A CASE STUDY ON LOAN STRUCTURE OF

MUKTINNATH BIKAS BANK LTD.

A Project Work Report

By

KUSUM THAPA

Symbol No.:705120011

T.U. Regd. No. 7-2-289-13-2019

Parashar College

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of BACHELOR OF BUSINESS

STUDIES (BBS)

Damuli, Tanhun

July, 2024
 DECLARATION

I hereby declare that the project work entitled “A Case Study on Loan Structure of
Muktinath Bikas Bank Limited.” Submitted to the faculty of management, Tribhuvan
University, Kathmandu is an original piece of work under the supervision Mr. Sanam
Adhikari, faculty member, Parashar College, Damauli, Tanahun , and is submitted in
partial fulfillment of the requirement for the award of the degree of Bachelor Of Business
Studies (BBS). This project work has not been submitted to any other university or
institution for award of any degree of diploma.

………………………
Kusum Thapa
Parashar College
Date:……………….

ii
 SUPERVISOR’S RECOMMENDATION

The project work report entitled entitled “A Case Study on Loan Structure of Muktinath
Bikas Bank Limited”. Submitted by Kusum Thapa of Parashar College, Damuli,
Tanahun is prepared under my supervision as per the procedure and format requirements
laid by the Faculty of Management, Tribhuvan university, as partial fulfilment of the
requirement for the award of the degree of Bachelor of Business Studies (BBS). I,
therefore, recommend the project work report for evaluation.

Mr. Sanam Adhikari

Supervisor
Parashar College
Date:………………..

iii
 ENDORSEMENT

We hereby endorse the project work report entitled “A Case Study on Loan Structure of
Muktinath Bikas Bank Limited”. Submitted by Kusum Thapa of Parashar College,
Damuli, Tanahun is partial fulfillment of the requirement for award of the Bachelor of
Business Studies (BBS) for external evaluation.

……………………………… ………………………………
Mr. Narayan Prasad Dhakal Mr. Amrit Bhandari
Chariman, Research Committee Campus Chief
Parashar College Parashar College
Date:…………….. Date:……………….

iv
 ACKNOWLEDGEMENT

This report entitled Loan Structure of Muktinath Bikas Bank Ltd. has been prepared in
partial fulfillment for the degree of Bachelor of Business Studies (BBS). The main objective
of this study is to overview and analysis the Loan structure and deposit mobilization Ltd.

At the time of preparing this study, I have consulted with various personalities. First of all, I
would like to express my gratitude to the department of Muktinnath Bikas Bank Ltd. for
providing necessary documents and information required for my case study. Then, I owe a
special thanks to my respected teacher Mr. Sanam Adhikari and Mr. Amrit Bhandari for
providing me necessary guidance.

At last, I am grateful to all other teachers of Parashar College for providing me

encouragement and support for completing my research study.

Kusum Thapa
Date: ………….

TABLE OF CONTENT
Contents Page no.

v
Title Page i
Declaration ii
Supervisor’s Recommendation iii
Endorsement iv
Acknowledgement v
List of Tables vii
List of Figures viii
List of Abbreviations ix

Chapter I : INTRODUCTION
1.1 Background of the study 1
1.2. Profile of Muktinath Bikas Bank Ltd. 6
1.3. Meaning and Concept of Loan Structure 9
1.4. Objective of Study 12
1.5. Rational of the Study 12
1.6. Limitation of the Study 12
1.7. Report Structure 13
1.8. Literature Review 14
1.9. Research Methodology 16

Chapter II: RESULT AND ANALYSIS

2.1 Data Presentation 19
2.2 Result Analysis 26
2.3 Major Findings 26

CHAPTER III: SUMMARY AND CONCLUSION

3.1 Summary 27
3.2 Conclusion 27
BIBLIOGRAPHY 29

LIST OF TABLES

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Table No. Title Page No.

Table: 1 Term Loan of Muktinath Bikas Bank 19

Table: 2 Overdraft Loan of Muktinath Bikas Bank 21

Table: 3 Real Estate Loan of Muktinath Bikas Bank 22

Table: 4 Personal Loan of Muktinath Bikas Bank 23

Table: 5 Margin Loan of Muktinath Bikas Bank 24

Table: 6 Other Loan of Muktinath Bikas Bank 25

LIST OF FIGURES

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Table No. Title Page No.

Table: 1 Term Loan of Muktinath Bikas Bank 20

Table: 2 Overdraft Loan of Muktinath Bikas Bank 21

Table: 3 Real Estate Loan of Muktinath Bikas Bank 22

Table: 4 Personal Loan of Muktinath Bikas Bank 23

Table: 5 Margin Loan of Muktinath Bikas Bank 24

Table: 6 Other Loan of Muktinath Bikas Bank 25

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 LIST OF ABBREVIATIONS

MBBL Muktinath Bikash Bank Limited

ATM Automated Teller Machine
F/Y Fiscal Year
i.e That is
Ltd. Limited
NRB Nepal Rastra Bank
BBS Bachelor of Business Studies
Fig. Figure
No. Number
Reg. Registration
S.N. Serial Number
IT Information & Technology
P.E Probable Error
OD Overdraft
R Correlation

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 CHAPTER I
INTRODUCTION

1.1 Background of the study

Bank is a financial institution, which can also be called as the backbone in the
development of the national economy. The word bank is derived from Italian word “Bencho”
which means bench. The Italian goldsmith used to perform monetary transaction sitting on
the bench. So, the literary meaning of bank is the act as a transaction of money by accepting
various types of deposit, withdraw of deposited money, disbursing loans and rendering other
financial services. Bank is defined as the financial institution which is established under
certain law, to perform monetary, credit and other financial transactions, such institutions
accept the deposits, grants loan and other financial services to the people. Among the various
functions to provide loan to the investors is the major function.

In long run financial sectors plays a crucial role in the economic growth and prosperity of
a country. The concept of financial institution in Nepal was introduced when the first
commercial bank, Nepal Bank Ltd. As a semi-government organization was established in
1983 A.D. it was established under special banking Act 1936 having elementary function of a
commercial bank. It becomes public limited company in 1953 A.D. later on in 1957 A.D. the
first commercial bank named as ‘Nepal Rastra Bank’ was established with an objective of
supervising, protecting and directing the functions of commercial banking activities in Nepal.
Another commercial bank fully owned by the government, named as Rashly a Banijya Bank’
was established in 1966 A.D. Later on, company Act and the Commercial Bank Act. in 1974
A.D, was introduced to further enhance the financial institution and commercial banks were
established to mobilize scattered fund in the country. Since then, many private commercial
banks are listed in Nepal Stock Exchange, which have highest contribution on the market
capitalization as compared to other sector. In Nepal, foreign joint venture banks perform
better than Nepalese ones because of their higher managerial efficiency and decision-making
capability. Recently, two Nepalese Banks, Nepal Bank Limited and Rastriya Banijya Bank
are being managed by foreign management group but no considerable performance
enhancement seemed for the period of one year of management transfer. However, Nepalese

1
Bank has higher potentialities to increase their risk attitude and improvement of their internal
management.

Therefore, a Bank is an institution, which deals in collection deposits and advancing of loans
and other credit activities. They collected deposits are utilized for giving loan to different
industrial and commercial enterprises. Besides these activities, bank also perform payment or
remittance and other activities. Simply speaking, a bank refers to a commercial bank.
Hence, we can simply define bank as a financial institution, which deals with Money. Many
schools and institutions have defined bank differently. Some of the definition is given below:
As per Oxford Dictionary:
“As bank is an establishment for custody of money which it pays out on customer’s orders.”
According to Walter Leaf:

“A bank is a person or Corporation Which Holds itself out to receive from the public,
deposit payable on demand by cheque.”
As Per Prof. Kinley:

“A bank is an establishment where individual makes advance of money as may be required

and safely made, and to which individual entrust money when not required by them for use.”

1.1.1 Historical Development of Banks in Nepal

The history of banking in Nepal dates back to the year 1937 AD with the establishment
of Nepal Bank Ltd. as the first commercial bank in Nepal. It was established as a semi-
government bank with metallic coins worth NRs.10 million as the authorized capital. Bank
notes in Nepal weren’t introduced up until the mid1940s. It was in this year 1945 that the
earliest bank notes were issued by the treasury “Sadar Muluki Khana”. These notes were
signed by a “Khajanchi”, the head of the treasury who also was a high Hindu Priest.

Later in the year 1955, Nepal Rastra Bank Act was formulated for a better banking system
and Nepal Rastra Bank was established in 1956 as the Central Bank of Nepal accordingly.
After this date, the banknotes were issued by the Central Bank with the signatures of the
governors of the institution. Till the 1980s, the banking sector was wholly owned by the
government, with Agriculture Development Bank, Rastriya Banijiya Bank, NBL, and NRB
being the pillars of financial institution in Nepal. 1984 saw the start of the private banking
2
industry with the establishment of Nabil Bank and the introduction of foreign banks such as
Nepal Arab Bank, Nepal Indosuez Bank, and Nepal Grindlays.
Rastriya Banijiya Bank was established in 1966 A.D. as the second commercial bank of
Nepal. The Agriculture Development Bank was established in 1968 A.D. This is the first
institution in agricultural financing.
The banking sector in Nepal has faced many hurdles and hindrances. It has undergone
various political conflicts and instability. But today, the banking sector is more liberalized
and modernized. As per the change in technology, the history of banking in Nepal has taken a
swift jump from metallic coins to online payments.
There are various types of banks working in the modern banking sector in Nepal. It includes
central, development, commercial, financial, co-operative and micro credit (Grameen) banks.
The NRB has the authority to classify the institutions into A, B, C and D classes on the basis
of capital structure and working area and also provide the suitable license to the bank or
financial institution. Class ‘A’ is for commercial bank, ‘B’ for the development bank, ‘C’ for
the financial institution and ‘D’ for the micro finance development banks. As per the list
issued by NRB as of 24 February 2023, the modern banking sector includes 21 Commercial
Banks, 17 Development Banks, 17 Finance Companies, 63 Microfinance and 1(One)
infrastructure bank that are currently operating in Nepal.

1.1.2 Introduction of Bank

In general, bank refers to any Financial Institution Which deals with the transaction of
money. Here the transaction of money refers to acceptance of deposits of money of people
and lending those deposited money to the needed people in the form of loan.
Banks runs with the view to earn profit, while it aims to shoulder the responsibility of
safeguarding the financial and economic stability of the country.
According to the World Bank:

“Bank are financial institutions that accept fund in the form of deposit repayable on demand
or in short notice.”
According to Walter Leaf: “A bank is a person or Corporation Which Holds itself out to
receive from the public, deposit payable on demand by cheque.”

3
1.1.3 Importance of Bank

Bank are rendering very reliable service to the community. Banks are not only safe place
to keep money it’s also profitable ones. Money deposited in saving accounts earns interest at
a specific annual rate. Some of the major notes that resemble the importance of bank.
a. Aid in developing industry and commerce.

b. Develop the habit of saving.

c. Provide security to valuable goods and property.

d. Relieve people from financial exploitation.

e. Investment opportunities in new enterprises.

f. Balance economic development as a whole.

Types of bank

The types of bank are as below:

• Commercial bank

• Investment bank

• Developing bank

• Micro finance etc.

i. Deposit Collection

Collection of deposit is the primary function of the banks. Collect deposit from individual
costumers, business sectors, government sectors, other institutions.
Generally, bank deposit are categorized as:

• Current Deposit

• Saving Deposit

• Fixed deposit

• Call deposit

• Margin deposit

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ii. Advancing Loans

The next important function of banks is advancing loans. Banks offer various types of loan to
the individuals, business units and other institutions. Deposit funds are used for this purpose
after allocation necessary amount in cash to meet current need possible for upcoming
obligation. Generally bank loan are categorized as:
• Cash Credit

• Overdraft

• Working Capital

• Term Loan

• Hire purchase Loan

• Consumer (Housing, Auto, Mortgage, Education etc.)

iii. Credit Creation

As bankers give loans and advances to the borrowers without physical transfer of money, the
credit creation takes place. Such created money adds to the total money supply of the bank
and to the country as a whole. Thus, we have a concept of real money and credit money.
Bank credit refers to multiplication of loan and advances thus bank acquire assets in the form
of cash, securities, bonds, other fixed assets and credited deposit to bank the loans advance.

iv. Payment Function

Providing for payment mechanism or the transfer of fund is one of the important functions
performed by commercial banks and it is increasing in importance, as greater reliance is
placed on the cheques and credit cards. Moreover, banks deposits and loan payment and
transfer funds between a depositor saving and checking account.

v. Polling of National Saving

Commercial banks perform vital services to all sector of economy by providing facilities of
the pooling national saving and making them available for economically and socially
desirable purpose. The saver is rewarded by the payment of interest on his saving. These
5
polled funds are made available to businessmen, who use them for the expansion of their
productivity capacity and customers for such items as housing and customer goods.

vi. Transfer Money (Remittance)

Money, can be transferred from one place to other through the bank in the different ways. So,
transfer money is another important function of commercial banks in the present days.
Likewise, bank draft, hundi, electronic transfer etc.

vii. Agency Function

Commercial banks also perform a number of agency functions for and on behalf of its
customer. They handle transactions in shares, stocks, bonds and debenture for their clients
requested by their customers, they pay taxes, fees, dues and collect the receipts on the behalf
of necessary.

viii. General Utility Functions:

A number of other functions are carried on by the commercial banks to facilitate the
customer:
• Safe Deposit Locker Facilities

• Guarantee Services

• Merchant Banking

• Automatic Teller Machine

• Gift Cheque

• E-Banking and other Miscellaneous services.

1.2 Profile of Muktinath Bikas Bank Limited

Muktinath Bikas Bank Limited (MNBBL) was established on 19 th paush 2063 B.S. (i.e.
3rd January 2007 A.D.). The Bank is licensed by the Central Bank of Nepal to operate as a
”B” Class National Level financial institution with its Central Office at Kamaldi,

6
Kathmandu, Nepal. Today Muktinath Bikas Bank is known as the leading Development
Bank of Nepal with a history of its own.
The citizen of Syangja District (a hilly district with tough geographical terrain) were starved
for financial needs and the local people were undoubtedly had to travel to Pokhara (the only
nearby metro, with approximately 38 Kilometer mountainous road linkage) for petty
transaction such as withdrawal of mere NRP 5,000 /- (approximately $50). The cost of
travelling and other involved security risk, hectic involvement and more cost thereon. Then,
the need for an immediate solution to these problem was felt and a seed for the same was
cultivated. The like-minded group of innovation local intellectuals from various sector joined
hands together to establish a local private sector Bank to resolve the issue being dealt by
people of Syangja
District.

Likewise, on January 3rd , 2007, (we) the proposed Bank got license from the Central Bank of
Nepal (i.e. Nepal Rastra Bank) to operate Banking Business initially in three district namely
Syangja, Kaski and Tanahun of them Western Development Region (currently Gandaki
Province) as a “B” class financial institution.

Since inception, the Bank has been adopting the deep rooted values of financial inclusion of
the community and core principle of “Janata Bank ma Hoina, Bank Janata ma Janu
Pardachha,” i.e. “People should not come to the Bank, Bank should go to the doors of
people”. The bank prioritized opening branches in the rural areas where in the absence of any
financial institution, people where in dire need for Banking services. The customer friendly
products, services and door-to-door facility are the major factor for the Bank’s popularity and
success among the local people of the area. Within one and half years of operations in the
months of April 2009, the Bank started a Microfinance Program in its host of service with
starting a dedicated department at central office and branches to serve low income but high
potential people with high productivity. The Bank was first “B” class with 3 pillars strategy
of Modern Banking, Rural Banking, and Micro Banking for serving low-income people with
dedicated departments for the same.
The Bank has a noticeable Balance sheet size of NPR 101.09 Billion (equivalent to USD 852
Million) as of Ashad End 2078 (July 2021) with 950000 happy customers from different age,
communities, societies and ethnic groups as of July 2021. The Bank has a large footprint if
178 branch outlets with 22 ATMs (and still counting) spread across the country as of date.
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Banking Services Rendered by Muktinath Bank Limited

Muktinath Bikas Bank Limited has been obtaining its objectives and targets through various
kinds of banking services with a large number of facilities. The services rendered by Laxmi
Bank are as follows:
 Muktinath Bikas Bank Limited provides loan, advances and overdraft to the needy
people and customers against pledge and securities.
 Muktinath Bikas Bank limited performs the agency services like payment of bills,
provides guarantee, transfer of money etc. on the behalf of customers.
 It accepts cheque of any bank of its customers only.

 It also provides the facility of remittance transfer, Fixed saving for certain time period as
customer choice etc.
Besides these, various instrumental and modern technological services are provided by Bank
which is discussed below:
• Deposits

• Credit cards

• ATM cards

• Mobile banking

• E-Banking

• Home loan, Auto loan, Education loan, etc.

• Other facilities

Board of Director of the MNBBL

The board members constitute the following six members:

• Bharat raj Dhakal Chairman

• Gajendra Man Shrestha Director

• Rabindra Man Shrestha Director

• Shaligram Mishra Director

• Nirmala Kumari K.C. Karki Director

8
 • Shyam Sundar Sharma Independent Director

Activities of Muktinath Bikas Bank Limited

The Bank is committed for good corporate governance practice and banking activities with
prudent banking culture. It has been offering various products and services for its customers
with competitive rate in market. It has been able to provide diversified service (Modern
Banking Limited Banking and Microfinance) backed by the latest technology.

1.3 Meaning and concept of Loan Structure

Loan structure refers to the different characteristics that a lender can choose from when
extending credit to borrower. Loan structure is can also be referred to the components that
makes up a loan, like the loan term, interest rate, collateral, and repayment.it is also often
referred to as credit structure. The process of spreading out a loan into payments that consist
of both principal and interest over a set of timelines. The loan structure is derived by taking
into consideration several factors, such as the purpose, the timelines, and the risk profile of
the borrower.

Criteria that influence Loan Structure

Loan structure is informed, at least in part, by any underlying assets that are being financed.
Criteria that influence Loan Structure are explained below:

The borrower’s level of risk

Lender have complex risk rating model that helps them understand the borrower’s likelihood
of triggering an event of default. The higher the likelihood of default, the greater the credit
risk.

The desirability of any underlying collateral

Credit is generally extended to support the financing of an asset. The quality of that asset as
collateral will also help to inform loan structure, including loan-to-value (LTV).

9
Aligning cash inflows and outflows

This is particularly true of corporate borrowers -think about a piece of manufacturing

equipment. If equipment is being purchased and it’s intended to produce cash flow for 10
years, it’s not unreasonable to consider a 10-years repayment period.
The upper limit on amortization may be governed by the condition of the asset, but,
intuitively, it would be odd to force a company to pay in full upfront for an asset that will
generate cash flow for many years into the future.

Mitigating transaction or asset-specific risks

This, too, is mostly true of corporate borrowers. Consider a management team that strips a lot
of cash out of the company by way of dividends. A lender may wish to put a covenant in
place that would restrict dividends to ensure that a sufficient cash buffer is retained in the
corporation to support liquidity (and timely loan payments).

Loan Structure Characteristics

While this is not an exhaustive list, important considerations around loan structure include
the following:

• The loan amount, which is generally a function of the loan-to-value (LTV).

10
 • 6The interest rate, as well as whether it should be a fixed rate or a variable (floating)
rate.
• Is it operating (revolving) credit, or will the loan be structured as term financing?
• Will the loan be reducing (amortizing)? If reducing, will the payments be periodic, or
will it be structured as a “bullet” repayment?
• Is the loan secured or unsecured?

• Will security charges be first ranking, or will the loan be “subordinated” (i.e., first vs.
second mortgage) behind another loan or lender?
• How frequently will the borrower be expected to provide financial reporting to the
lender, and what quality should that reporting?
• Will there be any specific financial or non-financial loan covenants that the borrower
must comply with?
• Will there be any type of secondary security taken (ie. government guarantee
programs, personal guarantees by owners, etc.)?

1.3.1 Statement of the Problem

The problem towards which this study is directed by today’s banking sector which is
competitive. There are different banks established to provide service to customer and achieve
existence in the market. Therefore, problem may arise due to the current situation has
brought a cutthroat competition in banking business. In this context, the Muktinath Bikas
Bank Ltd. is facing problems because it has to give service to the remote people where
financial benefit is at low at the same time, Bank mobilize deposit by making finances and
by investing in various financial markets. Acceptance of deposits is the primary function of
commercial banks. And deposit mobilization is one of the basic innovations in current
Nepalese banking activity. Hence, the study is carried out in order to look into the trend and
growth in deposit mobilization of Muktinath Bikas Bank Limited. Banks and financial
institution are facing huge competition and lots of challenges regarding liquidity risk, credit
risk, inflation risk, operational risk and interest rate risk. At present research raised the
following questions:
• What is the right approach on deposit mobilization of Muktinath Bikas Bank Ltd.?
• What are the liquidity and profitability position of Muktinath Bikas Bank Ltd.?

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 • What is the relationship among deposit, loan and advances and investment of
Muktinath Bikas Bank Ltd.?

1.4 Objective of the study

The main objective of the fieldwork study is to analyze deposit position and loan structure
Muktinath Bikas Bank Ltd., Waling. The study is intends to present a brief and clear picture
of deposit. The main objective of the study on deposit mobilization are as bellow:
• To find out the trend of deposit and lending of Muktinath Bikas Bank Ltd.

• To analyze the deposit mobilization areas of Muktinath Bikas Bank Ltd.

• To analyze the investment sectors of Muktinath Bikas Bank Ltd.

• To analyze the loan structure and types of loan of Muktinath Bikas Bank Ltd.

• To compare the income and expenditure pattern of Muktinath Bikas Bank Ltd on the
basis of the interest paid on loan.

1.5 Rationale of the study

In Nepal. Most of the investor are investing in the stock without adequate knowledge of
the market. This study is useful for the firm’s perspective and to aware the Nepalese
investors. There are basically two objectives:
• Receiving deposit analysis of investment bank

• To know the objective of investor and they can develop their plans and policies
accordingly.

1.6 Limitations of study

The study is limited to the deposit mobilization of Muktinath Bikas Bank. The data
information over the period of 5 years are used in study. Balance Sheets, Profit and loss
accounts, NR.13 data, etc. Are considered as basic various sources. For the literature review
various newspapers journals, unpublished thesis works and nevertheless the internet have
been referred. Best efforts have been to make the report accurate and to the point. But some
drawbacks, which could not be avoided, are mentioned below:

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• Simple statistical methods are used to analyze the data.
• The report is based on the data of five years from 2074/75 to 2078/79.
The accuracy of the report is the function of the accuracy of the data provided by the
bank. No authentic proof has been checked.
• Time limitation i.e. the study is carried in one month periodic.

• The study is limited only in the financial performance of the banks.

• Findings of the research cannot be generalized to all the banks

• The study will be done on the basis of the data provided by the bank and through the
annual reports, journals, textbooks, magazines etc. so the output of the study is entirely
based on the data provided by the bank.
• Based on statistical publication, annual reports, personal interviews and reference of
various books and other available data on this research have concluded.

1.7 Report Structure

The entire study was carried out to different stages and producers as it needed. The study
is organized in the following chapter in order to make the study easy to understand. The
report is in three chapters:

The First chapter is an introductory chapter, which contains background of the study.
Statement of the problems, objectives of the study. Rational of study, limitation of the study
and organization of the study. This contains conceptual formwork, review of legislative
provision, review of research paper and published and unpublished thesis of T.U. It contains
introduction, research design, and source of data, population and sample, financial analysis
and statistical analysis.

The Second chapter is analyzing chapter, which deals with result and finding of relevant
data through definite courses of research methodology with financial and statistical analysis
related to investment and deposit mobilization of Muktinath Bikas Bank. Major finding of
the study have presented at the end of this chapter.

13
The Third chapter is the past of the study which provides Discussion and conclusion for
improving the future performance of the sample banks. Finally, an extensive bibliography
and appendices are also presented at the end of the project work.

1.8 Literature Review

This section represents the review of already published materials. The main aim of this
section is to show the relevant literature related to the same topic and provide theoretical
framework. Every possible effort has been made to grasp knowledge and information that is
available from libraries and the documents available from relevant literatures and concerned
commercial banks have been reviewed. This chapter helps to take feedback to broaden the
information base and inputs to my study. This part can be divided into three parts. They are:
I. Conceptual Review

II. Review of literature

III. Research Gap

1.8.1 Conceptual Review

Financial development is one of the key indicators of economic growth for any country and
financial institution grant regular energy for investments. Which is needed for economic
development. Capital formation is one of the important factors for economic development.
The capital formation leads to increase in the size of national output. Income and
employment, solving the problem of inflation, balance of payment and making the economy
free from the burden of foreign debts. Domestic capital formation helps in making a country
self-sustainable. In developing countries, the rate of saving is quite low and existing
institutions are half successful in mobilizing such saving as most people have lower income
so that all current income must be spent in maintaining a subsistence level of consumptions.
Under this heading the concept of the bank and banking transactions are described after
reading thoroughly the available hooks.

14
1.8.2 Review of Literature

Review of literature is a crucial part of all studies. It helps to find out already discovered
things. Part studies are also the basis for the research so it cannot be ignored because they
provide the foundation to the present study. The review of literature accomplishes the
following functions:
• It will establish a point of departure for future research.
• It will avoid needless duplication of costly research effort.

• It will reveal areas of needed research.

The primary purpose of literature is to learn and it helps researcher to find out what research
studies have been conducted in one’s chosen field of study. And what remains to be done. For
review study, the researcher uses different books. Reports journals and research studies
published by various institutions; unpublished dissertations submitted by masted level
students have been reviewed.
 Conceptual Review

• Concept of Bank

• Concept of Commercial Bank

• Concept of Deposit Mobilization

 Review of Related Studies

 Review of previous Studies

1.8.3 Research Gap

Previous researchers covered all the commercial banks and some were either on the case
study between two commercial banks or some were on the particular bank branch. but this
study focused on some particular sample banks. This research is related only loan structure
(deposit mobilization). It covers the previous deposit mobilization of selected banks.
Moreover, this study has not been done by previous researcher as separately. Thus, to fill the
gap this study has been conducted.
All of the above research mentioned is primarily concerned with the mobilization of deposit
mainly in loan and advance. The research made does not cover the mobilization of deposit in
other short-term investment. Thus, to fulfill the gap this study will try to employ the
15
relationship of deposit mobilization with each use of fund, including fixed assets as well
without which the operation of daily transaction is almost impossible.

1.9 Research Methodologies

Research methodology is systematic way to solve research problem Research

methodology describes the methods and process applied in the entire aspects of the study. It
includes all the procedures from theoretical foundation to the collection and analysis of data.
“Research methodology refers to the various sequential step to be adopted by a researcher is
studying a problem with certain object in view.”
According to Kothari C.R. (1991), “Research methodology refers to the four various
sequential steps to be adopted by researcher in studying a problem with certain objective in
view. Research methodology basically describes the methods, processes, tools and
techniques applied in the entire process of a scientific referee to Michael V.P. (2000),
“Research is the process of systematic and in-depth study or search for any particular topic,
subject or area of investigation backed by collection. Presentation and interpretation or
relevant details or data.

1.9.1 Research Design

Research design is the plan. Structure and strategy of investigation conceived so as to

obtain answer to research question and control variance. To achieve the objectives of the
study, descriptive as well as analytical research design have been used. This study is based on
secondary data.

1.9.2 Nature and Sources of Data

The study is conducted on the basis of secondary data. The data relating to the investment,
deposit, loan and advances, assets profit are directly obtained from the Balance Sheet and
Profit and Loss a/c of the concerned bank's annual reports. Supplementary data and
information are also collected from number of institution and authoritative sources like NRB,
NEPSE, SEB, web sites, etc.

16
1.9.3 Instrument

Instruments for the study will be previous balance sheet, interview of personnel other
previous financial report etc. Descriptive analysis as well as statistical analysis has been
applied.
Calculated results are tabulated under different headings according to the objectives &
significance to interpret result.

1.9.4 Method of Data Analysis

Analysis and presentation of the data is the core of every research work. This study
requires some financial and statistical tools to accomplish the objective of the study.
The financial and statistical tools are most reliable. In this study various financial, statistical
and accounting tools have been used. These tools make the analysis more effective,
convenience, reliable and authentic.
The various results obtained with the help of financial, accounting, and statistical tools are
tabulated under different headings. Then they are compared with each other to interpret the
results. Two kinds of tools have been used to achieve the certain goals.

1.9.4.1 Financial Tools

Analysis and interpretation of various ratio should give experienced, skilled and analysis
of a better understanding of a financial condition and performance of the form than they
would obtain from analysis of the financial data alone. The type of analysis varies according
to specific interest of the party involved. Financial tools basically help to identify the
financial strengths and weaknesses of the firm by properly establishing relationships between
the items of the balance sheet and the profit & loss account.

17
Liquidity Ratios:

The ability of a bank to meet its short-term obligation is known as liquidity. It reflects the
short- term financial strength of the bank. These ratios are used to known capacity of the
concerned to repay its short-term liability.
All the necessary data are collected from published data as annual reports, bulletins.
Financial statements and annual balance sheets, etc. of the banks. For the analysis of the data
financial tools like (Credit Deposit Ratio) and statistical tools like (Mean, Standard
Deviation, Coefficient of Variation, Time Series & Trend Analysis, Correction, Percentage).

18
 CHAPTER: II
RESULT AND ANALYSIS

2.1 Data Presentation

Banks are the highly leveraged intuitions that are strictly depended on attracting deposits.
The main indicator affecting the deposits is the interest provided for those depositors by the
bank. Muktinath Bikas Bank Ltd. As a commercial bank has also the responsibility of
mobilizing these deposits in profit-making sector to generate revenue from the depositors the
would lend the bank for profit. Because of the interest provided to the depositors, people
become interested in saving of their income. To provide these facilities, bank need to utilize
its deposits to invest in appropriate sectors. If so, they could be able to pay the loan and the
advances that bank is loan and the advance that bank usually give to the creditors in higher
rate that the interest they paid to the depositors. Thus, the spread over of the interest rate in
deposits and credits will be one of the incomes of the bank.

2.1.1 Term Loan

A term loan is a type of loan offered by bank that are appr by business to help them
manage their cash flows. It can be categorized into two types, depending on the tenure of the
loan, such as unsecured and secured ones. An unsecured loan does not require any collateral
to be provided whereas a secured one does.
Table No. 2.1

Term Loan of Muktinath Bikas Bank Ltd (in millions)

Fiscal Year Term Loan (in million)

2075/76 7,279

2076/77 11,714

2077/78 24,049

2078/79 31,588

2079/80 40,979
(Source: Annual Report of MBBL)

19
 Figure No. 2.1
Bar Diagram on Term Loan of Muktinath Bikas Bank Ltd

Term Loan (in million)

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2075/76 2076/77 2077/78 2078/79 2079/80

Term Loan (in million)

The above figure shows that the Term Loan from 2075/76 to 2079/80 of Muktinath Bikas
Bank Ltd. The highest Term Loan is found in the year 2078/79. From the year 2075/76 to
2079/80. The Term loan has gradually increased.

2.1.2 Overdraft Loan

An overdraft means that the bank allows customers to borrow a set amount of money.
There is interest on the loan, and there is typically a fee per overdraft. An overdraft occurs
when an account lacks the funds to cover a withdrawal, but the bank allows the transaction to
go through anyway. The overdraft allows the customer to continue paying bills even when
there is insufficient money. An overdraft is like any other loan: The account holder pays
interest on it and will typically be charged a onetime insufficient funds fee.
Overdraft protection is provided by some banks to customers when their account reaches
zero, it avoids insufficient funds charges, but often includes interest and other fees.

20
 Table No. 2.2

Overdraft loan of Muktinath Bikas Bank Ltd. (in millions)

Fiscal Year Overdraft Loan (in million)

2075/76 6,203

2076/77 7,406

2077/78 12,599

2078/79 16,920

2079/80 5,251
(Source: Annual Report of MBBL)

Figure No. 2.2

Bar Diagram on Overdraft Loan of Muktinath Bikas Bank Ltd.

Overdraft Loan (in million)

16,000

12,000

8,000

4,000

0
2075/76 2076/77 2077/78 2078/79 2079/80

Overdraft Loan (in million)

The above figure shows the Overdraft Loan from 2075/76 to 2079/80 of Muktinath Bikas
Bank Ltd. The highest Overdraft Loan is found in the year 2078/79. From the year 2075/76
to 2078/79 the Overdraft Loan has gradually increased, but in 2079/80 the overdraft loan has
decreased.

21
2.1.3 Real Estate Loan

The real estate loan is financing used to purchase a property, and there are several types
available to aspiring home owners and real estate investors alike. Each loan type will come
with different approval requirements, interest rates, and terms.
Table No. 2.3

Real Estate Loan of Muktinath Bikas Bank Ltd. (in millions)

Fiscal Year Real Estate Loan (In Million)

2075/76 1,433

2076/77 1,810

2077/78 5,145

2078/79 5,757

2079/80 6,628
(Source: Annual Report of MBBL)

Figure No. 2.3

Bar Diagram on Real Estate Loan of Muktinath Bikas Bank Ltd.

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
2075/76 2076/77 2077/78 2078/79 2079/80

Overdraft Loan (In Million)

The above figure shows that the Real Estate Loan from 2075/76 to 2079/80 of Muktinath
Bikas Bank Ltd. The highest Real Estate Loan is found in the year 2079/80. From the year
2075/76 to 2079/780, the Real Estate Loan has gradually increased.

22
2.1.4 Personal Loan

A personal loan is an amount of motley you can borrow to use for a variety of purpose.
For instance, you may use a personal loan to consolidate debt or pay for home renovations.
Or plan a dream wedding.
Table No. 2.4

Personal Loan of Muktinath Bikas Bank Ltd. (in millions)

Fiscal Year Personal Loan (in million)

2075/76 7,399

2076/77 10,099

2077/78 11,291

2078/79 11,352

2079/80 13,751
(Source: Annual Report of MBBL)

Figure No. 2.4

Bar Diagram on Personal Loan of Muktinath Bikas Bank Ltd.

Personal Loan (in million)

16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2075/76 2076/77 2077/78 2078/79 2079/80

Personal Loan (in million)

The above figure shows the Personal Loan from 2075/76 to 2079/80 of Muktinath Bikas
Bank Ltd. The highest Personal Loan is found in the year 2079/80. From the year 2075/76 to
2079/80, the Personal Loan has gradually increased.

23
2.1.5 Margin Loan

Margin lending is a type od loan that allows you to borrow money to invest, by using your
existing shares, managed funds and/ or cash as security. It is type of gearing, which is
borrowing money to invest.

Table No. 2.5

Margin Loan of Muktinath Bikas Bank Ltd. (in millions)

Fiscal Year Margin loan (in million)

2075/76 809

2076/77 1,418

2077/78 2,523

2078/79 2,032

2079/80 2,786
(Source: Annual Report of MBBL)

Figure No. 2.5

Bar Diagram on Margin Loan of Muktinath Bikas Bank Ltd.

Margin loan (in million)

3000

2500

2000

1500

1000

500

0
2075/76 2076/77 2077/78 2078/79 2079/80

Margin loan (in million)

The above figure shows the Margin Loan from 2075/76 to 2079/80 of Muktinath Bikas Bank
Ltd. The highest Margin Loan is found in the year 2079/80. From the year 2075/76 to
2079/80. The Margin Loan has gradually increased. But in the year 2078/79 the Margin Loan
is decreased.
24
2.1.6 Other Loan

Other Loan is a form of debt incurred by an individual or other entity. The lender usually
a corporation, financial institution, or government advances a sum of money to the borrower.
In return, the borrower agrees to a certain set of terms including any finance charges, interest
repayment data, and other conditions.
Table No. 2.6

Other Loan of Muktinath Bikas Bank Ltd. (in millions)

Fiscal Year Other loan (in million)

2075/76 1,066
2076/77 1,209
2077/78 2,811
2078/79 7,077
2079/80 5,534
(Source: Annual Report of MBBL)

Figure No. 2.6

Bar Diagram on Other Loan of Muktinath Bikas Bank Ltd.

Other loan (in million)

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2075/76 2076/77 2077/78 2078/79 2079/80

Other loan (in million)

The above figure shows that the Other Loan from 2075/76 to 2079/80 of Muktinath Bikas
Bank Ltd. The highest Other Loan is found in the year 2078/79. In year 2075/76 the Other
Loan is decreased. From the year 2075/76 to 2077/78. The Other Loan has gradually
increased.

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2.2 Result Analysis

The Result analysis can be used to find out the internal and external changes in environment
of organization analysis is conducted to find out the strength, weakness, opportunity and
threats of Muktinath Bikas Bank on the basis of the information and data collected through
primary and secondary sources. A.
1. Muktinath Bikas Bank has strong financial position.

2. Muktinath Bikas Bank has computerized banking system.

3. Muktinath Bikas Bank has maintained requisite provision adequate to cover

possible loan losses.
4. Muktinath Bikas Bank has been able to maximize the shareholders' wealth at
a spectacular rate.
5. Muktinath Bikas Bank has operated in many parts of the country altogether
branches 6 extension counters respectively in Nepal.
6. Muktinath Bikas Bank is very strong as far as its market position is
concerned.

2.3 Major Findings

The result analysis examines the internal and external changes in the environment of
Muktinath Bikas Bank. This analysis identifies the strengths, weaknesses, opportunities, and
threats (SWOT) of the bank based on information and data collected from primary and
secondary sources.

 Muktinath Bikas Bank has a strong financial position.

 The bank has a computerized banking system.
 It has maintained adequate provisions to cover possible loan losses.
 The bank has maximized shareholders' wealth at a spectacular rate.
 It operates in many parts of the country, with numerous branches and extension
counters.

 Muktinath Bikas Bank holds a strong market position.

26
 CHAPTER: III

SUMMARY AND CONCLUSION

3.1 Summary
Commercial bank is the backbone of economic development of a developed country. At
present situation in Nepal, the bank deposit is the dependable and permanent source of
capital accumulation. However, since the commercial bank is operated in the business point
of view, most of their branches are in urban areas, which affect the proper accumulation of
capital and mobilization of deposits. There are many banks operated in Nepal these days. We
have also practiced that some of the banks operated in Nepal have been suffering from loss.
In this situation, a bank can succeed to complete with other banks only when it can provide
efficient services. Only collecting deposits should not aim of a bank. It has to disseminate the
collected funds in different investment as well. In this case, study of deposit mobilization of
Muktinath Bikas Bank have been allocating in investments and loans.

3.2 Conclusion
Following conclusion can be prescribed from study:

• Muktinath Bikas Bank is more successful in term of CDR but according to collected
maximum deposit and credit. The branches of banks have computerized system.
• Banks stuff was much motivating. There are opportunities on training, seminar,
observation tours and incentives to staff to increase to staff to increase their
efficiency.
• The evaluation of the staff should be done according to the quality and quantity of the
work they performed.
• To collect necessary and accurate information of the clients as well as getting success
in each mobilization, more local staffs are suggested to appoint in each branch.
• There should be certain cell for Ad display and the opportunity of people’s
participation in each branch if possible.
• Respective treatment should be given to high client and deposit that help so make
long term close relation between the client and hank. The physical appears of the staff
may possibly always he smiling and cheerful in order to provide better customer

27
 services in time and also eager to solve the problems of in valuable customers.
Effective campaign for deposition, AD and displays should also be taken into
consideration to attract the prospective clients.
• Effective communication has to play vital role to maintain good faith and reliability
in the transaction between bank and its customers. It is also recommended that the
bank should pay more attention on attractive interest policy in credit for shareholders
and borrowers.
• Finally, it can be concluded that study and analysis of the above source of
information that deposit control is the major economic activities of nation. The policy
matters the bank have to apply appropriate policy with attractive of nation. The policy
matters of the bank have to apply appropriate policy with attractive interest rates so
that large capital ca be collected at very low cost, which encourage the industrial and
commercial activities better economic development and employment opportunity.

Lastly, Muktinath Bikas Bank should on with its quality services to the country with
loyalty and devotion. I wish for their future progress.

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 BIBLIOGRAPHY

Adhikari, Devraj, Pandey, Dhrubalal. (2017). Business Research Methods.

Kathmandu: Asmita Publication.

Agrawal, G.R. (2005). Project Management in Nepal. Kathmandu: MK Publisher.

Koirala, K.D. (2007). Fundamental of Marketing Decision. Kathmandu: M.K. Publishers.

Gup, B.E., Kolari, J.W. (2016). Commercial Banking. New Delhi: Wiley India

Pandey, D.L. (2010). Effect of training on organizational performance in the service of

Nepal. The management review, 15:1, 149-161.

Loan Structure of MNBBL. (An Unpublished bachelor’s degree Report). Nepal

Adarsha Annual Report

Annual Report of Muktinath Bikas Bank Limited from fiscal year 2075/76 to 2079/80.

Website accessed :
 www.sharesansar.np
 www.muktinathbank.com.np
 www.wikipedia.com
 www.investopedia.com
 www.google.com.np
 www.merolagani.com.np

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