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CHAPTER ONE
INTRODUCTION

1.1 Background
This internship report is carried out for the partial fulfillment of the Bachelors in Business
Administration (BBA) program under Tribhuvan University. It is an essential part of
BBA program done under supervision of the different professionals in the organization.
Being a student of BBA, it is an honor to be a part of internship program, under this
curriculum, which has helped transforming the academic knowledge into practical
knowledge and to understand how the concepts and theories are applied in the real
working environment.

The base of the study was to review the different procedures and requirements of all
department of the organization and also to analyze the strengths, weakness in the working
system along with the possible solutions to track down the effects of the problems.
Internship not only gives the abilities to think and makes able to give the decisions at real
time and situation but also shows the way how working environment is like, how it
functions and what motivates the employee to perform well. “Internship creates
professionalism inside one’s mind.”

1.2 Objective
The general objective of the study is to fulfill the requirement for the degree of Bachelors
in Business Administration. It aims to make the BBA students relevant in the real world
situation. Besides this, the specific objectives are as follows:
 To present the practical insights about the banking activities
 To have a knowledge of overall banking procedures of commercial banks and
their impacts on banks productivity and profitability
 To explain the relation between the theoretical and practical knowledge of the
bank in action
 To gain knowledge and experience of banking by means of interaction,
observation and working experience
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 To understand how theoretical concepts in the syllabus are implemented

practically in the working procedures of bank
 To know about the corporate culture and social responsibilities of bank in the
present context
 To study how supervision and monitoring of activities are done in EBL

1.3 Methodology
This internship report is the in-depth study of particular subject or topic backed by the
collection, compilation, presentation and interpretation of relevant data. Completion of
internship is a combination of the different types of activities. It started from the selection
of the organization for the internship, performance of different kinds of activities and
placement in different parts of the organization and at last collection of various data for
the preparation of the report. The data were collected on the basis of observation and
personal interview with the staffs, the brochures, published reports and documents,
website of the bank and other related websites.

1.3.1 Organization Selection

The most important and the initial part in the internship program is the selection of an
organization. It is the basis from which interns get the platform to learn something and
analyze the practical implication of the theoretical aspects learnt in the academic session.
In order to be appointed as an internee it was necessary to drop the college
recommendation letter along with curriculum vitae (CV) in the Human Resource
Department of Everest Bank Limited. There was regular follow up calls to the HRD
which revealed interest and enthusiasm to work in EBL. After a week internee was
informed to join.

1.3.2 Placement
The internee was placed to EBL, New Road Branch office to start the internship. There,
the internee met branch manager and was asked to meet Officer In-charge and as per her
order internee was placed in Letter of Credit for 7 weeks. After completion of 7 weeks in
LC the internee was referred to Loan department for 1 week under the supervision of
Credit supervisor.
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1.3.3 Duration of internship

The duration of internship period was defined for 8 weeks by Tribhuvan University, so as
per the specified period, the internee worked in EBL, New Road branch from 10th May,
2016 to 10th July, 2016. The internee thought that those eight weeks were really fruitful
and it will definitely help in upcoming days. The placement of internship is shown in the
table below
Table 1.1: Placement and Duration of Internship
Department/Weeks 1 2 3 4 5 6 7 8
Letter of Credit
Loan

1.3.4 Activities performed in the organization

The Internee was placed in the LC and Loan Department of Everest Bank at New Road
Branch. The following are the major activities performed within the banking hours from
10 A.M. to 5 P.M. for the eight weeks:

Letter of Credit Department

 The first and the foremost activities performed are by operating machines for
photocopy, fax, printing, scanning, etc.
 Preparing BI.BI.NI forms.
 Making NRB cheques.
 Preparation of Guarantees (BG, PG).
 Putting cheque writers in NRB cheques and Guarantees.
 Preparation of Telegraphic Transfer copy and ensuring the TT copy match with
the TT form filled by the customers.
 Filled missing information of the clients in the documents.
 Making the new L.C. and Guarantee file.
 Chronological filing of the LC related documents.
 Observation of procedures of import and export LC issuance, guarantee issuance,
etc.
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Loan Department
 Checking Stock details of customer.
 Making the new Credit File (with the files arranged in chronological order in
concerned section as Branch Memo, Insurance, Credit Facilities, Company
Information, Legal Documents).
 Handling the customer who comes in the credit department.
 Forwarding approval sheet to the Customer relation department.

1.4 Limitations
Despite of most of the efforts undertaken to make the project more realistic in terms of
Nepalese context, the internee found certain limitations. And as limitations are the part of
progressive system, here are some limitations of the study.
 Lack of adequate time to learn, complete and detailed work in just eight weeks.
 Lack of data presented on the internet with the fear of copyright.
 The facts and figures keep changing with the change in the fiscal policy. So, it’s
difficult to get the updated data.
 Unable to gain knowledge from various other departments because of restrictions
imposed.
 The bank’s policy on keeping some matters confidential as a matter of secrecy
requirement that prevented the internee’s curiosity to know and develop
analyzing different bank activities.
 The report is based on the work that the internee has performed in EBL so it does
not give detail view of overall functioning of the bank.
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CHAPTER TWO
INTRODUCTION TO THE INDUSTRY

2.1 Meaning of Bank

A bank may be defined as an institution which deals in monetary transaction. It is a
financial intermediary which works as a bridge; fills the gap of fund between lenders and
borrowers. Bank draws surplus money from the people who are not using it at the time
(having excess money) and lend to those who are in a position to use it for productive
purposes. It creates credit and also provides exchange facilities to the public. So, bank is
also known as a factory of credit production.
The bank pays certain amount of money as interest, on the money they have borrowed.
Similarly, they charge interest on the money lent. Interest is always calculated in certain
rate percent per annum. The rate of interest on loans advanced is always greater than that
on deposits. The difference between the lending interest rate and borrowing interest rate is
called interest spread and this spread is the major source of income of any bank.

Nepal Rastra Bank Act 2002 states, “Bank is a financial institution, which provides
financial services that may be in the form of accepting deposits, advancing loan,
providing necessary technical advice, dealing over foreign currencies, remitting funds,
etc.”

2.2 History of Banking in Nepal

The history of Nepalese banking industry is not so long. The banking in Nepal may be
described as a component of the gradual and orderly evolution in the financial and
economic spheres of the Nepalese life. Nepalese people of rural area aren’t able to enjoy
the facilities of banks till date. The origin of modern banking dates back to the ancient
times. However, in the context of Nepal, the concept of modern banking has emerged
recently.
Modern banking system in Nepal started from the establishment of Nepal Bank Limited
(NBL) in 1937 A.D. under “Nepal Bank Act, 1937”. It is the first bank in Nepal and prior
to this, there was no such organized banking system in the country. After the
establishment of this bank, different services like accepting deposits, extending credit
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facilities for promotion of trade, rendering customer related services and investing in
government bond and securities were offered to general public.
Nepal Rastra Bank, the Central Bank of Nepal, was established in 1956 A.D. to
discharge the central banking responsibilities including guiding the development of
Financial Sectors in Nepal. Its major aim is to regulate the issue of paper money, secure
country wide circulation of Nepalese currency and stability in its exchange rate, mobilize
capital for economic development and for trade and industry growth. Another commercial
bank, Rastriya Banijya Bank (RBB), was established in 1965 A.D. To promote healthy
competition among banks, commercial Bank Act 1974 was amended in 1974. The new
policy allowed joint venture banks with foreign collaboration to operate in private sector
with the objective of introducing modern banking practices and widen the financial
structure. With the introduction of this policy, different commercial banks were
established.
Currently, there are many banks which are in increasing trend. Banks today have gained
paramount trust in the public. The function of bank is not confined to just accepting
deposits and offering loans. They render a wide variety of services covering different
strata of society like legal entity, financial intermediation, creation of capital, fund
transfer, boosting trade, safety of valuables, employment etc.

Fig2.1: Banking industry regulated by NRB

2.3 Importance of Bank

The Bank accepts deposits of spare money from its customers. The deposits are utilized
for formulation of capital in the productive sectors like industry, trade and service area of
the country. The bank issues different types of credit instrument such as bank draft,
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letter of credit, credit cards and Telegraphic Transfer (T.T). These credit instruments
facilitate fast and safe remittance of money from one place to another.
 Banks finance priority sectors, thus helping in economic development of the
country
 Bridge the gap between surplus and deficit unit.
 It offers different types of loans and advances enabling manufacturers to
undertake new ventures, adopt new techniques and introduce new means of
production
 It provides various card services, which has eliminated the difficulties and risks of
carrying
 Facilitate the customers with new and advanced products

2.4 Introduction of Commercial Bank

Like all financial intermediaries, the commercial bank acquires funds one group of
surplus spending units and makes these funds available to other deficit units. It provides
transactional, savings and money market accounts and that accepts time deposits.
Commercial banking may also be seen as distinct from retail banking, which involves the
provision of financial services direct to clients. Commercial banks also allow for a variety
of deposit accounts, such as checking, savings, and time deposit. These 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 primarily concerned with receiving deposits and lending to businesses. Because of
being the member of the central bank, the scheduled commercial banks enjoy a strong and
financial goodwill which attracts huge amount of deposits industrialists, traders and the
public at large. Commercial Banks extend various types of credit facilities to their
constituents, to enable them carry out their business activities.
The operation activity of commercial banks includes:
 Deposit collection
 Liquidity management
 Credit administration
 Capital structure management
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2.5 Functions of Commercial Bank

The functions of commercial banks are divided into two categories:
1) Primary Functions
The primary functions of a commercial bank include:
 Accepting deposit
 Advancing loan
 Discounting bill of exchange
 Transfer of money
2) Secondary Functions
The secondary functions of a commercial bank include:
 Issuing letters of credit, travelers' cheques, circular notes etc.
 Undertaking safe custody of valuables, important documents, and securities by
providing safe deposit vaults or lockers.
 Transferring money from one place to another and from one branch to another
branch of the bank.
 Standing guarantee on behalf of its customers, for making payments for purchase
of goods, machinery, vehicles etc.
 Collecting and supplying business information.
 Issuing demand drafts and pay orders and
 Providing reports on the credit worthiness of customers.
Thus, the primary and secondary functions performed by bank are the essential to
meet the overall objectives of the bank.
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CHAPTER THREE
INTRODUCTION TO THE ORGANIZATION

3.1 An Overview of EBL

Everest Bank Limited (EBL) started its operations in 1994 A.D. with a view and objective
of extending professionalized and efficient banking services to various segments of the
society. The Bank has been one of the leading banks of the country and has been catering
its services to various segments of the society. With clients from all walks of life, the
Bank has helped develop the nation corporately, agriculturally & industrially. With an
aim to help Nepalese citizens working abroad, the bank has entered into arrangements
with banks and finance companies in different countries, which enable quick remittance
of funds by the Nepalese citizens in countries like UAE, Kuwait, Bahrain, Qatar, Saudi
Arabia, Malaysia, Singapore and U K. Bank has set up its representative offices at New
Delhi (India) to support Nepalese citizen remitting money and advising banking related
services.

Punjab National Bank (PNB), the joint venture partner of Everest Bank (holding 20%
equity in the bank) is the largest nationalized bank in India. With its presence virtually in
all the important centers at India, Punjab National Bank offers a wide variety of banking
services which include corporate and personal banking, industrial finance, agricultural
finance, financing of trade and international banking. Among the clients of the Bank are
Indian conglomerates, medium and small industrial units, exporters, non-resident Indians
and multinational companies. The large presence and vast resource base have helped the
Bank to build strong links with trade and industry.

Recognizing the value of offering a complete range of services, EBL has pioneered in
extending various customer friendly products such as Home Loan, Education Loan, EBL
Flexi Loan, EBL Property Plus (Future Lease Rental), Home Equity Loan, Vehicle Loan,
Loan Against Share, Loan Against Life Insurance Policy and Loan for Professionals.

Everest Bank Limited (EBL) provides customer-friendly services through its wide
Network connected through Any Branch Banking System (ABBS) system, which enables
customers for operational transactions from any branches. The bank has 61 Branches,
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84 ATM Counters, 5 extension counter & 22 Revenue Collection Counters (as on 14th
January 2016) across the country making it a very efficient and accessible bank for its
customers, anytime, anywhere.

3.1.1 Performance
Table 3.1 Financial Performance of EBL

Key Financial Highlights

Fiscal Fiscal Fiscal
Fiscal Fiscal Fiscal
Particular Year Year Year
Year 2070 Year 2071 Year 2072
2067 2068 2069
Total Business. (Rs
6,448.87 7,278.97 8662.29 10191.82 11055.84 13,845.73
in Ten Million)
Operating Profit. (Rs
1,349.10 1,516.69 1,790.39 2401.55 2494.03 2,416.60
in Millions)
Dividend/Bonus
Payments. (In %)

Cash Dividend 30 50 1.58* 50 50 5

Bonus 30 10 30 10 12 30
(www.everestbankltd.com)

3.1.2 Vision
 To evolve & position the bank as a progressive, cost effective & customer friendly
institution providing comprehensive financial and related services.
 To integrate the frontiers of technology & serving the various segments of society.
 To be committed to excellence in corporate values.

3.1.3 Mission
 To provide excellent professional services & improve its position as a leader in
the field of financial related services.
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 To build & maintain a team of motivated and committed workforce with high
work ethos.
 To use the latest technology aimed at customer satisfaction & act as an effective
catalyst for socio-economic developments.
Every organization has its own structure to depict its line of authority and accountability.
There are top level management, middle level management and lower level management.
Top level manager is superior to middle level manager. Lower level manager is at the low
level.

3.1.4 Awards
 The bank has been conferred with the "Best Managed Commercial Bank" by
ASIAN PAINT NEWBIZ Award 2013.
 The bank adjudged as "Number 1 Bank" under CAMELS (along with Customer
Base & Branch Network) rating conducted by KAROBAR national daily (a
leading business media house of Nepal).
 The bank has been conferred with “Bank of the Year 2006, Nepal” by the Banker,
a publication of financial times, London.
 The bank was bestowed with the “NICCI Excellence award” by Nepal India
chamber of commerce for its spectacular performance under finance sector
(www.everestbankltd.com)

3.1.5 Pioneering achievements

 EBL was one of the first banks to introduce Any Branch Banking System (ABBS)
in Nepal.
 EBL introduced Mobile Vehicle Banking system to serve the segment deprived of
proper banking facilities through its Birtamod Branch, which was the first of its
kind.
 EBL introduced branchless banking system first time in Nepal to cover unbanked
sector of Nepalese society through biometric machine.
 EBL is first bank that has launched e-ticketing system in Nepal where customers
can buy yeti airlines ticket through internet.
 EBL introduced online payment of Mobile/PSTN/ADSL/NCELL bill or from the
counter as well.
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 EBL is the first bank to introduce agro-specialized branch "KRISHI UDHYAM

BIKASH SAKHA" at Rajbiraj.
 EBL introduced Cash Deposit Kiosk for the first time in Nepal through which the
Customers can deposit Cash conveniently.

(www.everestbankltd.com)

3.1.6 Objectives
The objectives of EBL are listed below:
 To become the bank of first choice.
 To bridge the gap between saver and borrowers efficiently and effectively.
 To provide the higher expected rate of return on investment.

3.2 Main Business Activities of EBL

EBL’s main business activities are to perform all the business transactions of a typical
commercial bank.
 It accepts deposit such as current, saving, fixed deposit etc and grant different
types of loans such as education loan, home loan, professional loan etc.
 It transfers money from one place to another through the means of draft, SWIFT,
at its customer’s request.
 It provides safe deposit lockers of different sizes.
 It purchases and sales foreign currencies.
 It acts as guarantor on the behalf of its customers.
 It provides LC services to its customers.
 It provides other services like ATM, ABBS, e-banking etc.

3.3 Shareholding Structure

The local Nepalese promoters hold 50 percent stake in the bank’s equity, while 20 percent
of the equity is contributed by joint venture partner PNB who has also undertaken
management responsibility under a Technical Service Agreement (TSA). The remaining
30 percent is held by the general public. This is shown in the following table:

Table 3.2 Shareholding Structure

Group Categories % of holding
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A Nepalese Promoters Ownership 50%

B General Public 30%
C Joint Venture (Punjab National Bank, India) 20%
Total 100%
The share ownership discussed above of EBL is shown in the following pie-chart.

20% Nepalese Promoters Ownership

50% General Public

30% Punjab National Bank

Fig 3.1 Percentage of Shareholdings

3.4 Product and Services Provided by EBL

EBL offers a wide variety of products and services, catering to wide range of customers
from individuals, to mid-market local corporate to multinationals and large public sector
companies, as well as embassies, aid agencies, airlines, hotels and government
corporations.
Everest Bank’s policy is to extend quality services to its customer as properly as possible.
Personalized services are provided to all clients. To extend more efficient services to its
customer, EBL has adopted innovated and latest banking technology. Everest Bank tailors
the facilities extended to its clients, taking into account their need and requirement,
besides the normal services, EBL has been providing the following services to their
customers. In many of these services, EBL has the pioneer.

3.4.1 Deposit
EBL offers a wide array of deposits schemes in both local and foreign currencies to help
the customer earn competitive interest rates in order to maximize returns on investment.
Some of the deposits schemes are as follows:
 Current account
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 Saving account such as: normal saving, Naari Bachat Khata, Saving Premium
Account, Baal Bachat Khata, Saugat Bachat Khata and Freedom Saving Account.
 Fixed deposit accounts such as: supreme deposit, cumulative deposit scheme, cash
certificate scheme and unfixed fixed deposit scheme.
 Recurring deposit account
 The types of recurring deposit account are: Sunaulo Bavisya Yojana and flexi
recurring deposit account.
 FCY deposit account
 The types of FCY deposit account are: USD account and EBL NRN deposit
account.
 Retirement plan account

3.4.2 Loans and Advances

EBL provides credit on competitive terms by way of term loans as well for financing
working capital needs of all kinds of productive and income generating activities.
Regarding Consumer Lending Schemes, it has following major schemes:
 Direct Housing Loan
 Vehicle Loan
 Education Loan
 EBL Property Plus
 Professional Loan Scheme
 Loan Against Mortgage
 Loan Against Share
 Home Equity Loan

3.4.3 Letters of Credit Activities

Through an extensive global network that aid domestic and international transaction, the
bank facilitates export and import in local and foreign market through offering facilities
like LCs, SWIFT transfers and Guarantees etc. The bank also offers Trust Receipt, Pre-
shipment & Post Shipment loans as a part of import/export finance.

3.4.4 Remittance Facilities

Remittance can be made to any part of the world by way of SWIFT Transfer instantly in
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addition to the conventional facilities like demand drafts, Travelers’ cheques etc. EBL has
drawing arrangements with about 130 branches all over India for remittance to India.
EBL facilitates both Inward and Outward remittance.

3.4.5 Foreign Exchange Facilities

The bank provides facilities for financing the export and import business, exchange (sale
and purchase) of foreign currencies, forward exchange contracts, etc.

3.4.6 Cards and ATM’s Facilities

EBL debit card is a plastic card which provides an alternative payment method to cash
when making purchases or cash withdrawal from ATM centers. It is associated with
Smart Choice Technology (SCT); it facilitates wide sharing of ATMs under SCT network
from more than 650 Locations throughout Nepal. EBL debit card holder can also have the
withdrawal facility from over 5000 PNB ATM in India.

3.4.7 E-banking Facilities

EBL offers E-banking facilities too. Through a computer connected to the Internet,
customer can log on the Everest Site and do various banking transactions from anywhere
at any time. It is used for:
 Account summary/ Statements
 Balance Inquiry
 Fund Transfers
 Offline Requests (Cheque books, remittance etc.)
 Ordering for different types of payments

3.4.8 Any Branch Banking System (ABBS)

EBL provides any branch banking service where customer can conduct their business or
make transaction from any of branch of EBL, deposit of where they have opened their
account. There is no charge EBL provides any branch banking service where customer
can conduct their business or make within the branch of Kathmandu valley and in case of
outside the valley bank charge basically 150 per transaction.

CHAPTER FOUR
ANALYSIS OF ACTIVITIES DONE AND PROBLEM
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SOLVED

4.1 Introduction
During the internship period, the internee was assigned in Letter of Credit and Loan
Department of the bank to get familiar basically with the LC and Guarantees as well as
other credit related activities and gain knowledge on its working process. Credit
Department mainly looks after the various documents required while processing loan,
makes necessary legal documents on behalf of bank, and manage the overall process of
Funded and Non-Funded Loans.

4.2 Letter of Credit Department

Letter of credit is a bank undertaking of payment. It is written undertaking by a bank
given to the seller (exporter/beneficiary) at the request and on the instructions of the
buyer (importer/ applicant) to pay at sight or at a determinable future date up to a stated
of money, within a prescribed time limit and against stipulated documents or other
conditions.
Letters of credit are often used in international transactions to ensure that payment will be
received. Due to the nature of international dealings including factors such as distance,
differing laws in each country and difficulty in knowing each party personally, the use of
letters of credit has become a very important aspect of international trade. The bank also
acts on behalf of the buyer (holder of letter of credit) by ensuring that the supplier will not
be paid until the bank receives a confirmation that the goods have been shipped.

4.2.1 Types of Letter of Credit

Sight Letter of Credit: Letter of credit that represents an obligation by the issuing bank
on a designated third party (the beneficiary), that is contingent on the failure of the bank's
customer to perform under the terms of a contract with the beneficiary. It is also called
a performance bond. In case of Sight LC, payment should be made to supplier or
beneficiary within seven workings days after the receivables of documents after arrival of
goods.
Deferred Letters of Credit: A letter of credit that is paid after a fixed number of days
(for e.g. after 90 days) after shipment or presentation of prescribed documents, then it is
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said to be deferred LC. It is also called Usance LC. It is used where a buyer and
a seller have a close working relationship because the seller is financing the purchase by
allowing the buyer a grace period for payment. A deferred payment letter of credit differs
from a sight LC in the sense that no grace period is provided, the payment is guaranteed
on the stated date.

4.2.2 Activities done in Letter of Credit

4.2.2.1 Opening of Letter of Credit

The processes involved in letter of credit issuance are diagrammatically shown and
discussed below:
Fig 4.1: Steps in LC Issuance

Agreement
between Buyer
and Seller
Payment Application by
Release to the Buyer in
Advising Bank Writing

Forwarding
Documents to Preparation of
Issuing Bank by Approval
Advising Bank Sheet

Merchandise
Ready for Issuance of LC
Shipment and and sending to
Documentatin Advising Bank
by Seller

Informing by
Confirmation
Advisory Bank
of LC Message
to the
by Issuing Bank
Beneficiary

The following is a step-by-step description of a typical Letter of Credit transaction:

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1. An Importer (Buyer) and Exporter (Seller) agree on a purchase and sale of goods
where payment is made by Letter of Credit.
2. The Importer completes an application requesting its bank (Issuing Bank) to issue
a Letter of Credit in favor of the Exporter. Note that the Importer must have a line
of credit with the Issuing Bank in order to request that a Letter of Credit be issued.
3. The Issuing Bank issues the Letter of Credit and sends it to the Advising Bank by
telecommunication or registered mail in accordance with the Importer’s
instructions. A request may be included for the Advising Bank to add its
confirmation. The Advising Bank is typically located in the country where the
Exporter carries on business and may be the Exporter’s bank but it does not have
to be.
4. The Advising Bank will verify the Letter of Credit for authenticity and send a
copy to the Exporter.
5. The Exporter examines the Letter of Credit to ensure: a) it corresponds to the
terms and conditions in the purchase and sale agreement; b) documents stipulated
in the Letter of Credit can be produced; and c) the terms and conditions of the
Letter of Credit may be fulfilled.
6. If the Exporter is unable to comply with any term or condition of the Letter of
Credit or if the Letter of Credit differs from the purchase and sale agreement, the
Exporter should immediately notify the Importer and request an amendment to the
Letter of Credit.
7. When all parties agree to the amendments, they are incorporated into the terms of
the Letter of Credit and advised to the Exporter through the Advising Bank. It is
recommended that the Exporter does not make any shipments against the Letter of
Credit until the required amendments have been received.
8. The Exporter arranges for shipment of the goods, prepares and obtains the
documents specified in the Letter of Credit and makes demand under the Letter of
Credit by presenting the documents within the stated period and before the expiry
date to the “available with” Bank. This may be the Advising/Confirming Bank.
That bank checks the documents against the Letter of Credit and forwards them to
the Issuing Bank. The drawing is negotiated, paid or accepted as the case may be.
9. The Issuing Bank examines the documents to ensure they comply with the Letter
of Credit terms and conditions. The Issuing Bank obtains payment from the
 19

Importer for payment already made to the “available with” or the Confirming
Bank.
10. Documents are delivered to the Importer to allow them to take possession of the
goods from the transport company. The trade cycle is complete as the Importer
has received its goods and the Exporter has obtained payment.

4.2.2.2 Cancellation of letter of credit

Since the LCs opened in Everest Bank basically are Irrevocable in nature the LC cannot
be cancelled through just one party, for the cancellation of LC the consent of both parties
is required. The buyer can cancel the LC before the goods have been shipped by the
seller, but if the seller has shipped the goods then he would not agree to cancel the LC.
There can be various personal as well as business problem which lead him to cancel and
LC. In order to cancel the LC, cancellation letter from the party is required.

4.2.2.3 Scanning LC related Documents

The documents related to LC such as: Pro-forma Invoice, Insurance, Packing List, TT
copies, Bill of Lading, Bills of Exchange and customer filled LC forms etc. were scanned
by the internee in order to keep record in case of any loss of document.

4.2.2.4 Preparation of DAP document

Document against Payment is an arrangement under which an exporter instructs the
presenting bank to handover shipping and title documents to the importer fully pays the
accompanying bill of exchange or draft. It is also called cash against document. The
documents are divided for Banijya, Calcutta, Custom Office, Bank copy and Customer
copy. The documents included invoice, bill of exchange, bill of lading, packing list,
certificate of origin etc.

4.2.2.5 Making calls

The internee was assigned to make calls to the customer whenever the documents for
DAP were received. The customers were informed about the document and the US dollar
or other foreign currencies that was mentioned in the document.
4.2.2.6 Preparation of TT copy
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Telegraphic Transfer is payment made in advance to the seller through bank. In this
process a SWIFT message is created which is accepted internationally. It can be for
import or export of goods as well as for educational purpose. In order to prepare a TT
copy, first the customers fill the TT forms and then TT copies were prepared. These TT
copies were then verified by credit supervisor for further processing.

4.2.2.7 Preparation of BI.BI.NI and NRB cheques

BI.BI.NI forms and the NRB cheques are the crucial part for import of the goods. In order
to free the goods from the custom office, 3 copies of BI.BI.NI forms were prepared from
which a copy was kept for bank record and other two copies were given to the customer.
NRB cheques were made after the BI.BI.NI forms are prepared and given to the
customer.

4.2.2.8 Preparation of Bank Guarantee

Bank Guarantee is the non-fund based fee generating service of the bank. Bank Guarantee
is used as an instrument by business partners to strengthen and/or secure an obligation in
their contract. Generally, the parties involved in business transactions may seek security
for their transaction / contract / commitment. To fulfill this requirement, bank issues the
guarantee, at the request and on behalf of its customer, to the party, committing that the
bank will pay up to guarantee amount upon claim of the party as per terms and condition
mentioned of the guarantee. The internee was assigned to prepare guarantee by checking
the forms filled along with the validity date.

Parties and terms used in Bank Guarantee

 Applicant - The party who requests to its bank to issue guarantee.
 Beneficiary - The beneficiary is the party to whom guarantee is issued.
 Bank / Issuing Bank - The bank who issues guarantee to the beneficiary.
 Validity - Validity of guarantee is the expiry or maturity date of guarantee. The
beneficiary to claim within the validity date. However, some guarantee allows the
beneficiary to claim for certain period after maturity of guarantee. Such period is called a
claim period.

4.2.2.9 Problem Solved at LC

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Both the LC and Bank Guarantee are the complex and one of the vital instruments in
banking institutions which requires deliberation and appropriateness as it is concerned
with international trade. During the internship period, the following problems were
solved.
 Providing information to the customers of Everest bank who have to open letter of
credit and guarantees and do not have ideas about it.
 Helping the customers to fill up forms, if any complication arises forwarding it to
responsible person.
 Finding the missing documents and filling them in appropriate files.
 Getting photocopies done from other departments and finding the solution if
problem arise in photocopy machine in LC department.
 Typing the different documents if staffs are in rush.
 FILE HANDLING is one of the major problem. The internee effectively manages
the various files (LC Files, Guarantee Files, Credit Files, and so on.) during the
internship period.
 Sharing and providing the information and experience that the internee has learnt
with the new internee, which results in the synergetic effort.
During the 7 weeks of internship period at LC, the internee was able to handle the
customers and their queries in the absence of the department head. Internee was able to
explain the customers about the information to be filled in TT forms.

4.3 Loan Department

Everest bank place very extreme emphasis on the credit functions of the bank. This
department provides different types of credit facilities as per the requirement of
customers. Management of credit is also the main responsibility under this department.
This department also holds the responsibility of finding ways to improve its product and
services related to credit in order to attract new customers as well as retain the existing
ones. It makes every attempt to satisfy the changing needs and demands of the customer.

4.3.1 Functions of Loan Department

Some of the major functions of the credit and loan department observed during the
internship period are as follows:
Analyzing the credibility of the customers by assessing:
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 Capacity of the customer for repayment of the loan.

 Collateral being put forward by customer, whether or not, enough to meet the
credit facility to be approved.
 Record of stocks.
 Character of the customer to recover the loan provided.
 Condition of the customer(background).
 Capital invested by the corporate client.

4.3.2 Activities done in Loan Department

The major activities done in the loan department are cited below:
 Checking Stock details of customer.
 Making the new Credit File (with the files arranged in chronological order in
concerned section as Branch Memo, Insurance, Credit Facilities, Company
Information, Legal Documents)
 Handling the customer who comes in the credit department.
 Forwarding approval sheet to the Customer relation department

Like all the banking activities, loan department works and information are important and
is always confidential. The internee didn’t encounter any significant problems.

4.4 Observed Gap

After doing the internship in one of the reputed commercial bank of Nepal, the internee
observed various gaps between theory and practice. It is really different to be in the field
than what is learned in the university studies. Practically doing things is much more
difficult than learning it theoretically. The internee also observed that one must be very
careful while using Finacle. One wrong entry can create a serious problem.
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CHAPTER FIVE
CONCLUSION AND LESSON LEARNT

5.1 Conclusion

This internship report is based on internship done at Everest Bank Ltd., New Road
Branch from May 10, 2016 to July 10, 2016 to know the various processes and working
environment of banking in real life. The internee has gained lot of experiences from the
internship at Everest, which was the first experience in banking sector. The internship
program helped the internee to learn professional attitude for future prospects and learn
practically apart from academic courses. During this period, the internee was able to learn
different services and products that are delivered by the bank, organizational culture,
nature of organizational problems, etc.

Among the different services, Letter of Credit service has played a vital role in the
development of international trade of the country. The LC and guarantee operation of the
bank has served the general people, the business houses, and in import and export of
goods and services. In Nepal's case, in recent years; trade operations have been playing a
vital role in the country's economic development by relaxing the foreign exchange
constraints and strengthening the balance of payments, among others which is
acknowledged after doing internship.

Hence, the internship experience was a milestone to the internee’s academic and
professional experience. Working as an internee mainly provided an opportunity to learn
about practical implication in career building hence it is a significant platform for the
future career.

5.2 Lesson Learnt

The eight weeks’ internship period in EBL has taught the internee many lessons. The
internee learnt different skill and obtained a variety of knowledge during the internship
period. Internship for 8 weeks really taught many things which have been listed below:
 Acquired good communication skills required for handling customers at the bank.
 Learned about time management skills in organization.
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 Learned how to prepare different documents such as to operate office equipment

like fax, photocopies, scanner, cheque writer, etc required in operation of various
activities in banks.
 Learned to be communicative with experts and various natured people as well as
built self-confidence.
 Learned the information filling and scrutiny process of the application forms and
other documents of LC and guarantee required in Everest.
 Learned the preparation of Approval Sheet, Bi. Bi. Ni. Forms, LC messages, TT
copies etc. which are required in LC operation in Everest Bank.
 Learned the chronological filing of documents.
 Understanding the organizational culture of banking institutions.
 It was the great chance to be familiar with the use of Finacle Software that helped
a lot in maintaining the proper balance in the overall activities of the bank. In case
if it failures, the whole activities of the bank come into halt creating the huge loss
to the bank.

Many other minor things which people ignore count most in an organization. Everest
Bank is growing in the Nepalese market by providing very efficient services to its clients.
The internee got an opportunity to experience the situation of a successful financial
institution. Overall, it was a great experience doing internship in Everest Bank and a good
exposure in the commercial banking sector.