Prepared By:: An Internship Report of Nepal Rastra Bank (NRB)

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An Internship Report of

NEPAL RASTRA BANK (NRB)

Prepared by:

Subin Shrestha

K&K International College

Submitted to:

Internal Administration Office

Banking, Baluwatar

April 25, 2021

In partial fulfillment of the requirements for the degree of

Bachelor of Business Administration


Acknowledgement

This report is the result of continuous effort and extended support of many people. The

preparation of this report needed a lot of effort and suggestions of many people in order to get to

its complete form. Firstly I would like to thank King’s College (Affiliated to Westcliff

University, CA, Los Angeles) for designing a platform where we can gain not only theoretical

knowledge but also practical knowledge.

First and foremost, my major indebtedness goes to Nepal Rastra Bank, Banking Office,

Thapathali for giving us an opportunity to use our theoretical knowledge in the practical field in

course of my internship program. A sincere gratitude to Mr. Rajan Bikram Shah, Executive

Director, Banking Office, Thapathali, Mrs. Binita Bista (Acting Director), Deputy Director

Mr. Raj Kumar Shrestha, and Mr. Satendra Subedi for providing me such an opportunity to

complete my internship at their bank. I am very thankful to all the staffs of banking department

for providing me proper guidelines and valuable suggestion throughout the internship period and

answering all my queries without hesitation despite their busy schedule.

Finally, I would like to pay heartwarming thanks to my family and my dear friends for their

valuable support and assistance. Though I am not a professional or experienced in this field but I

had tried my level best to make this project according to the internship guidelines.

Yours Sincerely,

Kabita Saud

BBA, 8th Semester

King’s College
Table of contents

Topics

1. INTRODUCTION

1.1 Background

1.2 Objectives of study

2. INTRODUCTION TO THE ORGANIZATION

2.1 Introduction of Nepal Rastra Bank

2.1.1 Departments under NRB

2.1.2 Organizational Structure of NRB

2.2 Introduction to Banking Office

2.3 Functions of Departments

3. ACTIVITIES DONE AND PROBLEM SOLVED

Ledger Lekha Department

Transfer Department

Electronic Cheque clearing Department

4. OBSERVATION, EXPERIENCE AND SKILLS LEARNT

5. SUMMARY AND CONCLUSION

5.1 Conclusion
Introduction

1.1 Background of Internship

Bachelor in Business Administration (BBA) is a special program in semester system,

designed to develop socially responsive, creative, and result oriented management professionals

to fill up the middle level managerial positions in the rapidly growing business sectors in Nepal

and abroad. It is a 4 years course with eight semesters that prepares students step by step towards

professionalism in the field of Business and Economy.

Furthermore, internship helps bringing out the hidden capability of students and makes

them able to face the internal as well as external environmental challenges. Through the

provision of the internship; one can understand the real scenario of the organization by being the

member of that same organization for a predetermined period. As per the course requirement of

the BBA program every eighth semester student should prepare the internship report after the

completion of the eight weeks internship in the institution. Since I have completed the internship

in Nepal Rastra Bank, Central Office, this report is the outcome of the valuable real life

experiences that I obtained during the internship in that organization. Getting involved in NRB

as an intern in Financial Management Department; I got real job-place experience and got the

chance to feel the different situations from the perspective of both the employees and the

customers. This internship had been fruitful because it had helped me to see the same things

from the two opposite directions and find the difference in the perception of these two

completely opposite sides as a neutral observer.

1.2 Objective of Internship

The main objective of the internship is to explain banking practices of NRB gained during the

internship period. The specific objectives are as follows:


 To learn the basic skills of accounting practices.

 To perform various activities such as maintaining government daily accounts and

monthly accounts of those banks who does government transaction with NRB.

 To assist in systematic arrangement of important files and documents.

 To have brief knowledge about rate determination and foreign currency management.

 To gain theoretical knowledge of the procedures, functions and responsibilities of

various departments that is in the banking office along with having practical know

how of the services they provide to their customers.

 To identify and study the problems and prospects of the organization using the

conceptual knowledge gained in the academic courses.

 To relate the different management theories learnt in the classroom with the

management practices used in the bank’s daily practice.

 To expand basic research skills by thoroughly going through the process of data

collection, analysis and interpretation

 To widen interpersonal and communication skills through the continuous interaction

with the various employees and related people of the organization.

 To learn how to deal with the different kind of customers of the organization along

with developing valuable skills on how to give proper services so as to increase

customer satisfaction.
CHAPTER II

BRIEF PROFILE OF NEPAL RASTRA BANK AND BANKING DEPARTMENT

2.1 Introduction of Nepal Rastra Bank

Nepal Rastra Bank (NRB), the Central Bank of Nepal, was established in 1956 under the NRB

Act, 1955, to discharge the central banking responsibilities including directing the development

of the emergent domestic financial sector. The functions and objectives of the bank have been

recast by the new NRB Act of 2002. Since inception, there has been a significant growth in both

the number and the activities of the domestic financial institutions. But the way how Central

bank has developed in Nepal has a curious history because it came only after the development of

commercial banks.

NRB is non- profit organization established under complete government ownership. It manages a

state's currency, money supply, and interest rates. NRB usually keep an eye on the commercial

banking system of a country and acts as a banker, advisor, the lender of the last resort and

financial agent of Government of Nepal.

The central office of NRB is located at Baluwatar and Thapathali in Kathmandu. There are 19

departments established to carry out its functions. The central administrative departments are

located at Baluwatar. The Banking office, Currency management department, Public debt

management department and bankers’ training center are located at Thapathali. NRB has opened

a number of offices and currency exchange counters in various parts of the economically active

areas in country. There are 7 offices outside Kathmandu Valley. They are located at: Biratnagar,

Pokhara, Siddharthanagar, Nepalgunj, Dhangadi, Janakpur, and Birgunj.


Objectives

The objectives of NRB are crucial because of their significance influence in the workings and
methods of operations of financial market. To reflect the vibrant environment, the functions
objectives of the bank have been recast by the new NRB Act of 2002, the preamble of which lays
down the primary objectives of the bank as:

 To develop a secure, healthy and efficient system of payments

 To make appropriate supervision of the banking and financial system in order to maintain
its stability and foster its healthy development

 To manage liquidity, ensure financial stability and promote financial services

 To promote entire banking and financial system of Nepal for enhancing its public
credibility

 To regulate, inspect, supervise and monitor the banking and financial system

 To avoid institutional failures- minimize the effects of the financial panics in the nation’s
financial system

 To prohibit banks and financial institutions to deal with activities providing too risky for
them to face serious future financial consequences to avoid unfavorable financial
difficulties

 To further enhance the public confidence in Nepal's entire banking and financial system

2.1.1 Departments under NRB

Nepal Rastra Bank is central regulating body of financial institution in Nepal. It consists of
diverse range of financial activities performed by various branches and division. The following
are the major Departments of Nepal Rastra Bank.

i) Human Resources Management Department


ii) General Services Department
iii) Financial Management Department
iv) Research Department
v) Foreign Exchange Management Department
vi) Internal Audit Department
vii) Banks and Financial Inst. Regulation Department
viii) Bank Supervision Department
ix) Financial Institutions Supervision Department
x) Micro-Finance Department
xi) Information Technology Department
xii) Bankers Training Center
xiii) Legal Division
xiv) Public Debt Management Department
xv) Corporate Planning Department
xvi) Currency Management Department
2.1.2 Organization Structure of NRB

2.2 Introduction to the Banking Office

As an Intern I was assigned to observe and do job in the divisions and sections of Banking office.

Banking office is the main part of NRB operation. It undertakes diverse work being the agent of

government, as bank of banks and financial institutions. Banking office manages account of

government agencies & commercial banks, collects revenue , makes cash payment from the
government accounts, transfers from controller’s offices to the designated accounts as per the

instruction, prepares drafts, remits amounts within the country and outside, public debt

management functions i.e. keeping accounts of the government securities, payment of interest

and principle of government securities, payment of the pension to the retired NRB staffs,

determination of fiscal position of the government by consolidating government transactions

undertaken by commercial banks on behalf of NRB. Kathmandu banking office has also been

operating a clearing house, which is responsible for clearing and settlement of negotiable

instruments (cheques and bills) in Kathmandu valley from the member banks and financial

institutions. There are various departments under banking office like:

 Administration department,

 Transfer department,

 Ledger department,

 ECC department,

 Foreign exchange department

o Remittance Section

o Letter of credit section

o IC Section

2.3 Functions of the department

A. Ledger department
This department acts as customer service department which is responsible to provide various

initial services to the government organizations, financial institutions and public institutions. It

performs various activities under this section which are:

1. Pension payment

Every month the pension is paid to the retired NRB staffs upon presenting the RED BOOK

which holds the details of their account number, name, address, employee identification, service

period, position during retirement, nominee of the account. With the input of account number in

the system of NRB i.e. Olympic we can easily get the information on how much pension is to be

paid. After the signature verification of the retired employee or the nominee the pension amount

is debited from the respective account. This is again validated by another staffs and if all the

details are correct then payment is made. If the retired staffs is unable to come to take the

pension then he/she can send some other person with the signed application “manjurinama” of

taking the pension amount on his/her behalf. But this works only for three months and after that

the employee him/herself should be present. This rule is made to avoid the fraud.

2. Account opening

Another function performed by ledger department is to open the account of the government

organization, financial institutions and public institutions which is done after fulfilling the

following criteria’s:

 Recommendation letter from Financial Comptroller General Office (FCGO) and other

concerned government offices to open current account

 Signature card with the name and position along with signature of minimum two

authorized person of concerned organization

 Letter from the respective offices


 Signature card should include stamp of that organization and should be verified by

Financial Controller General Office (FCGO).

3. Signature updates

During the course of operations there occur changes in the members of management committee,

board of directors. Hence, this department updates the signature of the newly appointed members

by removing the previous one which is done after the following criteria:

 Letter from the respective organization with the authorized signature to change and

update the signature

 Brief information on which signature to be cancelled and to be replaced.

 Valid reason on why signature is being changed.

 Stamp of the organization on the signature card as well as application letter.

 The process is made after the deputy director validates the letter and signature card

followed by signature scan and update in the system.

4. Issuance of cheque books

The function of the ledger department is to issue the cheque books to the organizations that have

accounts in NRB. The cheque is used by the organization to make the various payment and

transfers to their concerned parties. The cheque is issued upon fulfilling the following criteria:

 Letter from the respective organization demanding the issuance of new cheque book with

minimum two compulsory authorized signatures, stamp of the organization and name of

the staff send.

 Presentment of demand slip attached in the previously issued cheque book.


 ID photocopy of the staffs who will receive the cheque on behalf of the organization.

 If all the details is found feasible then the cheque is issued by imputing the cheque

numbers in particular account in the system as well as register.

 A signature card is also given to the person who is receiving the cheque which needs to

be duly signed by the authorized person and bring back to ledger department.

 Upon receiving the signature card, cheque is then made valid to use.

5. Interest and principal payment on development bonds

With the view to balance the supply and demand of money in the market NRB issues the 90-days

treasury bills, promissory note as well as development bonds to make investment. When the

money is being hold by the public then this instruments are issued in order to make the

investments in the development of the country. This department then provides the interest

amount semi-annually or annually along with the principal amount on the time of maturity. This

activity is performed after fulfilling the following criteria:

 Presentment of the original certificate of T-bill, promissory note or development bond

which contains information regarding the amount, interest rate, maturity date, date and

place of issuance, and issuer's signature issued by NRB.

 Liable person or (manjurinama) from the authorized person to get the interest and

principal amount.
 Civil and national bond interest payments are done in every 6 months. For financial

institutions 15 percent tax will be imposed and for individual 5 percent.

II. Transfer Department

Essentially, an electronic funds transfer is a transaction by which funds move from one

institution to another or one account to another at the direction of an institution’s customer and

through the transmission of electronic instruction messages that cause the institutions to make

the required bookkeeping entries and make the funds available. The funds transfer process

generally consists of a series of electronic messages sent between financial institutions directing

each to make the debit and credit accounting entries necessary to complete the transaction. NRB

uses Olympic software to transfer funds as per the message or voucher received for transfer. This

transfer of fund may be through electronic instruction messages (SWIFT) or through cheque. The

second and another important activity performed by the transfer department is recording the tax

voucher. Various organizations have to pay tax to the government, and this is paid by

organization through NRB.

III. Electronic Cheque Clearing (ECC) Department

Nepal Rastra Bank in collaboration with Nepal Clearing House Ltd (NCHL) operates ECC

system in Nepal. ECC System offers banks and financial institutions with an electronic medium

of cheque clearing and establishes a national payments gateway to facilitate electronic payments

& financial transactions across banks and financial institutions within the country. This system

has been made possible through the establishment of Nepal clearing house limited (NCHL).

Nepal Clearing House Limited (NCHL) is a public limited company established on 23rd

December 2008(9thMangsir 2065) under the leadership and guidance of Nepal Rastra Bank (The

Central Bank of Nepal) and Nepal Bankers Association. NCHL initially implement and operate
NCHL-ECC System in Nepal offering banks and financial institution with an electronic medium

of cheque clearing and later, establish a national payment gateway to facilitate electronic

payments and financial transactions across banks and financial institutions within the country.

Electronic Cheque Clearing (ECC) System provides means to electronically transfer cheque

images through a secure medium thus completely replacing the traditional physical routine of

moving paper-cheque among the banks and clearing house, which has resulted in significant

reduction of tedious and time consuming manual process of cheque clearing, both for the banks

and for the customers.

Individual banks and financial institution are enrolled within NCHL network as participating

members and are responsible for their clearing operation. It has 128 members including bank and

financial institutions. The software used for electronic cheque clearing is ProgressSoft. Nepal

Clearing House (NCH-ECC) currently support cheques clearing of four currencies like Nepalese,

U.S Dollar, GBP, and Euro Dollar with presentment cut off time at 14:00, paying bank response

cut-off time at 15:00 and final settlement at 15:30 for standard, regular (Magnetic Ink Character

Reader (MICR)) cheques. Previously non-standard (existing non-MICR) cheques were also

presented for clearing but from 1st Ashoj 2072 only MICR cheques were accepted.

This department with the help of NCHL performs various functions which are as follows:

1. Clearing Outward:

Clearing outward is the process of crediting the account of the organization having account in

NRB. In clearing outward section, the customer presents cheques of different commercial banks

and financial institutions to be deposited to different accounts of NRB. Upon receiving the other

institutions cheque, outward section of NRB signs and endorses it, then scans it and sends to

concerned authority through progress software. It sends cheque to respective banks for approval
to deposit amounts to different payee’s accounts maintained at NRB. The cheques presented are

generally of four currencies i.e. Nepalese, U.S Dollar, GBP, and Euro Dollar.

2. Clearing Inward:

Clearing inward is the process of debiting the account of the organizations which have account in

the NRB upon the verification and acceptance of cheque presented electronically. In this process

the cheque of NRB presented in other financial institutions is scanned and send through progress

software. Original cheque remains with the concerned financial institutions. Upon Checking the

cheque no., a/c payee stamp, amount in figure and words, date, account no. from face cheque and

checking endorsement stamp, reference a/c from back, the cheques are accepted which goes to

Manual CFI. From Manual CFI both the accepted cheque and rejected cheque go to Financial

clearing with reason specified for rejection of cheque. From there, after verification for sufficient

balance and signature, the cheques go to Clearing Approval and finally accepted cheques are

send to NCHL for final clearing that facilities electronic payment.

3. Final settlement:

This final settlement is related to making the final settlement of clearing by debiting or crediting

the account of government organization and financial institutions as per the information received

from NCHL. NCHL receives information regarding the cheque being present, accept and reject.

With this it make the final report regarding the settlement of the amount by showing whether the

particular organization account needs to be debited or credited. In settlement, if the cheque

payment (Dr) is higher than deposit (Cr) of the organization then its account needs to be debited

and vice versa. Upon receiving the information at 3pm ECC department makes the final

settlement by posting it to the system. Since ECC at Thapathali, being the central office for
cheque clearing maintains parking account of NRB, it settles the accounts of all the branches of

NRB.

IV. Foreign Exchange Department

As name suggests, this department works for exchanging the Nepalese currency to foreign one and

vice versa. There were three sections in this department being remit in, remit out, L/C and IC. Remit

in was the section where foreign currency was exchanged into Nepalese and remit out is the reverse

one where Nepalese rupee is taken in exchange of foreign one. In remit out, SWIFT message were

also transferred to other banks. The Society for Worldwide Interbank Financial Telecommunication

(SWIFT) provides secure electronic financial messaging services to financial institutions. SWIFT

represents an extensive telecommunications network by which a financial institution in one country

can communicate with its branches or correspondent institutions anywhere in the world. Remit in and

out deals only with the transactions of government staffs or the government organizations. Others

had to do their transactions from commercial banks.

CHAPTER III
ANALYSIS OF WORKS AND ACTIVITES PERFORMED

Upon the placement in various departments I carried out various job as per the rules and

regulation of NRB. In every department I did not have the right to make input in the system due

to the high risks. The jobs performed by me in various departments are as follows:

1. ECC

1.1 Clearing Inward

o Technical clearing of regular NRB cheques to verify cheque date, amount, stamp of

payee and drawer.


o Financial clearing of cheques to verify insufficient balance and signature of the

concerned parties.

o Clearing approval of cheques for approval for payment to presenting member.

o Rejecting the cheques with reasons specified.

o Inward clearing of the express cheques.

o Manual posting of High value cheques.

1.2 Clearing Outward

o Verifying the received physical cheques of other institution. (cheque date, amount,

signature, stamp)

o Scan the cheque and input the data such as account no, branch no, amount, date in the

Software.

o Send the scanned cheques to the concerned institution for clearing.

o Check whether the cheques are approved or not, if not correct the mistake and send again.

1.3 Settlement

o Make an excel file (CSV) of the approved cheques present at clearing approval.

o Upload the file in the Oly Reply Software for NCL settlement and send to NCHL.

o Check the reply files (GUI file) send by NCHL.

o Check the NCP status which needs to be 0.


o Settle the branch accounts by posting and controlling the transfer in Olympic Software.

3. Transfer Department:

o Online posting and controlling transfer as paper message provided.

o Verify the voucher and cheque, cheque date, office code, amount and stamp.

o Posting the transaction in Olympic Software.

4. Ledger Department

In this department I was responsible for helping the staffs on receiving the book from the pension

holders from the account where I need to verify whether the signature is done on the pension

book or not by the pension holder, accepting their application letter of “Manjurinama”.

Likewise, I was responsible for maintaining the record on register after cheque issuance to the

related organizations. I also verify and upload the signature card to the account of the various

institutions if they change their signature and members of their organization. Also, I performed

reconciliation of the pension payment of NRB staffs by matching the debit and credit amount by

putting the reference no. The main purpose of reconciliation is to make the balance zero. The

other work was to assist and observe the work of staffs when they are performing their jobs.
CHAPTER IV

OBSERVATION, EXPERIENCES AND PROFESSIONAL

SKILLS LEARNED

Observation and experience

o Motivational factors

The employees are highly motivated with good salary, allowances like: lunch, adsl, medical, paid

leave annually, international tours, and trainings. All this provides employees to work

enthusiastically with full concentration.

o Coordination and cooperation


All the staffs in every department work with full cooperation to each other and they highly value

teamwork. They are always ready to help their colleagues in the time of need.

o Job rotation

In order to avoid the monotonous in the work the job is rotated often. Every employee are given

opportunity to work in different departments which provides them gain knowledge.

o Friendly environment

The environment in NRB is very friendly. Every single staffs, intern and the helpers were treated

equally. Every one maintains a healthy and friendly relationship in the organization.

o Proper flow of information

With the use of system the flow of information as well as the communication is proper. All the

staffs can easily access the information regarding the recruitment, changes, notices that took

place in NRB

Issues identified

During my intern period I found various problems and issues in the departments which were

creating hindrance in the smooth operation of the work. Some of the issues were:

o Lack of process layout

This is the major problem I found in NRB. In every department I found the lack of proper

process layout. In order to accomplish one task flow of process is not smooth. For E.g: in ledger

section the after the entry is made in counter, to validate one has to reach other corner and to
make payment to another again to another corner. The desk of staffs are placed inappropriately

which made it difficult to communicate with each other.

o Overstaffing

Another major issue is the overstaffing. In most of the department I saw that the staffs have more

leisure hours than work hours.

o Uneven distribution of job

There is uneven distribution of job where some staffs have more workload whereas some have

minimum.

o Lack of technical knowledge

With the replacement of manual recording by software installment it has decreases the workload

but still some of the staffs are not efficient in using the system, software’s as well desktop. They

highly need proper technical knowledge and training.

o Lack of maintenance

I highly found the lack of maintenance in terms of keeping the records on books, files and so on.

There is lack of proper storage and filing. The maintenance is needed for computers, printers,

buildings, rooms, furniture’s and so on.

o Lack of communication
There is also lack of communication between the departments or in the hierarchy level. For e.g.

in most of the cases fax message was made twice due to absence of upper level employees like:

executive director, director and deputy director.

Lesson learnt during internship

An internship provides an opportunity to interns to be exposed to practical sights of theoretical

knowledge. Chapters read in books turn into a valuable knowledge when student get to

understand those lessons by themselves, which is possible only through exposure to real working

environment of an organization. Internship has made it possible for students to learn and

understand from practical point of view. As an intern in Nepal Rastra Bank, the internee got to

learn an array of tasks of various departments. The important lessons learnt by the intern are:

Realized Importance of Time Management

The intern learnt that punctuality and time management can be a stepping stone to reach the

height of success. The intern learnt that key to get over continuous work pressure is effective

time management. In fact, the intern developed time management skills while doing the

internship at NRB.

Developed Communication Skills

Answering to the queries of customers and facilitating them with bank services through

telephone or direct contact helped the intern to develop communication skills. Reporting to the

NRB staff about work progress and sharing opinions with them actually nurtured by

communication skills.
Learnt interpersonal Relationship

The intern learnt the key to success is networking and knowing more people, through internship.

The intern learnt that developing an interpersonal relationship with employees and other interns

broadens networking, which can be very helpful for career growth.

Chapter V

5.1 Conclusion

After the completion of the internship of Six weeks, the real meaning of the work life and the

actual pressure of the job had been felt. This feeling had changed the previous perception of the

job-life. It had been a fruitful experience for the present as well as for the future too. The charm

of the bankers’ life in the view of the public had been changed now and the reality of the charm

backed by the intense pressure had been felt. The ‘to be known world’ had been known now and

also a thought that, besides books and knowledge of the syllabic books there are a lot of things to

be known and learnt, had emerged. It was really a great opportunity to know new kinds of

people, new kinds of experiences, new kind of environment and a completely new atmosphere
around us. It was learning by doing kind of opportunity and had been successful to make a

change within myself.

Nepal Rastra Bank has had played the prominent role of Central bank and

maintains the smooth functioning of the economy. Being in NRB as an intern wouldn’t be much

interesting without the support of the NRB family. From them, I have learnt that the workplace is

also a family for any worker and how important is it for the social wellbeing of the worker.

Intern also got the chance to get wider variety of knowledge due to the support of the NRB

management.

While concluding this report, the intern is intensely satisfied with the internship

and its outcome. This experience will not only be beneficial today but also in the future where

the intern should work in the real life. Intern had a great experience working in NRB. Intern feels

proud to complete the internship in central bank of Nepal and hope this will prove me

advantageous for my banking career.

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