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Chapter 1 - Intern Reports of Nepalese bank
Mba
Pokhara University
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CHAPTER I
INTRODUCTION
1 Meaning of the Bank
A bank is a financial institution for collecting deposit, loans, exchange or issue of money and for the transmission of funds. It is essentially an intermediary of short- term funds. It can carry out extensive sending operation only when it can effectively mobilize the saving of the community. Banking is the lifeblood of the modern business for the economy. According to the dictionary, “Bank is an establishment for the custody of money which it pays out on customer’s order.” Bank is a financial intermediary between depositor and entrepreneurs. Some of the important definitions of a bank are as follows:-
“A bank is manufacture of credit and machine so facilitating exchanges.” (Horace)
“I believe in that fact the banks are not merely purveyors of money, but also in an important sense, manufactures of money.” (R. Sayers)
”Bank is an establishment which makes to individuals such advances of money or other means of payments as may be required and safely made and to which individuals entrust money or means of payment not required by them for use”. (Professor Kinley)
“Banks are financial institutions that accept funds in the form of deposits repayable on demand or in short notice”. (World Bank)
A bank simply carries out the work of exchanging money, providing loan, accepting deposit and transferring the money. Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, and ATM. Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making
instalment loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non- financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings too commercial banks are the heart of economic system. It exchanges money, accepts deposits, grants loan and operates commercial transaction. They make funds available through their lending and investing activities to borrowers, individuals, business firms and government. Thus, their task is to provide a collecting point for saving or relatively small average amount productive and needed sector of the country, so as to develop the nation. Financial markets play a fundamental role in the economic development of a country. They are the intermediary link in facilitating the flow of funds from savers to investors. By providing an institutional mechanism for mobilizing domestic savings and efficiently channelling them into productive investments, they lower the cost of capital to investors and accelerate economic growth of the country.
1 Origin and Evolution of bank
In 1988, a small group of investors founded Commercial Bank of West Port. A building and lot located at 2330 West Port Plaza Drive, which had housed many restaurants, was purchased and put through a major renovation to convert the location into a bank. Commercial Bank of West Port thrived at this location, serving both residential and commercial customers; it quickly became part of the Maryland heights community. During this period the “of West port” was dropped from the name and “Commercial Bank” opened its second location in Florissant. As with the first location, the commercial bank location in Florissant was very successful. Commercial
a central Bank of Nepal, Rastriya Banijya Bank (RBB), a commercial bank under the ownership of former government was established. Thereafter, former government adopted open and liberalized policies in the mid1980s as reflected by the structural adjustment process, which included privatization, tariff adjustment and liberalization of industrial licensing, easing of terms of foreign investment and initiation of more liberal trade and foreign exchange regime. With the adoption of liberalization policy, there has been rapid development of the domestic financial system both in terms of number of financial institutions and as ratio of financial assets to the GDP. To fulfill the necessity of the financial institutions to achieve the fixed goal, NIDC (Nepal Industrial Development Corporation) in 2016 B. and (Agriculture Development Bank) in 2041 B. were established under the special consideration. Rastriya Banijya Bank, the second commercial bank of Nepal was established in 2022 B. under the recommendation of Nepal Rastra Bank.
In the context of banking development, the 1980s saw a major structural change in financial sector policies, regulations and institutional developments. HMG emphasized the role of the private sector for the investment in the financial sector. The financial sector liberalization, started already in the early eighties with the liberalization of the interest rates, encompassed further deregulation of interest rates, relaxation of entry barriers for domestic and foreign banks, restructuring of public sector commercial banks and withdrawal of central bank control over their portfolio management. These policies opened the doors for foreigners to enter into banking sector under joint venture. Consequently, the third commercial bank in Nepal, or the first foreign joint venture bank, was set up as Nepal Arab Bank Ltd (Nabil Bank Limited) in 1984.
Thereafter, two foreign joint venture banks, Nepal Indosuez Bank Ltd. (now called as Nepal Investment Bank) and Nepal Grindlays Bank Ltd (now called Standard Chartered Bank Nepal Ltd.) was established in 1986 and 1987 respectively. Thereafter, twelve commercial banks have been established within the period of 12 years. Nepalese banking system has now a wide geographic reach and institutional diversification. Although, Nepalese financial sector is dynamic, a lot of scope for development of this sector exists. This is because the banking and non-banking sectors have not been able to capture all the potentialities of business till this time. It
is evident from the Rural Credit Survey Report that the majority of rural credit is supplied by the unorganized sector at a very high cost – perhaps being at two or three times of the formal sector - suggesting that the financial sector is still on the path of gradual development. Overdue loans and inefficiency of the older and the larger of commercial banks have aggravated and have been made to compete with the new trim banks with no rural operations. Also, the commercial banks, domestic or joint venture, have shown little innovation and positive attitude in identifying new areas of saving and investment opportunities.
In the long run, the Commercial Bank Act was established in 2031 after its need was greatly felt. According to section 2(a) of the Commercial Bank Act 2031, a “Commercial Bank” is a bank which operates currency, exchanges transactions, accepts deposit, provides loan, and performs dealing relating to commerce. It is concerned with commercial and financial activities. A commercial bank is the backbone of the nation for economic development and improvement which drives towards the pace of sustainable growth and development of the country. A commercial Bank is basically a type of financial intermediary. It is also called as business banking. This kind of a bank deals with deposits and loans from corporations or large businesses. It is also different from retail banking as it does not provide direct financial services to consumers.
Bank plays an important role in the economic growth of a country. Banking when properly organized, aids and facilities the growth of trade and industry and hence of national economy. In the modern economy, banks are to be considered not merely as dealers in money, but as the leaders of development. “Banks are not just the store houses of the country’s wealth but are the reservoirs or resources necessary for economic development.”
In the context of a developing country like Nepal, a commercial bank can play a key role to promote the national saving. Commercial banks are engaged in persuading people to save and invest in the bank in the form of deposit. Saving is necessary for investment and if investment is not possible, there is obstacle in the way of capital formation, because investment brings about capital formation. Economic growth of country depends on the growth and development of trade and industry, and industrial
Figure: 1.
Shareholder’s Structure
General public ; 49% Promotors; 51%
(Source: Annual Report, PCBL 2015/2016)
1.4. Members of Board of Directors of PCBL The bank focuses more on leadership skills and working in teams capabilities in its management team. These two factors are considered as key success factors for any organization. The rising trend of globalization and recent management turnover in the leading bank of the world owing to recession has started demanding dedicated professionals and PCBL is no exception to it.
The management team should not only be able to compete domestically but also have an international exposure so as to exploit numerous opportunities as well as to sustain the great degree of rising competition in the sector. PCBL management team comprises of experienced professionals with years of experiences in different commercial banks and other financial sector of the Nepal.
The management team of the bank is committed towards the upliftment of the bank in the height of success through customer satisfaction. The professionals comprising of present Boards of Directors (BODs) are as follows:
Table: 1. Members of Board of Directors Designation Name
Chairman Mr. Udaya Mohan Shrestha
Director
Mr. Rajendra Das Shrestha
Mr. Narendra Bajrachary
Mr. Shyam Bahadur Shrestha
Director- Public
Mr. Uttam Narayan Shrestha
Mr. Gajendra Bista Company Secretary Mr. Santosh Baral
Source :( PCBL website)
1.4. Organization Structure of PCBL An organizational structure defines how activities such as task allocation, coordination and supervision are directed toward the achievement of organizational aims. Organizations need to be efficient, flexible, innovative and caring in order to achieve a sustainable competitive advantage. Organizational structure can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
An organization can be structured in many different ways, depending on its objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of
As of Fiscal Year 2074/75, the bank has all together 56 branches across the country, out of which 17 branches are inside Kathmandu Valley and 39 branches are outside the valley. The Branches of PCBL are as follows:
Table 1. Branches of Prime Commercial Bank Limited SN Name of the Branch Address
1
Central Office / Kamalpokhari Branch Kamalpokhari, Kathmandu, Nepal 2 Ason Branch Ason Kamalakchi, Kathmandu
3 Bagbazar Branch Bagbazar, Kathmandu
4 Balaju Branch
Machhapokhari Chowk, Balaju, Kathmandu 5 Kalimati Branch Kalimati, Kathmandu 6 New Baneshwor Branch New Baneshwor,Kathmandu 7 Gatthaghar Extension Counter Gatthaghar, Bhaktapur 8 Chabhil Branch Chuchepati, Kathmandu 9 Koteshwor Branch Koteshwor, Kathmandu 10 Manbalbazar Branch Mangalbazar,Lalitpur 11 Sorakhutte Branch Old Baneshwor, Kathmandu 12 Patan Branch Lagankhel,Lalitpur 13 Sorakhutte Branch Nayabazaar, Kathmandu 14 Panauti Branch Panauti, Kavre 15 Samakhusi Branch Samakhusi,Kathmandu 16 Newroad Branch Newroad, Bira Complex Kathmandu 17 Banepa Branch Banepa 18 Bhairahawa Branch Bank Road, Milan 19 Bharatpur Branch Chaubishkothi,Bharatpur,Chitwan 20 Biratnagar Branch Biratnagar, Morang 21 Dharan Branch Mahindra Path, Dharan 22 Ithari Branch Sunsari 23 Jiri Branch Jiri VDC, Linkan Bazar, Dolakha 24 Kawasoti Branch Kawasoti, Nawalparasi 25 Manakamana Branch Manakamana, Gorkha 26 pokhara Branch New Road, Pokhara, Kaski 27 Sindhuli Branch Bank Road, Sindhuli 28 Taplejung Branch Birendra Chowk,Phungling 29 Gorkha Branch Haramtari,Gorkha 30 Birtamod Branch Anarmani VDC,Jhapa
31 Battar Branch Battar,Nuwakot 32 Nepalgunj Branch Nepalgunj,Dhamboji 33 Birgunj Branch Birgunj,MainRoad, MaiSthan Marga. 34 Traffic Chowk Branch Traffic Chowk,Biratnagar 35 Damak Branch Damak ,Jhapa 36 Biratchowk Branch Biratchowk ,Morang 37 Surunga Branch Surunga ,Jhapa 38 Budhabare Branch Budhabare ,Jhapa 39 Gauradaha Branch Gauradaha ,Jhapa 40 Inaruwa Branch Inaruwa ,Sunsari 41 Kanchanbari Branch Kanchanbari ,Biratnagar 42 Letang Branch Letang ,Morang 43 Chandragadi Branch Chandragadi ,Jhapa 44 Chakraghatti Branch Chakraghatti ,Sunsari 45 Puspalal chowk Branch Puspalal Chowk ,Biratnagar 46 Gaurigunj Branch Gaurigunj ,Jhapa 47 Khanddari Branch Khandbari ,Sankhuwasabha 48 Tumlingtar Branch Tumlingtar ,Sankhuwasabha 49 Sidhuwa Branch Sidhuwa ,Dhankuta 50 Narayangard Branch Narayangard 51 Butwal Branch Butwal 52 Baiteshwor Branch Baiteshwor,Dolakha 53 Shahid Lakhan Branch ShahidLakhan,Gorkha 54 Necha Salyan Branch Ramitebazar Tingla, Solukhumbu 55 Lek basi Branch Dasharathpur, Surkhet 56 Bhimphedi Branch Bhimphedi,Makawanpur Source :( PCBL website)
1.4. Mission/ Vision of PCBL
Mission The mission of Prime Bank are as follows:
To make a qualitative lending commercial bank in the Nepalese market to support all kinds of businesses including personal needs of the Nepalese citizens. To render quick and prompt banking services to the customers. To involve in aggressive marketing and business promotions to promote the banking products and awareness among the citizens where the country has large number of citizen who are still far away from the banking services.
1.4.5 Privilege Saving Conditions for opening account
Only promotors of PCBL are allowed to open this account Minimum Balance: NPR 1000 Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Feature
On Demand Statement Free Cheque Book Free SMS/Internet Banking Free ABBS Facility Unlimited Withdrawal/ Deposit
1.4.5 Prime Saving Conditions for opening account
Minimum Balance: NPR 50, Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Features
On Demand Statement Free Cheque Book Free SMS/Internet Banking Free ABBS Facility Unlimited Withdrawal/ Deposit
1.4.5 Public Saving Conditions for opening account
Minimum Balance: NPR 100 Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Features
On Demand Statement Free ABBS Facility Unlimited Withdrawal/ Deposit
1.4.5 Prime Corporate Staff Saving Conditions for opening account
Minimum Balance: Zero Balance Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Features
On Demand Statement Free Cheque Book Free SMS/Internet Banking Free ABBS Facility Unlimited Withdrawal/ Deposit
1.4.5 Prime Shareholders Saving Conditions for opening account
Minimum Balance: Zero Balance Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Features
On Demand Statement Free Cheque Book Free SMS/Internet Banking Free ABBS Facility Unlimited Withdrawal/ Deposit
1.4.5 Prime Gold Saving Conditions for opening account
Minimum Balance: NPR 25, Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis
Conditions for opening account
Minimum Balance: Zero Balance Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis Eligibility: Students of plus two or higher colleges of any faculty (Valid I. Card of college, Birth Certificate shall be obtained if the account holder is below 16 years)
Features
Any Branch Banking System (ABBS) SMS / E- banking( Internet Banking) Balance Certificate Internet Banking Payment of NTC Bills at counter
Privileged Facilities
25 % discount on Debit Card issuance fee 50 % discount on USD Travel Prepaid Card issuance fee 50 % discount on remittance fee ( Draft, RTGs to India ) 25 % discount on loan processing fee for Education Loan
1.4.5 Prime Teacher Saving Conditions for opening account
Minimum Balance: Zero Balance Interest Rate of 8% p. applicable on daily balance Interest posting on quarterly basis Eligibility: Salaried teachers of school/college/educational institute(Letter from Employer or Office I. Card shall be obtained)
Features
Any Branch Banking System (ABBS)
SMS / E- banking( Internet Banking) Balance Certificate Internet Banking Mobile Banking Payment of NTC Bills at counter
Privileged Facilities
25 % discount on Debit Card issuance fee 50 % discount on USD Travel Prepaid Card issuance fee 50 % discount on Good for Payment Cheque issuance fee 50 % discount on rental charges of Safe Deposit Locker (subject to availability) 50 % discount on remittance fee ( Draft, RTGs to India ) 25 % discount on Credit Card issuance fee
1.4.5 Fixed Deposits
1-3 Months Interest Rate 9% Interest Posting Quarterly
6 Months
Interest Rate 10% Interest Posting Quarterly
1 Year and above
Institutional Public and other Interest Posting 11% 11% Quarterly
1.4.5 Remittance and Transfers PCBL offers a range of services for retail or online money transfers with low fees for the PCBL account holders as well as non-account holders.
365 Days Banking PCBL have been offering 365 days banking from its New Road branch, which is located at New road where evening counters and holiday counters are provided to the customers. The bank provides services like deposit, withdrawal, ABBS facility, cheque collection, foreign currency exchange, etc.
SMS and E-Banking PCBL allows its customers to keep track of their account through SMS banking and E-Banking services. The customers can inquire balance, change pin, view last 5 transactions, etc. in SMS Banking and in E-Banking also they can inquire balance and check account, interest and tax statement. SMS service is available only on mobile phones of NTC network. Safe Deposit Locker Storing valuables at home becomes a security issue. Thus, PCBL offers safe, trustworthy space to store valuables, documents and other things in its safety locker. Customer should deposit Rs, 000 to Rs, 000 to use the locker facility and annual fee from Rs to Rs is charged according to variety of sizes of locker.
1. Objectives of the Internship
The main objective of the internship program is to relate the theoretical knowledge with practical knowledge. The study also helps to gain professional experience in the real work environment. Beside this, the other part of the objective is to develop intern’s skill on problem solving, communication, decision-making and build up confidence, time management, etc.
Considering these objectives, intern had chosen this internship in one of the leading bank of Nepal, PCBL (Prime Bank Limited) which is one of the top most banks in the Nepalese banking industry and it was one of the best places to strengthen the personal abilities and at the same time fulfill the internship objectives.
Some of the major objectives of this internship program are as follows:
To meet the partial fulfillment of the requirements for the degree of BBA under Pokhara University. To provide practical exposure to the industry. To study and analyze working system of the various departments of the bank. To develop the managerial behavior and skills through observation and work experience in the organization. To understand the major functions along with products and services of commercial banks. To know the work division and working procedures in the organizational setup. To understand the general banking activities, culture and policies. To observe and analyze the various problems that arises in the operational processes. To obtain an internship with PCBL that will benefit from an advanced knowledge of economics, finance and customer service skills.
1. Methodology of the Internship
The present internship study focuses on the direct involvement in the process and personal observation, which helps student get a better insight. The research methodology is the process of arriving at the solution of a problem through planned and systematic dealing with the collection, analysis and interpretation of facts and figures.
1.6. Organization Selection Organization selection is the crucial factor in an internship, because it is the place where intern gains practical knowledge of what they study in the classroom. For the completion of the internship, the intern approached the PCBL. The intern needed to select that organization which could help him/her learn the various aspects of the working environment, build up the confidence level, develop the interpersonal skills and many more skills which will help intern grow and develop as a professionals in their career.
Chapter 1 - Intern Reports of Nepalese bank
Course: Mba
University: Pokhara University
