internship at nepal investment bank limited

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An Internship Report

On

NEPAL INVESTMENT BANK LTD.

Putalisadak, Branch

Submitted To:

Modern Nepal CollegeFaculty of ManagementTribhuvan UniversityKathmandu, Nepal.

Submitted By:

Narayan SharmaExam Roll No: 1784-005

TU Regd. No: 7-2-444-43-005

An Internship report submitted on partial fulfillment of the requirement forthe degree of undergraduate course in Bachelor in Business Administration

(BBA)

August 2009

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Acknowledgement

It is difficult to draw up a list of persons to be thanked because several people have

helped in preparation of this report in diverse ways. Knowledge itself is cumulative so

it is difficult to acknowledge intellectual ideas. It is impossible to acknowledge all

those who contributed to this study. But some persons need to be publicly

acknowledged.

I am grateful to Tribhuvan University for initiating the internship program as the partial

fulfillment of Bachelor of Business Administration that gives one the practical

experience of real working environment and the application of the theoretical

knowledge in the real work life.

It was a wonderful experience to do internship in Nepal Investment Bank Ltd.

Foremost, I would like to express my heartfelt gratitude towards Ms. Era Subedi

(Internship Supervisor of concern organization) and Mr. Shiva Bhakta Pokhrel (College

Supervisor) who provided me with this opportunity

I would like to thank all the staffs of the organization for being so kind and co-

operative towards me during my internship period. With the help of them I was able to

learn much about the working area. I would also like to thank all the respondents for

their courteous response for giving their valuable time and briefing about different

respective topics

Finally, I like to present my sincere thanks to my family members and my friends for

their co-operation, inspiration, guidance and support during all stages of the preparation

of this report. Thanks all for your encouragement, support and warm cooperation.

Narayan Sharma

BBA VIII Semester

Modern Nepal College

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September 2009

Deceleration

I hereby declare that the internship report entitled, An internship report on NepalInvestment Bank Ltd. Submitted to Modern Nepal College, Faculty of Management,Tribhuvan University is my original work done in the form of partial fulfillment of therequirement of Bachelor of Business Administration under the supervision of Mr. ShivaBhakta Pokhrel.

-------------------------Mr. Narayan Sharma

StudentTU Regd. No: 7-2-444-43-005

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Table of Content

Topics Page No.

Chapter One: Introduction 1

1.1 Background of the study 11.2 Objective of Internship 21.3 Limitations of the Study 21.4 Methodology of the Study 2

1.4.1 Placement 21.4.2 Organization Selection 31.4.3 Duration of Internship 3

1.5 Activities performed at NIBL 3

Chapter Two: Chapter Two: Introduction of Banking Industry 6

2.1 History of Banking 62.2 Origin of the word Bank 62.3 Definition of the Bank 62.4 Commercial role of Bank 72.5 Banking channels 72.6 Types of banks 82.7 Global banking 92.8 History of Banking in Nepal 112.9 Commercial Banking System in Nepal 12

Chapter Three: Introduction of the Organization 14

3.1Introduction of the Bank 143.2 Vision of NIBL 153.3 Mission Statement of NIBL 153.4 Strategic Objectives of NIBL 153.5 Core values and Ethical Principles 153.6 Organization Structure of NIBL 163.7 Organization Structure of NIBL, Head Office 173.8 Organization Structure of NIBL, Putalisadak Branch 183.9 Products/Service of NIBL 19

Chapter Four: Analysis of Activities Done and Problem Solved 20

4.1 Customer Service Department 204.1.1 Saving Account 214.1.2 Fixed Account 23

4.1.3 Current Account 23

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4.1.4 Supporting Services 254.1.5 Account Operations 254.1.6 Customer Complaints 27

4.2 Foreign Exchange Department 284.3 Cash Department (Back Desk)4.3.1 Cheque Clearing Department. 294.3.2 Draft Department 30

4.4 Remittance Research and Development Department 31

4.4.1 Medium for Remittance 31

4.5 Trade Finance/Loan Administration Department 32

4.5.1 Lending procedure 36

4.6 Retail Bank Department 37

Chapter Five: Conclusion and Lesson Learnt 39

5.1 Conclusion 395.2 Lesson Learnt 395.3 Recommendation 40

Bibliography

Annexure

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List of Tables Page No

Table 1.1: Duration of Internship 3Table 2.1: Commercial Banks in Nepal 12Table 3.1: Board of Directors of NIBL 16Table 4.1: Types of account at NIBL 24Table 4.2: Account Operations 26Table 4.3: Customers Complaints 27Table 4.4: Remittance from the Middle-East 30

List of Figures

Fig 3.1: Shareholding Structure of NIBL 14

Fig 3.2: Organization Structure of NIBL, Head Office 17

Fig 3.3: Organization Structure of NIBL, Putalisadak Branch 18

Fig 3.4: Product/Services of NIBL 19

Fig 4.1: Types of account at NIBL 24

Fig 4.2: Account Operation 27

Fig 4.3: Customers Complaints 28

Fig 4.4: Account at NIBL 37

Fig 4.5: Satisfaction level of customers 38Fig 4.6: Other deposit schemes 38

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Abbreviations

ABBS: Any Branch Banking Service

ABK: Afnai Bachat KhataAOA: Article of AssociationATM: Automatic Teller MachineBBA: Bachelor of Business AdministrationCA: Credit ApplicationCEO: Chief Executive OfficerCIB: Credit Information BureauCSD: Customer Service DepartmentESA: E-Zee Student AccountESvA: E-Zee saving AccountGM: General Manager

KBK: KetaKeti Bachat KhataLC: Letter of CreditLSA: Lotus Saving AccountMOA: Memorandum of AssociationNIBL: Nepal Investment Bank Limited NRS: Nepalese Rupees NSA: Normal Saving AccountPA: Per AnnumTT: Telegraphic TransferTU: Tribhuvan UniversityUAE: United Arab EmiratesUSD: United State Dollar

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Chapter One:Introduction

1.1 Background of the study

Nepalese financial sector includes Central Bank, Commercial Banks, Finance Companies,Development Banks, Citizen Investment Trust, Provided Fund, Insurance Companies,Credit Unions, Loan Associations, etc. A Tribhuvan Universitys BBA student can work asinternee in any of the above sectors for fulfilling partial requirement of TU.

This study was conducted for partial fulfillment of the requirements for the degree ofBachelor of Business Administration (BBA) which carries six credit hours. The Internshipprogram was authorized by Tribhuvan University, every student has to perform internshipprogram any organization for a period of eight weeks. As a BBA student, I was assigned toan internship program at Nepal Investment Bank Ltd. The main objective of this internship

program is to provide the students the practical knowledge regarding the real work lifescenario and gain experience while working as the internee in the bank.

The internship program was started from 15 June 2009 to 15 August 2009. During the twomonths, I was given the opportunity to visit most of the departments. I was placed inCustomer Service Department for two weeks, Draft Department for one week, ForeignExchange Department for one week, Clearing Department for one week, Credit Departmentfor one week, Remittance Department for one week and Retail Bank for one weekAltogether I was placed in seven departments. The completion of eight weeks at NIBLgives me a professional experience as an internee in developing the interpersonal skills andworking as a part of team. This report depict about the work and experience I have gained

during two months at NIBL.

Details of Internship

Name and Address of the Organization:

Nepal Investment Bank LimitedPutalisadak Branch, Putalisadak, Katmandu, Nepal.Tel: 4445302, 4445303Fax: 4445304Website: www.nibl.com.npE-mail: [email protected]

Positions: InternName and Designation of the Internship Supervisors:Internal Supervisor: Mr. Shiva Pokhrel (faculty member, MNC)External Supervisor: Ms. Era Subedi (Relationship Manager, NIBL)

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1.2 Objective of Internship

The general objectives were:

1 To meet the partial fulfillment of the requirements for the degree of BBA of

Tribhuvan University

2 To acquire and understand practical knowledge of working in an organization

The specific objectives were:

1. To identify with the working environment of an organization

2. To understand the operation model of organization

3. To apply theoretical understanding from the class lectures in real practice

4. To build the professional working experience

1.3 Methodology of the Study

1.3.1 Organization Selection

As per the TU requirement, every BBA student should undergo internship program in anyinstitution for minimum eight weeks. I was interested to work in banking sector as internee.I get a golden opportunity to work as internee at NIBL, Putalisadak Branch. For theselection of the organization, my college had great contribution. I had no any idea about theselection of organization for internship. I would like to express my heartfelt gratitude to mycollege family for recommending me at such a reputed bank like NIBL. NIBL wasestablishes in 1986 and was able to win the award Bank of the Year for three times in

2003, 2005 and 2008. It has good financial position in Nepalese financial market. Its headoffice was located at Darbur Marg, Kathmandu. Currently it has 30 braches inside andoutside the valley and planning to establish 10 more branches in different part of thecountry by the end of 2009. Putalisadak branch is the largest branch among 30 branches. Itserves large number of customer a day.

1.3.2 Placement

During my eight weeks at NIBL, I was given the golden opportunity to visit most of thedepartments. Currently at Putalisadak branch, altogether there are 10 departments.Customer Service Department, Draft Department, Foreign Exchange Department, Credit

Department, Clearing Department, Card Department, Trade Finance Department,Remittance Department, Internal Audit Department and Retail Bank. But due to the timeconstraints, I could not worked at Card Department, Trade Finance Department andInternal Audit Department. But I was visited rest of all the departments.

133 Duration of Internship

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As per TU requirement, a BBA student should undergo internship for minimum eightweeks. I have spent eight weeks at NIBL as internee. The duration of my internship wasfrom 15 June, 2009 to 15 August, 2009. The detail of the duration of my internship can beshown below:

Table 1.1: Duration of Internship

Departments Duration

Customer Service Department 2 weeks

Draft Department 1 week

Foreign Exchange Department 1 week

Clearing Department 1 week

Credit Department 1 week

Remittance Department 1 week

Retail Bank 1 week

1.3.4 Activities performed at NIBL

As I have explained before, I was placed at different seven departments and performeddifferent activities in those department which can be explained below:

1) Customer Service Department

Customer Service Department is the front desk of any organization. It deals withcustomers through account opening, ATM/Cheque Book issuing, balance certificateand balance statement issuing, etc. I have stayed two weeks in this department andperformed following activities:

Helping customers in filling the account opening form and vouchers Keeping record of account holders manually

Binding the cheque books

Issuing cheque books and ATM cards to the clients

Signature scanning

Printing balance certificate and balance statements

Taking the documents to respective person for signature

Making phone calls to the clients for informing to collect the birthday cakes forKetaKeti Bachat Khata.

Photocopying

2) Draft Department

Draft department is responsible for facilitating internal transfer, telegraphic transfer,demand draft and mail transfer. In this department I have worked for one week andperformed the following activities:

1 Helping customers in filling form for demand draft, telegraphic transfer,internal transfer and good for payment

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2 Taking the documents to respective person for signature3 Helping customers in filling vouchers4 Issuing draft to clients and filing their record5 Faxing the SWIFT document to head office6 Photocopying

3) Foreign Exchange Department

Foreign Exchange Department is responsible for exchanging foreign currency forNepalese rupees (NRS) and NRS for foreign currency according to need of the clients.In this department, I have performed following activities during one week:

1 Filling forms for traveling cheque2 Filling the withdrawal slip3 Photocopying4

4) Clearing Department

Cheques from other banks and of NIBL are deposited in this department. During the

period of one week I have performed following activities:1 Making phone calls to the clients for informing about the cheque bounce2 Accepting cheques for deposit3 Sorting the documents that should be taken to central bank for clearing.

5) Credit Department

Customers visit this department if they need loan from the bank. Different varieties ofloans are provided by the bank currently. I was placed in this department for one weekand performed the following activities:

Photocopying

Sending fax

Tracking record of the customers whose insurance against security was going tobe expired.

6) Remittance Department

The main function of remittance department is to accept the fund transfer buy themigrant workers from abroad to the family back home. During my one week in thisdepartment, I have performed the following activities:

Sending fax

Photocopying Receiving fax and filing

7) Retail Bank

Activities related to marketing ere performed in retail bank department. I have gone tocity centre, Kamaladi for promoting the services of the bank. I have performed thefollowing activities there:

Informing about the services of NIBL to the individuals

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Convincing them to open account at NIBL

Obtaining their satisfaction level from the services of NIBL, if thecustomers of NIBL were met.

1.4 Limitations of the Study

1 The eight weeks of short time period allocated leads to limited learning about

an organization and working environment

2 Learning about working environment is deduced from an experience with one

organization

3 Students do not have access to the reports of work done for the organization

during internship

4 Learning during the internship period is guided by the requirement of the report

to be submitted for the BBA degree fulfillment

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Chapter Two:

Introduction of Banking Industry

2.1 History of Banking

A bank is a financial institution licensed by a government. Its primary activities includeborrowing and lending money. Many other financial activities were allowed over time. Forexample banks are important players in financial markets and offer financial services suchas investment funds. In some countries such as Germany, banks have historically ownedmajor stakes in industrial corporations while in other countries such as the United Statesbanks are prohibited from owning non-financial companies. In France, bancassurance isprevalent, as most banks offer insurance services (and now real estate services) to theirclients.

The level of government regulation of the banking industry varies widely, with countriessuch as Iceland, the United Kingdom and the United States having relatively lightregulation of the banking sector, and countries such as China having relatively heavier

regulation (including stricter regulations regarding the level of reserves).

2.2 Origin of the word Bank

The name bank derives from the Italian word banco "desk/bench", used during theRenaissance by Florentine bankers, who used to make their transactions above a deskcovered by a green tablecloth. However, there are traces of banking activity even in ancienttimes.Banks act as payment agents by conducting checking or current accounts for customers,paying cheques drawn by customers on the bank, and collecting cheques deposited tocustomers' current accounts. Banks also enable customer payments via other payment

methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money byaccepting funds deposited on current accounts, by accepting term deposits, and by issuingdebt securities such as banknotes and bonds. Banks lend money by making advances tocustomers on current accounts, by making installment loans, and by investing inmarketable debt securities and other forms of money lending. Banks provide almost allpayment services, and a bank account is considered indispensable by most businesses,individuals and governments. Non-banks that provide payment services such as remittancecompanies are not normally considered an adequate substitute for having a bank account.Banks borrow most funds from households and non-financial businesses, and lend mostfunds to households and non-financial businesses, but non-bank lenders provide asignificant and in many cases adequate substitute for bank loans, and money market funds,

cash management trusts.

2.3 Definition of Bank

The definition of a bank varies from country to country. Under English common law, abanker is defined as a person who carries on the business of banking, which is specified as:

conducting current accounts for his customers

paying cheques drawn on him, and

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collecting cheques for his customers.

According to Oxford Dictionary, a bank is an establishment or custody of moneyreceived from of on behalf of its customers, its essential duty is to pay their draft onit, its profit arises from its use of money left unemployed by them.

2.4 Commercial role of Bank

The commercial role of banks is not limited to banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to bearer ondemand)

processing of payments by way of telegraphic transfer, EFTPOS, internet bankingor other means

issuing bank drafts and bank cheques

accepting money on term deposit

lending money by way of overdraft, installment loan or otherwise

providing documentary and standby letters of credit (trade finance), guarantees,performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures

safekeeping of documents and other items in safe deposit boxes

currency exchange

acting as a 'financial supermarket' for the sale, distribution or brokerage, with orwithout advice, of insurance, unit trusts and similar financial products

2.5 Banking channels

Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank orfinancial institution offers a wide array of face-to-face service to its customers.

ATM is a computerised telecommunications device that provides a financialinstitution's customers a method of financial transactions in a public space withoutthe need for a human clerk or bank teller. Most banks now have more ATMs thanbranches, and ATMs are providing a wider range of services to a wider range ofusers. For example in Hong Kong, most ATMs enable anyone to deposit cash toany customer of the bank's account by feeding in the notes and entering the accountnumber to be credited. Also, most ATMs enable card holders from other banks toget their account balance and withdraw cash, even if the card is issued by a foreign

bank. Mail is part of the postal system which itself is a system wherein written documents

typically enclosed in envelopes, and also small packages containing other matter,are delivered to destinations around the world. This can be used to deposit chequesand to send orders to the bank to pay money to third parties. Banks also normallyuse mail to deliver periodic account statements to customers.

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Telephone banking is a service provided by a financial institution which allows itscustomers to perform transactions over the telephone. This normally includes billpayments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over theInternet through a bank, credit union or building society's secure website.

Mobile banking is a method of using one's mobile phone to conduct simple bankingtransactions by remotely linking into a banking network.

Video banking is a term used for performing banking transactions or professionalbanking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to anAutomated teller machine), or via a videoconference enabled bank branch.

2.6 Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals andsmall businesses; business banking, providing services to mid-market business; corporatebanking, directed at large business entities; private banking, providing wealth managementservices to high net worth individuals and families; and investment banking, relating toactivities on the financial markets. Most banks are profit-making, private enterprises.However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatoryresponsibilities, such as supervising commercial banks, or controlling the cash interest rate.They generally provide liquidity to the banking system and act as the lender of last resort inevent of a crisis.

Types of retail banks

Different types of retail banks include:

1. Commercial bank

The term used for a normal bank to distinguish it from an investment bank. After theGreat Depression, the U.S. Congress required that banks only engage in bankingactivities, whereas investment banks were limited to capital market activities. Since thetwo no longer have to be under separate ownership, some use the term "commercialbank" to refer to a bank or a division of a bank that mostly deals with deposits andloans from corporations or large businesses.

2. Community Banks

Locally operated financial institutions that empower employees to make local decisionsto serve their customers and the partners.

3. Community development banks

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Regulated banks that provide financial services and credit to under-served markets orpopulations.

4. Postal savings banks

Savings banks associated with national postal systems.

5. Private banksBanks that manage the assets of high net worth individuals.

6. Offshore banks

Banks located in jurisdictions with low taxation and regulation. Many offshore banksare essentially private banks.

7. Savings bank

In Europe, savings banks take their roots in the 19th or sometimes even 18th century.Their original objective was to provide easily accessible savings products to all strata ofthe population. In some countries, savings banks were created on public initiative; inothers, socially committed individuals created foundations to put in place the necessaryinfrastructure. Nowadays, European savings banks have kept their focus on retailbanking: payments, savings products, credits and insurances for individuals or smalland medium-sized enterprises. Apart from this retail focus, they also differ fromcommercial banks by their broadly decentralised distribution network, providing localand regional outreachand by their socially responsible approach to business andsociety.

8. Building societies and Landesbanks

Institutions that conduct retail banking.

9. Ethical banks

Banks that prioritize the transparency of all operations and make only what theyconsider to be socially-responsible investments.

10. Islamic banks

Banks that transact according to Islamic principles.

2.7 Global Banking.

Global banking and capital market services proliferated during the 1980s and 1990s as aresult of a great increase in demand from companies, governments, and financialinstitutions, but also because financial market conditions were buoyant and, on the whole,

bullish. Interest rates in the United States declined from about 15% for two-year U.S.Treasury notes to about 5% during the 20-year period, and financial assets grew then at arate approximately twice the rate of the world economy. Such growth rate would have beenlower, in the last twenty years, were it not for the profound effects of theinternationalization of financial markets especially U.S. Foreign investments, particularlyfrom Japan, who not only provided the funds to corporations in the U.S., but also helpedfinance the federal government; thus, transforming the U.S. stock market by far into thelargest in the world.

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Nevertheless, in recent years, the dominance of U.S. financial markets has beendisappearing and there has been an increasing interest in foreign stocks. The extraordinarygrowth of foreign financial markets results from both large increases in the pool of savingsin foreign countries, such as Japan, and, especially, the deregulation of foreign financialmarkets, which has enabled them to expand their activities. Thus, American corporations

and banks have started seeking investment opportunities abroad, prompting thedevelopment in the U.S. of mutual funds specializing in trading in foreign stock markets.

Such growing internationalization and opportunity in financial services has entirelychanged the competitive landscape, as now many banks have demonstrated a preference forthe universal banking model so prevalent in Europe. Universal banks are free to engagein all forms of financial services, make investments in client companies, and function asmuch as possible as a one-stop supplier of both retail and wholesale financial services.

Many such possible alignments could be accomplished only by large acquisitions, andthere were many of them. By the end of 2000, a year in which a record level of financialservices transactions with a market value of $10.5 trillion occurred, the top ten bankscommanded a market share of more than 80% and the top five, 55%. Of the top ten banks

ranked by market share, seven were large universal-type banks (three American and fourEuropean), and the remaining three were large U.S. investment banks who between themaccounted for a 33% market share.

This growth and opportunity also led to an unexpected outcome: entrance into the marketof other financial intermediaries: nonbanks. Large corporate players were beginning to findtheir way into the financial service community, offering competition to established banks.The main services offered included insurances, pension, mutual, money market and hedgefunds, loans and credits and securities. Indeed, by the end of 2001 the market capitalisationof the worlds 15 largest financial services providers included four nonbanks.

In recent years, the process of financial innovation has advanced enormously increasing the

importance and profitability of nonbank finance. Such profitability priorly restricted to thenonbanking industry, has prompted the Office of the Comptroller of the Currency (OCC) toencourage banks to explore other financial instruments, diversifying banks' business as wellas improving banking economic health. Hence, as the distinct financial instruments arebeing explored and adopted by both the banking and nonbanking industries, the distinctionbetween different financial institutions is gradually vanishing.

2.8 History of Banking in Nepal

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Banking industry is the oldest service industry in Nepal. It has gone through various stagesof evolution and development since the Vedic times. Though the modern bankinginstitution has a very recent origin in Nepal, some crude bank operations were in practiceeven in the ancient times.

The first commercial bank of Nepal is Nepal Bank Limited, which was established in 1937.

The government owned 51 percent of the shares in the bank and controlled its operations toa large extent. Nepal Bank Limited was headquartered in Kathmandu and had branches inother parts of the country.

There were other government banking institutions. Rastriya Banijya Bank (NationalCommercial Bank), a state-owned commercial bank, was established in 1966. The LandReform Savings Corporation was established in 1966 to deal with finances related to landreforms.

There were two other specialized financial institutions. Nepal Industrial DevelopmentCorporation, a state-owned development finance organization headquartered in Katmandu,was established in 1959 with United States assistance to offer financial and technical

assistance to private industry. Although the government invested in the corporation,representatives from the private business sector also sat on the board of directors. The Co-operative Bank, which became the Agricultural Development Bank in 1967, was the mainsource of financing for small agribusinesses and cooperatives. Almost 75 percent of thebank was state-owned; 21 percent was owned by the Nepal Rastra Bank, and 5 percent bycooperatives and private individuals. The Agricultural Development Bank also served asthe government's implementing agency for small farmers' group development projectsassisted by the Asian Development Bank (see Glossary) and financed by the UnitedNations Development Programme. The Ministry of Finance reported in 1990 that theAgricultural Development Bank, which is vested with the leading role in agricultural loaninvestment, had granted loans to only 9 percent of the total number of farming families

since 1965.Since the 1960s, both commercial and specialized banks have expanded. More businessesand households had better access to the credit market although the credit market had notexpanded.

In the mid-1980s, three foreign commercial banks opened branches in Nepal. The NepalArab Bank was co-owned by the Emirates Bank International Limited (Dubai), theNepalese government, and the Nepalese public. The Nepal Indosuez Bank was jointlyowned by the French Banque Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan(National Insurance Corporation), and the Nepalese public. Nepal Grindlays Bank was co-owned by a British firm called Grindlays Bank, local financial interests, and the Nepalesepublic.

Nepal Rastra Bank was created in 1956 as the central bank. Its function was to supervisecommercial banks and to guide the basic monetary policy of the nation. Its major aimswere to regulate the issue of paper money; secure countrywide circulation of Nepalesecurrency and achieve stability in its exchange rates; mobilize capital for economicdevelopment and for trade and industry growth; develop the banking system in the country,thereby ensuring the existence of banking facilities; and maintain the economic interests of

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the general public. Nepal Rastra Bank also was to oversee foreign exchange rates andforeign exchange reserves.

Prior to the establishment of Nepal Rastra Bank, Kathmandu had little control over itsforeign currency holdings. Indian rupees were the prevalent medium of exchange in mostparts of the country. Nepalese currency was used mostly in the Kathmandu Valley and the

surrounding hill areas. The existence of a dual currency system made it hard for thegovernment to know the status of Indian currency holdings in Nepal. The exchange ratesbetween Indian and Nepalese rupees were determined in the marketplace. Between 1932and 1955, the value of 100 Indian rupees varied between Rs71 and Rs177. The governmententered the currency market with a form of fixed exchange rate between the two currenciesin 1958. An act passed in 1960 sought to regulate foreign exchange transactions. Beginningin the 1960s, the government made special efforts to use Nepalese currency inside thecountry as a medium of exchange.

It was only after the signing of the 1960 Trade and Transit Treaty with India that Nepal hadfull access to foreign currencies other than the Indian rupee. Prior to the treaty, all foreignexchange earnings went to the Central Bank of India, and all foreign currency needs were

provided by the Indian government. After 1960 Nepal had full access to all foreigncurrency transactions and directly controlled its exports and imports with countries otherthan India.

As a result of the treaty, the government had to separate Indian currency (convertiblecurrency because of free convertibility) from other currencies (nonconvertible currencybecause it was directly controlled by Nepal Rastra Bank). In 1991 government statisticsstill separated trade with India from trade with other countries. Tables showinginternational reserves listed convertible and nonconvertible foreign exchange reservesseparately.

2.9 Commercial Banking System in Nepal

Commercial bank is the oldest form of bank. Bank that performs all kinds of bankingbusiness and generally finances trade and commerce is called commercial bank. It occupiesan important place in the framework of every economy. Commercial bank accepts depositfrom public and provide loan to them. It acquires fund from surplus saving unit to deficitspending unit. The main objective of commercial bank is to earn profit which is achievedfrom spread margin.

Nepal bank limited is the first commercial bank in Nepal which was established in 1937A.D. The lists of commercial banks licensed by NRB are:

Table 2.1: Commercial Banks in Nepal

Sn Commercial Banks Establishment Date(BS) Head Office

1 Nepal Bank Limited 1994/07/30 Katmandu

2 Rastriya Banijya Bank 2022/10/10 Katmandu

3 NABIL Bank Limited 2041/03/29 Katmandu

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4 Nepal Investment Bank Limited 2042/11/16 Katmandu

5 Standard Chartered Bank NepalLimited

2042/10/16 Katmandu

6 Himalayan Bank Limited 2049/10/05 Katmandu7 Nepal SBI Bank Limited 2050/03/23 Katmandu

8 Nepal Bangladesh Bank Limited 2050/02/23 Katmandu

9 Everest Bank Limited 2051/07/01 Katmandu

10 Bank of Katmandu Limited 2051/11/18 Katmandu

11 Nepal Credit and Commerce BankLimited

2053/06/28 Siddarthanagar

12 Lumbini Bank Limited 2055/04/01 Narayanghad

13 Nepal Industrial and CommercialBank Limited

2055/04/05 Biratnagar

14 Machhapuchre Bank Limited 2057/06/17 Pokhara

15 Kumari Bank Limited 2056/08/24 Katmandu

16 Laxmi Bank Limited 2058/06/11

17 Siddhartha Bank Limited 2058/06/12 Katmandu

18 Agriculture Development BankLimited

2024/10/07 Katmandu

19 Global Bank Limited 2063/09/18 Birgunj

20 Citizen Bank International Limited 2064 Katmandu

21 Prime Commercial Bank Limited 2064 Katmandu

22 Bank of Asia Limited 2064 Katmandu

23 Sunrise bank Limited 2064 Katmandu

24 Nepal Merchant Bank 2065 Katmandu

25 Development Credit Bank 2065 Katmandu

26 Kist Bank Limited 2066 Katmandu

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Chapter Three

Introduction of the Organization

3.1 Introduction of the Bank

Nepal Investment Bank Ltd. (NIBL), previously Nepal Indosuez Bank Ltd., wasestablished in 1986 as a joint venture between Nepalese and French partners. The Frenchpartner (holding 50% of the capital of NIBL) was Credit Agricole Indosuez, a subsidiary ofone the largest banking group in the world.

With the decision of Credit Agricole Indosuez to divest, a group of companies comprisingof bankers, professionals, industrialists and businessmen, has acquired on April 2002 the

50% shareholding of Credit Agricole Indosuez in Nepal Indosuez Bank Ltd.The name of the bank has been changed to Nepal Investment Bank Ltd. upon approval ofbanks Annual General Meeting, Nepal Rastra Bank and Company Registrars office withthe following shareholding structure.

A group of companies holding 50% of the capital

Rashtriya Banijya Bank holding 15% of the Capital.

Rashtriya Beema Sansthan holding the same percentage.

The remaining 20% being held by the General Public (which means that NIBL is aCompany listed on the Nepal Stock Exchange).

General Public

20%

Rashtriya

Banijya Bank

15%

DifferentCompanies

50%

Rashtriya

Beema

Sansthan

15%

Fig 3.1: Shareholding Structure of NIBL

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NIBL forged itself into the introduction of many innovative approaches as for rendering thepremium services and satisfaction using proper marketing concepts throughout the period.Represented as the milestone in the banking history in Nepal, NIBL primarily focuses andsets an objective to provide better services to its overall customers.

3.2 Vision of NIBL

"Our Vision is to be the most preferred provider of Financial Services in Nepal".

3.3 Mission Statement of NIBL

To be the leading Nepali Bank, delivering world class service through the blending of stat-of-the art technology and visionary management in partnership with competent andcommitted staff, to achieve sound financial health with sustainable value addition to all ourstakeholders. NIBL is committed to do this mission while ensuring the highest levels ofethical standards, professional integrity, corporate governance and regulatory compliance.

3.4 Strategic Objectives of NIBL

To develop a customer oriented service culture with special emphasis oncustomer care and convenience

To increase the market share by following the discipline growth strategy

To leverage the technology platform and open scalable system to achieve costeffective operations, efficient MIS, improve delivery capability and high servicestandards.

To develop innovative product and service that would attract targeted customerand market segment.

To continue to develops product and services that would reduce the cost offund.

To maintain a high quality asset portfolio to achieve strong and sustainablereturns and to continuously build shareholders value.

To explore new avenues for growth and profitability.

3.5 Core values and Ethical Principles

The core values lets the institute, customers and communities know what they serve, whothey really are and the principles by which they pledge to conduct business. In essence, the

bank believes that the success can only be achieved by living their core values andprinciples:

1 Customer focus

At NIBL, the prime focus is to perfect the customer service. Customers are theirfirst priority and driving forces. So, they wish to gain customer confidence and betheir trusting partner.

2 Quality

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They believe that the quality service experience is paramount to their customer andare strongly committed in fulfilling this ideal.

3 Honesty and Integrity

At NIBL, they ensure higher level of integrity to the customer, creating an ongoingrelationship of trust and confidence with a belief of treating each customer withhonesty, fairness and respect.

4 Belief in staff

At NIBL, every staffs are recognized as important assets and competitive strengthsand their worth and dignity are respected for the progress of the bank.

5 Teamwork

NIBL is a firm believer in teamwork and feel that loyal and motivated teams canproduce extraordinary results. They are driven by a performance culture whenrecognition and rewards are based on individual merit and demonstrated trackrecord.

6 Good Corporate Governance

Effective Corporate Governance procedures are essential to achieve and maintainpublic trust and confidence by following best practice.

7 Corporate Social Responsibility

NIBL is committed to behave ethically and contribute towards the improvement ofquality of life of people, community and greatly the society.

3.6 Organization Structure of NIBL

(table no on top and fig no on bottom)Table 3.1: Board of Directors of NIBL

Board of Directors

Prithivi Bahadur Pande Chairman/Chief Executive Director

Mr. Prajanya Rajbhandari Director

Mr. Deepak Man Serchan Director

Mr. Krishna Prasad Sharma Director

Dr. Shiva Hari Shrestha Director

Mr. Surendra Bdr. Singh Director

Mr. Damodar Prasad Sharma Pandey Professional Director

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3.7 Organization Structure of NIBL, Head Office

Fig 3.2: Organization Structure of NIBL, Head Office

24

Chairman and CEO

Senior GM

Senior GM Senior GM

GM

Assistant GMDeputy GM(Operation)

Deputy GM(Credit/Retail)

Head RetailHeadCorporate

CustomerService

Head Trade

CustomerFinance

Head Credit

DepositMarketing

BranchCoordinator

Head H/R Branch Credit

Head HR

Head Loan

Assistant GM

Assistant GM

HeadCorporate

HeadCorporate

HeadCorporate


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3.8 Organization Structure of NIBL, Putalisadak Branch

Fig 3.3: Organization Structure of NIBL, Putalisadak Branch

25

Branch Manager

Assistant Branch Manager

TradeFinanceDepartment

CorporateDepartment

Officer InCharge

CustomerServiceDepartment

OperationCard CentreRemittanceDepartment

Officer InCharge

Officer InCharge

Officer InCharge

Officer InCharge

Officer InCharge

Jr. Officer(R M)

Jr. Officer(R M)

Sr. AssistantMgmt. Trainee

Sr.Assistant

Sr. AssistantMgmt. Trainee

Assistant /Teller

Supervisor/HeadTeller

Clearing /ForeignExchange

Cash


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3.9 Products/Service of NIBL

Fig 3.4: Product/Services of NIBL

26

Remittance

Tele Banking ServiceBills purchase

Clearing/ Collection ofCheque

Dedposits

Locker Facility

Any branch Banking Service

Import and export credit

Bank Guarantee

NTC Mobile Bill Payment

ATM Card

Loans and Advances

Credit Card E- banking Services

365 Days Banking Premier Banking


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Chapter Four

Analysis of Activities Done and Problem Solved (arrange all in this gap)

During the period of two months at NIBL, I was given the opportunity to be placed inCustomer Service Department, Draft Department, Foreign Exchange Department, ClearingDepartment, Credit Department, Remittance Department and Retail Bank. Altogether I wasplaced in seven departments. The activities done in these departments can be explainedbelow:

4.1 Customer Service Department

Customer service department serve as the important department of anyorganization. It is the front desk of any organization. The ultimate goal of anyorganization is to satisfy the customers. So any institutions try their best in makingpositive impression to the clients. The image and reputation of the bank dependsupon the way how the staffs in this department behave with clients. So the ultimategoal of the organization can be achieved through efficient functioning in customerservice department.During the period of two months (15 June- 15 August), I was placed for two weeksin customer service department. During that period, I was given the chance toperform the following activities:

Helping customers in filling the account opening form and vouchers

Keeping record of account holders manually Binding the cheque books

Issuing cheque books and ATM cards to the clients

Taking the documents to respective person for signature

Making phone calls to the clients for informing to collect the birthday cakes forKetaKeti Bachat Khata.

Photocopying

Sometimes, I was given the chance to work with computer. At that time, I have todo following tasks:

Signature scanning

Printing balance certificate and balance statements Tracking record of e-banking service taken by clients.

But most of my time was spent in making photocopy of the document and taken it to therespective person for signature. Along with this, I was given the task of making phone callsto the clients and informing them about the improper signature in access card for accountopening.

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For the easiness of customers, customer service department offers various types account:

4.1.1 Saving Account

NIBL provides the saving account for the purpose of meeting the needs of surplussaving unit. Only the individuals can open this type of account. NIBL providesvarious types of saving accounts:

a) Afnai Bachat Khata (ABK)

Afnai Bachat Khata has the following features:

Customers can open account with minimum balance of NRS 1

It provides interest of 2% P.A. on monthly minimum balance.

ATM Debit card is compulsory for this account

Debit card is valid in Nepal and India

In India and other than NIBL ATM, charge per transaction is NRS 150 or

0.5% (whichever is higher) Transaction through Kumari Bank Rastriya Banijya Banks ATM possible

with charge of NRS 10 per transaction.

Cheque book is issued only after holding NRS 50,000 on request.

No maintenance charge is required

Debit card issuance charge NRS 200 P.A.

Any Branch Banking Service (ABBS) is free with in the valley.

Free E- Banking facility

Account will be blocked if no withdrawal is made more than six months

Interest is paid semiannually (ashad end and poush end)

b) KetaKeti Bachat Khata (KBK)

KBK has the following features:1 NRS 100 is to be contributed from the bank with every account opened in

the childs name.2 It provides interest of 3% P.A. on monthly minimum balance.3 The account is the operative account to be maintained by the

parents/guardians4 The account matures when the child matures 16 years and is converted into

saving account.5 Birthday cake will be provided by the bank on the birthday o the child

6 All clients will be issued the VISA Debit Cars with an insurance fee of NRS200 P.A.7 All clients will be issued with a privilege card with the photo of the child,

account name and validity8 Cheque Book will not be issued under this scheme.

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c) Lotus Saving Account (LSA)

KBK has the following features:


It provides interest of 2.25% P.A. on monthly minimum balance.


Debit card is valid in Nepal and India In India and other than NIBL ATM, charge per transaction is NRS 150 or

0.5% (whichever is higher)

Transaction through Kumari Bank Rastriya Banijya Banks ATM possiblewith charge of NRS 10 per transaction.

Maintenance charge of NRS 50 semi annually is required (ashad end andpoush end)





Interest is paid semiannually (ashad end and poush)

d) E-Zee Student Account (ESA)

ESSA has the following features:





In India and other than NIBL ATM, charge per transaction is NRS 150 or0.5% (whichever is higher)



Low balance charge NRS 300 per month (Below NRS 2000)






There is no cheque book facility in ESA.

e) Normal Saving Account (NSA)

Normal Saving Account has the following features:

Customers can open account with minimum balance of NRS 10,000




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In India and other than NIBL ATM, charge per transaction is NRS 150 or0.5% (whichever is higher)




Cheque book facility is available

NRS 300 is levied for uncollected cheque book after 90 days.




Low balance charge NRS 300 per month (Below NRS10,000)

f) E-Zee Saving Account (ESvA)

ESA has the following features:

Customers can open account with minimum balance of NRS 50,000

It provides interest of 2.75-4% P.A. 0n daily balance (condition apply)

Any Branch Banking Service (ABBS) is free

ATM Debit card is free for this account


Provide the facility if accidental insurance coverage of NRS50,000

No key deposit for lockers

Unlimited withdrawal facility is possible

Low balance charge NRS 500 per month (Below NRS50,000)

NRS 300 is levied for uncollected cheque book after 90 days. Maintenance charge of NRS 50 is required semi annually

Any Branch Banking Service (ABBS) is free of cost



Interest is paid semiannually (ashad end and poush end)

4.1.2 Fixed Account

If the customers want to deposit their cash for fixed period of time i.e. 1 year, 2year, 5 year, 10 year ,20 year etc. then they can open fixed account. Generallyinterest rate is higher in fixed account. The interest rate range from 1.25% for 1year maturity deposit to as high as 5% to maturity above two years. If thecustomer wants to withdrawal cash before the maturity, bank will charge extracharge.

4.1.3 Current Account

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NIBL provides the facility of current account targeting at the businessorganization. It is also called checking account. Account holders will not getany interest and is used for the transaction purpose.

Features:1 Provides the cheque book for transaction purpose2 Provides Visa Debit Card3 Tele banking facility is available

During my two weeks in customer service department, 279 customers visited NIBL foropening account. The detail is presented below:

Table 4.1: Types of account at NIBL

Types of Account No of Customers

Afnai Bachat Khata (ABK) 201

KetaKeti Bachat Khata (KBK) 31

Lotus Saving Account (LSA) 32E-Zee Student Account (ESA) 0

Normal Saving Account (NSA) 6

E-Zee Saving Account (ESvA) 2

Current Account (CA) 7

Total 279

0

50

100

150

200

250

ABK KBK LSA ESA NSA ESvA CA

Types of Accounts

NoofCustomers

fig 4.1: Types of account at NIBL

Above table and chart shows that a large number of customers visit NIBL for openingABK. During two weeks, out of 279 customers, 201 customers opened ABK, 31 opened

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KBK,32 opened LSA, no customers opened ESA, 6 customers opened NSA, two customersopened ESvA and seven customers opened current account.

4.1.4 Supporting Services

NIBL provides the following services and documents on demand for facilitatingthese accounts:

1. Cheque Book

For the withdrawal of cash deposited in their account, NIBL provides the facility ofcheque book. During the two weeks, I found about 20 customers request for chequebook. For issuing cheque, first of all it should be recorded in the cheque bookregister.

2. ATM Cards

Most of the accounts provide the facility of Visa Debit Card. So the customerrequesting for ATM card is high. Everyday about 35 customers come to collectATM card. ATM of NIBL can be operated in any ATM machine of Visa Company.

3. Balance Statement

NIBL issue the balance statement to the client on demand. This statement isdistributed if the customer wants to know about the amount debited and credited intheir account. It has no any other purpose. Every day 30-40 customers visit tocollect balance statement.

4. Balance Certificate

Balance Certificate is distributed to clients mainly for visa purpose. A form shouldbe filled by the clients for balance certificate. For a balance certificate, client ischarged Rs 500 if account opening crosses three months and Rs 800 if duration ofaccount opening is less than three months. Every day about 20-30 clients visit bankfor balance certificate.

5. E-Banking User ID Distribution

Through E- banking facility, clients can check their balance through internet. Forthis they will get user password form customer service department. NIBL has itsown website through which it will connect to the clients. The client can use the siteto conduct transaction on their account.

4.1.5 Account Operations

NIBL performs two activities for account operation. They are:

1. Account opening

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Account opening is the important task of banking institutions. Every day 30-40customers come to NIBL to open account. The following documents are to besubmitted while requesting for opening the account:

Photocopy of citizenship certificate of the account holder

Three photographs

List of office bearer and address (in case of club society and association)

Copy of by-law/constitution (in case of club society and association)

Certificate of registration and renewal certificate (in case of club societyand association)

Deceleration of sole proprietorship (in case Sole trading)

Certificate of registration and renewal certificate (in case Sole trading)

Letter of partnership duly signed by all partners (in case of Partnership)

Memorandum and article of association (in case of Company)

Resolution of BOD to open and operate the account (in case of Company)

List of directors duly signed by respective directors (in case of Company)

Company registration paper of account operator (in case of Company)

Income tax registration/renewal certificate (in case of sole trading,Partnership and Company)

2. Account Closing

Customers do not open account only; sometimes they close the existing account.Every day 3-4 customers come to the bank to close the account. They do so if theywere not satisfied with the services provided by the bank. Another reason isincreasing competitors. Customers should go through the following process tocancel their account:

1 Customers willing to close the account must fill up the form specifying thereason2 Customers are asked to return the belongings like Cheque Book, ATM Card

etc3 Bank charge certain charge for account closing4 Finally closed the account.

During the two weeks in CSD, I kept the record of number of customers opening andclosing the account. The detail is presented below:

Table 4.2: Account Operations

Account Operations No of Customers

Account opening 279

Account Closing 27

Total 306

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Account Operations

Account

opening

91%

Account

Closing

9%

Fig 4.2: Types of account at NIBL

During my two weeks at customer service department, out of 306 customers, 91% came foraccount opening and 9% came for closing account.

4.1.6 Customer Complaints

Some times customers will face the problem while taking the services of NIBL. I

have conducted the survey about the problems faced by the customers. I have askedthe respondents who came to the counter of the bank about the problem createdfrom the services of NIBL. The detail is presented in the form of table and chartbelow:

Table 4.3: Customers Complaints

Customers complains No of Customers

Late delivery of ATM 12

Not friendly staffs 6

High renewal charge of ATM 4

No clear information 2

No provision for illiterate and sightless 1Necessary for Introducers Deceleration 9

Total 34

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Customers' complains

0

24

68

1012

14

Late delivery

of ATM

Not friendly

staffs

High renewal

charge of

ATM

No clear

information

No provision

for illiterate

and sightless

Necessary for

Introducers

Deceleration

Complains

NoofCustomers

Fig 4.3: Customers Complaints

Above table and chart shows that most of the customers faced the problem related to ATMcards. Out of the total respondents, 16 respondents had the problem related to ATM; sixrespondents argued staffs are not friendly, two respondents responded that informationprovided by the bank is not clear. There is no provision of account for illiterate andsightless person (those who can not make sign). One respondent had this problem and ninecustomers responded that they cant provide the introducers deceleration.

4.2 Foreign Exchange Department

From its name it is clear that foreign exchange department is responsible forexchanging foreign currency i.e. buying and selling foreign currency. Buying rate isdiffering from selling rate. Selling rate is slightly higher than buying rate.

a) Selling of Foreign Currency

Selling foreign currency means providing foreign currency for Nepalesecurrency. Customers should require different documents for exchangingforeign currency with Nepalese currency. But Indian currency can beexchanged without any criteria. For other currency following documents are

required: Airway ticket for the respective country, whose currency is to be

exchange.

Photocopy of passport.

b) Buying of Foreign Currency

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Buying foreign currency means providing Nepalese currency for foreigncurrency. Bank only buy the foreign currency from those who were alreadyvisited to the respective country. Without that bank will be unable toexchange foreign currency. Following documents are to be submitted by the

customers for enabling the bank to buy foreign currency from them:1 Return airway ticket from respective country2 Photocopy of passport.

Bank does not charge any commission for exchanging foreign currency. The gapbetween selling and buying is the benefit for the bank. During my internship period,I found foreign exchange department very crowd.

Travelers Cheque

NIBL offers "American Express Traveler's Cheque" that is accepted worldwide.

4.3 Cash Department (Back Desk)

Cash Department (back desk) includes the following:

4.3.1 Cheque Clearing Department

In Cheque clearing department, the cheque from different banks including NIBLare presented for deposit. I have got the opportunity to stay one week in thisdepartment. Every day about 20-30 cheques were deposited during my one week inthis department. For depositing the cheque, simply customers have to fill up thevoucher with the amount of cheque. Once the cheque is deposited in the bank, if thecheque is of NIBL, his/her account is directly credited with the amount of cheque.If it is of other bank, then it will be send to Nepal Rastra Bank for clearing. AtNRB, all the banks who accept the cheque of other banks are presented for clearingit. At NRB there are separate desks for each institution. In the desk of NIBL, all thecheques of NIBL which are deposited in other banks are placed together. Then theyare sending to NIBL which is called inward clearing. Those cheques are treated likenormal cheque i.e. NIBL debit the amount of cheque of from the depositorsaccount with the amount of cheque and inform to NRB. Then NRB pay cash to thedepositor bank. Then after that bank credit the account of clients with the amount ofcheque. Sometimes, NIBL will bounce its cheques collecting from other banks. Inthis case, the cheque is send to the bank where it is collected. Account holders haveto pay Rs. 205 of the cheque is bounced. The reason for bounce of cheque can bepointed below:

1 Improper signature2 Cheque post added (cheque is to be paid later)3 Expired cheque4 No endorsement stamp

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5 Improper amount in words

Types of Cheque Clearing

There are two types of clearing. They are:

1. Inward ClearingIf the cheque of NIBL is deposited in other banks and finally comes to NIBL forclearing, it is called inward clearing. It takes two days for inward clearing.

2. Outward Clearing

If the cheque of other bank is deposited in NIBL, then it should be send torespective bank for clearing, which is called outward clearing. It takes two days foroutward clearing.

Draft Department

Draft is the mechanism for sending money from one place to another place. NIBLis also providing good facility of draft. Draft can be send both inside and outsidethe country. No documents need to submit for sending draft in Nepal and India. AtNIBL, students are the major clients for draft. Draft can be sending far any purposein Nepal and India but in other country it is only for study purpose. This departmentis responsible for performing following activities:

a) Demand Draft

NIBL has draft drawing arrangement with its correspondent banks indifferent countries. NIBL honors bank drafts drawn on/by variousinternational banks denominated in major currencies like US Dollar, Euro,Great Britain Pound, etc.

b) Telegraphic Transfer/ SWIFT

NIBL offers fast and reliable money transfer services through SWIFT.Customers bank account with NIBL can be credited with remittance fromanywhere in the world. The remitter has to mention the NIBL's SWIFTAddress "NIBLNPKT" and the beneficiary details to transfer money toNepal through NIBL. NIBL caters the need of customers to remit fundanywhere in the world, denominated in major currencies, through SWIFT.

c) Internal Transfer

NIBL offers the service of internal transfer. Customers can transfer theirfund from one account to another account of the bank.

d) Good for Payment

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Good for payment refers to the facility that bank guaranteed the payment tothe person who provide fund to another who have account at NIBL.

4.4 Remittance Research and Development Department

During the period of eight weeks, I was given the chance to work in remittancedepartment for one week. The main function of remittance department is to acceptthe fund transfer buy the migrant workers from abroad to the family back home.During my one week in this department, I have learned to do the followingactivities:

4 Sending fax5 Photocopying6 Receiving fax and filing

Remittance is the main source of government revenue. Every year about two Arabsdollar import in Nepal from foreign country.

Nepal Investment Bank Limited (NIBL), operating under the guidelines set by TheGovernment of Nepal and Nepal Rastra Bank (the Central Bank of Nepal), offersone of the safest and the most secured means of money transfer to Nepal. Remitterscan send money to NIBL from any part of the globe through our correspondentbanks, exchange houses and banks in the Middle East and using Prithivi Express,our in-house remittance software.

4.4.1 Medium for Remittance

There are two medium for remittance in Nepal; official medium and un-officialmedium. Official medium includes banking channels and un-official mediumincludes personal delivery i.e. Hundi, which is illegal medium of remittance.

NIBL offers account-opening facilities for Non-Resident Nepalese expatriates with zerobalance. To open an account, submit the following documents at any of itsCorrespondents:- Application Form, duly filled.- Three recent passport size photographs- The attested copy of your passport

How to send money?

1 Visit the nearest branch of our Remittance Correspondent

2 Fill up a form with the following details:

The Remitter's full name and address

The amount you are remitting.

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The full name, address, telephone number and account number (ifavailable) of the person in Nepal who will receive the money

1 Customers will receive a secret Code that should be given to the beneficiary(person receiving money) in Nepal

How to receive money in Nepal?

2 Customers can collect their money on the same day from any of ourbranches and agents

3 Simply, visit NIBLs nearest Branch/Agent with

The secret code given to you by the remitter.

The original passport, citizenship certificate, or any other identificationissued by The Government of Nepal.

4.5 Trade Finance/Loan Administration Department

Trade finance/loan administration department, also called credit departmentbasically deals with the corporate loan. But also provide individual loan. During myone week in this department, bank did not provide any loan because of the end ofthe fiscal year. So I could not observe the lending procedures directly.

NIBL provides a large amount loan to the corporations. About 40% of the loan isprovided to Todi Group (Rishi Exim Intl Pvt.Ltd., varun Udhyog Pvt. Ltd.,Vinayak Argo p. Ltd., Hanuman Metal p. Ltd., Harisiddi paints P. Ltd., etc.) Bankcharge certain percent of interest depending upon the terms and conditions of loan.Currently, various types of loan are provided by the bank; overdraft, term loan,education loan, home loan, trust receipt, bank guarantee, letter of credit, hirepurchase, bill purchase, etc. bank requires the following documents from clients in

order to provide the corporate loan:

1 Request letter

2 Financial statement (last 2 year P/L and B/S)

3 Bank statement (last one year)

4 Name of father and grandfather of the proprietor/shareholders

5 Registration certificate

6 VAT/PAN certificate

7 Income tax certificate

8 MOA/AOA (for private limited company only)9 Broad resolution with borrowing power

10 Citizenship copy

11 Receivable statement (if applicable)

12 Stock statement (if applicable)

13 Title deed copy (if applicable)

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14 Malpot receipt

15 Blue print

16 Four boundaries

17 Building approval letter

18 Building drawing

NIBL deals with both funded and non- funded loans which can explained below:

1. Funded Loan

Funded loan refers to those types of loan, in which bank provides fund to the clients.It includes:

a) Overdraft

Overdraft refers to the credit limit given by the bank to the customers for thepurpose o financing working capital needs. It is of one year and can be renewaleach year. Bank charges 13% interest rate to the clients. Customers can withdrawalany amount up to that limit. Interest is charged on withdrawal amount not on thelimit. The limit is determined based on sales, profit, net worth and credibility of theborrower. If the borrower has good credibility, extra 5% of the limit is lent for oneweek. Borrowers can drawdown the amount i.e. borrow, repay, and reborrow.

b) Term Loan

NIBL lend certain amount to the clients for fixed period such as 1 year, 2b year, 5year, 10 year, 15 year, etc. Bank finance the investment in any project. Term loan isof three types:

Short Term Loan: Short Term Loan is of one year and charge13% interest p.a.

Mid Term Loan: Mid Term Loan is of one to five years andcharge 13% interest p.a.

Loan Term Loan: Loan Term Loan is of more than five yearsand charge 13% interest p.a.

In term loan 100-130% collateral is to be maintained.

c) Education LoanEducation loan is provided by the bank to the students to meet the fees declare bythe college and university. Borrowers can borrow the loan backed by the securitiesequal to 100-130% of the loan. They need to submit the offer letter from the collegedeclaring the amount of fee. Mainly, students going abroad take education loan.Education loan charges 11% interest p.a.

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d) Home Loan

NIBL provides loan for constructing building that may be for project financing orpersonal. Bank charges 10.5% interest for home loan up to five years and 11.5% formore than five years.

e) Hire Purchase

NIBL also provides vehicle loan to its clients. NIBL offers the following servicesfor vehicle loan:

1. Up to 80% for new vehicles

2. Up to 50% for second hand cars

3. Interest rate @10% p.a.

4. Processing fee of 1% flat front end on the loan amount.

5. Tenure up to 5 years

6. Any brand of passenger car for private use

7. Fast track processing

f) Bills Purchase

Bills purchase is facilitate to discount cheque. When the cheque of other bank ispresented at NIBL for collection, it takes two/three days for clearing. So beforeclearing the cheque, client may need cash, in this case, bank will provide theamount of cheque in demand of clients with the interest of 0.15% of the amount orRs. 150 (whichever is higher)

g) Trust receipt

Trust receipt is the type of funded loan which enables the client company retires thedocument of its import L/C established with the bank. It is short term loan maturein 90 days. It is uses to support L/C. In Trust receipt, 80% of the fund is financedby bank and remaining 20% by the client himself. Client cant physically use thecash. The interest rate in TR is:

Level one (low amount): 9.25% p.a.

Level two (high amount): 9.50 p.a.

2. Non- funded loan

Non funded loan refers to those loan in which bank do not provide the cashphysically, but finance in certain sectors. It is of two types:

a) Letter of Credit

Letter of credit L/C is the form of non funded loan provided by NIBL. It isprovided for import and export of trading items, mainly import. In internationaltrade goods can be ordered through internet. But it is not guarantee that thecustomer will pay the amount of goods to the creditor after receiving the goods.

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And it is also not guarantee that supplier will supply the goods to the clients afterreceiving cash. In this case, bank guaranteed the delivery if foods and payment ofcash. It requires cash margin of 5% and bank commission of 0.2%.L/C is of twotypes:

Sight L/C: Payment is to be made with in 5 days after sending the

document to Client Company.

Usance L/C: Payment can be made with in 45 days after sendingthe documents to the client company.

b) Bank Guarantee

NIBL also provide the facility of bank guarantee to enable the clients to bid thetender of government, I/NGO, etc. It is the type of non funded loan because bankdoes not lend money to the clients, only the bank guaranteed that its client iscompetent for tender. It requires cash margin of 5% and bank commission of

0.75%.

4.5.1 Lending procedure

NIBL provides both corporate and individual loan to the clients. It adopts thefollowing steps for providing loan to clients:

a) Submission of request letter

First of all customer should submit the request letter with the requireddocuments to the credit department of the bank. Request letter shouldinclude loan amount and proposed security.

b) Sight visit of the property

Then bank will go to sight visit of the proposed security and ask thequestions to the borrower.

c) Preparation of credit application

After that bank will prepare credit application (CA) and send to headoffice for approval.

If the loan is of up to one crore , it will be send to head of the corporateand in from 1-4 crore, send to General Manager and if of 4-7 crore, sendto CEO.

d) Preparation of value letter

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Bank prepares the offer letter that includes the interest rate repaymentschedule and other criteria offering to clients. Offer letter is to be dulysigned by client.

e) Acquisition of information from CIB

The next step is to acquire information from Credit Information Bureau.This information is useful for whether the client is in black list or not orwhether the same security is used for taking loan from other institutions.CIB charge Rs 750 per page.

f) Valuation of security (in case of Land)

Land is valued from 40% of the government value and 60% of marketvalue and the total value is called distress value only 70% of distressvalue is provided to the clients as loan. Then after valuation report issend to head office for approval.

g) Mortgaging processAfter the valuation report is approved by head office, then the title deedcertificate and CIB report are send to Malpot for mortgaging process.

h) Lending

After completion of mortgaging process, the final step is to provide loanto the clients.

4.6 Retail Bank Department

Retail bank department is the major department at NIBL because it looks after all

the marketing activities. Through marketing customers can be aware about theproduct/services lunch by the organization. Marketing helps to inform and remindabout the companys product. I got chance to work one week in this department.During that period I was visited to city centre with my team to promote thefacilities of the bank. We were trying to convince the proposed customers to openaccount at NIBL. If we found the customer of NIBL there, we asked about theirsatisfaction level from the service consumed.

Through our effort, if customers were convinced, we have helped them to openaccount. We have given briefing about different accounts on NIBL, procedure toopen account and other information.

At city center we have conducted a survey to know the response of customers.

Account at NIBL

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Account at NIBL

Yes

40%

No

60%

Fig 4.4: Account at NIBL

Based on the above figure, out of the total respondents, 40% of the respondents haveaccount at NIBL and rest 60% do not open any account here.

Satisfaction Level of Customers

Satisfaction Level of Customers

Yes

35%

No65%

Fig 4.5: Satisfaction level of customers

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Above figure shows that, most of the customers of NIBL are not satisfied with the serviceof the bank. Only 35% customers are satisfied with the services.

Other Deposit Schemes

Other Deposit Schemes

0% 20% 40% 60% 80%

Mahila Bachat

Budha Budhi

Bachat

DepositSchemes

No of Customers

Fig 4.6: Other deposit scheme

Above figure shows that respondents want other two types of schemes; Budha BudhiBachat and Mahila Bachat. 25% of the respondents need Budha Budhi Bachat and 75%need Mahila Bachat facility from the bank.

Chapter Five

Conclusion and Lesson Learnt

5.1 Conclusion

The completion of eight weeks at NIBL gave me a professional experience as an internee

in developing interpersonal skills and working as a part of team. Nepal Investment BankLtd. (NIBL) was established in 1986 as a joint venture between Nepalese and Frenchpartners. It was able to win the award Bank of the Year for three times in 2003, 2005 and2008. It has good financial position in Nepalese financial market. Through observation andsurvey, the major service process given to customer is identified. According to it, NIBLmostly has customers with ABK because of the scheme with opening balance of Rs 1.Along with ABK, KBK has also prominent role in attracting customers. This accountprovides birthday cake and privilege card to the customers. Based on my survey, more than

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half customers are not satisfied. The major complaints are late service, non friendly staffsand lack of clear information. NIBL facilitates the service of draft. Most of the customersvisit this department to send demand draft, SWIFT in India, USA, UK, Australia andCanada. Everyday NIBL deposit about 30 cheques on clearing department. It provides thegood facility of remittance too. Generally fund transfer from golf countries and distributed

through different agents throughout the country. Loan department is another importantdepartment. It provides both corporate and individual loan. Customers get loan against thesecurity equal to 100-0130%. For the promotion of its product, NIBL regularly involves inmarketing activities.

For a banking sector to lead from its competition, it needs to capture the potential segmentof customers by offering them more than what they expect. All the departments are equallyimportant which gives the impression to the outsiders about the bank. So all thedepartments need to be good in order to attract and retain customers.

5.2 Lesson Learnt

Involving as an internee at NIBL was truly an amazing experience. During internship, I gota great opportunity to learn about so many things that have practical implication in mycareer building. The direct and indirect learning and work getting involved in variousdepartments at NIBL provide the internee even with experience.

With the acquaintance of knowledge regarding the dealing made by the institute a clearglance of suitable working environment for the staffs and the customers was also visiblewithin the internship period.

The term of two months of internship, paved the way to learn new and specific things aboutthe institute. Along with this, it opens the door towards taking the initiation to handle somespecific projects that were challenging enough. But with such short term of internship, itwas not possible to achieve all the goals and objectives. The learning and knowledge wasbased on the way work was done and observed and as per all the individual skills, it dependon how it was achieved. So some of the objectives that were achieved are listed ad follows:

knew about the structuring of the institute and each functions

knew about daily transaction carried out

knew about the marketing position of NIBL

knew about wow to deal with customers

knew about developing communication skills.

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Bibliography

www.nibl.com.npwww.wikipedia.comwww.nrb.com

Brochures of NIBL

Annual report of NIBL

Financial Institutions and Markets; Monohar Krishna Shrestha and Dhruba BahadurBhattarai
http://www.nibl.com.np/http://www.wikipedia.com/http://www.nrb.com/http://www.nibl.com.np/http://www.wikipedia.com/http://www.nrb.com/

internship at nepal investment bank limited

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