1

CHAPTER – I
INTRODUCTION

1. Background of Co-operative:-
Tribhuvan University is the reputed University of Nepal. This is running the 4 years
Bachelor Degree Programmed since many years. The students are learning and know
about many new things in these 4-years period. In these three years, they know about
many theoretical aspect of the study. At the last year they have to prepare the field
work report which is related to their 4-years study. Tribhuvan University wants to
make student effective by giving the opportunity to write the field work report.

This report makes student be practical in the related field. They know many things by
writing this report. They are learning to struggle and know about the real world of the
management. In this report they use all the knowledge which they get after the high
school. The main objective of T.U. to force in report writing is to teach about practical
field of the management and the problems arise in the field T.U. wants to know that
whether the student are use their theoretical knowledge in practical field or not. This
is the best way to check the effectiveness of the teaching way and curriculum of the
T.U.

This is a study done to fulfill the requirement of BBS fourth year. Nepal is one of the
underdeveloped countries of the South Asia. It has different geographical features. It
has been facing the problem of accelerating the pace of economic development. It has
very low per-capital income. The only one alternative of economic development is the
maximum utilization of existing human, economic, natural and physical resources in
the productive sector. For this purpose Nepal has been adopting mix economic model
in five year plans although the economic modality is under restructuring phase. In this
regard, banks play vital role by identifying and mobilizing the saving, which are
scatted in small amounts in nook and corner of the country. Banks collect the deposits
from various a\c and invest them in productive sectors. It deals with money and credit.
It is an institution that accepts deposits of customers and lends it out to those who
require it for investment. Thus, banks are those financial institutions that offer the
widest range of financial services especially saving and credit and perform the widest
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range of function of financial intermediary for supporting the business and industry in
the national and international economy.

Bank is an institution which deals with money and credit. It accepts deposits from the
public and mobilizes find to productive sector. It also provides remittance facility to
transfer money from one place to another.

The term bank is oriented from the French word "banque" and the Italian word
"Banco" which means a bench for keeping, lending and exchanging of money or coins
in the market place by money lender and money exchanger. Bank is a business
establishment that safeguards people's money uses it to make loan and investment;
people keep their money in banks rather than at home for several reasons. Money is
safer in the bank than at home.

1.1 INTRODUCTION
A co-operative is an association of person who join together to carry on an
economic activity of mutual benefit in an egalitarian fashion. Co-operative refers a
legal organization owned and controlled by its member where member are united
voluntarily to meet common economic, social and cultural needs. In fact co-operative
performs a variety of function that it is different to give precise and general definition
of co-operative so different expert’s give different definition of co-operatives.

According to Henry Calvert, “ Co-operative are a form organization where in

persons voluntarily associate together as human beings on the basis of equity for
promotion of economic interest of themselves.”

According to V.L. Meheta, “Co-operative is only one aspect of a vest movement

which promotes voluntary association of individuals of common economic end.”

At last we can conclude that co-operative is a form of organization where in

persons voluntarily associates together as human beings on the basis of equality for
promotion of economic interest for them.
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1.2 Profile, Events And Activities of the organization

National Co-operative Bank Limited was established in 2003, as the only bank in the
co-operative movement of Nepal at national level, in exercise of the power conferred
by the sub-section 4 of section 26 under the co-operative Act, 1002 (first amendment,
2000) and from the recommendation of Nepal Rastra Bank as an umbrella institution
to provide banking and financial services to all its member co-operatives following
the long and continuous demand and effort of co-operators. Assessing the importance
of setting up a separate bank to exclusively support the co-operatives in the country,
Nepal Government had amended the co-operative act, 1992 and released NPR 10
million as equity participation in the fiscal year 2000/2001 . It has been successfully
carrying out co-operative banking business since seven years. NCBL is primarily
established with the objective to meet the financial needs and launch different
promotional activities to support its member co-operatives to be more professional
and competitive. The establishment of NCBL, therefore, has a special implication for
development of co-operatives movement of Nepal since the promotion and
strengthening the co-operatives address the country major socio-economic
deprivations, poverty, unemployment and inequality etc. At present, the bank with
about 7500 meter co-operatives covering all 75 districts and with rapidly growing its
network in 34 different places nationwide and will be going to be expanded to 40
places in the current fiscal year to better serve the member co-operatives.

1.3 Statement of the Problems

Presently , Co-operative is facing high competition due to increase in number of
co-operative such as it is ought to have problems relating to finances , which
this study of liquidity & profitability of co-operative attempts to identify . co-
operative with its goodwill is able to collect more deposits from public . But
the co-operative is not been able to invest its funds in productive areas , which
is good sources of income . Co-operative has also given more emphasis on
providing loans rather than investing in productive sectors . And raising or
collection loans from them could be difficult and challenging job for the co-
operative. As such co-operative should be aware of loan section .
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This study attempts to answer the following research question

 What is the position of NCBL'S profits, loan and deposits over the different
period?
 How is the relationship between loan and deposits?
 What is the NCBL'S turnover different period?

1.4 Objective of the study:-

The purpose of this field work report is to introduce Co-operative. Which helps to
promote business, agriculture and industrial especially in Makawanpur’s area peri
pheri phery of Hetauda ? Certain word is done with special motive, without any
target. But it has also some pacific purpose with are as follows.

a) To survey on study of customer satisfaction.

b) To know the financial position of National Co-operative Bank.

1.5 Rationale of the study:-

Nepal is poor agricultural country. More than 80% people are depending upon
agriculture and more than 75% people live in rural areas. Among the people of rural
areas more than 70% Nepalese live under of poverty. In rural sector there are no
changes of other sources of income except agriculture. Some know the traditional
skills for making domestic thing and other arts but they could not extend their
business due to the lack of capital. In this situation institutional services are
significance to eliminate poverty and to increase agriculture production and
development by developing small and cottage industries. Nowadays many
commercial bank, financial institution and insurance companies are established in all
over the country. But they are under to provide services to poorer and voiceless
people of the society, therefore, bank organization is suitable for poorer people and
day by a day its popularity is increasing among the helpless and voice less rural
people, Bank is a most essential part of society. Bank sprit is the heart of bank
society.
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1.6 Research Methodology

As per the opinion of C.R. Kothari, “Research Methodology refers to the various
sequential steps to adopt by researcher in studying problem with certain objectives in
view.” There are several methods of collecting data and researcher may collect data or
supervise its collection. This fieldwork is prepared by collecting primary and
secondary data for research analysis, financial analysis is major tool; which measures
the liquidity position of concerned co-operative. The main other study is to analyze
the loan procedure of “FINANCIAL POSITION OF NATIONAL CO-OPERATIVE
BANK LTD.” This research tries to perform a well-designed quantitative and
qualitative research in very clear and direct way using both financial and statistical
tools.

1.6.1 Types of research:

The required types of data are given below:

Quantitative research

If a researcher used quantitative method to analyze information and data is called

quantitative research. In another word he data and information collect on basis
number at the time of research is called quantitative research. This research approach
is used when the research subject can measure in the form of numerical values. Also
this approach evaluate through the statistical tools e.g. T-test, Z-test, mean, median,
standard deviation etc. Quantitative research finds out the society’s problem that why
and how appears. The relevant information can be achieved from answer and
secondary data. Quantitative data also use latter research. Quantitative research is
easier than the qualitative research because qualitative research depends on the social
science or human behavioral. And then quantitative data can be presented in the form
of table, pie chart and bar-diagram. This study is mainly based on quantitative
research and data.

Qualitative research

The data and information collect on the basis of same characteristics and feature at the
time of research is called qualitative research. Qualitative research is an inquiry
process of understanding based on district methodological traditions of inquiry that
explore a social or human problem. It can’t verify and measure in numerical values.
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Qualitative research related into the human cultural, attitude, norms and values of the
society and nation. Qualitative research used to achieve the deep information about
social science and this approach descriptively analysis of the collected data. Special
qualitative data is a primary data because social science is dynamic so researcher must
be collect the data from the field visit. Qualitative data is accurate than the
quantitative because of field base. It is differ between each other also based on
interview and related two or more the concepts. It can’t covert into numerical values
but rendering the rule and principles. The various types of qualitative research:

Analytical method: The fact and information, which are really available , is used
and analyzed by the research to make a critical evaluation of the material.

Descriptive method: This research includes survey and facts finding enquirers of
different kinds. This method does the literature review to conduct research are survey
method of all kinds, including comparative and co-relational method.

1.6.2 Population and Sample

The term "population" used in statistics denotes the aggregates from which the
sample is to be taken and the term "sample" is that part of the population which
we totality of all purpose of investigation .population refer not only to people but the
totality of all observation that has been selected for the study .Population is also
known as universe Sample refer to a part chosen from the population. Thus, in static,
population means whole and Sample means the part of the whole.

1.6.3 Types of data

Required data for the report can be obtained either from primary sources or secondary
sources.

Primary Data: Primary data is that data which is initially collected by the researcher.

Secondary Data: Secondary Data is that data which is used secondary from primary
data.
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1.7 Literature Review:-

Literature review is an essential part of the research. It is way to discover of financial
position an analysis is a statement of the sources and use of cash. The statement which
reports financial position during the period classified by current ratio, short-term
financing and capital structures is financial position of co-operative bank.

Previous study materials, books and research reports related to current research issues
are considered as literature. Review of previous study is very important in an
academic research and it helps to complete the research work. We used to do
literature review to understand our literature problem better and know the
methodology that can be used in the research.

1.7.1 Conceptual Framework:-

The modern financial evaluation has greatly affected the role and importance of
financial performance. Now days, finance is best characterized as ever changing with
new ideas and techniques. Only efficient manager of the company can achieve the
setup goals. If a bank does not maintain adequate equity capital, it make the bank
more risky. If a bank has inadequate equity capital, it must use more debt that has
high fixed cost. So any firm must have adequate equity capital in their capital
structure.

1.7.2 Research Gap:-

Plenty of the research works have been done on the topic of “Loan disbursement and
Recovery” of varying co-operative under Co-operative act. This research is done
furthermore to find the gap of previous research. The study focuses on all the loan
disbursement and recovery. However, the previous study on the their selection of the
samples, i.e, on their selection of co0-operative, they have done random sampling
without any base to selection. In this study of sample, the sample selection is
categorized in a definable way which makes sense.
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1.8 Limitations:-

Each and every study is followed by some limitation. This study too has some
limitation which is as follows:

a) Only the NCBL is taken in the study.

b) The main source of the study are the answer given by the staffs of the
organization. The accuracy of the data collected depends upon the sources.
c) Past five years data is taken in study.
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CHAPTER-II
RESULTS AND ANALYSIS

2.1 Presentation of Data

It is needless to say that diagrams are more attractive, fascinating and impressive then
the numerical data, since they are attractive they leave much lasting impression on
mind. So here the data of National Co-operative Bank limited of providing 5 years is
presented in tabular from, pie chart and bar chart.

At different places, were it was necessary, the statistical diagram has been used to
bring out the clear picture of the analysis. Specially, these diagrams are concerned
with the position of profit, loan, deposit, income, expenditure and fixed assets etc.

Also the tabulation and pie chart is used as the major diagram. Beside the statistical
tools like correlation has been used to so the relationship between the loan and total
deposits.

Tabulation and Bar Chart of Last Five Years share Capital

Table no.2.1

S.N. FY Share Capital

1 2075/76 153007300
2 2076/77 185157300
3 2077/78 266235000
4 2078/79 507510000
5 2079/80 612393000

From the above table no.1 here share capital of the fiscal year 2075/76 to 2079/80 is
153007300,185157300,266235000,507510000 and 612393000 respectively.
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Figure no.2.1

Share capital of last five years

90000000
80000000
70000000
60000000
50000000
Series 3
40000000
30000000
20000000
10000000
0
2075/76 2076/77 2077/78 2078/79 2079/80

Trend of Deposit of NCBL

Table no.2.2

S.N. Fiscal year Total Deposit

1 2075/76 65656300

2 2076/77 1232861168

3 2077/78 3395693236

4 2078/79 4994076678

5 2079/80 7690742313

From the above table no.2 here deposit of the fiscal year 2075/76 to 2079/80 is
65656300, 1232861168, 3395693236, 4994076678, 7690742313 respectively.

Figure no.2.2
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Total deposit
2071/72 2072/73 2073/74 2074/75 2075/76

3%
7%

19%
43%

28%

Net Profit of NCBL

Table no.2.3

S.N. Fiscal year Net profit

1 2075/76 15952851

2 2076/77 28913531

3 2077/78 42156623

4 2078/79 100232983

5 2079/80 89931348

From the above table no.3 here Net Profit of the fiscal year 2075/76 to 2079/80 is
15952851, 28913531, 42156623, 100232983 and 89931348 respectively.

Figure no.2.3
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120000000

100000000

80000000

60000000
Net profit

40000000

20000000

0
2075/76 2076/77 2077/78 2078/79 2079/80

2.2 Earning Per Share

The profitability of common shareholder’s investment can be measured in many other

ways. The income of per common share can be known from the earning per share.
The earning per share is calculated by diving the net profit after taxes less preference
dividing by the total number of common share. Its formula is given below:

¿
Earning per share¿ Net profit available¿ equity shareholder Numbers of common share

Where,

NPATES = Net profit after tax- preference dividend.

Here, NCBL for the financial year form 2075/76 to 2079/80 are given below:

Table no.2.4
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Fiscal year NPATES NCS EPS ( Rs )

2075/76 15952851 153007 104.26

2076/77 28913531 185157 156.25

2077/78 42156623 266235 158.75

2078/79 100232983 507510 197.50

2079/80 89931348 612393 146.85

Source: Annual report of National co-operative bank Ltd 2075/76 to 2079/80.

Interpretation:-

The profitability of the shareholders can be measured by the means of earning per
share. The more per share return, the more excellent it is and the less per share return
the worse it is. The earning per share increasing fiscal year 2075/76 104.26 to 156.25,
156.25 to 158.25 in 2077/78 and 158.75 to 197.50 in 2079/80 but this fiscal year is
decrease earning per share 197.50 to 146.85.

2.3 Profitability

The last category of financial ratio is profitability ratio. It measure the efficiency and
provides incentive to achieve efficiency. Following ratios are commonly used to
measures profitability of the firm. Gross profit margin, net profit margin, operating
profit margin, return on assets (ROA), return on equity (ROE) and return on capital
employed (ROCE).

RETURN ON ASSETS:-

This ratio lies under the profitability ratio. This ratio establishes the relationship
between net profit and total assets. This is also called “Profit to assets ratios”. It is
shown in percentage. Its formula is as:

Net profit after tax

Return on Assets (ROA) ¿
Total assets

Table no.2.5
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Fiscal year NPAT Total Assets ROA

2075/76 15952851 927491337 1.72%

2076/77 28913531 1498110415 1.93%

2077/78 42156623 3867580000 1.09%

2078/79 100232983 6127773000 1.64%

2079/80 89931348 9313874000 0.97%

Source:- Annual report of National co-operative bank ltd 2075/76 to 2079/80.

Interpretation

This ratio measures the profitability of all financial resource invested in the firm’s
assets. Here, the higher ratio implies that the available resource and tools are
employed efficiency. The return on assets ratio for financial Year 2075/76 to 2079/80
are 1.72%, 1.93%, 1.09%, 1.64% and 0.97% respectively.

RETURN ON EQUITY CAPITAL (ROE):-

It is ratio of bank’s net income after tax dividend by its total equity capital.

ROE ratio, on the other hand, it is the measures of rate of return flowing to the Banks
shareholder’s. It is approximate the net benefit that the shareholders have received
from investing their capital in the corporative.

Net income after tax

Return on Equity (ROE) ¿
Total equity capital

Here, current ratios of NCBL. Bank for the financial year form 2075/76 to 2079/80 is
shown below.

Table no.2.6
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Fiscal year NPAT Total equity ROE

2075/76 15952851 161459183 9.88%
2076/77 28913531 205532715 14.07%
2077/78 42156623 309167039 13.64%
2078/79 100232983 606475022 16.53%
2079/80 89931348 728572815 12.34%
Source:- Annual report of National co-operative bank ltd 2075/76 to 2079/80.

Interpretation:-

This ratio indicates how well the firm has used the resource contributed by the
owners. It is good for the firm to be the return of investment high. Higher ratio
indicates more efficient to management for utilizing of shareholder’s funds.

The returns on shareholder’s equity of National co-operative bank for financial year
2075/76 to 2079/80 are 9.88%, 14.07%, 13.64%, 16.53% and 12.34% respectively.

2.4 Major Findings

There were return on assets, return on equity, cash position indicator earning per share
and Net profit to loan and advance ration were shows 5 years data of NCBL. Here is
case of NCBL the ROA of financial year 2075/2076 to 2079/2080 is 1.72, 1.93, 1.09,
1.64, and 0.97 respectively.

In the some NCBL the ROE of financial year 2075/76 to 2079/80 is 9.88, 14.07,
13.64, 16.53, and 12.34 NCBL respectively. There is loan and advance to Total
deposit ratio is. 0972, 0.108, 0.1029, 0.158 and 0.175 respectively.

NCBL the earning per share of financial year 2075/76 to 2079/80 are 104.26, 156.25,
158.75, 197.5 and 146.85 respectively.

CHAPTER – III
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SUMMARY AND CONCLUSION

3.1 Summary

This filed work project on the topic of “Financial Performance of National Co-
operative Bank Ltd: A Case study of Hetauda Branch, Makawanpur” was conducted
to find out the types of services provided by National Co- operative Bank and gauge
to popularity of these services among customers. The study also aimed at knowing the
existence of relation among different levels and categories of the nominal variables.

Nepal is an underdeveloped country. For the gradual development of the country

small saving of the individual also must be utilized in a productive sector. It helps in
economic development as well as employment opportunity is general. So with this
objective National Co-operative Bank Ltd. is established. National Co-operative Bank
Ltd. Was established in 2003 A.D. With the objective of mobilization of the small
saving of the individual. This survey is based upon the study of loan management of
the Co-operative. These data about banking services, in loan, are collected for the
easy and effective study of the Co-operation.

3.2 Conclusion

From the above presentation and analysis of data we concluded that fund collected is
utilized in proper way. But the invested money is mainly invested in non-productive
sector so customer’s needs and demand will be fulfilling. If that was utilized in other
sectors which can generate income from that or create employment opportunity in the
society would be better. Even though the invested money is satisfactorily returned
back and interest is earned.

3.3 Recommendation:-
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The data analysis and finding suggested some important facts about the banking
services being provided by nation bank ltd. On the basis of above data analysis
and findings, the researcher has pointed out following recommendations:

 It should provide decision platform for the self-motive customers.

 For the social and economic development of the country most of the
investment should be done in productive sector.
 Since the Co-operative’s earning is only interest it should be collected in
time.
 Co-operative can create a separate department of loan management.
 Co-operative should be investing in portfolio basis.
 Co-operative should give training their staff to improve working capacity.
 New technology should be adopting to serve the customer fast.
 Co-operative should attract to customer in low interest and high interest in
deposits.
 Co-operative bank should keep on improving its pace of quick service.
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REFERENCE

 Annual report of National Co-operative Bank Ltd.

 Annual report of office of Division of co-operative.
 Review of Nirmala’s report (2005), “The fixed deposit of Nepal Bangladesh
Bank”.
 Bajracharya, B.C, Basic Statistic", M.K. publishers and Distributor, Bhotahity.
 Bhandari, Dilli Raj, Principle and Practice of Banking and Insurance, 3 rd
edition 2060, Aayush Publication Kathmandu.
 Khadka, Shrejang and Singh, Harydaya Bir, 2066 B.S Edition, Banking and
Insurance Asia Publications, Kathmandu.
 Pandey, IM, Financial Management, 1987 Edition, Vikas Publishing House
Pvt Ltd. New Delhi, India.
 Vaidya, Shakespeare "Banking & Insurance management ", 3rd edition 2010,
Taleju Prakashan, Ktm.
 Westen & Brigham," Essential of Managerial Finance "Eleventh Edition".