personal observations.

Secondary Data:

Secondary data is also secondary data because the sources of the data are accurate. In this
data, data have been subjected to interpretation; they are referred to as coming from
secondary resources. Apart from primary data collection other data was collected from the
secondary sources. Secondary sources refer to data has been complied by others these
secondary sources of data were also thoroughly studied for the field work purpose. The data
collection method from secondary was mainly from internal and external sources.

1.6.2 Population and sample

All branches of commercial banks established in Ghorahi fall under the population of this
study. Overall study of all elements of this population could not be possible due to several
reasons. Therefore, Ghorahi branch of Sanima is selected as the sample of this study using
judgmental sampling technique.

1.6.3 Hypothesis

Nepal is one of the least developed countries in the world. For its development, business area
plays an important role. So, I believe that branch office of Sanima Bank in Ghorahi, Dang has
placed an important role in the area of development of business sector.

1.6.4 Data collection procedures

The required data was collected in a period of about one month and made use of the
following techniques such as Observational method, Interview method and Questionnaire
method. But due to the time limitations, all these data are secondary. Although these data are
secondary, they are reliable, suitable and adequate.

1.6.5 Data processing and analysis

These collected data are processed for analysis and interpretation. In content of that, all the
analyzed data are classified, tabulated and presented in table and bar diagrams.

1.6.6 Technique of analysis

Technique of analysis refers to the methods and tools used to interpret data and derive
insights in research. It involves applying quantitative and qualitative approaches to examine
and understand specific aspects or issues.

To collect the information, secondary data source is used. Financial statements of the sample
banks for five fiscal years were obtained from official website and the publication, various
financial and statistical tools have been used for the data analysis. Financial ratios have been
used for measuring investment policies of the bank and its effect on economic development.
For the analysis, analytical statistical tools such as means, coefficient of correlation between
different variables have been used. The tools applied are as follows:

1. Financial Analysis Tools: Financial analysis tool refers to any method, software, or
framework used to evaluate the financial performance, health, and position of a company or
organization. These tools typically involve the use of financial ratios, trend analysis,
benchmarking, and other metrics to assess profitability, liquidity, solvency, and efficiency,
providing insights for decision-making and strategic planning.

In order to make rational decisions in keeping with the objectives of the company and its
financial viability, an analysis is undertaken by every interested party such a creditors,
investors and also by the company itself. Such, analysis varies according to the specific
interests of party involved, this analysis is called financial analysis. There are following
financial ratios, which can be analyzed to determine financial position of an organization.

a) Ratio Analysis

It is studied by analyzing the following ratios:

i) Current Assets to Total Assets (CATA)

The ratio of current assets to total assets indicates what percentages of the company's total
assets are invested in the form of current assets. It is calculated as:

Current Assets to Total Assets = Current Assets / Total assets

As the ratio increases, the risk and profitability of the company would decrease. The low ratio
indicates the small amount of working capital.

ii) Current Assets to Fixed Assets (CAFA):

This ratio shows the relationship between the current assets and fixed Assets and can be
calculated as:

Current Assets to Fixed Assets = Current Assets / Fixed Assets

If the ratio is large, it indicates the sound working capital.

iii) Cash and Bank Balance to Current Assets (CBBCA)

It is calculated as:

Cash and Bank Balance to Current Assets = Cash and Bank / Current Assets

The small ratio indicates the sound management and large ratio vice versa. The working
capital is directly affected by it.

iv) Cash and Bank Balance to Total Assets (CBBTA)

This ratio is calculated as under and indicates what percentage of total assets is invested in
cash and bank balance.

Cash and Bank Balance to Total Assets = Cash and Bank / Total AssetsA

v) Inventory to Total Assets (ITA)

This ratio can be calculated as:

Inventory to Total Assets = Inventory / Total Assets

This ratio indicates the percentage of total assets invested in form of invest in the form of
inventories. Inventory is a part of working capital so, if the percentage increased the working
capital automatically increased. The increase also indicates liberal inventory policy or
blocking of materials in stock.

vi) Ratio of Inventory to Current Assets (ICA)

This ratio implies the percentage of current assets in form of inventory and derived as:
Inventory to Current Assets = Inventory / Current Assets

The increase in the ratio is an indication of liberal inventory policy followed by company. If
ratio increases or percentage increases means greater part is occupied by inventory.

b) Percentage Analysis

Percentage analysis is a financial analysis technique used to evaluate the relative size of
various components within a financial statement. By expressing each item as a percentage of
a base figure, such as total sales or total assets, this method highlights the proportional
significance and trends of each component. This simplifies comparisons over time or between
different companies, helping stakeholders understand financial health, operational efficiency,
and performance changes. It is commonly applied in vertical and horizontal analyses of
financial statements.

c) Growth Rate Analysis

Growth rate analysis involves evaluating the rate at which a specific variable, such as sales,
revenue, or population, increases over a set period. It helps businesses and researchers
understand trends, forecast future performance, and make informed decisions. By comparing
different time periods or segments, growth rate analysis can identify patterns, measure
success, and highlight areas needing improvement. It is a crucial tool in strategic planning
and resource allocation, providing insights into the effectiveness of strategies and overall
organizational health.

2. Statistical Tools

In this study, various statistical tools have been used to present and analyze the data for
achieving the objectives. Following statistical tools has been for the analysis of the data

i. Trend Analysis

ii. Mean

1.7 Limitation of the study

Each & every study has its own limitation. Best effort has been made to make report accurate
& to the point. But also there are following limitation while preparing this report:-

i) This study is limited only in the loan lending performance

ii) Certain period's data (5 yrs.) has been taken for the analysis; result is based on data. C

iii) Time limitation i.e. the study is carried out in one-month period.

CHAPTER II

RESULT AND ANALYSIS

This chapter presents with the analysis, presentation and interpretation of relevant data and
conclude major finding of Sanima Bank in order to fulfill the objectives of research study. To
obtain better result, the data have been analyzed according to the research methodology as
mentioned in third chapter. The purpose of this chapter is to introduce the mechanics of data
analysis and interpretation. With the help of this analysis, efforts have been made to highlight
liquidity analysis of Sanima Bank as well as other cases or problems also. For analysis,
different types of analytical methods and tools such as financial ratio analysis as well as
statistical analysis are used. This chapter deals with the various aspects of liquidity
management such as financial ratios, impact of deposit in liquidity, priority sector lending,
lending efficiency, and trend analysis.
2.1 Data Presentation

This chapter covers data analysis, finding and discussion of the research, secondary data was
collected from published annual report of Sanima Bank and from NRB. Presentation and
analysis of data means to show the accurate data and perform its presentation clearly or
informatively. The main aim of this chapter is presentation and analysis of data according to
research method to attain the objective of this study. In this chapter, an attempt has been
made to analyze the Loan Lending of for its operational period of five years that is 2018/19 to
2022/23. The data for this study are presented in tabular form and figure of table are analyzed
with the help of financial tool.

2.1 Presentation of Data in Tables and Figures and their Analysis

a) Total Loan Lending

Table 2.1: Total Loan Lending

Year Total Loans (in million NPR)

2018/2019 83,439.28
2019/2020 11,929.56
2020/2021 123,165.42
2021/2022 141,685.90
2022/2023 149,870.10
Source: Annual report of Sanima Bank Limited.

The table presents the total loans in millions of Nepalese Rupees (NPR) over a five-year
period from the fiscal year 2018/2019 to 2022/2023. In 2018/2019, total loans were recorded
at 83,439.28 million NPR. The following year, 2019/2020, saw a significant drop in lending,
with total loans decreasing to 11,929.56 million NPR. However, this trend reversed in
2020/2021, with total loans surging to 123,165.42 million NPR. The upward trajectory
continued in 2021/2022, reaching 141,685.90 million NPR. By 2022/2023, the total loans
further increased to 149,870.10 million NPR. This year-by-year analysis indicates an initial
decline in loan amounts, followed by a substantial and consistent increase over the
subsequent years, reflecting a recovery and growth in lending activities.
 Total Loans (in million NPR)
160,000.00

140,000.00

120,000.00

100,000.00
Total Loans (in million NPR)
80,000.00

60,000.00

40,000.00

20,000.00

0.00
2018/ 2019/ 2020/ 2021/ 2022/
2019 2020 2021 2022 2023

Figure 2.1: Total Loan lending

In the given diagram it shows the total loan lending year wise. Vertical Lines indicates
amount in million and horizontal line indicates year.

b) Total loan lending individual data sector wise year

Table 2.2: Loan Lending Individual

(In Million)

Year 2018/19 2019/20 2020/21 2021/22 2022/23

Term 17,266.76 21,461.65 26,579.27 32,005.04 60,555.35
Overdraft 8,237.96 8,884.38 12,145.20 14,669.32 781.40
 Trust 2,154.21 2,488.84 4,785.82 1,945.97 25,228.36
Real Estate 5,869.53 5,554.21 5,403.95 6,666.59 6,881.64
Loans
Margin 289.59 502.24 2,221.04 1,757.70 6,556.62
lending loans

Others 130,471.66 144,052.49 189,469.61 218,402.07 184,998.17

Source: www.sanima.com

The table provides a breakdown of loans in millions of currency units across various
categories from the fiscal year 2018/19 to 2022/23.

Term loans, starting at 17,266.76 million in 2018/19, steadily increased each subsequent year,
reaching 60,555.35 million by 2022/23. Overdraft loans remained relatively stable over the
years, fluctuating slightly from 8,237.96 million in 2018/19 to 781.40 million in 2022/23.
Trust loans saw notable growth, peaking at 25,228.36 million in 2022/23 after a gradual
increase from 2,154.21 million in 2018/19.

Real estate loans showed varying trends, initially at 5,869.53 million in 2018/19, dipping
slightly in 2019/20 and 2020/21, then increasing to 6,881.64 million by 2022/23. Margin
lending loans started at 289.59 million in 2018/19, surged to 2,221.04 million in 2020/21, and
continued rising to 6,556.62 million in 2022/23.

Other loans, which include a broad category of lending activities, started at 130,471.66
million in 2018/19, peaked at 218,402.07 million in 2021/22, and declined to 184,998.17
million by 2022/23. Overall, the data reveals varied patterns across different loan types over
the years, reflecting changes in market conditions, regulatory environments, and economic
factors influencing lending practices.
 250,000.00

200,000.00

Term
150,000.00
Overdraft
Trust
Real Estate Loans
100,000.00 Margin Lending laons
Others

50,000.00

0.00
2018/19 2019/20 2020/21 2021/22 2022/23

Figure 2.2: Loan lending individual

In the figure 2.2 the diagram shows vertical axis indicates the amount in million and
horizontal axis shows year of loan lending. In year 2018/19 the diagram seem Others is high
and Term, Trust, Overdraft, Real Estate Loans, Margin Lending loans respectively. In
another years the diagram shows the level peeler also same level with in year 2018/19.That’s
means loan trend of Others, term, Overdraft, Real Estate loans ,Margin even amount figure is
different in every year.

2.2.1 Presenting data to the Pie-Chart

To presenting the data to pie chart, the chart shows the year wise data individually such as
2018/19, 2019/20…. So on in percentage
 2018/19
5.0
1%
10.51% 1.3
1% Term
3.5 Overdraft
6% Trust
0.1 Real Estate Loans
7% Margin lending loans
Others

79.42%

Figure 2.3: Annual Loan Lending 2018/19

Looking chart 3, 10.51% loaned in Term sectors and 5.01%in Overdraft, 1.13%in
Trust,3.56%in Real Estate Loans,0.17% in Margin lending loans,79.42%in others sectors.

2019/20
4.8
5%
11.73% 1.3
6% Term
3.0 Overdraft
4% Trust
0.2 Real Estate Loans
7% Margin lending loans
Others

78.74%

Figure 2.4: Annual Loan Lending 2019/20

In the above chart 4 shows the loan lending 11.73% in Term and 4.85% Overdraft,1.36% in
Trust,3.04% in Real estate loans,0.27% in Margin lending loans,78.74% in others sectors.
 2020/21

1.9
11.05% 5.0 9%
6% 2.2 Term
5% Overdraft
Trust
0.9
2% Real Estate Loans
Margin lending loans
Others

78.75%

Figure 2.5: Annual Loan Lending 2020/21

In the above Chats 5 shows the 11.05%in Term, 5.06%in Overdraft, 1.99%in Trust,2.25% in
Real estate loans, 0.92% in Margin lending loans ,and 78.75% in others sectors.

2021/22
5.3
2%
11.62% 0.7 Term
1%
2.4 Overdraft
2% Trust
0.6 Real Estate Loans
4% Margin lending loans
Others

79.29%

Figure 2.6: Annual Loan Lending 2021/22

In the above Chats 6 it shows that 11.62% in Term, 5.32% in Overdraft, 0.71% in Trust,
2.42% in Real Estate loans, 0.64% in Margin lending loans, and 79.29% in others sectors.
 2022/23

21.25% Term
0.2 Overdraft
7% Trust
Real Estate Loans
8.85%
Margin lending loans
Others
64.91% 2.3
0%
2.3
0%

Figure 2.7: Annual Loan Lending 2022/23

In the above chats 7 shows the 21.25% in Term, 0.27%in Overdraft, 8.85% in Trust, 2.30% in
Real estate loans, 2.30% in Margi lending loans, and 64.91% in others sectors.

2.2 Analysis of Data

The study of the bank's overall transaction has been successful enough to accumulate
considerable financial ratios. So based on the analysis conducted on previous chapters, some
shorts are found. Thus following recommendations could be possibly to improve the financial
position and thus it can help to make a profitable investment.

 For the growth and profit the bank's main source is the deposit of money from
individual and organization, so the bank must aim to increase the deposit from
individual and organization, especially form the rural areas.
 The deposited amount must be invested so for the investment of deposited amount the
bank must follow easy rules for loan seekers. The bank must be able to attract
customers who are seeking loan.
 Again the bank is listed in NEPSE index so this time the bank must give much more
satisfaction to it's customer so that it can secure the investment of investor so to
increase the par value of share.
 In this dynamic environment the management of Sanima Bank must accept the change
and according to change the technology and service provided by bank must be
changed.
Finally, it should be beyond doubt that a fully-grown bank like Sanima Bank will go a long
way in revitalizing the financial sector of Nepal. A bank with the structure and goodwill of
Sanima Bank will definitely be a source of inspiration for other financial institutions and the
banks in Nepal.

2.3 Major findings

The table provides a detailed snapshot of financial data spanning multiple years across
various categories. One prominent trend is the substantial growth in the "Term" category,
which has more than tripled from 17,266.76 in 2018/19 to 60,555.35 in 2022/23. This
significant increase suggests a robust expansion in longer-term financial commitments or
investments over the years. Concurrently, "Others" remains the largest category, indicating its
diverse nature and dominance within the organization's financial portfolio. Despite
fluctuations, it peaked at 218,402.07 in 2021/22 before slightly declining to 184,998.17 in
2022/23, underscoring its pivotal role in the overall financial strategy.

Conversely, the "Overdraft" category shows varying figures year-on-year, with a notable
peak in 2021/22 at 14,669.32 before decreasing sharply to 781.40 in 2022/23. This pattern
suggests dynamic management of short-term credit or changes in borrowing strategies during
these periods. Similarly, "Trust" displays fluctuating amounts, with a significant increase to
25,228.36 in 2022/23, indicating shifts in trust-related financial activities or possibly
increased investments managed under trust arrangements.

Furthermore, specific loan categories like "Real Estate Loans" and "Margin Lending Loans"
show distinct patterns. "Real Estate Loans" demonstrate steady growth across the years,
reflecting ongoing investments or financing activities in real estate. On the other hand,
"Margin Lending Loans" exhibit more volatile fluctuations, with a notable increase to
6,556.62 in 2022/23, potentially indicating heightened activity or risk exposure in margin
lending.

In summary, the table highlights a dynamic financial landscape characterized by significant

growth in long-term commitments and substantial fluctuations in short-term borrowing and
specialized loan categories. These trends suggest a strategic approach to financial
management, navigating through changing market conditions while capitalizing on growth
opportunities in various sectors like real estate and margin lending.
 CHAPTER III

SUMMARY AND CONCLUSION

In this conclusion chapter, summary, finding and some prescribed recommendations have
been put forward for the benefit of the selected banks along with conclusions derived from
the study are highlighted in order to fit the country from the present economic turmoil.

3.1 Summary
This chapter focused, main objective of the study was to clarify about loan lending process of
bank. To achieve the objective the researcher sampled of population all commercial bank that
exhibited the characteristics for the study. Secondary data was used in this study. Data was
collected by the review of documents, annual report of the sample banks published book of
accounts. I have provided a summary of what we know loan lending short time of research.
Although I have gained sum understanding of what value loan lending provide, our
knowledge has clear limitations. For example, in many instances, economist's conclusions
depend on the use of fixed rate loan and changeable which are rather common in the market.
In research where loan lending can be used to distinguish between borrowers with a priori on
observable characteristics, the results are to setting where it must unobservable which is far
too restrictive.

Sanima Bank Limited follows a standard loan lending process that involves several stages,
including application, verification, appraisal, and disbursement. First, the borrower submits
an application, providing information about their creditworthiness. financial status, and the
purpose of the loan. The bank then verifies the application and the borrower's credit history to
determine their eligibility.

Next, an appraisal is conducted to assess the value of the collateral, if any, and to determine
the amount of the loan. This involves a thorough analysis of the borrower's financial
statements, credit report, and other relevant factors, such as their business plan or income
sources.

Once the appraisal is complete, the bank makes a decision on whether or not to approve the
loan. If approved, the borrower is notified and the loan agreement is finalized.
3.2 Conclusion

This serious consequence of previous statement, highlight the important of supervision.

especially in the banking sector. In order foot the proper legislation system to be have
implemented, its vital to have a thorough understanding about the operational of commercial
banks in general and determine of the loan lending process specially. As raised "Without
understanding bank's observed loan level and interest, it's hard to predict how the bank will
response to economic or supervisory changes." This motivated us to conduct hour paper in
this field, examining determines of bank loan, at both bank and country level with a closer
look in Nepal.

As per this research findings banks are oriented to loan invest at high interest rate to the
others sector. The data shows that loan lending trend is high in the others but slow to the
sector like Margin lending loans and other necessary sector such as trust, real state loan,
margin lending loans etc. Bank ought to follow instruction of NRB.
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Dahal, B., & Dahal, S. (2002). A Handbook to Banking. Asmita Books and Stationery.

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www.sbl.com.np

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APPENDIX