ANALYSIS OF LOAN INVESTMENT AND

RECOVERY OF HIMALYAN BANK LIMITED

A Project Work Report

By
Sabita K.C.
T.U. Reg. No7-2-1144-30-2018
Rukumeli Campus

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Rukum (West), Nepal

April, 2023

i
 DECLARATION

I hereby declare that the project work entitled ANALYSIS OF LOAN

INVESTMENT AND RECOVERY OF HIMALYAN BANK
LIMITED submitted to the Faculty of Management, Tribhuvan University,
Kathmandu is an original piece of work under the supervision of Mr. INDRA
BAHADUR BHANDARI, faculty member, RUKUMELI CAMPUS
MUSIKOT RUKUM (WEST) and is submitted in partial fulfillment of the
requirements for the degree of Bachelor of Business Studies (BBS). This
project work report has not been submitted to any other university or institution
for the award of any degree or diploma.

Signature:...........

Sabita K.C.

Date:......................
 Supervisor’s Recommendation

The project work report entitled “ANALYSIS OF LOAN INVESTMENT

AND RECOVERY OF HIMALYAN BANK LIMITED” submitted by
Sabita K.C.of RUKUMELI CAMPUS MUSIKOT RUKUM (WEST), is prepared
under my supervision as per the procedure and format requirements laid by the Faculty of
Management, Tribhuvan University, as partial fulfillment of the requirements for the degree
of Bachelor of Business Studies (BBS). I, therefore, recommend the project work report for
evaluation.

Signature:

Indra Bahadur Bhandari

Date:
 Endorsement

We hereby endorse the project work report entitled “ANALYSIS OF LOAN

INVESTMENT AND RECOVERY OF HIMALYAN BANK

LIMITED” submitted by Sabita K.C. of RUKUMELI CAMPUS MUSIKOT
RUKUM (WEST), in partial fulfillment of the requirements for the degree of the
Bachelor of Business Studies (BBS) for external evaluation.

Signature: Signature:

Gopiram K.C. Meen Bahadur Pun

Chairman, Research Committee Campus Chief

Date: Date:
 ACKNOWLEDGEMENTS

As the partial fulfillment of the Bachelor of Business Studies, I have prepared

the report. During the course, I Worked with sincerity, honesty and diligently,
as far as possible, but decide my continual efforts, I also got unforgettable
support form different people and parties. I am extremely grateful and
overwhelmed by their support while completing my work.
First of all, I would like to pay my sincere thanks to Meen Bahdadur Pun
Campus Chief, Rukumeli Campus Rukum West. I could not remain without
thanking to my parents who helped me during my study of BBS, and during
preparation of this report.
This thesis has also been influenced by a number of standard and popular
textbooks, journals, articles etc. As far as possible, they have been duly
acknowledged at the appropriate places. I am thankful to all of them. I am very
grateful to my family, friends, colleagues and others for their kind co-operation
and support during the research period.

Sabita K.C.

TABLE OF CONTENTS
Title page… … … … … … … … … … … … … … … … … … … … … … … … …. … .i
Declaration… … … … … … … … … … … … … … … … … … … … … … … … .. …ii
Supervisor’s Recommendation… … … … … … … … … … … … … … … … … … …iii
Endorsement… … … … … … … … … … … … … … … … … … … … … … … … ….iv
Acknowledgements… … … … … … … … … … … … … … … … … … … … … … … v
Table of Contents… … … … … … … … … … … … … … … … … … … … … … … vi
List of Tables… … … … … … … … … … … … … … … … … … … … … … … … ..
vii
List of Figures… … … … … … … … … … … … … … … … … … … … … … … … viii
Abbreviations… … … … … … … … … … … … … … … … … … … … … … … … ...ix
CHAPTER I: INTRODUCTION… … … … … … … … … ……….1-14

1.1 Background… … … … … …… … … … … … … … … … … ..1

1.2 Profile of organization … … . … … … … … … … … … … … ..2

1.3 Objectives… … … … … … … …… … … … … … … … ....… .4

1.4 Rationale… … … … … … … … …… … … …… … … … … ..5

1.5 Review… … … … … … … … … … … … … … … … … ...… 5

1.6 Methods… … … … … … … … … … … … … … … … … …11

1.7 Limitations… … … … … … … … … … … … … … … … … 14

CHAPTER II: RESULT AND ANALYSIS… … … … … … … ... 15-21

2.1 Data Presentation… … … … … … … … … … … … … … … .15

2.2 Analysis of Result… … … … … … … … … … … … … … … 19

2.3 Findings… … … … … … … … … … … … … … … … … … 20

CHAPTER III: SUMMARY AND CONCLUSION… … … . …. ..22-25

3.1 Summary… … … … … … … … … … … … … … … … … ... 22

3.2 Conclusion… … … … … … … … … … … … … … … … … .24

BIBLOGRAPHY… … … … … … … … … … … … … … … …. … 26
APPENDIX … … … … … … … … … … … … … … … …. … ….27
 LIST OF TABLES

Table No. Titles Page No.

1. Investment of loan Himalayan bank 15

2 Loan Recovery of Himalyan Bank 17

 LIST OF FIGURES

Figures No. Titles Page No.

1. Investment of loan Himalayan bank 16

2. Loan Recovery of Himalyan Bank 18

 ABBREVIATIONS

B.B.S. : Bachelor of Business Studies

B.O.D. : Board of Directors

B.S. : Bikram Sambat

e.g. : For example

FY : Fiscal Year

i.e. : That is

LTD : Limited

NRB : Nepal Rastra Bank

RS : Rupees

TU : Tribhuwan University

HBL : Himalayan Bank Limited

 1

CHAPTER I
Introduction

1.1 Background of study:

Himalayan Bank limited is a leading commercial bank in Nepal that
provides various financial services to its customers, including. Loans
and advances. The bank has a significant presence in the Nepalese
market and is known for its high-quality services.
The background of this study is to analyze the loan investment will help
performance of Himalayan bank Limited. This analytics in
understanding how the bank manages its loan portfolio and the factors
that influence loan recovery. The Study will also provide insights into
the effectiveness of Bank's risk management practices and the impact of
macroeconomic factors on its loan investment and recovery.
The analysis will be based on the bank's financial statements, loan
portfolio data, and other relevant information. The study will use various
analytical tools and techniques to examine the bank's Loan investment
and recovery performance, such as loan-to deposit ratio, non-performing
toon ratio, recovery rate, and provision coverage ratio. The analysis will
also include a comparison of recovery the bank is loan investment and
recover peers in the Nepalese banking sector.
The Findings of this study will be useful for policymakers, regulators,
investors, and other stakeholders in the Nepalese banking sector. The
study will provide insights into the factors that affect to an investment
and recovery, and help in identifying areas for improvement in the
bank's risk management practices. The study also provide a benchmark
for comparing the performance of other banks in the Nepalese banking
sector.
 2

1.2 Profile of the Organization

Himalayan Bank Limited, established in 1993 as a Joint Venture of
Habib Bank Limited of Pakistan has been successfully reigning the
banking industry since its inception.
The bank holds the legacy of introducing various banking services for
the first time in Nepal from the very beginning. Products such as
Premium Savings Account, HBL Proprietary Card and Millionaire
Deposit Scheme besides services such as ATMs and Tele-banking were
first introduced by HBL which was able to win customers’ hearts during
that time. Since its establishment, the bank has been highly focused on
innovative approaches and customer satisfaction. The bank started its
journey from Employees Provident Fund Building, popularly known as
Sanchayakosh Building at Thamel, Kathmandu.
HBL has also been serving Nepali citizens living in the country and
abroad through remittance service. Presently, HBL is the biggest inward
remittance handling bank in Nepal. With its exclusive and proprietary
online money transfer software – HimalRemitTM, HBL is among the
top remittance service providers in Nepal having ties with financial
institutions based in the Middle East, Gulf region, UK, Australia, USA,
Japan, Israel, South Korea, Malaysia, Singapore, Portugal, Spain and
Hongkong. With respect to the Merger and Acquisition Policy
introduced by Nepal Rastra Bank, Himalayan Bank Limited acquired
Civil Bank Limited at 100:80.28 swap ratio (A shareholders holding 100
scrips of CBL will get 80.28 scrips of HBL) and commenced the joint
operation as “Himalayan Bank Limited” from February 24, 2023. After
acquisition, the Banks has been happily serving its customers from total
of 189 Branch Offices, 20 Extension Counters and more than 263 ATM
Booths spread all over Nepal.
 3

HBL is not only a Bank, It is committed Corporate Citizen

Corporate Social Responsibility (CSR) holds one of the very important
aspects of HBL. Being one of the corporate citizens of the country, HBL
has always promoted social activities. Many activities that do a common
good to the society have been undertaken by HBL in the past and this
happens as HBL on an ongoing basis. Significant portion of the
sponsorship budget of the Bank is committed towards activities that
assist the society as large.

The Bank’s Vision:

Himalayan Bank Limited holds of a vision to become a Leading Bank of
the country by providing premium products and services to the
customers, thus ensuring attractive and substantial returns to the
stakeholders of the Bank.

The Bank’s Mission:

The Bank’s mission is to become preferred provider of quality financial
services in the country. There are two components in the mission of the
Bank; Preferred Provider and Quality Financial Services; therefore we at
HBL believe that the mission will be accomplished only by satisfying
these two important components with the Customer at focus. The Bank
always strives positioning itself in the hearts and minds of the
customers.

The Bank’s Objective:

To become the Bank of first choice is the main objective of the Bank.
 4

1.3 objective of the study:

Every study has certain and specific reasons with certain Purpose. First
of all, the main purpose of this report is to meet partial of 50 marks of
finance subject. The overall objectives of this project work study are to
inde identify practically the lending procedure of loan investment and
recovery policy of Himalayan bank Limited.
The presentation of the field of the project report the topic " loan
investment and recovery policy of Himalayan Bank" was done for the
following purpose

i. To identify Policy in the process of loan investment the recovery

of and 10002
ii. To bring theoretical knowledge in to practical work and attain the
practical knowledge about their problem and their effective
solution.
iii. To compare the investment of loan in different se Sector
individually and also with recovery of loan.
 5

1.4 Rationale of the study:

The loan analyzing the bank's loan investment and recovery Practices
can provide insights into how it manages its loan portfolio, assesses
Credit risk, and recovers loon, which is essential for understanding its
overall financial hearth and sustainability.
The rationale for conducting a study on the analysis of loan investment
and recovery of Himalayan Bank Limited in a paragraph encompasses
the importance compasses the importance of loan Portfolio management
& risk management, regulatory compliance, stakeholder interest,
alignment with project objectives, and practical implications for the
bank's management. The study aims to provide a comprehensive
analysis of the bank's loan investment and recovery practices, it identify
areas for improvement, and provide recommendations to enhance the
bank's loan portfolio management practices for better financial
performance and risk management.

1.5 Review
1.5.1 Conceptual review :
"A loan is a financial asset resulting from the delivery of cash or other
assets by a lender to a borrower. The borrower has an obligation to
repay the amount borrowed to the lender on a specified date or on
demand. A loan is money lent by a creditor, such as a bank, to a
borrower, such as a customer. The loan may be granted on the basis of
security, which is money or assets provided by the borrower to the bank
as collateral."
In summary, a loan is a financial agreement between a lender and a
borrower, where the lender provides the borrower with a sum of money
or other assets, and the borrower agrees to repay the loan with interest
on a specified date or on demand. The loan may be secured by collateral,
which is held by the lender until the loan is fully repaid. It's very
important to be reminded that most of the bank failures in the world are
due to shrinkage in the value of the loan and advances. Hence, risk of
non-payment of loan and is known as credit risk or default risk" (Dahal;
2002 114)
"The basic purpose of a commercial bank is to maximize shareholder
wealth by accepting deposits and granting loans. In order to provide a
reasonable return to shareholders, the bank is required to invest its funds
in a mix of safe and risky assets. While lending is an important activity
for banks, it is not the only one. Banks also invest in government
 6

securities, corporate bonds, and other financial instruments to diversify

their portfolios and manage risk.
A key responsibility of a commercial bank is to ensure the safety of
deposit funds while providing a reasonable return to shareholders. To
achieve this, banks need to adopt sound loan and credit policies that
balance risk and return. Lending policies are typically defined as the set
of guidelines and procedures that govern the management of loans and
advances. These policies help banks assess creditworthiness, evaluate
collateral, and manage risk.
In summary, commercial banks play a vital role in the economy by
accepting deposits and providing loans and other financial services.
While their primary goal is to maximize shareholder wealth, they also
have a responsibility to ensure the safety of deposit funds and manage
risk through sound lending policies. "Types of lending
The basic types of lending format.
(a) Overdraft
An overdraft is a type of short-term borrowing that allows an account
holder to withdraw more money from their account than is currently
available. Essentially, an overdraft allows the account holder to borrow
money from the bank, up to a pre-determined limit, when their account
balance falls below zero.
Overdrafts can be either authorized or unauthorized. An authorized
overdraft is arranged in advance with the bank, typically with an agreed-
upon limit and interest rate. Interest is charged only on the amount
borrowed, and the borrower is expected to repay the overdraft within a
specified period. Unauthorized overdrafts, on the other hand, occur
when an account holder withdraws more money than is available
without prior agreement with the bank. Unauthorized overdrafts are
typically subject to high fees and interest charges.
Overdrafts can be a useful tool for managing short-term cash flow issues
or unexpected expenses. However, they should be used sparingly, as
they can be expensive if not managed carefully. Account holders should
also be aware of the terms and conditions of their overdraft, including
the interest rate, fees, and repayment terms, to avoid unexpected
charges.

(b) Cash credit

Cash credit is a type of short-term credit facility provided by banks to
businesses, primarily to meet their working capital requirements. Under
 7

this arrangement, the bank allows the borrower to withdraw funds from
a cash credit account up to a pre-determined limit, which is based on the
borrower's creditworthiness and ability to repay the loan. The interest is
charged only on the amount borrowed, and the borrower is expected to
repay the amount within a specified period.
Cash credit is usually granted against a collateral, such as inventory,
accounts receivables, or other assets of the business. The collateral
provides security to the bank against the risk of default. The borrower
can draw funds from the cash credit account as and when required,
subject to the limit and terms and conditions of the agreement. The
interest rate on cash credit is typically higher than on other forms of
credit due to the flexibility and ease of access to funds.
Cash credit is a useful tool for businesses to manage their short-term
working capital needs. It provides them with the necessary funds to
cover expenses such as wages, rent, and supplies, without tying up their
own funds. However, businesses should be careful to borrow only what
they need and to manage their cash flow carefully to avoid defaulting on
the loan.
(c) Direct credit
Direct credit refers to a type of credit arrangement where funds are
directly deposited into a borrower's bank account without any
intermediaries involved. It is often used to refer to social security
payments, tax refunds, and other government payments that are
deposited directly into an individual's bank account.
Direct credit can also refer to loans provided directly by the lender to the
borrower, without the involvement of intermediaries such as brokers or
loan officers. In such cases, the borrower deals directly with the lender,
negotiating the terms and conditions of the loan and applying for the
loan directly.
Direct credit is a convenient and efficient way of providing funds to
borrowers, as it eliminates the need for physical checks or paper
transactions. It also provides greater security, as funds are transferred
directly to the borrower's bank account, reducing the risk of theft or
fraud.
Overall, direct credit is a useful tool for providing fast and efficient
access to credit and funding, and it is becoming increasingly popular in
today's digital economy. However, borrowers should still exercise
caution when applying for direct credit and carefully review the terms
and conditions of any loans or credit arrangements they enter into.
 8

(e) Working capital credit

Working capital credit is a type of short-term financing that businesses
use to fund their day-to-day operations. It is designed to provide a
company with the necessary cash flow to meet its short-term
obligations, such as paying employees and suppliers, buying inventory,
and covering overhead expenses.
Working capital credit can be provided in a variety of forms, including
lines of credit, overdraft facilities, and trade credit. Lines of credit are
the most common form of working capital credit and are typically
provided by banks or other financial institutions. They allow a business
to borrow up to a certain amount of money, which can be drawn upon as
needed to cover operating expenses.
The amount of working capital credit that a business can obtain will
depend on several factors, including its creditworthiness, the nature of
its operations, and its history of cash flow. Lenders will typically require
a business to provide financial statements, tax returns, and other
documentation to evaluate its creditworthiness.
Working capital credit can be an important tool for businesses that need
to manage their cash flow and meet their short-term obligations.
However, it is important to use this type of financing responsibly and to
carefully consider the costs and risks associated with it.
 9

1.5.2 Review of project work

Literature survey is a brief study of subject relates topic for
understanding the loan management, it is essential to understand the
word loon) and management separately. According to the Nepal Rastra
Bank loan is the amount given to the customer for their different
purpose at fixed rate and certain term and condition. The amount should
be return.
And management of loan is established of object and Policy and
procedure for loan grating, controlling etc. "In brief the loan
management is the management of loan and their recoveries are properly
managed.
The customer were taken as sample and where asked about their grating
process seven person if them satisfied and Said that the process of loan
investing and its recovery. is simple to understand and interest rate of
this loan is reasonable of loan investing and it's recovery and the person
them said that its person of them said that interest is too much high that
made them quite unsatisfied.
Dhungana (2014), in this well read article," probles of NPL and the need
of financial discipline in the Nepalese Banking. system " has concluded
that poor credit. management determinants in the performing assets and
quality of loans give birth to non-performing Assets.
Bhandari (2015), in this well-read article" Etiology and Strategy of loan
Repayment "has concluded that tending agencies should adopt serves
strategies for achievement of credit repayment their target achieving
their target of credit payment.
 10

1.5.3 Research Gap

Some previous students have conducted their report in this similar topic
however, there is fundamental difference between those and his present
and re I recovery. But now I present with solution of problem. Most of
Previous researchers have been taken more than one Firm as a sample.
Which cannot implication in every banking sector. But is conducted
with sample one firm which helps to identify the investment the loan
investment and recovery policy of every Himalayan bank loan
administration involves the certain and management of risk asset . The
purpose lending takes in to consideration about people and system
required for the evaluation and approval of the loan request, negotiation
of terms, documentation disbursement, administration of outstanding
loan and workout, knowledge of the process and awareness of its
strength and weakness are important in Setting objective and goal for
lending activities and for allocating available fund to various lending
function such a commercial, installment and mortgage portfolio.
The project work report theoretical knowledge of loan into Practical
work and attain the practical knowledge about their problem and their
effective solution. Compare the investment of loan in different sector
individually and also recovery of loan.
 11

1.6 Methods
1.6.1 Types of Research
Research is systematic and organized effort to investigate a specific
problem that needs a solution. Management research has become very
necessary for organization today this chapter looks in to the in to the
research design, Mature and source of data. Data collection procedure
and tools are technique if analysis. A research mythology helps us to
find out accuracy, validity and Suitability. The justification of on the
present study couldn't be obtained without help of proper research
methodology the for the purpose of achieving the objectives if study
applied methodology is used: the research methodology used in the
present study is briefly mentioned below.

1.6.2 Population and sample

There exit 21 Commercial banks operating in Nepal, which are assumed
to be the population of this study. But, is not possible to study all of
these commercial banks whitens this study. So taking the total number
of commercial banks as population of the study, only one Commercial
banks, namely Himalayan bank was incorporated in April 2002 as the
finance limited, a first generation financial company which was the first
merger in the Nepal Corporate history' Nepal.
 12

1.6.3 Types of data

To fulfill the predetermined objectives that are set up for the study, both
primary and secondary sources are included The secondary data have
been obtained from mainly the annual report of TBBL further,
brochures, souvenir and the official websites have also been containing
A collected through making questionnaire question and distributing in to
the respondents.
Data collection procedure
A project work requires following a certain guidelines subject teacher
and other the teacher our college helped us by supervision and giving
the full and essential advice. The procedure becomes easy by study of
the report presented by our senior batch colleagues. Their reports helped
us a lot.
a) Orientation Class was taken to knowledge about the project work
with the help of lecture.
b) Then we have to select our topic in which we are going write our
project work after choosing subject we have to write application, which
must be registered collage.
Techniques of Analysis
Financial tools were us to examine financial strength and weakness of
bank of Analysis financial is a part of the whole process of financial
Statements such a balance sheet and profit and loss account can be
assess the financial health of the bank. In this study, financial tools like
ratio anal lysis were used.
 13

Ratio Analysis
Financial ratio is the mathematical relationship between to accounting
figures. The ratio analysis is a part of the whole Process of analysis of
financial statement of ant business or industrial concern especially to
take output and credit decision thus, ratio analysis is use to compare the
firm financial performance and status to that of other firm or to itself
over time. The qualitative judgment regarding financial performance of
a firm can be done with the help of ratio analysis.
Even though, there are many ratio analysis were used and various
industry base for example, it is no significant to analysis ratio analysis
used and various the quick ratio in the bank the insider fund base cannot
be interpreted per the standard of the units since financial institution are,
by value, highly by levered out snider fund.
 14

1.7 Limitation of the study

Now work in this word is perfect according to the course of study up
level, we have to complete the report on the selected topic with the tot of
limitation regarding times, cost money and resources. Thus this project
work study had been prepared with lots of limitation and various factors
are being ignored due to the same.
Following are some limitation of this project work study. The data
available is not systematically recorded.
i) The data available is not systematically recorded.
ii) The study depends on the data of central committee of
Himalayan bank.
iii) The study is only concentrated in the loon investment and
every aspect so not enter other personal programs and recover
Subject of Himalayan Bank Limited. 20775 to 2078/79
iv) The report shows only Last five year 2074/75 to 2079/80.
v) Reliability of this depends of on the source of Himalayan
Bank Limited.
vi) This report should be completed in certain time period
according to the course of the B.B.S Fourth Year
 15

CHAPTER-II
Results and Analysis

2.1 Data presentation in Table and figures in their analysis.

The main chapter of the assignment is the presentation and analysis of
the data. This chapter shows the clear eye view of the loan investment
and its recovery. It clarifies the Himalayan bank is progress in the field
of the loan management. The analyzing the loan investment and
recovery of the Himalayan bank from year 2074 175 to 2078/79 As
Follows:
Investment and Recovery of loan.
Table No. 1 Investment of loan Himalayan bank (in lakh)
Year Investment (in Lakh)
2074/075 8,68,466
2075/076 9,82,063
2076/077 10,72,948
2077/078 13,28,584
2078/079 15,64,459
(source : Annual Reports of Himalyan Bank Limited)

From the above table it is found that loan investment is increasing order
on Fiscal year 2074/075 is Rs 8,68,466, And 2075/076 is invest RS
9,82,063. 2076/077 is invest RS 10,72,948 and 2077/078 is invest Rs
13,28,584. And last year 2078/079 is Invest 15, 64,459. So that the
above. Table Shows that loan investment is increasing.
 16

Figure No. 1 Investment of loan Himalayan bank (in lakh)

Investment of loan Himalayan bank (in lakh)

1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
2074/075 2075/076 2076/077 2077/078 2078/079
fiscal Year

(source : Annual Reports of Himalyan Bank Limited)

From the above figure it is found that loan investment is increasing

order on Fiscal year 2074/075 is Rs 8,68,466, And 2075/076 is invest
RS 9,82,063. 2076/077 is invest RS 10,72,948 and 2077/078 is invest Rs
13,28,584. And last year 2078/079 is Invest 15, 64,459. So that the
above. Table Shows that loan investment is increasing.
 17

Table No. 2 Loan Recovery of Himalyan Bank

Loan recovery
NPA Recovery
Year (in Lakh)
(in Percent) (In percent)
2074/075 1.40 98.6 856307.476

2075/076 1.12 98.88 971063.89

2076/077 1.01 98.99 1062111.225

2077/078 0.48 99.52 1322206.797

2078/079 1.59 98.51 1539584.102

(source : Annual Reports of Himalyan Bank Limited)

From the above Table it is found that re of loan is not same on Fiscal
shows that the loan recovery years. Fiscal year recovery 2074/075 is Rs
856307.476 lakh but which have due to receive a loan to 40 percent.
Year 2075/076 Shows that the loan recover is Rs 971063.89 lakh but
which to have due to recover a loan is 1.12 percent. Year 2076/077
Shows that the loan recover is Rs 10621110 225 lakh but which have
due to recover a loan is tot percent. Year 2077/078 shows that the loan
recover is Rs 1322206.797 lakh but which have due to recover a loan is
0.48 percent. Year 2078 1079 shows that the loan recover is RS
15395840102 lakh but which have due to recover a loan is 1.59 percent.
 18

Figure No. 2 Loan Recovery of Himalyan Bank

Investment of loan Himalayan bank (in lakh)

1800000

1600000

1400000

1200000

1000000

800000

600000

400000

200000

0
2074/075 2075/076 2076/077 2077/078 2078/079
fiscal Year

(source : Annual Reports of Himalyan Bank Limited)

From the above Figure it is found that re of loan is not same on Fiscal
shows that the loan recovery years. Fiscal year recovery 2074/075 is Rs
856307.476 lakh but which have due to receive a loan to 40 percent.
Year 2075/076 Shows that the loan recover is Rs 971063.89 lakh but
which to have due to recover a loan is 1.12 percent. Year 2076/077
Shows that the loan recover is Rs 10621110 225 lakh but which have
due to recover a loan is tot percent. Year 2077/078 shows that the loan
recover is Rs 1322206.797 lakh but which have due to recover a loan is
0.48 percent. Year 2078 1079 shows that the loan recover is RS
15395840102 lakh but which have due to recover a loan is 1.59 percent.
 19

2.2 Analysis of Results

2.2.1 Investment of loan
From the above Table and figure it is found that loan investment is
increasing order on Fiscal coming fiscal year 2074/075 is invest Rs 868
466 Lakh. And 2075/076 is invest Rs 982063 lakh. 2076/077 is invest
RS 1072948 lakh and 2077/078 is invest RS 1328 584 Lakh. And last
year 2078/079 is invested Rs 1564459 lakh. So, that, the above table and
figure shows that loon investment is increasing .
2.2.2 Recovery of loan
From the above Table and Figures it is found that re of loan is not same
on Fiscal shows that the loan recovery years. Fiscal year recovery
2074/075 is Rs 856307.476 lakh but which have due to receive a loan to
40 percent. Year 2075/076 Shows that the loan recover is Rs 971063.89
lakh but which to have due to recover a loan is 1.12 percent. Year
2076/077 Shows that the loan recover is Rs 10621110 225 lakh but
which have due to recover a loan is tot percent. Year 2077/078 shows
that the loan recover is Rs 1322206.797 lakh but which have due to
recover a loan is 0.48 percent. Year 2078 1079 shows that the loan
recover is RS 15395840102 lakh but which have due to recover a loan is
1.59 percent.
 20

2.3 Findings:
The following findings have been identified;
1. Quality of loan portfolio: The quality of a bank's loan portfolio is a
crucial factor in determining its profitability and risk exposure. If a bank
has a high percentage of non- performing loans, it may face significant
financial losses.
2. Credit risk assessment: Banks need to have a robust credit risk
assessment framework to ensure that they lend to creditworthy
borrowers who can repay the loan. This framework should include a
comprehensive evaluation of the borrower's credit history, financial
stability, and ability to repay the loan.
3. Loan loss provisions: To account for potential losses due to non-
performing loans, banks need to set aside loan loss provisions. These
provisions should be sufficient to cover expected losses and should be
regularly reviewed and updated.
4. Collection procedures: Banks should have effective and efficient
collection procedures in place to ensure that they can recover loans that
become delinquent. These procedures should include regular follow-ups
with borrowers, early intervention, and prompt legal action if necessary.
5. Recovery rates: The rate at which a bank is able to recover non-
performing loans is an essential factor in its financial performance.
Higher recovery rates indicate better collection procedures and a
stronger loan portfolio.
6. Interest rates: The interest rate charged on loans is a critical factor in
determining a bank's profitability. A higher interest rate can result in
higher returns, but it may also increase the risk of default by borrowers.
7. Loan diversification: A diversified loan portfolio can help reduce the
risk of losses due to non-performing loans. Banks should consider
lending to borrowers from different industries and sectors to spread the
risk.
8. Monitoring and reporting: Banks should have a system in place to
monitor the performance of their loan portfolio regularly. This system
should include regular reporting on the status of loans, loan loss
provisions, and recovery rates.
9. Asset quality review: Periodic asset quality reviews can help banks
identify potential credit risks in their loan portfolio. These reviews
should be conducted by an independent team and should include a
comprehensive evaluation of the bank's loan portfolio. 10. Regulatory
 21

compliance: Banks need to comply with all relevant regulations related

to loan investment and recovery. Non-compliance can result in
regulatory sanctions and fines, which can significantly impact a bank's
financial performance.
Overall, the key to a healthy loan investment and recovery portfolio is to
maintain a balanced approach that takes into account risk management,
collection procedures, and regulatory compliance. By doing so, banks
can reduce their exposure to credit risk and increase their chances of
recovering non-performing loans.
9. Asset quality review: Periodic asset quality reviews can help banks
identify potential credit risks in their loan portfolio. These reviews
should be conducted by an independent team and should include a
comprehensive evaluation of the bank's loan portfolio. 10. Regulatory
compliance: Banks need to comply with all relevant regulations related
to loan investment and recovery. Non-compliance can result in
regulatory sanctions and fines, which can significantly impact a bank's
financial performance.
Overall, the key to a healthy loan investment and recovery portfolio is to
maintain a balanced approach that takes into account risk management,
collection procedures, and regulatory compliance. By doing so, banks
can reduce their exposure to credit risk and increase their chances of
recovering non-performing loans.
 22

CHAPTER III
Summary and Conclusion

3.1 Summary:
In summary, loan investment and recovery analysis is an important
aspect of a bank's risk management strategy. Banks typically use
financial ratios and performance indicators such as the non-performing
loan ratio, loan loss provision, net interest margin, loan-to-deposit ratio,
and recovery rate to monitor their loan portfolio's performance. By
analyzing these indicators, banks can identify potential problem areas in
their loan portfolio and take corrective action to manage their risk
exposure.
Non-Performing Loans (NPLs) are a key indicator of a bank's asset
quality. NPLs are loans that are in default or that are not being paid back
as per the agreed-upon terms. Banks aim to keep their NPL ratios low,
and a higher NPL ratio could indicate that the bank's loan portfolio is
risky.
Loan loss provisions (LLPs) are an essential part of a bank's financial
statements. Banks set aside a portion of their profits as provisions to
cover potential losses on their loan portfolio. The amount of LLPS is
dependent on various factors such as the bank's loan portfolio's quality
and economic conditions.
The Net Interest Margin (NIM) is a key performance indicator for
banks, measuring the difference between the interest earned on loans
and the interest paid to depositors. A higher NIM indicates that the
bank's lending activities are generating more income than the cost of
funding from deposits.
The loan-to-deposit ratio (LDR) measures a bank's ability to lend money
based on the deposits it has received. Banks with higher LDRs are
considered riskier, as they may not have sufficient liquidity to cover
their loan obligations in case of a sudden demand for deposits.
Recovery rate is an essential metric that measures the percentage of the
outstanding loan balance that has been recovered by the bank after a
default. A higher recovery rate indicates that the bank's loan recovery
process is efficient, and the bank can minimize its losses. In conclusion,
loan investment and recovery analysis are crucial for banks to ensure
their loan portfolio's quality and profitability. By monitoring these key
indicators, banks can make informed decisions about lending and
 23

manage their risk exposure. Here are some additional points on loan
investment and recovery analysis:
Banks use various methods to evaluate the creditworthiness of
borrowers before approving loans. This includes assessing the
borrower's financial statements, credit history, and collateral. Banks aim
to ensure that they lend to borrowers who can repay the loan as per the
agreed-upon terms.
One of the essential factors in loan recovery is the collateral or security
provided by the borrower. If a borrower defaults on the loan, the bank
can seize the collateral to recover its outstanding dues. Therefore, banks
carefully evaluate the collateral value and its ability to recover the
outstanding loan balance in case of default.
Loan investment and recovery analysis is not only critical for banks but
also for regulators and investors. Regulators monitor banks' loan
portfolio quality to ensure that they comply with regulations and
maintain financial stability. Investors evaluate a bank's loan portfolio
quality to make informed investment decisions.
In addition to traditional financial ratios and performance indicators,
banks also use advanced analytical techniques such as machine learning
algorithms to analyze their loan portfolio's performance. These
techniques enable banks to identify patterns and predict potential
defaults in advance.
COVID-19 pandemic has impacted banks' loan portfolio quality, and
they have had to reassess their loan portfolio's risk profile. Banks have
increased their provisions to cover potential loan losses and have offered
loan restructuring to help borrowers who are facing financial difficulties
due to the pandemic.
Overall, loan investment and recovery analysis is a complex and
dynamic process that requires banks to continually monitor and evaluate
their loan portfolio's performance. Banks need to balance the risk and
return on their loan portfolio to ensure financial stability and
profitability.
 24

3.2 Conclusion:
In conclusion, loan investment and recovery are important aspects of
banking that help generate revenue for banks while also carrying a
certain level of risk. Banks must perform thorough credit analysis. set
specific terms and conditions, and collect collateral to minimize the risk
of loan defaults. Recovery of loans is also important and can be a time-
consuming and expensive process for the bank. Overall, effective
management of loan investment and recovery is essential for the success
and profitability of banks.
In addition to the factors mentioned in the conclusion, there are other
considerations that banks must take into account when investing in loans
and recovering them. These include macroeconomic factors, market
trends, and the creditworthiness of individual borrowers.
Macroeconomic factors such as inflation, interest rates, and overall
economic growth can impact the performance of loans. For example,
high inflation or interest rates can make it difficult for borrowers to
make their loan payments, which can increase the risk of defaults.
Conversely, a strong economy and low interest rates can make it easier
for borrowers to repay their loans.
Market trends can also impact loan investment and recovery. For
example, changes in the real estate market can impact the value of
collateral for loans that are secured by property. Similarly, shifts in
consumer behavior or industry trends can impact the creditworthiness of
borrowers and their ability to repay their loans.
Finally, the creditworthiness of individual borrowers is a key factor in
loan investment and recovery. Banks must perform thorough credit
checks to assess the likelihood that a borrower will repay their loan on
time. They may also use credit scores, income verification, and other
data to determine the creditworthiness of borrowers and set appropriate
terms and conditions for their loans.
Another important factor to consider when it comes to loan investment
and recovery is the regulatory environment in which banks operate.
Regulatory agencies impose rules and guidelines that govern lending
practices and require banks to maintain certain levels of capital and
liquidity to manage risk. These regulations can impact the types of loans
that banks can offer and the terms and conditions that they can set.
For example, regulations may require banks to maintain a certain level
of reserves to cover potential losses from loan defaults. This can impact
the amount of capital that banks have available to invest in loans and
 25

may impact the types of loans that they offer. Similarly, regulations may
set limits on the interest rates that banks can charge for loans, which can
impact the profitability of loan investment.
Another factor to consider is technological advancements in the lending
industry. Fintech companies have disrupted traditional lending practices
by offering innovative products and services that cater to borrowers'
needs more effectively. Banks must keep up with these advancements
by adopting new technologies and developing digital platforms to stay
competitive.
In summary, loan investment and recovery are complex processes that
involve careful risk management, attention to macroeconomic and
market factors, thorough credit analysis, compliance with regulatory
requirements, and adoption of technological advancements. By
effectively managing these factors, banks can generate revenue from
loan investment while minimizing the risk of loan defaults and
maximizing the recovery of non-performing loans.
 26

BIBLOGRAPHY
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insurance 1st edition,
 Kathmandu Asis publication.
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Kathmandu: M.K. publisher and distribution.
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 Garg, N.C. (2013). Principal of Lending and Credit Culture At
Rastriya Banijya Bank.New Delhi: Irwin
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✓www.himalayan com.np
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APPENDIX
Questionnaire
1. When the company established?
2. Who are involved in the initial phase?
3. How many members are there in the management committee?
4. Is the company totally private company or have share government/
5. What are main objectives behind establishing project?
6. Is the objective match with actuality Project?
7. What is the ultimate goal of project ?
8. What are source of fund and how is the expenditures occurred?
9. What is the function ?
10. What are the main problems faces by the project?
11. How the company contribute the society?