BANKING SERVICES PROVIDED BY KIST BANK (A Case Study of Dhading Branch, Dhadingbesi, Dhading district)

By TANKA NARAYAN SHRESTHA

B.B.S.(Final Year) Exam Roll No. 3750028 T.U. Reg. No. 14023-90

(tankanarayan_shrestha2000@yahoo.com)

A Fieldwork Report

Submitted to

Nilkantha Multiple Campus

Tribhuvan University

in partial fulfillment of the requirement for the d egree of BACHELOR OF BUSINESS STUDIES

Dhadingbesi, Dhading District December 2010

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Faculty of Management TRIBHUVAN UNIVERSITY

RECOMMENDATION

This is to certify that the Fieldwork assignment Report Submitted by

Tanka Narayan Shrestha

B.B.S.(Final Year) Exam Roll No. 3750028 T.U. Reg. No. 14023-90

Entitled

BANKING SERVICES PROVIDED BY KIST BANK

(A case Study of Dhading Branch, Dhadingbesi, Dhading district)

has been prepared as approved by this Department. This

fieldwork assignment report is forwarded for examination.

.................................................... .................................... Nawa Raj Sharma Bhupendra Shrestha Supervisor and Faculty In-charge Campus Chief

Nilkantha Multiple Campus

Dhadingbesi, Dhading

Date: Dec, 2010

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Declaration I hereby declare that this fieldwork assignment report entitled " Banking

services Provided by kist bank: A case Study of Dhading Branch,

Dhadingbesi, Dhading district" is my own work except otherwise as

acknowledged. I have not submitted it or any of its part to any other

institutions for any degree.

……………..........…………………..

(Tanka Narayan Shrestha)

December 2010

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Acknowledgement

First and foremost, I would like to acknowledge my heartfelt gratitude and sincere thanks to The Campus Chief of Nilkantha Multiple Campus Mr Bhupendra Shrestha and Supervisor and Faculty In-charge Mr Nawa Raj Sharma for their intellectual guidance, constructive comments and moral support throughout my fieldwork period. I would like to thank Nilkantha Multiple Campus administration and lecturers for their cooperation since the inception of this fieldwork. I am grateful to all the respondents (Customers) who participated actively in my fieldwork and cooperated with me by responding to my all questions readily. I owe a great debt of gratitude to the staff family of KIST Bank, Dhading Branch, Dhadingesi for providing me secondary source of information. My appreciation goes to Branch Manager Mr. Tejasbi Kumar Basnet, Accountant Mr Ram Chandra Giri, Ms Subhadra Adhikari of Customer Service Department, Cashier Pradip Lohani, Security Guard Mr Ash Man Shakya and rest staffs who cooperated with me to boost up my fieldwork report successfully. My colleagues at Nilkantha Multiple Campus Dhading deserve thanks for unconditional support at many activities. I am obliged to my wife Sita Shrestha, who assisted me in computer work along with moral support. I am obliged to my Son Adesh Shrestha and daughter Agya Shrestha who assisted me with moral support and deep affection. At last but not least, I am indebted to my father and mother who are always a great source of inspiration to me.

Tanka Narayan Shrestha BBS, 3rd (Final) Year (Email: tankanaryan_shrestha2000@yahoo.com) December, 2010(Paush, 2067)

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List of Acronyms

CSD Customer Service Department FD Fixed Deposit NRB Nepal Rastra Bank ATM Automated Teller Machine Ltd Limited NRS Nepalese Rupees BOD Board of Directors CDs Certificates of Deposit NOW Negotiable Order of Withdrawal A.D. Anno Domini B.S. Bikram Sambat(Nepal's authentic year) A/C or a/c Account ADBL Agricultural Development Bank Ltd RBBL Rastriya Banijya Bank Ltd SDBL Sanima Development Bank Ltd DDBL Deprosc Development Bank Ltd MBL Machhapuchhre Bank Ltd CDBL Civic Development Bank Ltd MDBL Mankamana Development Bank Ltd No/s Number df Degrees of Freedom S.D. Standard Deviation S.E. Standard Error NEPSE Nepal Stock Exchange FDL Fixed Deposit against Loan Govt Government SMS Short Message Service ABBS Any Branch Banking Service TC Travel Cheque SME Small and Medium Enterprises L/C Letter of Credit MBS Mobile Banking Service CSR Corporate Social Responsibility Dev Commtt Development Committee KBL KIST Bank Ltd BC Before Christ

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Table of Contents Recommendation i Declaration ii Acknowledgement iii List of Acronyms iv Table of Contents v List of Tables vii List of Figures viii Chapter 1. Introduction 1 1.1. Introductory Information 1 1.1.1. Background Information 1 1.1.2. Literature Survey 2 Concept and Origin of Banking 2 Concept 2 Some definitions of Bank 3 Origins of Banking 4 Services Banks offer 5 Deposit Services 5 Loan Services 6 Cash Management and other Services 7 1.1.3. Overall Objectives and problem statement 9 1.1.4. Specific Objectives and Significance of the study 9 1.1.5. Limitations of the study 10 1.1.6. Methodology of the fieldwork 10 1.1.6.1. Research Design 10 1.1.6.2. Introduction of KIST Bank Ltd 11 Introduction to Dhadingbesi Branch 12 1.1.6.3. Population, Samples and Method of Sampling 12 1.1.6.4. Data Collection Procedure 13 Primary Source of Data 13 Secondary Source of Data 13 1.1.6.5. Variables and measures 13 1.1.6.6. Sample Characteristics 14 1.1.6.7. Data Analysis 14 Chapter 2: Data Presentation, Analysis & Discussion 15 2.1. Presentation of Data 15 2.1.1. Services Provided by KIST Bank 15 2.1.1.1. Deposit Services 15

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2.1.1.2. Non-deposit services 17 2.1.1.3. Newly developed unique service 22 2.1.1.4. Corporate Social Responsibility (CSR) 22 2.2. Frequency Distribution 22 2.2.1. Sex of the Respondent 22 2.2.2. Age of the Respondents 23 2.2.3. Caste of the Respondent 24 2.2.4. Village Development Committees of the Respondent 25 2.2.5. Profession of Respondents 26 2.2.6. Role of Respondents in Respective Families 27 2.2.7. Number of Accounts each Respondent has in the Bank 28 2.2.8. Objectives for which each Respondent visited the bank 28 2.2.9. Type of Deposits Respondents has in KIST Bank 29 2.2.10. Decision Making style of Respondent 30 2.2.11. Competitors of KIST Bank Ltd. 31 2.2.12. Motivating Factors 31 2.2.13. Familiarity of the Interest Rate 32 2.2.14. Interest Rate Sensitivity 33 2.2.15. Familiarity with KIST's additional services 34 2.2.16. Unique Services 35 2.2.17. Quality of KIST's Banking Services 36 2.3. Analysis of Data 37 2.3.1. Average Age and nos of a/c each respondent has in the bank 37 2.3.2. Chi-Square statistics for test of goodness of fit 37 2. 4. Findings 38 Chapter 3: Summary, Conclusion and Recommendation 40 3.1. Summary of the Fieldwork project 40 3.2. Conclusion 40 3.3. Recommendations 40 3.3.1. Core Recommendation 41 3.3.2. Other Recommendation 41 References 43 Appendices 44

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List of Tables

Table 1: Gender of Respondents 22

Table 2: Age of Respondents 23

Table 3: Ethnic access to the Banking services 24

Table 4: Village Dev Commtt having access to the Bank's Services 25

Table 5: Profession of Respondents 26

Table 6: Role of Respondents in Respective Families 27

Table 7: Number of Accounts each Respondent has in the Bank 28

Table 8: Objectives for which each Respondent visited the bank 28

Table 9: Type of Deposits Respondents has in KIST Bank 29

Table 10: Decision Making style of Respondent regarding a/c opening 30

Table 11: Other Banks Where each Respondent has Deposit Accounts 31

Table 12: Motivating Factors for Respondent to open Accounts in

KIST Bank 32

Table 13: Familiarity of the Interest Rate Provided by the Bank 33

Table 14: Interest Rate Sensitivity of the Respondents 33

Table 15: Familiarity with KIST's additional services except deposit 34

Table 16: Unique Services Offered by KIST Bank against

Competitors 35

Table 17: Quality of KIST's Banking Services as Perceived by the

Respondents 36

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List of Figures

Figure 1: Gender of Respondents 23

Figure 2: Age of Respondents 24

Figure 3: Ethnic access to the Banking services 25

Figure 4: Village Dev Commtt having access to the Bank's Services 26

Figure 5: Profession of Respondents 27

Figure 6: Role of Respondents in Respective Families 27

Figure 7: Number of Accounts each Respondent has in the Bank 28

Figure 8: Objectives for which each Respondent visited the bank 29

Figure 9: Type of Deposits Respondents has in KIST Bank 30

Figure 10: Decision making style of Respondent regarding

a/c opening 30

Figure 11: Other Banks where each Respondent has Deposit

Accounts 31

Figure 12: Motivating Factors for Respondent to open

Accounts in KIST Bank 32

Figure 13: Familiarity of the Interest Rate Provided by the Bank 33

Figure 14: Interest Rate Sensitivity of the Respondents 34

Figure 15: Familiarity with KIST's additional services except deposit 35

Figure 16: Unique Services Offered by KIST Bank against

Competitors 36

Figure 17: Quality of KIST's Banking Services as Perceived by the 37

Respondents

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Chapter 1

INTRODUCTION

1.1. Introductory Information

This section has dealt with introductory matters and overall design of field work project.

1.1.1. Background Information

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-capita 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 a vital role by identifying and mobilizing the savings, which are scattered 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 range of function of financial intermediary for supporting the business and industry in the national and international economy.

In Nepal there are development and commercial banks. Their number is increasing very rapidly. Nepal Rastra Bank is central bank of Nepal. It regulates, monitors and inspects the banking and financial sector and money market. Banking regulation has made it mandatory that each bank should establish its rural branch for extending its urban branches. Nepal's majority of the population lives in rural areas. The poverty is also hedging in the same area. Investment in new productive sectors has become compulsory for creating employment and easy environment of development within country boundary. At the same time many banks have been established aiming at providing quick, quality and comfortable banking services to the general public and commercial and industrial sectors. While speaking about Dhading's banking sector, there are about dozen banks either development or commercial ones. Agricultural Development Bank, Rastriya Banijya Bank,

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Sanima Development Bank, Deprosc Bank, Swablamban Development Bank, Machhapuchhre Bank (Highway site), Civic Development Bank (Central office), KIST Bank and Mankamana Development Banks have already launched their services in Dhading district.

In the whole, every bank's motto is to provide simple and needed banking services to the public. Banking is the fastest growing sector in the economy. In such context, it has been necessary and interesting to find out what type of services these newly established and mushrooming banks are currently offering to the general public. In this background, KIST bank has been chosen for this field study. KIST Bank is one of the commercial banks of Nepal. This fieldwork has made an attempt to study different aspects of banking services provided by KIST bank, Dhading branch and give relevant feedback to the Bank's branch team.

1.1.2. Literature Survey

Before the topic for the field study was chosen, the researcher went through the online and offline literatures regarding concept of bank, banking services, origin of bank and development of banking sector in Nepalese and world context. Different textbooks, bulletin and reports were reviewed. The annual report of the selected bank, previous fieldwork reports, textbooks and banking laws and regulations were reviewed to identify and understand the context and situation of the field study problem. The online material was reviewed in Microsoft Encarta Library 2009. Similarly website of Nepal Rastra Bank and KIST bank were also visited by the researcher for obtaining depth knowledge of the topic.

The important outputs of the literature reviews can be summarized hereunder:

Concept and Origin of Banking

Concept

Microsoft Encarta defines bank as business offering financial services. It further explains that this is a business that keeps money for individual people or companies, exchanges currencies, makes loans, and offers other financial services.

Banking is the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future

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use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. Four types of banks specialize in offering these basic banking services: commercial banks, savings and loan associations, savings banks, and credit unions. But in developing countries like Nepal, there are one more type of Bank-Development Banks.

A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts.

Some definitions of Bank

Simply, Bank can be defined as the institution which is legally authorized to create money and credit. Many scholars have defined bank with different terms but with more or less same meaning.

R.S. Sayers defines bank as" I believe in that fact the banks are not purveyors of money, but also in an important sense, manufacturers of money."

G. Crowther defines bank in this way-"A bank is an institution, which collects money from those who have it spare or who are saving it out of their income and lends this out to those who require it."

On the other hand, Horace White defines bank as a manufacturer of credit and machine for facilitating exchanges.

Professor R.P.Kinley defines Bank as "Bank is an establishment, which makes to individuals such advance of money as may be required safety made and to which individuals entrust money when not required for use."

According to Nepal's Commercial Bank Act, 2031(1974 A.D.), bank means a commercial bank established under this act.

While summarizing above bank definitions it can be said about the nature of bank that bank is an artificial individual created by state's law, it is financial intermediary, it works as an agent, issues notes, accepts cheque, provides

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merchant banking services and it works as an advisor of the customer and nation. In this meaning, the bank looks as partner of the nation which collaborates its efforts with the government to uplift the economy of the country.

Origins of Banking

In Nepalese context, Nepal Bank Ltd is the oldest but sufficiently modernized commercial bank. After that different development and commercial banks were established for development of Nepalese economic sector by boosting up financial part. Now there are more than 30 commercial banks within country boundary. There are joint venture banks also.

Speaking about world banking history, many of today’s banking services were first practiced in ancient Lydia, Phoenicia, China, and Greece, where trade and commerce flourished. The temples in Babylonia made loans from their treasuries as early as 2000 BC. The temples of ancient Greece served as safe-deposit vaults for the valuables of worshipers. The Greeks also coined money and developed a system of credit. The Roman Empire had a highly developed banking system, and its bankers accepted deposits of money, made loans, and purchased mortgages. Shortly after the fall of Rome in AD 476, banking declined in Europe.

The increase of trade in 13th-century Italy prompted the revival of banking. The moneychangers of the Italian states developed facilities for exchanging local and foreign currency. Soon merchants demanded other services, such as lending money, and gradually bank services were expanded.

The first bank to offer most of the basic banking functions known today was the Bank of Barcelona in Spain. Founded by merchants in 1401, this bank held deposits, exchanged currency, and carried out lending operations. It also is believed to have introduced the bank check. Three other early banks, each managed by a committee of city officials, were the Bank of Amsterdam (1609), the Bank of Venice (1587), and the Bank of Hamburg (1619). These institutions laid the foundation for modern banks of deposit and transaction.

For more than 300 years, banking on the European continent was in the hands of powerful statesmen and wealthy private bankers, such as the Medici family in Florence and the Fuggers in Germany. During the 19th century, members of the Rothschild family became the most influential bankers in all Europe and probably in the world. This international banking

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family was founded by German financier Mayer Amschel Rothschild (1743-1812), but it soon spread to all the major European financial capitals.

The Bank of France was organized in 1800 by Napoleon. The bank had become the dominant financial institution in France by the mid-1800s. In Germany, banking experienced a rapid development about the middle of the 19th century with the establishment of several strong stock-issuing or publicly owned banks.

Banking in the British Isles originated with the London goldsmiths of the 16th century. These men made loans and held valuables for safekeeping. By the 17th century English goldsmiths created the model for today’s modern fractional reserve banking—that is, the practice of keeping a fraction of depositors’ money in reserve while extending the remainder to borrowers in the form of loans. Customers deposited gold and silver with the goldsmiths for safekeeping and were given deposit receipts verifying their ownership of the gold deposited with the goldsmith. These receipts could be used as money because they were backed by gold. But the goldsmiths soon discovered that they could take a chance and issue additional receipts against the gold to other people who needed to borrow money. This worked as long as the original depositors did not withdraw all their gold at one time. Hence, the amount of receipts or claims on the gold frequently exceeded the actual amount of the gold, and the idea that bankers could create money was born.

Services Banks offer

Deposit Services

Commercial banks and thrifts offer various services to their customers. These services fall into three major categories: deposits, loans, and cash management services. There are four major types of deposits: demand deposits, savings deposits, hybrid checking/savings deposits, and time deposits. What distinguish one type from another are the conditions under which the deposited funds may be withdrawn.

A demand deposit is a deposit that can be withdrawn on demand at any time and in any amount up to the full amount of the deposit. The most common example of a demand deposit is a checking account. Money orders and traveler’s checks are also technically demand deposits. Checking accounts are also considered transaction accounts in that payments can be made to third parties—that is, to someone other than the depositor or the bank

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itself—via check, telephone, or other authorized transfer instruction. Checking accounts are popular because as demand deposits they provide perfect liquidity (immediate access to cash) and as transaction accounts they can be transferred to a third party as payment for goods or services. As such, they function like money.

Savings accounts pay interest to the depositor, but have no specific maturity date on which the funds need to be withdrawn or reinvested. Any amount can be withdrawn from a savings account up to the amount deposited. Under normal circumstances, customers can withdraw their money from a savings account simply by presenting their “passbook” or by using their automated teller machine (ATM) card. Savings accounts are highly liquid. They are different from demand deposits, however, because depositors cannot write checks against regular savings accounts. Savings accounts cannot be used directly as money to purchase goods or services.

The hybrid savings and checking account allows customers to earn interest on the account and write checks against the account. These are called either negotiable order of withdrawal (NOW) accounts, or money market deposit accounts, which are savings accounts that allow a maximum of three third-party transfers each month.

Time deposits are deposits on which the depositor and the bank have agreed that the money will not be withdrawn without substantial penalty to the depositor before a specific date. These are frequently called certificates of deposits (CDs). Because of a substantial early withdrawal penalty, time deposits are not as liquid as demand or savings deposits nor can depositors write checks against them. Time deposits also typically require a minimum deposit amount.

Loan Services

Banks and thrifts make three types of loans: commercial and industrial loans, consumer loans, and mortgage loans. Commercial and industrial loans are loans to businesses or industrial firms. These are primarily short-term working capital loans (loans to finance the purchase of material or labor) or transaction or longer-term loans (loans to purchase machines and equipment). Most commercial banks offer a variable rate on these loans, which means that the interest rate can change over the course of the loan. Whether a bank will make a loan or not depends on the credit and loan

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history of the borrower, the borrower’s ability to make scheduled loan payments, the amount of capital the borrower has invested in the business, the condition of the economy, and the value of the collateral the borrower pledges to give the bank if the loan payments are not made.

Consumer loans are loans for consumers to purchase goods or services. There are two types of consumer loans: closed-end credit and open-end credit.

Closed-end credit loans are loans for a fixed amount of money, for a fixed period of time (usually not more than five years), and for a fixed purpose (for example, to buy a car). Most closed-end loans are called installment loans because they must be repaid in equal monthly installments. The item purchased by the consumer serves as collateral for the loan. For example, if the consumer fails to make payments on an automobile, the bank can recoup the cost of its loan by taking ownership of the car.

Open-end credit loans are loans for variable amounts of money up to a set limit. Unlike closed-end loans, open-end credit does not require a borrower to specify the purpose of the loan and the lender cannot foreclose on the loan. Credit cards are an example of open-end credit. Most open-end loans carry fixed interest rates–that is, the rate does not vary over the term of the loan. Open-end loans require no collateral, but interest rates or other penalties or fees may be charged—for example, if credit card charges are not paid in full, interest is charged, or if payment is late, a fee is charged to the borrower. Open-end credit interest rates usually exceed closed-end rates because open-end loans are not backed by collateral.

Mortgage loans or real estate loans are loans used to purchase land or buildings such as houses or factories. These are typically long-term loans and the interest rate charged can be either a variable or a fixed rate for the term of the loan, which often ranges from 15 to 30 years. The land and buildings purchased serve as the collateral for the loan.

Cash Management and other Services

Although deposits and loans are the basic banking services provided by banks and thrifts, these institutions provide a wide variety of other services to customers. For consumers, these include check cashing, foreign currency exchange, safety deposit boxes in which consumers can store valuables, electronic wire transfer through which consumers can transfer money and

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securities from one financial institution to another, and credit life insurance which automatically pays off loans in the event of the borrower’s death or disability.

In recent years, banks have made their services increasingly convenient through electronic banking. Electronic banking uses computers to carry out transfers of money. For example, automated teller machines (ATMs) enable bank customers to withdraw money from their checking or savings accounts by inserting an ATM card and a private electronic code into an ATM. The ATMs enable bank customers to access their money 24 hours a day and seven days a week wherever ATMs are located, including in foreign countries. Banks also offer debit cards that directly withdraw funds from a customer’s account for the amount of a purchase, much like writing a check. Banks also use electronic transfers to deposit payroll checks directly into a customer’s account and to automatically pay a customer’s bills when they are due. Many banks also use the Internet to enable customers to pay bills, move money between accounts, and perform other banking functions.

For businesses, commercial banks also provide specialized cash management and credit enhancement services. Cash management services are designed to allow businesses to make efficient use of their cash. For example, under normal circumstances a business would sell its product to a customer and send the customer a bill. The customer would then send a check to the business, and the business would then deposit the check in the bank. The time between the date the business receives the check and deposits the check in the bank could be several days or a week. To eliminate this delay and allow the business to earn interest on its money sooner, commercial banks offer services to businesses whereby customers send checks directly to the bank, not the business. This practice is referred to as “lock box” services because the payments are mailed to a secure post office box where they are picked up by bank couriers for immediate deposit.

Another important business service performed by banks is a credit enhancement. Commercial banks back up the performance of businesses by promising to pay the debts of the business if the business itself cannot pay. This service substitutes the credit of the bank for the credit of the business. This is valuable, for example, in international trade where the exporting firm is unfamiliar with the importing firm in another country and is, therefore, reluctant to ship goods without knowing for certain that the importer will pay for them. By substituting the credit of a foreign bank known to the

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exporter’s bank, the exporter knows payment will be made and will ship the goods. Credit enhancements are frequently called standby letters of credit or commercial letters of credit.

1.1.3. Overall Objectives and problem statement

The objectives of this field study were to find out situation and/of services provided by KIST Bank. This field study has tried to identify the situation of different variables regarding banking services provided by KIST bank. The field study has focused the services of KIST bank Dhadingbesi branch for this purpose.

1.1.4. Specific Objectives and Significance of the study

The specific objectives of this field study were as follows:

• To find out types of baking services provided by the Dhadingbesi branch of KIST Bank.

• To trace out uniqueness of the banking services of the bank branch.

• To identify the customers of the different VDCs or location and professions of respondents who have received the services of the bank's branch so far.

• To study the structures of deposit of the bank branch.

• To know the popular deposit and other services the branch is offering till date.

• To find out the major objectives of respondents for which they visit the branch.

• To describe the decision making styles of customers with which they are deciding to open account in the bank.

• To identify the competitors of the KIST Bank in Dhadingbesi.

• To know the factors of attraction of customers to open account in KIST bank.

• To find out the interest rate sensitivity and level of awareness of the customers regarding services provided by the branch.

• To measure the quality of services of KIST bank branch Dhadingbesi from the customers' perspective.

The significance of this study could be mentioned in the following points:

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• This field study makes an attempt to find out average number of accounts each respondent has in this bank.

• Similarly the study tries to work out which age group of customers is most engaged in banking activities and its cause.

• This field study aims at looking for the relation between different levels of categories of variables in the regard of banking services provided by the Dhadinbesi branch of KIST Bank.

• And ultimately, on the basis of the over mentioned findings, the study recommends necessary and appropriate measures to the bank branch for sustaining its growing customer craze and further improve its services towards customers' satisfaction.

1.1.5. Limitations of the study

The constraints and limitations of the study were as follows:

• This study is based on the experience of KIST Bank, Dhadingbesi branch which is situated at the Bhairavi Sadan of Bich Bazaar of Dhadingbesi, Dhading district. It takes only the services of KIST bank's Dhadingbesi branch into account. Thus it is case study.

• The study includes only the customers who visited the bank when this study was carried out. Its results are valid only for the customers of KIST bank.

• This case study survey is based upon the record of the Bank's branch, direct observation of the banking activities and personal interviews with the customers of chosen day of operation.

• Necessary and enough information were difficult to obtain easily regarding the total list of customers because of the need of customers' safety and business secrecy of Bank's branch.

• There was not enough time for the study to complete comfortably.

1.1.6. Methodology of the fieldwork

The methodology followed to carry out the field study was as follows:

1.1.6.1. Research Design

The study is based on explorative, descriptive and non parametric research methodology. It relies upon central tendency, frequency, measure of dispersion and Chi Square statistics of variables under study.

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The study has made an attempt to examine if there is any relation among different categories of variables- uniqueness and quality of bank services. Similarly the study explores the relation among the categories of the variables-interest rate sensitivity, decision making style on account opening, objective of bank visit, profession, ethnicity, motivating factors of the customers pertaining to opening the account and familiarity of interest rate and other services provided by the bank branch. The study also aims at finding out the existence of interrelation among the categories of variables like types of deposits and other competing banking establishments in the local area where KIST Bank is delivering its various banking services.

1.1.6.2. Introduction of KIST Bank Ltd

The bank has come into existence with the vision to become the best bank based on operational excellence and superior financial performance. Its mission is to become a leading bank by providing best quality financial products and services to its customers, enhancing shareholders value, contributing to the economic prosperity of the country and creating excellent growth opportunity for the employees.

With its vision of becoming the best bank on operational excellence and superior financial performance, KIST Bank was initially incorporated as a 'C' class financial institution in 2003 for undertaking limited banking activities. The Bank started commercial banking activities from May 7, 2009 after complying with all the conditions of Nepal Rastra Bank(NRB). The Bank is a public limited company incorporated under the Bank and Financial Institution Act 2006 and the Companies Act 2006. The Bank is licensed by NRB to undertake commercial banking services and merchant banking activities in the country.

The Authorized Capital of the Bank is Rupees 5 Billion and the Issued and Paid-Up Capital is Rupees 2 Billion. 60 Percent of the Paid-Up Capital is held by the promoter and remaining 40% is held by the general public. The shares of the Bank are listed at Nepal Stock Exchange Limited (NEPSE), the only Stock Exchange in the country, as 'A' category share. The Bank has a six member Board of Directors (BOD) out of which four represents the promoters' group, two represents the general public and one represents the Professional Director.

By end of fiscal year 2065/66 the bank has fifty one branches across the country. KIST Bank stands for customers' convenience and support. The bank is claimed to be driven by values of efficiency in operations, integrity and a strong focus on catering the needs of every customer by offering high

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quality and cost effective products and services. The professional management team along with dedicated employees is always looking forward to serve the customers, understand their needs and design tailored products. The bank operates in highly automated environment in terms of information technologies and communication systems, thus enabling delivery of prompt and quality services. It has put in substantial efforts and investments in acquiring the best technologies available to build necessary banking infrastructures.

Introduction to Dhadingbesi Branch

The study is primarily based on the activities of Dhadinbesi branch of KIST Bank Ltd situated at the Bichbazar of Dhadingbesi, district centre of Dhading. The branch is one and 45th branch of the 51 branches of KIST Bank Ltd spread over the area of country Nepal. The branch was established and inaugurated on Phagun 19th of calendar year 2066 B.S.( Feb-Mar, 2010) with transaction. Its most unique service is ATM that started on 1st week of Asar 2067 (2010). The branch has started services also except the deposit services. The branch has issued bank guarantee and Fixed deposit against loan (FDL). There are altogether seven staffs working in the branch. Among them four are office staffs, one support staff and two security guards. Among the four office employees of the branch, there are Branch Manager, Accountant, Cashier and CSD staff. There are five males and two female staffs in total.

1.1.6.3. Population, Samples and Method of Sampling

The study covers the customers of the Dhadingbesi branch of KIST Bank. The Bank was selected randomly for the study of given variables. For this, the bank was selected by using StatTrek Software. The software randomly selected this bank from among the list of banks operating in Dhadingbesi. Then it selected the month Bhadra among 12 months of operation of KIST banks's Dhadingbesi branch. Likewise, the software further selected the third week of Bhadra (Aug-Sep) from among the five weeks of this month. Among the 7 days of the week of operation of the branch, the working day-Thursday was selected for administering the interview with the customers. The day was 17th (2nd of Sep) day of the selected month-Bhadra. At that day, total 199 people visited the bank branch. They were 145 male and 54 female customers. Out of them total 20 customers (10 male and 10 females) were randomly selected for questionnaire survey.

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1.1.6.4. Data Collection Procedure

Primary Source of Data

The primary data was collected from the 20 customers of the selected day. An interview schedule was designed in view of the data requirements. The interview schedule was administered to the customers on the premises of the bank's branch office.

All the customers who were approached for the interview readily agreed to respond to the questions. The average time taken by each questionnaire to be filled up was 20 minutes. The whole study was carried out within 2067 Bhadra (Aug-Sep, 2010) alone.

Secondary Source of Data

The secondary sources of data were textbooks, annual progress report of the bank, and official publication, online and offline, of concerned agencies. The researcher visited website of Nepal Rastra Bank (NRB), the central bank of Nepal also. The online library Microsoft Encarta 2009 was gone through to gain knowledge of banking history in worldwide context.

Likewise the official website of KIST Bank Ltd was also visited by the researcher to collect secondary information about the bank and its services. To check the validity of the information and for obtaining information about contemporary development of the branch, group discussion was also carried out with the branch staffs including the branch manager.

1.1.6.5. Variables and measures

The interview schedule had seventeen items. Two items were designed to obtain demographic feature of the respondents. They were sex and respondents' role in their families. These variables had dichotomous questions. Among the rest items, no of a/c each respondent has in the bank and their ages were quantitative variables.

The remaining items were designed to grab data of uniqueness and quality of services of the bank. Likewise other variables were- interest rate sensitivity and familiarity, decision making style, objectives of bank visit, occupation, ethnicity, location or VDCs of customers, their familiarity with other services except deposit and factors that motivated the customers to open account in KIST bank.

In the same way, the variables-types of deposits and local competitors were designed to collect required data for analyzing the question at hand.

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All the variables except number of accounts and age were measured in the nominal (categorical) scale. For the ease of respondents to answer, some categorical variables were designed as multiple choice questions.

1.1.6.6. Sample Characteristics

The sampled respondents comprised of 10 male and 10 females. Similarly among the customers, there were two respondents having role of guardians and 18 respondents having role of members in their family.

1.1.6.7. Data Analysis

The responses were categorized, tabulated, processed and analyzed using different methods. The researcher used the SPSS 14 software for analyzing collected data. Frequency distributions, percentages, means, standard errors confidence interval and mode were calculated. To find out the existence of the inter-relation among the different categories of nominal variables, chi-square statistics for the test of goodness of fit were also calculated and compared with the tabulated value for certain degrees of freedom(df) and at certain significance level. To visualize the statistics, different types of charts were used. The significance of calculated statistics was tested in 95 % confidence level.

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Chapter 2

DATA PRESENTATION, ANALYSIS & DISCUSSION

2.1. Presentation of Data

The section is devoted to present the description of services KIST Bank Ltd is offering to the general public and also includes statistics like frequencies, mean, mode, standard deviation and chi-square values of the collected data. The statistics have been presented, analyzed and their significance tested. On the basis of tested significance, relevant conclusions have been drawn about the population. They could be mentioned under following sub-sections:

2.1.1. Services Provided by KIST Bank

This subsection describes the various services provided by KIST Bank Ltd. They can be mentioned as Deposit services, Non deposit services, other services and Newly developed unique services so on. They are elaborated into following paragraphs:

2.1.1.1. Deposit Services

KIST Call Account This account is an ideal for carrying out day to day business transactions thus facilitating corporates by paying interest on the deposits. This account will be linked with current account.

KIST Current Account A current account is ideal for carrying out day-to-day business transactions. KIST Current Account offers the flexibility of accessing account anytime, anywhere, pay using payable at par cheques or deposit cheques at any KIST branches.

Fixed Deposit Account KIST has introduced several schemes of Fixed Deposits in order to cater the needs of its depositors. The bank offers attractive rates of varied maturities ranging from three months to six years. There is flexibility of payment of interest on the same. Customers can get interest payment on a periodic basis or at maturity.

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KIST NaraNari Nikshep Naranari Nikshep was brought for a period of one month on the occasion of upgradation of Kist from finance company into a commercial bank. Both singles and couples can take advantage of this scheme that offers an attractive interest rate. The product was valid until 7 June 2009.

Kist Savings Account KIST Savings Account is a deposit scheme designed to cater the saving needs of individuals, households, businessman and corporates. It is a transactional interest bearing account wherein a deposit is placed with the bank for an unspecified period of time and the depositor can withdraw or transfer the funds whenever required through different means. The bank believes that the saving account with it will rightly meet customers' needs for a bank account. Main savings accounts would be explained hereunder:-

KIST Khutruke Savings Scheme It is a form of Savings Account which aims to cultivate savings habit amongst the children and encourages the parents for the best utilization of money for their children. This product has been extremely popular among the housewives who are playing a significant role in getting their children habitual in savings and husband in depositing the amount regularly in the bank.

KIST Student Savings Scheme KIST Student Savings Scheme is a form of Savings Account introduced with the object of developing banking habits amongst the students and providing them easy and convenient banking facilities in the form of free fund transfer, debit card and other various facilities.

KIST Super Savings Scheme KIST Super Savings Scheme is claimed to provide attractive return on customers' savings. This Scheme is offered with a very attractive interest rate of 7% p.a. which is said to be arguably one by the best rates in savings accounts in the industry. This account can be opened with a minimum balance of Rs.1,000.

KIST Senior Citizen Savings Scheme Old aged citizens are always looked upon with great respect and reverence for their contribution to the society. KIST Bank has designed unique savings scheme especially dedicated to senior citizens of more than 58 years of age

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offering interest rate of 6.75% p.a. on daily balance. Account can be opened with just a minimum balance of Rs. 100/-.

KIST Tax Free Savings Scheme It is claimed to be one of the most innovative and probably the first one of its kind in the Nepalese banking industry. Under the scheme, customers can enjoy interest @ 6% p.a. on daily balance and the bank itself pays interest tax on behalf of the customers.

KIST Bonus Savings Scheme It was introduced for a limited period of time. The account could be opened by depositing only Rs.1/- and additional Rs. 100/- was deposited by the bank itself. The product offered interest rate @6.25% p.a. on daily balance.

KIST Gaunle Bachat KIST Gaunle Bachat is a saving account targeted to the individuals. This account is expected to contribute positively in endeavor of Bank to get maximum access of banking to the actual need people who are staying in villages.

KIST Journalists Peace Savings Journalists have played a significant role in restoring peace in the country. The country is still struggling in establishing peace in the country fully. Despite journalists playing a viral role in all sectors, no banks have brought out a separate product aiming to facilitate them. Aiming to provide tailor-made banking service package to Journalist, KIST Bank has launched KIST Journalist Peace Savings. Identity Card of the Journalist or recommendation letter from the respective media is must to enjoy this service.

KIST Paurakhi Bachat Khata For the benefit of all employees and laborers all around Nepal, "Paurakhi Bachat Khata" scheme has been launched. All laborers can be benefited by opening this new scheme which has very low minimum balance and high interest-rate.

2.1.1.2. Non-deposit services Consumer banking, corporate banking and transaction banking come under this service.

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Consumer banking:- Various type of loaning services come under this service. They are as follows:

Agriculture Loan Based on the viability of the agriculture project/proposal, Agriculture Loan to finance the short/long-term financing need of an individual/firm/company may be made available to purchase tractor, seeds, fertilizers, insecticides etc.

Education Loan Such loan has been designed to meet the aspirations of students for completion of their studies both in and out of the country. KIST's education loan scheme provides loan for those students who demonstrate ability, drive and ambition but do not have the financial resources to achieve their goals. It is provided for payment of admission fees, monthly fees, examination fees, books, stationery and instruments required for course undertaken by borrowing scholar.

Hire Purchase Loan KIST's Hire Purchase Loan with its attractive features and simplicity in processing has been designed with a view to fulfill the dreams of professionals, self employed, business executives, and business houses who wish to own a vehicle of their own. Under this scheme, KIST avails loans for purchase of new/used vehicles as well as for commercial vehicle financing.

Housing Loan Owning a house is a dream for many and KIST Bank is always there to help customers realize their dreams under Kist home loan (Kist Ghar Karja) scheme. Kist Home Loan is a term loan, developed to cater the personal financing needs of salaried individuals, self-employed, professionals, and owners of small family businesses. It is provided for construction/renovation/extension of house, purchase of house/apartments, land or land and building or apartment for individual purpose.

KIST Cheli-Beti Home Loan Scheme This is a simple term loan developed to provide indivisual home loan facilities to women. The product is launched with a view to meet the financing needs of such women who cultivates strong dream to have a plot of land or construction/renovation/extension a home or purchase a home to pass life with family in own home under her own ownership. Its target market is Nepalese women having own regular income from undivided family, permanent salaried women in continued service for minimum 2

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years. Professionals-at least in 2 years in practice, self-employed businessmen-at least 2 years in business, high Net worth individuals (having personal net worth of more than Rs. 10 million). It is provided for construction/renovation/extension of house, purchase of house/apartment and land only or land and building or apartment for individual purpose.

KIST Easy Loan It is the first product of its kind to be introduced in Nepal to fulfil the short term cash requirements of students. Under this scheme, the students are provided loan against their educational certificates.

Corporate Banking:- Bank Guarantee Business, KIST Microfinance Wholesale Loan, KIST Salary Solutions, KIST Uddhamshil Karja, Letter Of Credit, Project Finance and Working Capital Loan come under such service.

Bank Guarantee Business In the course of business, if the customers or their business needs any form of guarantee to smoothly carry out your activities, the bank is ready for issuance of the different types of guarantees as bid bond and performance bond.

KIST Microfinance Wholesale Loan Such Loan is specially designed for financing to the rural people through partnership with other microfinance institutions. The product aims to empower financially excluded deprived people across the country.

KIST Salary Solutions KIST Salary Solutions is an extension of KIST Uddhmshil Karja. It has been designed to provide free salary distribution to the staff of educational institutions, government offices and finance for meeting the working capital requirement of the educational institutions

KIST Uddhamshil Karja It is brought for enterprises like wholesalers, retailers, small scale manufacturing and processing units, importers and exporters, suppliers, workshops, educational institutes, clinics and hospitals, tours and travels etc who are in actual need of external financing to enhance their business. The product will finance net current asset of business unit in the form of working capital up to one year and term loan to finance on capital expenditure requirement up to 6 years.

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Letter Of Credit KIST Bank provides the facility of opening Letter of Credit (L/C) in order to enable corporates and businessmen to import and export different goods.

Project Finance

On the basis of the viability of the project, term loan is provided for acquiring fixed assets (land, building, machinery and equipments) to set up a new industrial unit, or for financing the modernization, expansion or diversification of an existing unit.

Working Capital Loan In order to cater to the diverse and varied business requirements of the clients, bank offers wide range of credit solutions with the aid of world class technology platforms. Working capital needs of the business will be funded under working capital loan. The funding will be made based on the actual needs of the business. The intended business house should submit the proposal for working capital loan. Transaction Banking:-

Any Branch Banking Service Any Branch Banking System (ABBS) provide customers with a flexible service for banking from any branches located anywhere in the country. Through its nationwide network of branches and an array of upcoming branches, customers can enjoy Any Branch Banking Service from any of the nearest KIST Branches. Now customers can withdraw or deposit amount, receive information about the current balance of their account from any KIST branches.

Cheque Clearing Service KIST Bank Ltd has become the member of the clearing house of the Nepal Rastra Bank. Now, cheques issued by customers can be deposited into any banks and other financial institutions who are the member of the clearing house issue. Alternatively, customer can deposit cheques drawn on various banks and other financial institutions who are the member of the clearing house. In additional to this the bank is providing service as leader clearing agent for other sub-member of the clearing house for their clearing transactions. This is one of the value added services to its customer.

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Fund Transfer KIST Bank provides the facility of inward and outward transfer of funds through its strong network of branches spread across the country.

Investors Grievances Cell The Bank has set up Investor Grievance Cell at its registered office wherein investors' grievances relating to transfer of shares, non-receipt of dividend, annual report, or any other matter can be made. These grievances shall be addressed and solve within 3 working days from the date of receipt of the grievances.

KIST SMS Banking Service The bank is claimed to take care of host of banking needs of its customers through KIST SMS banking. Through SMS banking, customers can check their current balance, receive notification of loan related transactions and notification of cheque transactions.

Locker Service KIST Bank has started Safe Deposit Locker Service to its customers from its own Head office premises and other branches including Banepa, Koteshwor and Narayangarh Branch. KIST Bank is planning to provide Safe Deposit Locker Service from all other branches to its customers. KIST has made arrangements of an advance security system for security of its customer's valuables put on locker. CCTV and alarm system linked directly with government security organization has been fitted. KIST has insured every locker with a sum ranging from Rs.50,000.00 to Rs.1,00,000.00 depending upon size of locker to compensate customer for any kind of losses of valuable due to any kind of theft or burglaries or natural calamities, disasters or act of god.

Remittance KIST Bank being very much concerned about customers and by assessing their need has come up with new product namely 'KIST REMIT'. The KIST Remittance System is designed for its geographically disbursed customers, to help them in easy, convenient and safe money transfer anywhere in the world. The bank provides attractive exchange rates to customers.

Traveller Cheque

Traveler's Cheque (TC) is a secured way of carrying cash during foreign trips. KIST Bank provides the facility of purchase and sell of these cheques at competitive rates

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2.1.1.3. Newly developed unique service

KIST Mobile Banking Service In the quest to provide innovative banking services to customers, KIST bank has launched Mobile Banking Service (MBS) from 19th May 2010. It's main objective is to provide banking services to those who are currently facing difficulty for banking accessibility on account of unavailability of banking services pervasively which will definitely add value to customers' banking experience.

2.1.1.4. Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) has always been on top of the agenda of KIST Bank. CSR for it means embracing responsibility for the impact of our activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere thereby managing our business responsibly and sensibly for long term sustainable banking. As part of its commitment to CSR, KIST has been conducting various (almost dozen) activities for the welfare of the community and leading employee engagement activities.

2.2. Frequency Distribution

This part has dealt with organization of data collected through questionnaire survey. The data were organized into frequency distribution tables.

2.2.1. Sex of the Respondent

The respondents were categorized into female and male for the study of respondents' demographic feature. They were deliberately selected. Table 1 and the bar chart of Figure 1 show that among the respondents there were 10 female and 10 male.

Table 1: Gender of Respondents Gender Frequency Percent Cumulative Percent Male 10 50 50 Female 10 50 100 Total 20 100

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2.2.2. Age of the Respondents The respondents were categorized into six age groups each having interval of five years. Most of the customers (35%) were of age between 20 to 25 years. Similarly 25 percent respondents were of age between 31 to 35 years. The data shows the maximum involvement of younger people in banking activities. The oldest respondents were of age between 46 to 50 years showing least activity (5%) in banking affairs. Main cause for the big involvement of younger customers is that the bank is technology driven and youths are major users of the newly developed technology. Table 2 and chart of Figure 2 together reveal the age composition of the respondents clearly.

Table 2: Age of Respondents Age Group Frequency Percent Cumulative Percent 20 to 25 years 7 35 35 26 to 30 years 3 15 50 31 to 35 years 5 25 75 36 to 40 years 2 10 85 41 to 45 years 2 10 95 46 to 50 years 1 5 100 Total 20 100

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2.2.3. Caste of the Respondent The respondents were classified among three ethnic groups for the study of ethnic participation in banking activities and access to the banking services. They were classified into Janajati, marginalized and elites. Shrestha was categorized as Janajatis.. Marginalized group consists of Tamang castes. The category Elites consists of Rijal, Timalsina, Thapa, Regmi, Ghimire, Barakoti, Wasti and Adhikari. The caste Elites is most advantaged one. Table 2 and Figure 2 together show that the Janajatis and Elites have most access to the banking services and most active in banking activities.

Marginalized people have least access and are least active (5%) in banking services and activities. This is also because Janajatis and Elites are businessmen, educated, live in the district centre and the bank branch is also operating within the same periphery. Table 3 and Figure 3 together show this fact.

Table 3: Ethnic access to the Banking services Ethnic Group Frequency Percent Cumulative Percent Elites 9 45 45 Janajati 10 50 95 Marginalised 1 5 100 Total 20 100

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2.2.4. Village Development Committees of the Respondent The respondents were observed in terms of their place of residence or organization. The place of residence was measured in categories of VDCs. The VDCs categories were found to be Nilkantha, Sankosh, Dhuwakot, Salang, Semjong, Muralibhanjyang, Salyankot, Salyantar and Sunaulabazar. One non vdc category was Govt Office. Nilkantha VDC is the town area where the premise of the bank branch is also situated. Most of the respondents (40%) were from town area. Sankosh VDC, despite of being village area, touches the town VDC and 20% customers were found to have come from there. The reason may be nearness, access to education and information. Table 4 and the bar chart of Figure 4 disclose this reality clearly.

Table 4: Village Dev Commtt having access to the Bank's Services VDCs Frequency Percent Cumulative Percent Dhuwakot 1 5 5 Muralibhanjyang 1 5 10 Nilkantha(town area) 8 40 50 Govt. Office 1 5 55 Salang 1 5 60 Sankosh(adjoining town) 4 20 80 Semjong 1 5 85 Salyankot 1 5 90 Salyantar 1 5 95 Sunaulabazar 1 5 100 Total 20 100

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2.2.5. Profession of Respondents The respondents were observed from the view of their profession. The occupation was classified as Agriculture, Business, Daily laborers, Employee, House wife and Retired employee.

Table 5 and bar chart of Figure 5 together reveal that there are 50% of the respondents whose occupation is business. Employed persons are 20 % among the total 20 respondents. The farmers occupy 15% of the respondents. Daily laborers, housewives and retired employees are each 5% of the total respondents. This figure slightly indicates that majority of the customers of the bank branch are from profession of business.

Table 5: Profession of Respondents Occupation Frequency Percent Cumulative Percent Agriculture 3 15 15 Business 10 50 65 Daily Laborers 1 5 70 Employee 4 20 90 House Wife 1 5 95 Retired Employee 1 5 100 Total 20 100

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2.2.6. Role of Respondents in Respective Families The respondents were categorized from the view of their role and/or position in their families. This was done for the purpose of gaining information regarding their demographic features. Table 6 and Figure 6 together disclose about the responsibility of the respondents in the respective families. It depicts majority of the respondents (90%) are in dominated (member) position in their families.

Table 6: Role of Respondents in Respective Families Position in Family Frequency Percent Cumulative Percent Guardian 2 10 10 Member 18 90 100 Total 20 100

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2.2.7. Number of Accounts each Respondent has in the Bank

The respondents were observed in terms of number of accounts they are holding in the KIST Bank Ltd. Most of the respondents (80%) have single account in the bank. Out of the 20 respondents involved in the interview, 3 (15%) have two accounts in the bank in name of different deposits and saving accounts. Only one respondent (5%) has different four accounts in the same bank. This is well revealed from table 7 and bar chart of Figure 7.

Table 7: Number of Accounts each Respondent has in the Bank Nos of a/c Frequency Percent Cumulative Percent

1 16 80 80 2 3 15 95 4 1 5 100

Total 20 100

2.2.8. Objectives for which each Respondent visited the bank

Each of the respondents was asked why they had come to the bank on the day the survey was being carried out. Out of them, 9 (45%) told their objective as depositing cash. The percentage of the respondents, who came to open new accounts and withdraw cash from their accounts for the consumption, was 20% each. This is well illustrated in the Table 8 and Figure 8 together.

Table 8: Objectives for which each Respondent visited the bank Objectives of Visit Frequency Percent Cumulative Percent Consult/Other Services 3 15 15 Deposit cash 9 45 60 Open New Account 4 20 80 Withdraw cash 4 20 100 Total 20 100

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2.2.9. Type of Deposits Respondents has in KIST Bank

The bank has provided different deposit services. Particularly the bank branch has Normal Saving, Super Saving, Khutruke Saving, Salary Saving, Gaule Saving, Institutional Current accounts and other various saving accounts for the convenience of the customers to deposit their money. Table 9 and Figure 9 are together depicting that most of the customers (40%) have Super saving a/c in the bank. The customers (15%) who have more than one account also have Super and other saving accounts mixed. Likewise, Normal, Khutruke and Gaule saving accounts each has occupied 10% of the total deposit accounts. There is a slight indication that Super saving account is the most popular product of KIST Bank Ltd. out of its all the deposit saving accounts.

Table 9: Type of Deposits Respondents has in KIST Bank Type of Deposit a/c Frequency Percent Cumulative Percent Normal Saving 2 10 10 Super Saving 8 40 50 Khutruke Saving 2 10 60 Salary Saving 1 5 65 Gaule Saving 2 10 75 Institutional Current 1 5 80 Super and Others 3 15 95 Gaule and Others 1 5 100 Total 20 100

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2.2.10. Decision Making style of Respondent

The respondents were observed in terms of how they decide regarding a/c opening in the bank. There were four categories of the respondents. Table 10 reveals that majority of the respondents (60%) have told that they opened the account in the bank with self motivation. Similarly four respondents (20%) have opened their account with the advice of Staffs of KIST Bank Ltd. This fact is well justified by the Figure 10 also.

Table 10: Decision Making style of Respondent regarding a/c opening Source of Decision Frequency Percent Cumulative Percent Bank Staff 4 20 20 Friend & Neighbors 2 10 30 Institutional Decision 2 10 40 Self Motivation 12 60 100 Total 20 100

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2.2.11. Competitors of KIST Bank Ltd.

The survey looked for banking competitors of KIST Bank operating in the local market. There are various other banks in which customers of KIST Bank Ltd have deposit accounts. It has been well disclosed from the Table 11 that Rastriya Banijya Bank and Sanima Development Bank are nearest competitors of KIST Bank in local market of Dhadingbesi. ADBL, CDBL and other cooperatives are also there which share deposit of the same respondents. Similarly it can be observed from the Table that there are 4 (20%) respondents who have their accounts only in KIST Bank. They have accounts nowhere other than KIST Bank Ltd. They are fresh customers for the bank branch. This reality is visually illustrated with the Figure 11 also.

Table 11: Other Banks Where each Respondent has Deposit Accounts Other Banks Frequency Percent Cumulative Percent Agriculture Dev. Bank 1 5 5 Rastriya Ban. Bank 4 20 25 Sanima Dev. Bank 3 15 40 Civic Dev. Bank 1 5 45 Cooperative 1 5 50 More than One Bank 6 30 80 Nowhere 4 20 100 Total 20 100

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2.2.12. Motivating Factors

The study has also observed the factors which have motivated the customers to deposit their money in KIST Bank Ltd although they have already such deposit accounts in other banks in the local market. The factors were categorized into five types. The first category Free Services and Facilities refers to the free ATM, SMS banking and ABBS services. This category has secured maximum (60%) score. This service alone has made this bank outstanding among its competitors in the narrow money market of Dhadingbesi. Similarly the mixed category of higher interest rate, free services and facilities has also attracted the customers to open accounts in KIST Bank Ltd, Dhadingbesi branch. Table 12 and Figure 12 together reveal this situation.

Table 12: Motivating Factors for Respondent to open Accounts in KIST Bank Factors Frequency Percent Cumulative Percent Free Services & Facilities 12 60 60 Higher Interest Rate 3 15 75 Higher interest, Free Service & Facilities 1 5 80 Location 1 5 85 Quick Good Service 3 15 100 Total 20 100

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2.2.13. Familiarity of the Interest Rate

The researcher had a pre-assumption that those who have deposit accounts in the bank should be certainly aware of the interest rate provided. This has proved less true from the survey. There were 7 (35%) respondents also who were not informed of the interest rate provided by the bank where they have deposit accounts. Rest respondents (65%) were aware of the interest rate provided by KIST Bank Ltd. This can be seen from Table 13 along with Figure 13.

Table 13: Familiarity of the Interest Rate Provided by the Bank Category Frequency Percent Cumulative Percent Unfamiliar 7 35 35 Familiar 13 65 100 Total 20 100

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2.2.14. Interest Rate Sensitivity

The Bank claims that its interest rate service is best of the banks. This field study has checked the interest rate sensitivity of the respondents. This variable was measured because it has direct impact on the depositors who are receiving good interest service from the bank. This matter becomes important matter of concern in the time of liquidity crisis.

The analysis of the data shows that most of the respondents (14, 70%) are indifferent against the decrease of interest rate provided in their deposits by the bank. This may be because of unique services of the bank provided in the local market. The analysis of Table 14 tells that least of the customers (2, 10%) are afraid of the interest rate decrease and they have declared that they will decrease balance in their deposit accounts in KIST Bank Ltd. Such depositors are from poor economic background. Similarly 4 (20%) respondents appeared to be those who will divert their deposit anywhere else if the interest rate is decreased by the bank branch. The same matter has been illustrated by the Figure 14.

Table 14: Interest Rate Sensitivity of the Respondents Response Frequency Percent Cumulative Percent It doesn't matter 14 70 70 I Invest anywhere else 4 20 90 I Decrease the Deposit 2 10 100 Total 20 100

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2.2.15. Familiarity with KIST's additional services

KIST Bank Ltd has been providing additional services except the deposit ones. These additional services include Fixed Deposit Against Loan(FDL), ATM, SMS banking, remittance service, cheque clearing facility, bank guarantee, cheque-book, statements, balance certificate, SME loan, auto loan, chelibeti home loan, revolving loan, hire purchase loan, KIST udhyamsheel karja, home loan, TC service, business loan, mobile banking and so on.

Out of them ABBS, statements, SMS banking, ATM card and cheque books are free services provided by the bank from its head office and different branches including Dhadingbesi branch. Most of the respondents (11, 55% customers) are familiar with these extra, non deposit, cost and free of cost services. Table 15 and Figure 15 together clearly illustrate this fact.

Table 15: Familiarity with KIST's additional services Except deposit Response Frequency Percent Cumulative Percent I don't know 9 45 45 I know 11 55 100 Total 20 100

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2.2.16. Unique Services

Present banking sector has become most competitive. There is cut throat and tough competition among the banking institutions for luring customers and maintaining liquidity. They are following unhealthy practices for surviving. But this has provided many alternatives and advantageous choices to the customers. The banks should survive and grow with proliferation of services now-a-days. In Dhadingbesi KIST Bank Ltd has started free ATM card service first. Most of the respondents (9, 45%) told that free ATM service is the most unique service of Dhadingbesi KIST bank. Three respondents (15%) have said that free ABBS is the unique service of the bank. This fact is well depicted from Table 16 and Figure 16 together.

Table 16: Unique Services Offered by KIST Bank against Competitors Services Frequency Percent Cumulative Percent ATM & Free ABBS Services 6 30 30 I Don't Know 2 10 40 Free ABBS Services 3 15 55 Free ATM Provision 9 45 100 Total 20 100

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2.2.17. Quality of KIST's Banking Services

The variable Quality of banking services of KIST Bank Ltd was measured to gauge the standard of service of the branch in particular and provide relevant feedback to the branch team. In this regard, 10 (50%) respondents said quality of services of KIST bank very good. Similarly, eight (40%) respondents have ranked the bank's service as fair and very few (2, 10%) respondents have suggested the bank to improve its service quality. This was obvious because the bank premise was under construction at the time of this survey. The fact will be clearer from Table 17 and Figure 17 together.

Table 17: Quality of KIST's Banking Services as Perceived by the Respondents Response Frequency Percent Cumulative Percent Improve it 2 10 10 Fair 8 40 50 Very Good 10 50 100 Total 20 100

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2.3. Analysis of Data

This subsection has dealt with the analysis of data presented in previous subsection. The analysis was done by using central value, spread of data and sampling errors. To evaluate the importance of the result of analysis of some nominally classified data, chi-square tests were used. These could be presented in followings:

2.3.1. Average Age and nos of a/c each respondent has in the bank

Table 18: Mean, Mode and Standard Deviation

Statistics Sample Size(N) Variable Mode Mean Std. Deviation

Age(years) 23 30.5 8.6 20

Nos of a/c 1 1.3 0.72 20

2.3.2. Chi-Square statistics for test of goodness of fit

Table 19: Chi-Square Values at 95% confidence level Variables Value(cal.) df Value(table) Caste 7.2693 2 5.99

VDCs (Town and Village area) 0.2 1 3.84

Profession 6.8 3 7.82

Objectives 4.4 3 7.82

Type of Deposits 7.2 3 7.82

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Decision Making Style 13.6 3 7.82

Competitors 9.0954 2 5.99

Motivating Factors 13.2 3 7.82

Familiarity of the Interest Rate 1.8 1 3.84

Interest Rate Sensitivity 12.3938 2 5.99

Familiarity of Additional services 0.2 1 3.84

Unique Services 6 3 7.82

Quality of KIST's Banking Services 5.1974 2 5.99

The test shows that, at the 95 % confidence level (0.05 Significance level), the calculated Chi Square Values of variables caste, decision making style, competitors, motivating factors and interest rate sensitivity are greater than the tabulated value for the given degrees of freedom. It means that there is significant difference among the categories of tested variables. The difference are real and not due to sampling variation.

Similarly the calculated Chi Square Values of variables VDCs, profession, objectives, type of deposit, familiarity of interest rate, familiarity of additional services, unique services and quality of services are smaller than the tabulated value for the given degrees of freedom. It means that there is not significant difference among the categories of tested variables. The difference has appeared due to merely sampling fluctuation. The Chi-Square test frequency tables (observed and expected, original and reduced level) have been included in the appendix.

2. 4. Findings

Significant Chi-Square value indicates that for given degrees of freedom and at specified significance level, there is a real difference among the categories of variables. The significant Chi-Square value of the variable Caste of respondents shows that there is not equal participation and access of different ethnic groups in the banking activities and services. The significance test indicates that marginalized groups are the least benefited ones from the banking services of KIST Bank Ltd in Dhading district. Janajatis and Elites have more access in services of KIST Bank.

Similarly, significant chi square value of the variable Decision making style shows that most of the customers are self-motivated towards opening accounts in KIST Bank. The advice and mouth-to-mouth publicity by bank staffs has played second effective role to help the customers decide upon opening a/c in KIST Bank in Dhading. The next variable whose chi square value is significant is Other competitor banks in local area. This has indicated that Rastriya Banijya Bank is the biggest one of competitor banks where customers of KIST Bank have various saving accounts.

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Although there are various competitors of KIST Bank in the local market, the bank is successful to attract sufficient customers. The motivating factors are namely Free services and facility, Higher interest rate, mixture of these products, Location of bank premise and Quick good service. The significant chi square value of this variable obviously demonstrates that the free services and facilities have performed major role to attract customers. Free ATM, ABBS and other free of cost services fall under this category. Likewise the significance chi square value of variable Interest rate sensitivity has indicated that most of the customers (14, 70%) are indifferent to the interest rate decrease. Four (20%) respondents are sensitive in terms of that they will invest anywhere else if the interest rate decreases. Similarly two (10%) respondents say that, if the interest rate decreases, they will decrease their balance gradually from their accounts.

The remaining variables are location (vdc), profession, objectives of customers' bank visit, type of deposits, knowledge of interest rate, familiarity of additional service, unique service and quality of banking service of KIST Bank Ltd. The chi square value of these variables at 0.05 significance level for the given degrees of freedom is not significant for the test statistics fall within the tabulated value. The difference between the categories of these variables is merely due to sampling variation. So, no significant meaning could be derived from these variables.

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Chapter 3

SUMMARY, CONCLUSION AND RECOMMENDATION

3.1. Summary of the Fieldwork project

This field work project on the topic of "Banking Services Provided By KIST Bank: A Case Study Of Dhading Branch, Dhadingbesi" was conducted to find out the types of services provided by KIST Bank and gauge the 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. The Questionnaire was administered to the 20 customers of the bank who visited the branch at the day the survey was being carried out. The Software StatTrek and SPSS 14 were used to sample bank, month, week and day of operation to collect and analyze the collected data. The researcher undertook informal discussion with the bank branch staffs also. Different reports, textbooks, journals, annual publication of banks, online and offline both were gone through to get the idea of topic to be studied. The collected data were analyzed using simple statistical tools like frequency, percentages, mean, mode, standard deviation and chi square value. The calculated statistics were tested at 95 % confidence level and conclusion was drawn.

3.2. Conclusion

The Analysis of the data shows that the confidence interval of per customer average number of a/c lies within 1.3+ 1.96*0.164 that is 0.9786 through 1.6214 in 95 % confidence level. Similarly per customer average age in years lies within 30.5+ 1.96*1.9242 that is 26.73 through 34.27 in the same confidence level. Similarly the Chi Square statistical test of five variables-caste of respondents, their decision making style pertaining to opening various a/c in KIST Bank, KIST's competitor banking institutions, motivating factors and interest rate sensitivity shows that there is significant difference among different level and categories of these variables. It means the differences are not due to merely sampling variation. The difference carries important meanings regarding the researched aspects of banking services of KIST Bank, Dhading.

3.3. Recommendations

The data analysis and finding suggests some important facts about the banking services being provided by KIST Bank Ltd Dhading branch. On the

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basis of above data analysis and findings, the researcher has pointed out following recommendations:

3.3.1. Core Recommendation

• KIST Bank Dhading branch has not spread its services to the disadvantaged and marginalized people equally. Bank should equally cater the banking needs of all ethnic and economic groups. It should attract and bring such section of society under the umbrella of its smart banking services. It should provide its banking services for the upliftment of poor and marginalized people of Dhading.

• The customers' decision regarding a/c opening in this bank seems influenced with advice of bank staffs. So the branch must use its dynamic staff's potential for motivating the customers. It should provide decision platform for the self-motivated customers.

• Rastriya Banijya Bank is the nearest competitor of this bank. There is sufficient number of fresh customers also. The KBL should focus on fresh customers rather than the shared customers who have multiple deposits and various saving a/c in multiple banks.

• It must continue its free services and facilities to keep on attracting customers. The popular ATM and ABBS services shouldn't be dropped soon. These are the magnetic weapons of this bank.

• The contemporary money market is facing liquidity shortage. Dhading is rural economy based district. Most of the population is living in poverty. Neither there is employment generation nor sufficient profitable investment opportunities. The share market is also deteriorating. In such condition, the customers are looking very sensitive to the interest rate behavior of the bank. The bank should think once more before decreasing its interest rate given in various deposit and savings a/c.

3.3.2. Other Recommendation

• The bank branch should launch business loan quickly. This is because businessmen are major customers of this bank which is increasing gradually. Dhading is going to become industrial district as small and medium type entrepreneurship is developing within its boundary.

• Dhading is remote district but almost all VDCs have motor road access. The bank branch must start mobile (bus) banking service to cater the banking need of remote villagers.

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• The bank should expand its CSR component. Its majority of the customers are from the age group of 20 through 25 years. To retain this economically active population, the bank should launch youth-friendly social packages in the district. This may include sponsorship of games and tournaments in special occasions and so on.

• The bank must give emphasis on research and development of unique services because the banking sector is full of cut-throat competition. Unique services may assist the bank to keep its mass of customers intact and attract new customers.

• The bank should keep on improving its pace of quick service.

• The bank should aggressively go ahead to attract all categories of customers. It should make its extra services familiar among all sectors of population.

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REFERENCES

1. Panta, Prem.R.(2009).Social Science Research and Thesis Writing. Kathmandu: Buddha Academic Publishers and Distributors of Nepal.

2. Subedi, Bhisma.R., Devkota, Surya Pd. & Neupane, Dipendra K. (2008).Banking & Insurance. Kathmandu:Asmita Books Publishers and Distributors of Nepal.

3. Gupta, S.P. (1991).Statistical Methods.New Delhi:Sultan Chanda & Sons Publishers of India.

4. Department of Forest.(2006).Kabuliyati Ban Hastantaran Prakriya Sahayogi Pustika;Kathmandu:DoF.

5. KIST Bank Ltd.(2009/2010). Annual Progress Report;Kathmandu:KBL.

6. Agrawal, Gobinda Ram (2010).Project Management in Nepal.Kathmandu:M.K.Publishers and Distributors of Nepal.

7. Subedi, Pushpa Kamal.(2000).Quantitative Techniques. Kathmandu:Ratna Pustak Bhandar of Nepal.

8 Aryal, Luna. (2009). A case Study of Credit Policy and Loan Management of Nepal Bank Limited. (n.p.).

9. Statistics Tutorial [Online](Cited 2010, Aug, 25)

Available: <http://www.stattrek.com>

10. Microsoft® Encarta® 2009. © 1993-2008 Microsoft Corporation

11. List of Commercial Banks in Nepal [Online](cited 2010, Aug, 28)

Available: <https: //www.nrb.org.np>

12. Services of KIST Bank Ltd [Online](cited 2010, Aug, 20)

Available: <https://www.kistbank.com>

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APPENDICES Appendix 1

Questionnaire Model for Bank Customers S.N.: -........ Name of the respondent:................................................................ 1. Sex ( √): Male ( ) Female ( ) 2. Age (years):-............... 3. Which ethnic group do you belong? ( √ ) Janajati ( ) Marginalized ( ) Elites ( ) 4. VDC............................................... 5. Occupation? ( √ ) Agriculture ( ) Business ( ) Employee ( ) Daily Laborer ( ) Housewife ( ) Employee ( ) Retired Employee ( ) 6. Position in your family? ( √ ): Member ( ) Guardian ( ) 7. Number of a/c in KIST Bank? One ( ) Two ( ) Three ( ) Four ( ) 8. Objective of Bank Visit? ( √ ) Open new a/c ( ) Deposit ( ) Withdraw ( ) Consult/ other service ( ) 9. Type of a/c of deposit in this bank? ( √ ) Normal saving ( ) Super saving ( ) Khutruke saving ( ) Salary saving ( ) Gaule saving ( ) Institutional current ( ) Super and others ( ) Gaule and others ( ) 10. How did you decide to open a/c in KIST Bank? ( √ ) Bank Staffs ( ) Friend and Neighbors ( ) Institutional Decision ( ) Self Motivation ( ) 11. Do You have deposits or any a/c in banks other than KIST? If yes, please specify........................................................ 12. Which service of KBL motivated you to open a/c? ( ) Free services and Facilities ( ) Higher Interest Rate ( ) Location ( ) Quick & good service ( ) Mix of higher interest rate, free service & facilities ( ) 13. Are you familiar what interest rate KIST is providing in your deposit a/c? ( ) Familiar ( ) Unfamiliar ( ) 14. What happens if KIST decreases interest rate in your deposit? ( ) Doesn't matter ( ) Invest anywhere else ( ) Decrease deposit ( ) 15. Do you know other services except deposit KIST Bank provides? ( ) Know ( ) don't know ( ) 16. Which service do you think Unique provided by KIST bank? ( ) ATM & ABBS ( ) Free ABBS ( ) Free ATM ( ) don't know ( ) 17. Please qualify service of KIST Bank. ( ) Very Good ( ) Fair ( ) Improve ( ) Bad ( )

Thanks!

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Appendix 2 Chi-Square Test Frequency Tables(Observed & Expected)

Table 1 Caste of the Respondents

Category Observed N Expected N Residual

Others(Elites) 9 6.67 2.33

Janajati 10 6.67 3.33

Marginalised 1 6.67 -5.67

Total 20 20

Table 2

Location of the Respondents(reduced)

Category Observed N Expected N Residual

District Center 9 10 -1

Village Area 11 10 1

Total 20 20

Table 3

Occupation of Respondents(reduced)

Category Observed N Expected N Residual

Business 10 5 5

Employee 4 5 -1

Agriculture 3 5 -2

Others 3 5 -2

Total 20 20 Table 4

Objectives of Bank Visit

Category Observed N Expected N Residual

Consult/Other services 3 5 -2

Deposit cash 9 5 4

Open New a/c 4 5 -1

Withdraw cash 4 5 -1

Total 20 20

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Table 5 Types of Deposit A/C in KIST Bank(reduced)

Category Observed N Expected N Residual

Normal Saving 2 5 -3

Super saving 8 5 3

Gaule saving 2 5 -3

Mixed & Others Saving 8 5 3

Total 20 20

Table 6 Decision Making Style(Source of decision)

Category Observed N Expected N Residual

Bank Staff 4 5 -1

Friend & Neighbours 2 5 -3

Institutional Decision 2 5 -3

Self Motivation 12 5 7

Total 20 20

Table 7 Other banks where respondents have a/c (reduced)

Category Observed N Expected N Residual

Rastriya Banijya Bank 4 6.67 -2.67

Sanima Dev. Bank 3 6.67 -3.67

Others 13 6.67 6.33

Total 20 20

Table 8 Motivating Factors(reduced)

Category Observed N Expected N Residual

Free Service & Facilities 12 5 7

Higher Interest rate 3 5 -2

Quick Good Service 3 5 -2

Other Factors 2 5 -3

Total 20 20

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Table 9 Familiarity of Interest rate

Category Observed N Expected N Residual

Unfamiliar 7 10 -3

Familiar 13 10 3

Total 20 20 Table 10

Interest rate sensitivity

Category Observed N Expected N Residual

Doesn't Matter 14 6.67 7.33

Invest anywhere else 4 6.67 -2.67

Decrease the deposit 2 6.67 -4.67

Total 20 20 Table 11

Familiarity of additional services

Category Observed N Expected N Residual

Don't Know 9 10 -1

Know 11 10 1

Total 20 20 Table 12

Unique services of KBL

Category Observed N Expected N Residual

ATM & Free ABBS 6 5 1

Don't know 2 5 -3

Free ABBS 3 5 -2

Free ATM Provision 9 5 4

Total 20 20 Table 13

Quality of Services of KBL

Category Observed N Expected N Residual

Improve it 2 6.67 -4.67

Fair 8 6.67 1.33

Very Good 10 6.67 3.33

Total 20 20

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Appendix 3

List of Statistical Formulas

i) Chi-Square Value

ii) Airthematic Mean ( X )

N

XX ∑=

Where,

Σ = the ‘sum of’ N = Number of observations X = Individual observation

iii) Standard Deviation(S.D.)

( )2

1..

−−

= ∑N

XXDS

Where,

Σ = the ‘sum of’ N = Number of observations X = Individual observation N-1 = Degree of freedom

χχχχ2 = Σ (O – E)2

E Where, O = the frequencies observed E = the frequencies expected Σ = the ‘sum of’

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Appendix 4 Composition of Deposits of KIST Bank Ltd Dhading

as of 2067_Bhadra_19

S.N. Products Type of Deposit Quantity Percentage 1 Kist Current Account Institutional 98 4.93 2 Kist Call Account Institutional 17 0.86 3 Kist Normal Saving Individual 275 13.83 4 Kist Super Saving Individual 480 24.14 5 Kist Student saving Individual 91 4.58 6 Kist Khutruke Saving Individual 65 3.27 7 Kist Salary Saving Individual 317 15.95 8 Kist Journalist Saving Individual 26 1.31 9 Kist Paurakhi saving Individual 76 3.82

10 Kist Gaule Saving Individual 498 25.05 11 Kist Naranari Deposit Individual 20 1.01 12 Kist Fixed Deposit Both 25 1.26

Total 1988 100.00

Figure : Composition of Deposit of KIST Bank Dhadingbesi

0

5

10

15

20

25

30

35

1Types of Deposit

Per

cent

age

of D

epos

it

Kist Current Account

Kist Call Account

Kist Narmal Saving

Kist Super Saving

Kist Student saving

Kist Khuturke Saving

Kist Salary Saving

Kist Journalist Saving

Kist Paurakhi saving

Kist Gaule Saving

Kist Naranari Deposit

Kist Fixed Deposit

Source: KBL, Dhading-067/68

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Map of the Study Area Dhading District

Location of KIST

Bank Dhading

Nilkantha VDC

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Few Snaps

Customer Service Department Cash Department

Researcher waiting Respondents Researcher administering questionnaire

KIST Bank Dhading at Bhairavi Sadan KIST Bank Dhading with ATM outlet