Deposit Analysis of Himalayan Bank

Submitted By:
Papila Tamang
T.U. Regd No:7-2-538-71-2010
Saraswati Multiple Campus
Roll no:5173

A thesis proposal

Submitted to:
Head of research Department
Faculty of management
Tribhuvan University

In partial fulfillment of the requirement for the degree of

Masters of Business Studies (M.B.S)

Lainchaur , Kathmandu
2020
 Table of contents
Page no
1. Background of the study ………………………………………1
2. Statement of problems…………………………………………2
3. Objectives of the study ………………………………………...3
4. Theoretical framework………………………………………....3
5. Significance of the study ………………………………………4
6. Limitations of the study ……………………………………….5
7. Review of literature …………………………………………….5
8. Methodology…………………………………………………….6
8.1 Research Design
8.2 source of Data
8.3 Sample Size
8.4 Tools and Techniques of Analysis
9. Organization of the study……………………………………….7

References

1. Background of the study

Nepal is one of the least development countries under the line of the poverty
line. Agriculture plays a crucial role in Nepalese economy. The development
of bank in Nepal is in stage. This is why bank plays primitive role for the
economic development of Nepal on which no other organization are not
likely to substitute at all.
In the banking history of Nepal, it started on 8th century when king Gunak
mahadev took loan from the public for the reconstruction of Kathmandu
Valley. Then, in 1989 B.S when Taskbar bibhag was establish wince when
coins were created scientifically.
The modern banking system in Nepal started from the establishment of the
Nepal bank on 2012 B.S. Baishakh 14th which is only the central bank of
Nepal. It issued the nepali note on 2015 falgun7th for the first time. It has
been helping to make banking system more systematically and dynamically
since that times. later in 2022 B.S another commercial bank named Nepal
Banijya Bank was established . Since then banking activities has been
increasing rapidly
In order to operate all the commercial banks uniformly under a single act ,
commercial bank act 2031 was enacted . In 2042 B.S Nepal also adopted
liberal and free economy and allow to establish joint Venture bank with
foreign banks. Since then many joint venture banks and private commercial
banks have been operated.
Now there are 27 "A" class commercial banks in Nepal .Himalayan bank is
one of the largest private bank of Nepal . The bank was incorporated in 1992
A.D.by few eminent individual of Nepal in partnership with the employees
provident fund and Habib bank limited of Pakistan .

The bank commenced its operation in January 1993. Himalayan bank is the
first commercial bank of Nepal with most of its shares held by the private
sector of Nepal.

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2. Statement of problem
Being Nepal as underdeveloped country, naturally it has a numerous
problems. The pace of development is not so fast in Nepal . Nepal has been
developing its infrastructural development and others however Nepal is
blocked for development because of some unwanted situations such as
Nepal banda, chakka jam, political instability and so on .
IN fact, economics development of the country need capital investments.
Capitals are raised from deposits made by the general people of the country.
But in Nepal, people save their money at home . The trend of deposit has
not been yet satisfactory. As such, there is a shortage of capital. The
situation aroused because bank provides low interest rate.
To collect lot of deposit and utilize in different sources, commercial banks
must need effective rate of interest to attract the customer and try to rise the
deposit of the bank . Commercial banks must try introducing Nepalese
people to save maximum possible extent.

As we know that Nepal is under developed country so rapid economic

development is the basic need of the country which cannot be achieved
through overnight, so proper planning should be built up to reach targeted
goals. In Nepal, the process of development started only after 1986 when the
first 5th plan came into practice. Proper implementation of planning, capital
is required which plays the leading role for the economic development of the
country. These are various source of accumulating the capital.
 External source
 Internal source
Under external source aid, grants and loans are the main source though it
cannot be considered as a permanent source.

Under internal source, taxes, public enterprises , public debt and

miscellaneous loans are popular source of capital . but due to poverty , lack
of banking knowledge , desired capital cannot be accumulated to increase
internal source of capital. Banks are opening their branches not only in
urban areas but also in as.

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But even these banks have not yet been successful much in mobilizing
capital for productive purpose. It can be said that due to the lack of banking
knowledge, education, poverty, low per capita income, banks are unable to
upgrade their capital for investment and increase their profit .

3. Objectives of the study

In Nepal present situation, the government and banking sectors has adopted
a policy to provide maximum banking facilities to the country for the rapid
economic growth by a keen competition among different banks including
foreign banks. The basic objectives of the proposal is to understand the
basic concept as being a management student the knowledge might be
helpful for the increment of career in near future . The other objectives of
the proposal concerning the subject matter of himalayan bank are as
follows;

a. To know the position of total deposits

b. To know on trend of total deposits
c. To know the deposit mix of HBL
d. To know on trend of fixed deposit
e. To know relationship between fixed deposit and total deposit
f. To know on cash and bank balance to total deposit
g. To know on cash and bank balance to fixed deposit
h. To know on strength , weakness , opportunities and threats of HBL

4. Theoretical framework
Deposits are defined as funds placed in a financial institution by economic
surplus units such as households, corporations, investors and government.
These funds can either be from cash, claims to money, like cheques
placed in depositor's accounts, bank loans or money from investments.

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These institutions are called deposit-taking institutions. Other financial

institutions that do not comply with the definition in the Act are non-
deposit taking institutions and hence, are prohibited from taking
deposits from the public. Examples of non- deposit taking
financial institutions are factoring or leasing companies. The importance of
deposits to an economic system is paramount in several ways. By
depositing money in a bank, the customers expect the bank to
safeguard their savings, to utilize them into productive investment for
a satisfactory rate of return or to enable them to facilitate their payment
transactions. At minimum, a customer expects that he gets back a deposit
that he puts in a bank and the bank has a contractual obligation to honor the
claim on demand or upon withdrawal. Banks uses customer's deposits
mainly to give out loans to deficit economic units or borrowers.
Besides loans, banks also mobilize deposits by purchasing trading
securities, investments and maintain some cash in hand.
The larger the amount of deposits a bank receives from its customers,
the better is its capacity to give out loans and the higher is the interest
income. Banks ability to create credit and able them to supply money
to borrowers, suppliers and investors to conduct economic activities,
such as opening up plants, funding their working capital requirements,
financing their business expansion or increasing their investments. Such
economic activities create job opportunities, increasing productivity and
income, which subsequently lead to wealth creation in the economy.
For interest-bearing deposits, interest rate is very important. When market
interest rates rise, so would deposit rates and this would attract higher
deposits to flow into the economic system.

5. Significance of the study

Mostly among the various deposit features provided by commercial banks,
fixed deposit is considered to be more important. In the case of team
deposit although the bankers pays interest (longer the period higher the rate
of interest) the fund are committed for the longer periods, which can be

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safely lent for long term project. But in case of current deposit although no
interest is payable these deposits are repayable at demand and therefore
bankers must be caution in lending such deposits. Fixed deposit is
considered to be must suitable because these deposits can be invested in
long term loans with higher rate of return and hence helps to earn high
profits. Moreover the proposal report itself keeps important for the banks.
This help to equity holders, investors to get to get management faculty like
teachers, researcher and students etc.

6. Limitation of the study

The study does not present the detailed analysis if deposit of HBL due to
the lack of time relevant data and resources. This study is limited to the
information that was available from the bank and other sources that are as
follows

 Annual report of HBL

 Report should be submitted with in specific time period
 Limited types of ratio analysis are adopted to fulfill the basic
objectives of the fieldwork
 Study is mostly based on secondary data
 Based on statistical publication, annual report and references of
various books and other available data
 Limited with in past 5 years trend
 Lack of budget

7. Review of literature
A literature review is a summary and analysis of current knowledge about a
particular topic or areas of inquiry. It is the process of learning and

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Understanding the concept of the related topic. The purposes of literature
review are as follows

 Identifying variables relevant for research

 Synthesis of prior works
 Avoidance of repetition
 Determining meaning and relationship among variables

8. Methodology
8.1 Research Design
First of all, the researcher has indentified the places where required
information and concerned data of the study could be collected. The
researcher chooses loan department, HBL. For the purpose of contacted
interviewed several personnel's and collected the information and data
available with them. Only the useful information and data have been
studied and analyzed carefully. Unnecessary information and data have
been omitted to make the proposal simple and straightly concern with its
objectives.

8.2 Sources of data

The study is based on the secondary data of HBL. All the necessary data
has been collected from HBL such as annual reports and prospectus of
HBL. The researcher also referred to various other books to clear at the
concept.

8.3 Sample Size

I have chosen the Himalayan bank limited to prepare the field report

8.4 Tools and Techniques of Analysis

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 The collected and observed data are tabulated after adjusting necessary
amounts of each overheads; however for the analysis of data the following
two tools are used

 Financial Tools
These wide areas of financial tool that can be applied in order to analysis
the financial performance of HBL. But for this following ratio analysis ad
tools are used.
a) Liquidity Ratio
i. Cash reserve ratio
ii. Balance with NRB to total deposit
iii. Balance with NRB to fixed deposit
b) Fixed to other ratio
i. Fixed to total deposit ratio
ii. Cash and bank balance to fixed deposit
iii. HBL fixed deposit to total deposit ratio
 Statistical Tools
Similarly after collecting the numerical data for statistical enquiry, it has to
be classified and tabulated and as well as , other different type of statistical
tools can be used to examine the economic data of HBL, but for this study,
following tools are taken ;
i. Mean
ii. Correlation coefficient
iii. Deviation
iv. Bar diagram
v. Pie-chart

9. Organization of the Study

The whole study is divided into five different chapters. They are:
Chapter I is the introduction chapter. It includes background of the study,
statement of the problems, objectives of the study, significance of the
study, Limitations of the study and organization of the study.

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Chapter II deals with reviews of literatures, which includes theoretical
review and review of related studies.

Chapter III is research methodology which includes research design,

sample size, source of data, tools and techniques.

Chapter IV deals with analyzing the data of the sample banks related to the
deposit analysis and the opinion of the respondents. It also shows major
finding of the study.

Chapter V includes summary and conclusion of the study. It also deals with
recommendations suggested.

Besides these, references and appendix are presented at the end of the
study.

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 REFERENCE
Adhikari ,DR. Pandey, DL (2073). Business Research method, Kathmandu:
Asmita publication,Joshi, Padamraj.(2012). Fundamentals of financial
management. Kathmandu:Asmita publisher and distributer. Nepal Rastra
Bank Samachar, Yearly publication 2073Bhandari . M (2014). A comparative
financial performance analysis of Himalayan bank and everest bank limited
Bajracharya, B.C. (2053), Business statistics & mathematics, M.K. publishers and
Distributors.
Brigham, Weston, Essentials of Managerial Finance”, Eleventh Edition, University
Publishers,
USA.
Kothari, C.R., Research Methodology”, Mc. Grow
Hill Company, second Edition.
Shekhar and Shekhar “Banking Theory & Practice”, Eighteenth Revised Edition,
1996.
Himalayan Bank limited, Banking and Financial Statistics,
Annual report of HBL bank www.hbl.com/np