LIQUIDITY ANALYSIS OF NABIL BANK LIMITED

A Project Work Report

By
Abisek Nepal
Symbol No: 4840002
T.U. Registered Number 7-2-0484-0102-2015
Lincoln College, Kathmandu

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kirtipur, Kathmandu May, 2019

ii

DECLARATION
I hereby declare that the project work entitled “LIQUIDITY ANALYSIS OF
NABIL BANK LIMITED” submitted to the Faculty of Management, Tribhuvan
University, Kathmandu is an original piece of work under the supervision of
Mr.
Sandesh Thapa (supervisor), faculty member Lincoln College, Kathmandu,
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.

___________ Abisek Nepal

May, 2019

iii
SUPERVISOR’S RECOMMENDATION
The project work report entitled “LIQUIDITY ANALYSIS OF NABIL BANK
LIMITED” submitted by Abisek Nepal of Lincoln College; Kathmandu 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.

________________ Mr. Sandesh Thapa May, 2019

iv

ENDORSEMENT
We hereby endorse the project work report entitled A CASE STUDY ON
LIQUIDITY ANALYSIS OF NABIL BANK LIMITED submitted by Abisek
Nepal of Lincoln College, Kathmandu in partial fulfillment of the requirements
for
the degree of the Bachelor of Business Studies (BBS) for external evaluation.

---------------------------………………………..
-----------------------------Prakash Sharma Ghimire
Research Committee
Principal
May, 2019
May, 2019

ACKNOWLEDGEMENTS
This report has been prepared to fulfill the partial requirements for the
Degree of
Bachelors of Business Studies (B.B.S), Tribhuvan University, Nepal. In the
process of
preparation of this Term Paper, I got a lot of inspiration, co-operation and
suggestion
from various persons.

Firstly, I owe a debt of gratitude to my respected adviser Mr. Sandesh

Thapa,
Lectures of Lincoln College for his valuable support and suggestion in the
process of
preparation of this thesis. I am extremely indebted by their efforts despite
of their
busy schedule.

I would like to thanks to my friend Mr. Shiva Shrestha who helps to prepare
to this
report for his valuable time for a editing the reports.

Finally, I would like to thank all respondents and informants for providing me
the
required information in the process of data collection, and I never forget all
those who
were sharing their brotherly advice and materials.

Abisek Nepal

vi

TABLE OF CONTENTS
Title Page
Declaration
Endorsement
Acknowledgements
Table of Contents
List of Tables
List of Figures
Abbreviations
CHAPTER I INTRODUCTION
1.1. Background of the Study
1.2. Introduction of Nabil Bank Limited.
1.3. Statement of the Problems
1.4. Objectives the Study
1.5. Rationale of the Study
1.6 Review of Literature
1.7 Research Methodology
1.8. Limitation of the Study
CHAPTER II RESULTS AND ANALYSIS
2.1 Data Presentation
2.1.1. Participation of the All the Deposit in the Total Deposit Liability
2.2 Major Finding
CHAPTER III SUMMARY AND CONCLUSION
3.1. SUMMARY
3.2. CONCLUSION

i ii iii iv vi vii viii ix

1 5 7 9 9 9 13 14

15 15 25

26 26

BIBLOGRAPHY APPENDICES

vii

LIST OF TABLE
1. All the Deposit in the Total Deposit Liability………………………..………16
2. Saving Deposit to Total Deposit……………………………………………..17
3. Fixed Deposit to Total Deposit Ratio………………………………….…......18
4. Cash and Bank Balance to Current Deposit Ratio……………………….......19
5. Cash and Bank Balance to Total Deposit Ratio…………………….…..……20
6. Balance with NRB to current and Saving Deposit Ratio…………………….21
7. Balance With NRB to Fixed Deposit Ratio………………………………….22
8. Total Investment to Total Deposit Ratio……………………………………..23
9. Liquidity Assets to Total Deposit Ratio……………………………………..24

viii

LIST OF FIGURE
1. Total Deposit Liability……………………………………….………………16
2. Saving Deposit to Total Deposit Ratio……………………………….............17
3. Fixed Deposit to Total Deposit Ratio…………………………………….…..18
4. Cash and Bank Balance to Current Deposit Ratio………………………..….19
5. Cash and Bank Balance to Total Deposit Ratio…………………………...…20
6. Balance with NRB to Current and Saving Deposit Ratio…………………...21
7. Balance With NRB to Fixed Deposit Ratio………………………………....22
8. Total Investment to Total Deposit Ratio…………………………………….23
9. Liquidity Assets to Total Deposit Ratio…………………………………..…24

ix

ABBREVIATION
ABBS
Any Branch Banking Service
- Smart Choice Technology
SCT
- Automatic Teller Machine
ATM
- Nepal Rastra Bank
NRB
NIC
- National Industrial Corporation
- Agricultural Development Bank
ADB
- Letter of Credit
L.C.
NBL
- Nepal Bank Limited
CDs
- Certificates of Deposits
- Gross National Product
GNP
- Bachelor of Business Studies
B.B.S.
- United States Dollar
USD
NRs
Nepalese Rupees

CHAPTER – 1 INTRODUCTION
1.1. Background of the Study
Generally, bank is an institution which accepts deposits, makes business
loans, and offers
related services. Commercial banks also allow for a variety of deposit
accounts, such as
checking, saving, and time deposit. There institutions are run to make a
profit and owned
by a group of individuals, yet some may be members of the Federal
Reserve System.
While commercial banks offer services to individuals, they are primary
concerned with
receiving deposits and lending to businesses.
In an economy the bank is regarded as one of the economic backbone of the
country for
its development. Bank is a financial institution that deals in money. The basic
function of
bank is collecting deposit and granting the loans. It involves in credit
creation that in
related to creation of deposit and loan. In the economy, the banks collects
small saving of
general people, accumulative it and lends the productive sectors of the
society for the
overall economic development.
Various writers have been defined the word “bank” in different ways.
According to Scholars, “The bank is defined as factory of money for credit
where it does
not purchase goods and sells it rather produces credit inform of deposit and
sells it inform
of loans.”
According to C.R. Crowther, ”A banks collects money from those who have it
to spare or
who are saving it out of their income and lends this money to those who
required it.”
Thus in conclusion, we can say that bank is an organization which deals
with the
monetary transactions for the mobilization of idle money or deposits in
productive
sectors, is essentially essential for the development of the whole net.
And this study will be equally useful to the other readers, students of related
subjects and
other people who are concern with banking field.

1.1.1. The Banking in Nepal

In the context of Nepal, like as in other country the goldsmiths and
landlord was the
ancient banker. The Nepalese people were highly exploited by shahu
mahajan by
charging higher interest rate that is compound interest rate and even by
manipulating the
principle amounts. If we try to see the history of banking transaction in
depth then
th
evidence of money landing function are found in practice before 8 century in
780 B.S.
Gunakamdev the ruler of Kathmandu reconstructed Kathmandu valley by
borrowing dept
th
from the people. In 14 century tankdhari system had been running in the
period of
ranodip shing in Kathmandu established and office called tejarath adda.
From the office
the government distributed salary to their employees and provided loan to
government
employment @5% of interest against the security gold, silver etc.
Because of the development of economy activities in Nepal the above
institutions could
not be fulfilled the need of people. So in kartik 30, 1994 B.S. Nepal bank was
established
as one of the semi government commercial bank which had 10 million
authorized capital
and 842000 paid of capital. it has done the pioneering function in function
spreading the
banking habits among the people. Having felt a need of central bank to
control and direct
the commercial bank and help the government for making monitory polices
Nepal Rastra
bank was set up in 14 Baishakh, 2013 B.S.
To fulfill the growing credit requirement of the country. The commercial
bank i.e.
th
Rastraya Banijya bank was establishes in 10 Bhadra 2022 B.S. this bank also
provides
facility for the economy welfare of the general public. Nepal is an agricultural
country to
develop agriculture system. Industry agriculture development bank and
Nepal industrial
development corporation was established in 2024 B.S. 2016 B.S.
respectively.
The initiation of the financial sector; liberalization policy by Nepal rastra
bank, a board
of joint venture banks entered with the view to accelerate the pace of
development of
nation. At present, there are many joint venture banks which are running
successfully in a
competitive environment. His majesty government deliberates policy of
allowing foreign
joint venture banks to operate in Nepal basically targeted, to encourage
local tradition
commercial bank to enhance their capacity through competitor’s efficiencies

mechanization modernization prompt customer service. Nepal Arab bank ltd

was
established in 2041 as a first foreign joint venture bank.
Now in our country there are 31 commercial bank, 87 development bank, 79
finance
company and 21 micro credit development banks after mid July
2011(licensed by NRB)

1.1.2. List of Commercial Banks in Nepal:

The history of financial and economic development in Nepal is not very old. It
has gone
through different stages, during the PM Ranodip shingh around 1972 A.D.
“TEJARATH
ADDA” was introduced, which brought a reform in economic and financial
section. The
main purpose of “TEJARATH ADDA” was to provide credit facilities to the
general
public at confessional rate. However the installment of “KHUSI KHANA” as a
banking
agency during the king Prithivi Narayan Shah could also be regarded as the
first step
towards banking in Nepal.
After that the first commercial bank of Nepal, Nepal bank Limited (NBL) was
lunched
with the cooperation of imperial bank of India in November 1937. Holding
51%
government equity. The second commercial bank, Rastriya Banijya bank
come into
existence in 1966 A.D. with 100% government ownership. In early 1980, to
meet the
need of health completion in the financial system, Nepal allowed to entry
of foreign
banks as joint ventures with up to maximum of 50% equity participation.
Nepal Arab bank limited was the first joint venture bank which was
established with the
joint venture of Arab bank emirates in 1984. in 1986, Nepal grind lays bank
limited (now
chartered bank limited) entered in Nepali financial market as a joint venture
with ANZ
Grind lays.

1.1.3.2 Functions of Commercial Banks:

Although profit maximization is a major objective of commercial bank, to
achieve this
objectives commercial bank performs various functions under the mandatory
rules and
registrations and directives of NRB and commercial Bank Act 2031(1974)
which are:

Primary functions
a) Accepting Deposits:
Accepting deposits is the main function of commercial banks. Commercial
banks collects
money from those who want to deposit in different types of deposits
accounts such as:
● Fixed deposit account
● Current deposit account
● Saving deposit account
b) Advancing of Loans:
Commercial banks provide the required loan or credit to various sectors of
economy such
as industry, trade, agriculture, business deprived sector etc. in this way
bank creates
facilities. It provides loans from various procedures in different form such as:
● Overdraft
● Cash credit
● Direct loan with collateral
● Discounting bill of exchange
● Loans of money at call and notice
General Utility functions
Commercial banks also form general utility functions such
Issuing of letters of credit to customers
● Issuing of bank draft and travels cheque etc for transfer of funds from one
place to
another.
● Dealing in foreign exchange and financial foreign trade by accepting or
collecting
foreign bill of exchange.
● Underwriting loans to be raised public bodied and corporations.
● Providing safety vaults or lock for the safe custody of valuables and
securities of
the customers.
● Remittance of money

Agency Functions
Apart from the above function, commercial banks also perform agency
functions for
which they act as agent and claim commission on some facilities such as:
● Collection of customer’s money from other banks.
● Receipt and payment of dividend and interest.
● Security brokerage service
● Financial advisory services
● To underwrite the government and private securities.
1.2. Introduction of Nabil Bank Limited.
Nabil, the first foreign joint venture bank of Nepal, started operations in
July 7, 1984.
Nabil was incorporated with the objective of extending international
standard modern
banking services to various sectors of the society. Nabil provides a range of
commercial
banking services through its 74 points of representation across the country
and over 170
correspondent banks across the globe. It was earlier known as Nepal Arab
Bank Ltd. It
has its head office located at Nabil Center, Durbar marg, which is also a
premium
location of the capital. It has the largest staff among private commercial
banks of Nepal.
Pursuing its objective, Nabil provides a full range of commercial banking
services
through its 74 points of representation. In addition to this, Nabil has
presence through
over 1500 Nabil Remit agents throughout the nation.
Nabil, as a pioneer in introducing many innovative products and marketing
concepts in
the domestic banking sector, represents a milestone in the banking history
of Nepal as it
started an era of modern banking with customer satisfaction measured as a
focal objective
while doing business. Operations of the bank including daytoday operations
and risk
management are managed by highly qualified and experienced management
team. Bank
is fully equipped with modern technology which includes international
standard banking
software that supports the E-channels and E-transactions.
Nabil is moving forward with a Mission to be “1st Choice Provider of
Complete
Financial Solutions” for all its stakeholders; Customers, Shareholders,
Regulators,

Communities and Staff. Nabil is determined in delivering excellence to its

stakeholders in
an array of avenues, not just one parameter like profitability or market
share. It is
reflected in its Brand Promise “Together Ahead”.
Vision, Mission, Value and Ethics
“Our Vision is to be the most preferred provider of Financial Services in
Nepal”
Mission Statement:
To be the leading Nepali bank, delivering world class service through the
blending of
state-of-the-art technology and visionary management in partnership with
competent
and committed staff, to achieve sound financial health with sustainable value
addition
to all our stakeholders. We are committed to do this mission while ensuring
the highest
levels of ethical standards, professional integrity, corporate governance and
regulatory
compliance.

Core Values and Ethical Principles:

Our core values tell us, our customers and the communities we serve, who
we really
are; what we are about; and the principles by which we pledge to conduct
business. In
essence, we believe that success can only be achieved by living our core
values and
principles:

Customer Focus: At Nabils, our prime focus is to perfect our customer

service.
Customers are our first priority and driving force. We wish to gain customer

confidence and be their trusted partner.

● Quality: We believe a quality service experience is a paramount to our
customers
and we are strongly committed in fulfilling this ideal.
● Honesty and Integrity: We ensure the highest level of integrity to our
customers,
creating an ongoing relationship of trust and confidence. We treat our
customers with
honesty, fairness and respect.
● Belief in our people: We recognize that employees are our most valuable
asset and
our competitive strength. We respect the worth and dignity of individual
employees
who devote their careers for the progress of the Bank.
● Teamwork: We are a firm believer in team work and feel that loyal and
motivated

teams can produce extraordinary results. We are drived by a performance

culture
where recognition and rewards are based on individual merit and
demonstrated track
record.
● Good Corporate Governance: Effective Corporate Governance procedures
are
essential to achieve and maintain public trust and confidence in any
company, more
so in a banking company. At Nabils, we are committed in following best
practices
resulting in good corporate governance.
● Corporate Social Responsibility: As a responsible corporate citizen, we
consider it
important to act in a responsible manner towards the environment and
society. Our
commitment has always been to behave ethically and contribute towards
the
improvement of quality of life of our people, the community and greatly the
society,
of which we are an integral part.
1.2.1. Strategies and Future Plans of the Nabil Bank.
● To develop a customer oriented service culture with special emphasis on
customer care and convenience
● To increase our market share by following a disciplined growth strategy
● To leverage our technology platform and pen scalable systems to achieve
cost
effective operations, efficient MIS, improved delivery capability and high
service
standards
● To develop innovative products and services that attracts our targeted
customers
and market segments
● To continue to develop products and services that reduce our cost of
funds
● To maintain a high quality assets portfolio to achieve strong and
sustainable
returns and to continuously build shareholders’ value
● To explore new avenues for growth and profitability

1.3. Statement of the Problems

Liquidity is the status and part of the assets which can be used to meet the
obligation.
Liquidity can be viewed in term of liquidity stored in the balance sheet and in
term of
liquidity available through purchased fund. The degree of liquidity
depends upon the

relationship between cash assets plus those assets which can be quickly
turned into cash
and liability awaiting payments.
Bank needs to maintenance some seasonable level of liquidity to fulfill
different
commitments such as provide money to depositors when they demand for
administrative
expenses, for maintaining cash reserve ratio in the central bank etc. so,
liquidity is
defined as the bank’s capacity to pay cash in exchange of deposits. Liquidity
is crucial in
the business like banking. Because if the bank has the high liquidity it can no
on a desired
profit and if the bank has the shortfall of the liquidity it cannot satisfy its
customers.
Inadequate liquidity may lead to collapse of the bank while excess liquidity
is
determinant to bank’s profitability in order to remove demerits associated
with
maintaining inadequate and excess liquidity, bank should maintained and
optimum level
of liquidity. This possible only when bank’s liquidity needs is correctly
predicted.
Prediction covers inflows and outflows of liquidity. If prediction shows more
outflows,
bank should be prepared to cover the shortfall by borrowing or by liquidating
assets. If
inflow is greater than outflows, bank should plan where to invest so that
income can be
increase. Banks attach great importance short terms and long terms
predictions.
Prediction of liquidity need should be in the form of primary and secondary
reserve so
that bank generates income and at the same time does not compromise to
liquidity. Banks
got failure because of wrongly analyzed liquidity position and wrongly
predicated
liquidity requirement and management policy of liquidity. Thus to gain the
trust of the
customers and be success on the operation, the bank should maintain and
forecast the
liquidity need for the period and optimum level of liquidity based on the past
liquidity
position.
● How to check the liquidity position of the Nabil’s?
● How to analyze the financial performance?
● How to check the Nabil bank’s profitability?
● How to suggest the liquidity management policies?

1.4. Objectives the Study

The main objective of the study is to analyze the Nabil Bank’s liquidity
position. Based
on the analyzed liquidity position, the study will suggest the liquidity need
and its
management for the current year. Objectives can be listed below:
● To check the liquidity position of the Nabil Bank
● To check the Nabil Bank’s profitability
1.5. Rationale of the Study
This report is prepared to analyze the liquidity position of Nabil Bank. This
report
comprises the date from 2011 to 2016. This would help the bank to observe
the trend of
the liquidity position hold in those periods. Besides that, this study also
evaluates the role
of short term obligation and the bank ability to pay the currently maturity
obligation.
Moreover, the study will check the profitability of the bank. This will help the
bank to
take the corrective actions if there are any errors on the past performance
and the study
aims to recommend correcting the division if the standard has not been met.

1.6 Review of Literature

This chapter deals with the theoretical aspects of the topic of financial
analysis of Nabil
Bank. in more detail and descriptive manner. For this study, journals,
articles, and some
research reports related with this topic have been reviewed. This study has
to refer almost
all books related with this topic published. Some of the prior reports by
students of BBS
regarding this topic have also been reviewed.
1.6.1. Conceptual framework
One of the sensitive factor or element in the bank is liquidity. Liquidity refers
to the
convertibility assets into cash. It means how fast the assets can be change
into cash.
There are many assets which are easily converted into cash by the bank.
Such as cash in
hand, cash at bank, cash at central bank, investment in government
securities. But some
assets are difficult to get converted into cash such as loan and fixed assets.
Liquidity is also defined as the position or capability of a bank to meet the
current
obligation of customers such as payment of cheque. Payment of demand
drafts,

10

disbursement of approved loan etc. Bank needs to maintain some

reasonable level of
liquidity to fulfill different commitments such as provide money to depositors
when they
demand for administrative expenses, for maintaining cash bank’s capacity to
pay cash in
exchange of deposits. Liquidity is crucial in the business like banking.
Because if the
bank has high liquidity, it can no earn a desire profit and if the bank has the
shortfall of
the liquidity it cannot satisfy its customers. Inadequate liquidity may lead to
collapse of
the banks while excess liquidity is detrimental to bank’s profitability. In order
to remove
demerits associated with maintaining inadequate and excess liquidity, banks
should
maintain an optimum level of liquidity. This possible only when bank’s
liquidity needs is
correctly predicted. Prediction covers in present outflows of liquidity. If
prediction shows
more outflows, bank should be prepared to cover the shortfall by borrowing
or by
liquidating assets. If inflow greater than outflow, bank should plan where to
invest so that
income can be increase. Banks attach great importance short term and
long term
predictions. Prediction of liquidity need should be in the firm of primary and
secondary
reserves so that bank generates income and at the same time does not
compromise to
liquidity.
1.6.1.1. Liquidity assets:
The assets which can be converted into cash immediately with or without a
nominal loss
of value. Liquidity can be in the firm of treasury bills, investments in
government
securities, gold and silvers, inventories and marketable securities etc.
1.6.1.2. Cash reserve Ratio (CRR):
Central banks the world over make banks maintains the certain level of
liquidity to total
deposit liabilities in the form of the cash and bank balance. This ratio is
known as the
cash reserve ratio or primary reserve.
1.6.1.3. Statutory liquidity ratio (SLR):
Central bank orders to the banks to maintain the certain level of liquidity to
total deposit
liabilities in the form of the cash and bank balance and treasury bills and
government
securities and bonds. Such liquidity requirement is called the statutory
liquidity ratio.

11

1.6.1.4. Importance of liquidity for the bank:

The liquidity is important for the bank for the motives cited as follow:
● Transaction motive
● Speculative motive
● Precautionary motive
1.6.1.5. Need of liquidity for the bank:
● To meet the expenses for the bank’s administrative works
● To pay all sorts of deposit on demand
● To repay the debt
● To provide the security to the bank
1.6.1.6. Demand for the liquidity:
● Withdrawal of customer deposit
● Acceptable loan request
● Repayment of non-deposit borrowing
● Payment of interest on deposit
● Payment of dividends
● Miscellaneous liabilities
1.6.1.7. Supply of bank liquidity:
● Capital issue
● Retained earning
● Borrowings
● Bond issue
● Repayments of loans
● Other incomes
1.6.1.8. Criteria of the measuring the bank liquidity:
● Criteria of measuring of the bank liquidity denotes
● attributes required being bank liquidity
● compliance test of liquidity requirement

12

In words criteria area bank liquidity refers to:

● What conditions the assets have to meet to be bank liquidity?
● Whether CRR and SLR have been maintained as per instruction of the
central
bank?
21.6.1.9. Liquidity to be maintained with the central bank:
Nepal Rastra Bank, as the central bank of Nepal, had made it mandatory for
commercial
bankers to maintain liquidity as under:
Balance at Nepal Rastra bank – 7% current and saving deposit liabilities.
4.5% of fixed
deposit liabilities. Cash in vault – 2 % of deposit liabilities
1.6.1.10. Penalty for non-compliance:
Penalty will be levied for failing to maintain the adequate liquidity as above
under any of
the following conditions:
● In the case of shortfall in maintenance of balance with Nepal Rastra bank
but
maintenance of cash at vault more than 2%, then on such shortfall amount.
● In the case shortfall in maintenance of balance with Nepal Rastra bank
but
maintenance of cash at vault more than 2%, up to 1% excess cash of total
deposit
is added in the balance with NRB, than on such shortfall amount (after
adding up
to 1% excess)
● In the case of shortfall in maintenance of cash in vault as well as
shortfall in
balance held with Nepal Rastra bank, than on total shortfall amount.
1.6.1.11. Applicable penalty rates:
1. first time shortfall

Equivalent to bank rate/highest refinance

(currently 5.5%)
Equivalent to 2 times of bank rate
3.for third time shortfall and all Equivalent to 3 times of bank rate.
subsequent shortfalls
The penalty is imposed on the shortfall amount on weekly basis.

2. for second time shortfall

13

1.6.2 Review of Previous Research:

In last 3 years prior to this thesis, some students of B.B.S. programme have
been found
conducting research about the Liquidity Analysis of Nabil Bank. Some of
them which are
supposed to be relevant have been reviewed and presented in this section.
Rimal, Roshani, (2018) conducted a study in a topic of “Liquidity Analysis of
Nabil
Bank”. He collected the data of 5 year data in this bank. The study carried
out with the
following objectives;



To analyzed the liquidity position of Nabil Bank Ltd.

To check the profitability of Nabil Bank.

Shrestha, Shiva (2017) conducted a study in topic of “Liquidity Analysis of

Nabil Bank
Ltd.” He studies on all the strength and threats on liquidity as well as
profitability of
Nabil Bank Ltd. and he carried out with some objectives which is list out
following



To analysis the liquidity of Nabil Bank.

To explain the changing situation of liquidity in the banks.

1.7 Research Methodology

The method which is use in the research is called research methodology.
How the data is
collected and which source the research use for getting the data is under
the research
methodology. Research methodology covers the data analysis tools as well.
1.7.1. Research Design:
A research design is the arrangement conditions, for the collection and
analysis of data in
a manner that aims to combined relevance to the research purpose with
economy in
procedures.
This study aims on the financial analysis of the Nabil Bank. This study is
mainly based
on primary data and secondary data. The primary data, which are collected
directly from
the question answer, direct interview with customer and office staffs. The
secondary data
are collected from respective annual reports especially from the Nabil Bank’s
web sites

14

and various other journals and from security bond Nepal (SEBON) and
Nepal stock
exchange (NEPSE).
1.7.2 Population and Sample
At present, there are 28 commercial banks operating in Nepal out of 161
financial
institutions in 2018. Out of various bank functioning in the country, Nabil
Bank Limited
has been chosen as samples to conduct the research due to the time
constraint.
1.7.3 Data Collection Method
I went to the main office of Nabil Bank, Coprporate office, Darbarmarga,
Kathmandu,
and get the important information. I collected the main annual reports of
this bank
directly from the web site. And other various articles and journals from
various
publication and some others from the SEBON, NEPSE and previous field
reports are also
taken in to accounts.
1.7.4 Data Analysis Tools
● Financial Tools
● Statistical Tools

1.8. Limitation of the Study

This study is simply conducted for the partial fulfillment of the requirement
for the
degree of the Bachelor in Business Studies (BBS). And only the secondary
data is used
and analyzed which could not disclose the actual result. And being the first
endeavor, the
report can comprise some mistakes which may cause to misinterpretation of
the results.
The other limitation of the study is listed below:
● Only five years observation covering from fiscal year 2013/14 to
2016/17 is
analyzed.
● Analysis is based on the ratio and trend lines of the corresponding ratios
only.
● For the forecast of the liquidity requirement, daily and monthly data is
needed.
But due to time and cost constraints, only the annual data is used for
analysis.
● Only the secondary data is used.

15

CHAPTER – 2
RESULTS AND ANALYSIS
Presentation means the presentation of the collected data through table;
figure etc.
presentation is the process of understanding the study or the report and
calculating the
opinion. An analysis of a data means the process where the statement or the
report gets
resolve by breaking them into simple statement. Analysis means to find out
something
and give opinion about the presented data.
2.1 Data Presentation
2.1.1. Different segments of Deposits in Nabil
Table No 1 All the Deposit in the Total Deposit Liability

Year
2013/14 1,705,668,495
2014/15 2,175,020,657
2015/16 3,138,669,428
2016/17 3,756,570,350
2017/18 4,025,820,180
Source: - annual reports of Nabil Bank.

Current deposit
Saving deposit Fixed deposit Total deposit
8,081,980,512
10,742,331,625 7,516,686,866 20,424,048,148
13,688,766,549 7,944,232,558 24,771,668,535
17,066,252,467 11,633,380,218 32,456,203,035
14,324,255,897 16,825,148,284 35,175,224,361

5,412,969,595 15,200,618,592
Fig No 1 Total Deposit Liability
2013/14 2014/15 2015/16 2016/17 2017/18

16

In the above table and chart, we see that, in fiscal year 2013/14, the
current deposit
account occupied 11%, saving deposit account 53%, fixed deposit account
37%.in fiscal
year 2014/15 the current deposit account occupied 10%, saving deposit
account53%,
fixed deposit account 36% occupied. In fiscal year 2015/16 the saving
deposit account
occupied 13%, saving deposit account 53%, fixed deposit account 37%
occupied. In
fiscal year 2016/17 the current deposit account occupied 13% saving
deposit
account55%, fixed deposit account32% occupied. In fiscal year 2017/18 the
current
deposit account occupied 11%, saving deposit account 42%, fixed deposit
account
occupied 48%.
2.1.2 Saving Deposit to Total Deposit Ratio:
Table No 2 Saving Deposit to Total Deposit Ratio
Saving deposit
8,081,980,512
1,074,233,1625
13,688,766,549
17,066,252,467
14,324,255,897
Source: - annual reports of Nabil Bank.
Fig No 2 Saving Deposit to Total Deposit Ratio

Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18

Total deposit 15,200,618,592 20,424,048,148 24,771,668,535
32,456,203,035 35,175,224,361
Ratio 0.53 0.53 0.55 0.53 0.41
Ratio, 2013/14,
0.53, 0.207843137

Ratio, 2017/18,
0.41, 0.160784314

2013/14 2014/15 2015/16 2016/17 2017/18

Ratio, 2016/17,
0.53, 0.207843137

Ratio, 2014/15,
0.53, 0.207843137

Ratio, 2015/16,
0.55, 0.215686275

From the above table and trend line chart, the ratio is fluctuating state. In
the fiscal year
2013/14, the bank has the saving deposit of 0.53 times of total deposit
liability. And 0.53,

17

0.55, 0.53, 0.41 times of total deposit liability in fiscal year 2014/15,
2015/16, 2016/17
and 2017/18 respectively
2.1.3. Fixed Deposit To Total Deposit Ratio:
Table No 3 Fixed Deposit to Total Deposit Ratio
Fixed deposit
5,412,969,595
7,516,686,866
7,944,232,558
11,633,380,218
16,825,148,284
Source:- annual report of Nabil Bank.
Fig No 3 Fixed Deposit to Total Deposit Ratio

Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18

Total deposit 15,200,618,592 20,424,048,148 24,771,668,535
32,456,203,035 35,175,224,361
Ratio 0.36 0.37 0.32 0.35 0.48
Ratio, 2013/14,
0.36, 0.191489362

Ratio, 2017/18,
0.48, 0.255319149

2013/14 2014/15 2015/16 2016/17 2017/18

Ratio, 2014/15,
0.37, 0.196808511

Ratio, 2016/17,
0.35, 0.186170213

Ratio, 2015/16,
0.32, 0.170212766

From the above table and trend line chart, the ratio is fluctuating in
increasing and
decreasing trend. The highest ratio is 0.48 times in year 2017/18 and lowest
ratio is 0.32
times in fiscal year 2014/15. And 0.36 times, 0.37 times and 0.35 times in
year 2013/14,
2015/16 and 2016/17 respectively.

18

2.1.4 Cash and Bank Balance to Current Deposit Ratio:

Table No 4 Cash and Bank Balance to Current Deposit Ratio
Cash and bank balance Current deposit
81,0454,736
106,0162,644
1,934,935,533
3,578,672,803
3,506,870,807
Source:- annual report of Nabil Bank.
Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18
Ratio 0.48 0.49 0.62 0.95 0.87
1,705,668,495 2,175,020,657 3,138,669,428 3,756,570,350 4,025,820,180
Fig No 4 Cash and Bank Balance to Current Deposit Ratio
Ratio, 2013/14,
0.48, 0.140762463

Ratio, 2017/18,
0.87, 0.255131965

2013/14 2014/15 2015/16 2016/17 2017/18

Ratio, 2014/15,
0.49, 0.143695015

Ratio, 2015/16,
0.62, 0.181818182

Ratio, 2016/17,
0.95, 0.278592375

From the above table and trend line chart, the ratio is fluctuating in not
normally. In fiscal
year 2013/14, the bank has the liquidity against current deposit is 0.48
times. And the
bank has the liquidity against current deposit are0.49, 0.62, 0.95,
0.87times in year
2014/15, 2015/16, 2016/17 and 2017/18 respectively.

19

2.1.5. Cash and Bank Balance to Total Deposit Ratio:

Table No 5 Cash and Bank Balance to Total Deposit Ratio
Cash and bank balance Total deposit
15,200,618,592
20,424,048,148
24,771,668,535
32,456,203,035
35,175,224,361

Fiscal year
2013/14
2014/15
2015/16
2016/17
2017/18
Source:- annual report of Nabil Bank.
Fig No 5 Cash and Bank Balance to Total Deposit Ratio

Ratio 0.05 0.05 0.08 0.11 0.10

810,454,736 1,060,162,644 1,934,935,533 3,578,672,803 3,506,870,807
Ratio, 2012/13,
0.05, 0.128205128

Ratio, 2016/17, 0.1, 0.256410256

Ratio, 2013/14, 2012/13

0.05, 0.128205128

2013/14 2014/15 2015/16 2016/17

Ratio, 2015/16,
0.11, 0.282051282

Ratio, 2014/15,
0.08, 0.205128205

From the above table and trend line chart, the ratio is fluctuating. In fiscal
year 2012/13,
the bank has the liquidity for total deposit in the ratio of 0.05 times. And in
fiscal year
2013/14, 2014/15, 2015/16, and 2016/17, the bank has the liquidity for the
total deposit in
ratio of 0.05, 0.08, 0.11 and 0.10 times respectively.

20
2.1.6. Cash and Bank Balance to Total Deposit (Excluding Fixed Deposit)
Ratio:
Table No 6 Cash and Bank Balance to Total Deposit Ratio
Cash and bank balance Total deposit
9,787,648,997
12,917,361,282
16,827,435,977
20,822,822,817
18,350,076,077

Fiscal year
2013/14
2014/15
2015/16
2016/17
2017/18
Source: - annual report of Nabil Bank.
Fig No 6 Cash and Bank Balance to Total Deposit Ratio

Ratio 0.08 0.08 0.11 0.17 0.19

810,454,736 1,060,162,644 1,934,935,533 3,578,672,803 3,506,870,807
Ratio, 2012/13,
0.08, 0.126984127

Ratio, 2016/17,
0.19, 0.301587302

2012/13 2013/14 2014/15 2015/16 2016/17

Ratio, 2013/14,
0.08, 0.126984127

Ratio, 2015/16,
0.17, 0.26984127

Ratio, 2014/15,
0.11, 0.174603175

From the above table and trend line chart, the ratio is fluctuating in
increasing state. In
fiscal year 2012/13, the bank has the liquidity against current and saving
deposit account
deposit account liability in the ratio of 0.08 times. And in fiscal year 2013/14,
2014/15,
2015/16, and 2016/17, the bank has the liquidity against current and saving
deposit
account liability in the ratio of 0.08 times, 0.11 times, 0.17 times and 0.19
times
respectively.

21

2.1.7. Balance with NRB to Current and Saving Deposit Ratio:

Table No 7 Balance with NRB to Current and Saving Deposit Ratio
Fiscal year
2013/14
2014/15
2015/16
2016/17
2017/18
Source: - annual report of Nabil Bank.

Balance with NRB Current Saving

1,526,066,660
1,381,351,556
1,820,006,035
4,411,133,083
3,237,217,030

Ratio 0.16 0.11 0.11 0.16 0.18

9,787,648,997 12,917,361,282 16,827,435,977 20,822,822,817
18,350,076,077
Fig No 7 Balance with NRB to Current and Saving Deposit Ratio

Ratio 2013/14 2014/15 2015/16 2016/17 2017/18

22%

25%

16%
22%

15%

From the above table and trend line chart, the ratio has been maintained in
fiscal year
2013/14 by 0.16 times. And the bank has been maintained its ratio in fiscal
year 2014/15,
2015/16, 2016/17 and 2017/18 by 0.11 times, 0.11 times, 0.16 times and
0.18 times
respectively.

22

2.1.8. Balance With NRB To Fixed Deposit Ratio:

Table No 8 Balance With NRB to Fixed Deposit Ratio
Balance with NRB Fixed deposit
1,526,066,660
1,381,351,556
1,820,006,035
4,411,133,083
3,237,217,030
Source: - annual report of Nabil Bank.

Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18

Ratio 0.28 0.18 0.23 0.38 0.19
5,412,969,595 7,516,686,866 7,944,232,558 11,633,380,218
16,825,148,284
Fig No 8 Balance with NRB to Fixed Deposit Ratio
Ratio, 2016/17,
0.19, 0.150793651

Ratio, 2012/13,
0.28, 0.222222222

2012/13
2013/14
2014/15
2015/16
0.18, 0.142857143 2016/17
Ratio, 2014/15,
0.23, 0.182539683

Ratio, 2015/16,
0.38, 0.301587302

Ratio, 2013/14,

From the above table and trend line chart, the ratio is fluctuating. In fiscal
year 2012/13,
the bank has the balance with NRB against fixed deposit liability in the ratio
of 0.28
times. And in fiscal year 2013/14, 2014/15, 2015/16, 2016/17, the bank has
the balance
with NRB against fixed deposit liability in the ratio of 0.18 times, 0.23 times,
0.38 times
and 0.19 times respectively.

23

2.1.9. Total Investment to Total Deposit Ratio:

Table No 9 Total Investment to Total Deposit Ratio
Total investment
5,602,808,649
6,505,679,987
6,874,023,625
7,399,811,700
8,635,530,125
Source: - annual reports of Nabil Bank.

Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18

Total deposit 15,200,618,592 20,424,048,148 24,771,668,535
32,456,203,035 35,175,224,361
Ratio 0.37 0.32 0.28 0.23 0.25
Fig No 9 Total Investment to Total Deposit Ratio
Ratio, 2017/18,
0.25, 0.172413793

Ratio, 2013/14,
0.37, 0.255172414
2013/14 2014/15 2015/16 2016/17 2017/18

Ratio, 2016/17,
0.23, 0.15862069

Ratio, 2014/15,
0.32, 0.220689655

Ratio, 2015/16,
0.28, 0.193103448

From the above table and trend line chart, the ratio is fluctuating. In fiscal
year 2012/13,
the bank has invested 37% of the deposit in investment. In fiscal years
2013/14, 2014/15,
2015/16, 2016/17, the bank has invested 32%, 28%, 23% and 25% of the
deposit in
investment respectively.

24

2.1.10. Liquidity Assets to Total Deposit Ratio:

Table No 10 Liquidity Assets to Total Deposit Ratio
Liquidity assets
4,068,425,766
5,203,482,662
5,403,444,347
5,561,846,381
5,683,996,571
Source: - annual report of Nabil Bank

Fiscal year 2013/14 2014/15 2015/16 2016/17 2017/18

Total deposit 15,200,618,592 20,424,048,148 24,771,668,535
32,456,203,035 35,175,224,361
ratio 0.26 0.51 0.51 0.50 0.48
Fig No 10 Liquidity Assets to Total Deposit Ratio
Ratio, 2013/14,
0.26, 0.115044248
Ratio, 2017/18,
0.48, 0.212389381

2013/14 2014/15 2015/16 2016/17 2017/18

Ratio, 2014/15,
0.51, 0.225663717

Ratio, 2016/17, 0.5, 0.221238938

Ratio, 2015/16,
0.51, 0.225663717

From the above table and trend line chart, the ratio is fluctuating slightly
except fiscal
year 2012/13 in fiscal year 2012/13; the bank has invested 26% of the
deposit in the
liquid assets. In fiscal year 2013/14, the bank has invested 51% of deposit in
liquid assets.
In fiscal year 2014/15, 2015/16 and 2016/17, the bank has invested 51%,
50%, and 48%
of the deposit in the liquid assets respectively.

25

2.2 Major Finding

● Cash and bank balance to total deposit ratio is fluctuating. But the ratio
is
somehow satisfactory even though the ratio is higher than the central
banks
prescription. The ratio is moving around the between 0.05 times to 0.11
times.
● The balance with the NRB to fixed deposit ratio is fluctuating. It is
moving
around between 0.18 times to 0.39 times.
● The investment to total deposit ratio is fluctuating adversely. Since the
ratio is
fluctuating the bank has unsatisfactory result. However the investment
from
source of deposit is higher. It will give a higher return without risk only if
the
ratio is stabilized.
● The proportion of the saving deposit account is high in total deposit
liability. So,
it is recommended that the bank should utilize the amount collected from
the
saving deposit account carefully. It should be invested in the higher yielding
areas.
● Balance with NRB to current plus saving deposit should be maintained at
the
below than 0.11 times.
● Bank should not spend too much in the fixed assets because it yields
only a
nominal portion, almost no yield.

26

CHAPTER – 3 SUMMARY AND CONCLUSION

3.1. SUMMARY
Nepal is one of the least developed countries of the world. For most of the
developing
process, it is financially depending upon the foreign countries. It is
economically too
weak. Thus, the economic condition of the people is weak. In Nepal 85% of
the people
are depended upon agricultural sector which is unable to provide full
employment to the
people. Nepal government has to activate people in the nation’s
development through
overall industrialization of nation. For this purpose, development of sound
banking
system is essential.

In Nepalese banking sector, commercial banks including ventures banks are

operating at
present. In the absences of modern banking any country cannot develop
the economic
activity. Therefore, it is essential to find out whether or not the banks are
serving an
important contribution to develop sectors of economy. Liquidity is said to be
general
business of fund, which shows the bank ability to meet cash requirement. In
this record,
this study has been based upon the objective to evaluate the liquidity
position of Nabils.

3.2. CONCLUSION
● The saving deposit account is nearly constant trend. The highest ratio is
0.55
times in fiscal year 2016/17 and the lowest ratio is 0.41 times in fiscal year

2017/18. But the ratio is not satisfactory due to the last year ratio was
decline.
● Fixed deposit is fluctuated. The lowest ratio is 0.32 times and highest
ratio is 0.48
times. It is decrease up to fiscal year 2015/16 and grows up then. And it is
0.48
times on 2017/18. It is satisfactory. Bank made good ratio after 2014/15.
● From the cash and bank balance to current deposit liability is fluctuating.
The
ratio is moving around between 0.48 times to 0.95 times. It is satisfactory.

27

● Cash and bank balance to total deposit ratio is fluctuating. But the ratio
is
somehow satisfactory even though the ratio is higher than the central
banks
prescription. The ratio is moving around the between 0.05 times to 0.11
times.
● Cash and bank balance to total deposit (excluding fixed deposit) ratio is
fluctuating in increasing state. The ratio is satisfactory. It is moving around

between 0.08 times to 0.19 times.

● The ratio of balance with the NRB to current and saving deposit has
been
fluctuating. The ratio is declined in year 2013/14 and constant in 2014/15
and
then it is grow up. So, the ratio is satisfactory.
● The balance with the NRB to fixed deposit ratio is fluctuating. It is
moving
around between 0.18 times to 0.39 times.
● The investment to total deposit ratio is fluctuating adversely. Since the
ratio is
fluctuating the bank has unsatisfactory result. However the investment
from
source of deposit is higher. It will give a higher return without risk only if
the
ratio is stabilized.
● The liquid assets to total deposit ratio is fluctuating slightly except fiscal
year
2013/14. However the ratio is higher and somehow may be considered

satisfactory.

28

BIBLIOGRAPHY
Anderson et al., (1992). Thesis and Assignment writing. Wiley Eartren
Limited, New
Delhi,
ANNUAL REPORT. Himalayan Bank Limited
Bajracharya, B.C. (2053), Business statistics & mathematics, M.K. publishers
and
Wistributors.
Brigham, Weston, Essentials of Managerial Finance”, Eleventh Edition,
University
Publishers, USA.
Kothari, C.R., Research Methodology”, Mc. Grow Hill Company, second
Edition.
INFO HIMALAYAN . Bimonthly newsletter of Himalayan Bank Limited.
J. F. W. & E. F. Brigham, (2056). Essential of Managerial Finance. The Dryden
Press.
Harcount Brance Collage Publishers, U.S.A.
Joshi, S. & H.P. Shrestha, (2056). "Principles of Banking and Insurance".
Taleju
Prakashan, Bhotahiti, Kathmandu.
Shekhar and Shekhar “Banking Theory & Practice”, Eighteenth Revised
Edition, 1996.
Nepal Rastra Bank, Banking and Financial Statistics,
Nabil Bank., “annual report 2012-2018

Websites
http:// www.nrb.org.np
http://www.nabilbank.com.np

29

APPENDICES
Appndix-1 List of Commercial Banks in Nepal
Operation
Date (A.D.) Head Office

Paid up
Capital
(Rs.in Crore)
804.27
1393.79
804.32
1064.56
1987/02/28 Nayabaneshwor, Kathmandu 801.14
811.45
804.69
808.81
810.69
596.95
822.17
2007/04/20 Narayanhitipath, Kathmandu 803.32
803.33
815.26
806.34
800.13
805.57
803.11
888.84
646.18
800.13
846.44
624.54
725.93
467.91
800.08
900.48
928.68
S.
N.
1 Nepal Bank Ltd.
2 Agriculture Development Bank Ltd.
3 Nabil Bank Ltd.
4 Nepal Investment Bank Ltd.
5 Standard Chartered Bank Nepal Ltd.
6 Himalayan Bank Ltd.
7 Nepal SBI Bank Ltd.
8 Nepal Bangaladesh Bank Ltd.
9 Everest Bank Ltd.
10 Kumari Bank Ltd.
11 Laxmi Bank Ltd.
12 Citizens Bank International Ltd.
13 Prime Commercial Bank Ltd.
14 Sunrise Bank Ltd.
15 Century Commercial Bank Ltd.
16 Sanima Bank Ltd.
17 Machhapuchhre Bank Ltd.
18 NIC Asia Bank Ltd.
19 Global IME Bank Ltd.
20 NMB Bank Ltd.
21 Prabhu Bank Ltd.
22 Siddhartha Bank Ltd.
23 Bank of Kathmandu Ltd.
24 Civil Bank Ltd.
25 Nepal Credit and Commerce Bank Ltd.
26 Janata Bank Nepal Ltd.
27 Rastriya Banijya Bank Ltd.
28 Mega Bank Nepal Ltd.
Source: “https://www.nrb.org.np/bfr/bfi_list/List%20of%20BFIs_July2018.pdf”

Name
1937/11/15 Dharmapath,Kathmandu
1968/01/21 Ramshahpath, Kathmandu
1984/07/12 Beena Marg, Kathmandu
1986/03/09 Durbarmarg, Kathmandu

1993/01/18 Kamaladi, Kathmandu

1993/07/07 Kesharmahal, Kathmandu
1994/06/06 Kamaladi, Kathmandu
1994/10/18 Lazimpat , Kathmandu
2001/04/03 Durbarmarg, Kathmandu
2002/04/03 Hattisar, Kathmandu

2007/09/24 Kamalpokhari, Kathmandu

2007/10/12 Gairidhara, Kathmandu
2011/03/10 Putalisadak , Kathmandu
2012/02/15 Nagpokhari, Kathmandu
Lazimpat , Kathmandu
2013/6/30 Thapathali, Kathmandu
2014/4/9
2015/10/18 Babarmahal, Kathmandu
2016/2/12 Babarmahal, Kathmandu
2016/7/21 Hattisar, Kathmandu
2016/7/14 Kamaladi, Kathmandu
2016/10/17 Kamaladi, Kathmandu
2017/01/01 Bagbazar, Kathmandu
2017/04/07 Thapathali, Kathmandu
2018/05/02 Singhadurbarplaza, Ktm
2018/05/13 Kamaladi, Kathmandu

2012/7/9
Panipokhari, Kathmandu