helpful for management students for preparing internship report

1

Overview of Banking Depts of NBL Dinesh Gautam

CHAPTER ONE-1

INTRODUCTION

1.1 Background of the Internship Report

Today’s global world is becoming very competitive. Every sector of the economy has various

opportunities and threats to the general people. It’s because of this various educational system

is upgrading in Nepal. One of them is Bachelors in Business Administration BBA. It’s a four

year semester system imparting knowledge of management field. So at our eighth (last)

semester, we are assigned to prepare an internship report by working any financial institution

to know and implement theoretical knowledge in practical field.

Thus internship report is the first ladder of any graduating student that makes him/her eligible

to compete in real world. This internship report covers an overview of general banking

procedures of Nepal Bank Limited. Here focus is made in knowing the framework and

guidelines of various departments and their working process. The study is at its layer

covering major six departments. They are remittance, bills/clearance, customer care,

credit/loan, deposits, loan against gold/silver, and cash management.

This internship report covers all the activities learnt and contributed while tenured in between

the two months. All departments’ activities, procedures and processes are presented

sequentially. Here I have come up with the recommendations and conclusions that I thought

are lacking in this bank which is described in last chapter. Similarly, history of banking sector

(global and Nepalese perspective), current scenario of banking sector, and major services of

NBL is also described in upcoming chapters.

1.2 Objective of the study

The main purpose of my internship is to assess information about overall banking procedure

of various departments of Nepal Bank Ltd.

Besides this, the internship report has been prepared for the partial fulfillment of BBA course

in Tribhuvan University.

Putting it all together, the objectives of my study have been shown as below:

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1.2.1 General Objectives:

To incorporate theoretical knowledge into practice.

To understand the nature of real life problems arising in the organizational setting.

To develop real managerial skills to become a full fledged manager.

To gain an experience to work independently to formulate projects.

To be acquainted with overall organizational environment in Nepal Bank Ltd

(commercial bank).

1.2.2. Specific Objectives:

To have a knowledge of overall banking procedure of commercial banks and their

impact on banks productivity and profitability.

To know the level of activities essential in generating profit in bank.

To assess the similarities and differences of different banks performance.

To study how supervision and monitoring of activities are done in NBL.

To suggest better means of managing activities with small changes and up gradation.

To visualize the quantitative and qualitative aspects of NBL.

1.3 Methodology of Study

My study is completely based on observation and learning that I got in various departments

of NBL as an intern for the period of two months. During this period I learnt about the

procedures inside and outside the department and how they are managed. However, for the

purpose of project report preparation both the primary and secondary data are used equally.

This supported in making my report effective.

1.3.1 Sources of Data

Primary Source: I collected first hand data from Nepal Bank Limited as follows:

My Notes,

Guidelines,

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Feedback Of Customers,

Discussion With The Bank Officers And

Personal Observation.

Secondary Source: Certain secondary data are collected from:

Annual report of the Bank.

Brochures, magazines and leaflets of bank.

Different Statements.

Files, Balance sheet and various documents.

Websites of NRB and NBL.

Data Processing: Collected information is processed by the use of computer system.

Detailed analysis, working variables and working definitions embodied in the report.

1.3.2 Organizational Selection

Organizational selection was really a hectic task to do. I had approached a lot of organization

in Nepal. Finally, I got the acceptance letter from Nepal Bank Limited. In searching

organization the recommendation letter provided by college was a great help.

After having been given the acceptance letter I was provided to seat in various departments

on weekly basis.

1.3.3 Placement

After knowing about my area of interest for internship and the objectives of my study I was

being sent to various departments viz. remittance, deposit, bill/clearance, customer care,

credit/loan, loan against gold/silver, cash management.

During two months of internship period I got familiar to the working environment of NBL

and also to the various functions of each department.

1.3.4 Duration

As prescribed by Tribhuvan University I joined in Nepal Bank Limited, Dharmapath and

completed my two months internship. It really helped me to develop my managerial and

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interpersonal skills. I was able to learn banks’ culture, work environment, and procedures

during the period. I spent whole two months of my study in all departments as I was assigned.

1.4. Limitations of the study

The limitations of study are listed as below:

i. Time constraint: Two months of internship program is not enough for learning

overall functioning of each Department at its core depth.

ii. Organizational regulations: Organizational regulation and secrecy norms did not

allow accessing required data as to prepare and know in depth about bank.

iii. Confined to single organization: Since the internship is conducted in a single

organization, cross-sectional analysis and comparative study of different

organizations of the industry is not possible and the presentation is based only in trend

analysis.

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CHAPTER TWO-2

INTRODUCTION OF THE BANKING INDUSTRY

2.1 World’s Banking History

The term bank is derived from the Latin word ‘bancus’, Italian word ‘banca’ and French

word ‘banque’ all of which mean ‘a bench’. At ancient times there used to be some

moneylenders who sat in the bench for keeping, lending and exchanging of money in the

market place. That was the origin of commercial bank.

The origin of commercial bank can hence be traced back to the early times of human history.

As early as 2000 BC some people had developed a system of banking in Babylonia. In

ancient Greece and Rome, the practice of granting credit was widely prevalent. At the same

time, some rich people used to practice storing of precious metals and coins at safe places and

loaning out money for public and private purposes on interest.

According to Crowther, modern banking has three ancestors. They are the merchants,

goldsmiths and moneylenders.

The merchants or traders are entitled as the ancestors of the bank. As trading require

remittance of money from one place to another it involved the theft of metallic coins during

transportation. So traders in those days began to issue documents which were taken as title of

money. This gave rise to hundi which is the letter of transfer of money. It included the

direction from one banker to another to pay the bearer of hundi the specified amount of

money and debit the amount against the drawer. Thus in this way merchant banker form the

earliest stage in the evolution of modern banking.

The goldsmiths dealt with precious metals. In the period when money consisted of gold and

silver, people largely, because of the danger of theft, started leaving their precious money in

the custody of goldsmiths. As the practice of safeguarding others’ money became

widespread, the goldsmiths became in charge for the safekeeping service.

Performing the safekeeping duty, goldsmiths issued the receipt for deposits to the customer.

Later such receipt for deposits with the goldsmiths began to be used as a means of payment.

Then people started keeping gold, silver and coins with goldsmiths in exchange for receipts,

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which is called goldsmith note. It is the writer claims against the deposits. These receipts

became a good medium of exchange and a means of payment.

The next step in the development of banking arose when the goldsmiths became the

moneylender. This development was based on the goldsmiths’ discovery that it was not

necessary to hold hundred percent of the coins deposited with them. The goldsmiths soon

realized that, on average, daily withdrawals were equal to daily deposits and only a

contingency reserve was required for the period when withdrawals exceeded deposits.

After keeping the contingency reserve, the goldsmiths loaned out the remaining deposits on

interest. In this way, the system of fractional reserve banking was born. Thus, goldsmith

becomes a banker. They started to perform the two major functions of a bank:

Receiving deposits

Advancing loans

During the above discussed period, private individuals did the banking business. As public

enterprise, banking made its appearance in Italy in 1157 AD when the ‘Bank of Venice’ was

established. History shows the existence of the ‘Monte’ in Florence in 1336. The meaning of

Monte is given in the Italian dictionary as a standing bank. During early 1349, the shopkeeper

of Barcelona carried on the banking business. Meanwhile, the local government restricted the

shopkeepers to operate this business they had given sufficient security. During 1401, a public

bank was established in Barcelona. It used to exchange money, receive deposits and discount

bills of exchange.

The bank of Amsterdam was established in 1609 to meet the needs of the merchants of the

city. It accepted all kinds of precious metals, coins and currencies on deposits. These deposits

could be withdrawn on demand. The facility of transferring the deposits from one account to

another was also available their. The bank also provided the certificate of the deposits to

withdraw within six months. Later, this came to be used in the same manner as the modern

check.

The beginning of the English banking may correctly be attributed to the London Goldsmiths.

They marked a turning point in the history of English banking and lead to the growth of

private banking with the establishment of the ‘Bank of England’ in 1694. Many of today’s

banking services were practiced in ancient Lydia, Phoenicia, China, and Greece, where trade

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and commerce flourished. The temple in Babylonia made loans from their treasuries as early

as 2000BC. The temples of ancient Greece served as safe-deposit vaults for the valuables of

worshippers. 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 476 AD, banking

declined in Europe.

The increase of trade in 13th century Italy prompted the revival of banking. The

moneychangers of Italian states developed facilities for exchanging local and foreign

currency. Soon merchants demanded for other services, such as lending money and gradually

banking 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

currencies, and carried out lending operations. This bank is also believed to have introduced

the bank check. Three other early banks that were 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 deposits and transaction.

For more than 300 years, banking on the European continent was in the hands of powerful

statesman and wealthy private banker, such as the Medici family in Florence and the Fugger’s

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 family

was founded by German financier Mayer Amschel Rothschild [1743-82], but 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 issuing, or

publicly owned banks.

Banking in the British Isles originated in with the London goldsmiths of the 16 th century.

These men made loans and held valuables for safekeeping. By the 17 th 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 burrowers in the form of loans. Customers deposited gold and silver with the goldsmiths

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for safekeeping and were given deposit receipts verifying their ownership of the gold. These

receipts could be used as money as they were backed by gold. But the goldsmiths soon

discovered that they could take a chance and issue additional receipts against the other people

who needed to burrow 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.

In early India, the religious book namely ‘Manu’ contains references regarding deposits,

pledges, policy of loan and the rates of interest. The banking service in those days largely

meant only money lending as the complicated mechanism of modern banking was not known

to people then.

2.2 Evolution of Banking Industry in Nepal

The history of modern commercial banking industry dates back to 1937 AD in which Nepal

Bank Limited was incorporated. The government owned 51 percent of the shares in the bank

and controlled its operations to a large extent. It was headquartered in Kathmandu and had

branches in other parts of the country as well.

In order to regulate the economy and the unregulated use of money Nepal Rastra Bank was

created in 1956 as the central bank. Its function was to supervise commercial banks and to

guide the basic monetary policy of the nation. Its major aims were to regulate the issue of

paper money; secure countrywide circulation of Nepalese currency and achieve stability in its

exchange rates; mobilize capital for economic development 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 the general public. Nepal Rastra Bank also

was to oversee foreign exchange rates and foreign exchange reserves.

After almost 30 years another state owned commercial bank Rastriya Banijya Bank (National

Commercial Bank, was established in 1966. The Land Reform Savings Corporation was also

established in the same year to deal with finances related to land reforms. During 1967AD the

Agricultural Development Bank was also established. Almost 75 percent of the bank was

state owned; 21 percent was owned by the Nepal Rastra Bank and 5 percent by cooperatives

and private individuals. Hence it is clear that since the 1960s; both commercial and

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specialized banks have expanded. More businesses and households had better access to the

credit market although the credit market had not expanded.

However, the decade of 1980s can be considered as the landmark in the modern banking

history for Nepal. It was only in this decade government allowed the excess to foreign joint

venture banks to be the part of the Nepalese banking business. During this period, three

foreign commercial banks opened branches in Nepal. The first was Nepal Arab Bank

established in 1984 AD. It was co-owned by the Emirates Bank International Limited

(Dubai), the Nepalese government, and the Nepalese public. After that in 1984 came Nepal

Indosuez Bank (currently Nepal Investment Bank) which was jointly owned by the Credit

Agricola Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan (National Insurance

Corporation), and the Nepalese public. Then Nepal Grind lays Bank was the third foreign

joint venture to be established in Nepal which was co-owned by a British firm called Grind

lays Bank, local financial interests, and the Nepalese public.

Although government had started the liberalization of financial sector during the decade of

80s but this process speeded up only in early 1990s. In fact private sector rushed into the

banking and financial industry after the restoration of democracy in 1990. Many commercial

banks like Himalayan Bank, Everest bank, etc were established during this decade. After the

period till date twenty eight commercial banks have been established in Nepal.

The lists of all commercial banks in Nepal are given below:

Table 2.1 List of Commercial Banks of Nepal

S. No Commercial banks Operation date

1 Nepal Bank Limited 1937/11/15

2 Rastra Banijya Bank 1966/01/23

3 NABIL Bank Limited 1984/07/16

4 Nepal Investment Bank Limited 1986/02/27

5 Standard Chartered Bank Nepal 1987/01/30

6 Himalayan Bank Limited 1993/01/18

7 Nepal SBI Bank Limited 1993/07/07

8 Nepal Bangladesh Bank Limited 1993/06/05

9 Everest Bank Limited 1994/10/18

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10 Bank of Kathmandu Limited 1995/03/12

11 Nepal Credit and Commerce Bank Limited 1996/10/14

12 Lumbini bank Limited 1998/07/17

13 Nepal Industrial and Commercial Bank Limited 1998/07/21

14 Machhapuchhre Bank Limited 2000/10/03

15 Kumari Bank Limited 2001/04/03

16 Laxmi Bank Limited 2002/04/03

17 Siddhartha Bank Limited 2002/12/24

18 Agriculture Development Bank Limited 2006/03/16

19 Global Bank Limited 2007/03/16

20 Citizen Investment Bank Limited 2007/04/20

21 Prime Commercial Bank Ltd.

22 Bank of Asia Nepal Ltd.

23 Sunrise Bank Ltd.

24 Development Credit Bank Ltd.

25 KIST Bank Ltd. 2009

26 NMB Bank Limited 2009

27 Janata Bank Nepal Limted 2010

Furthermore there are other 4 banks that are in process to operate in 2010. Megha Bank

Limited will be the highest authorized share capital with 2 Arab and 11 Lakhs that has

announced to open 4 branches at its inauguration.

2.3 Current Scenario of Banking

Currently the banking sector is evolving to be very competitive and challenging. The fastest

growing and emerging industrial sector today is not other than banking. It is flourishing and

upgrading day by day. Talking about its life cycle it is at its saturation point. Band-wagon is

prevailing in the market with lots of new ideas and techniques to attract the customers. Banks

are using various new technological advancements to provide timely, fastest and economical

services to the customers.

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http://www.kistbank.com.np/

http://www.dcbl.com.np/

http://www.sunrisebank.com.np/

http://www.boanepal.com/

11


Banks with the collaboration of other financial institutions, IT’s and other organization they

always try to attract the customers. The different ages of banking sector clarifies the

improving current scenario of banking. It can be summarized as in following points:

a. Shift from traditional book keeping system to computerized system for keeping

records.

b. Use of various financial tools and software like NEWTON, PUMORI, for record

keeping and networking.

c. Emergence of MIS in banks for database, financial analysis, research and so on.

d. Use of electronic tools for banking like ATM cards, Credit cards, ABBS, web remit,

swifts, e-banking, mobile banking and etc.

e. Shift to real estate investment, housing and other various schemes. But with the

tightened policy of central bank, it is slowed down.

f. Due to financial crisis occurred recently, banks are suffering from liquidity problem,

inter bank loan, lower profitability etc, and slowly upcoming from it.

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CHAPTER THREE-3

INTRODUCTION OF THE ORGANIZATION

3.1 Nepal Bank Limited: An Overview

King Tribhuvan inaugurated Nepal Bank

Limited in November 13, 1937. This

marked the beginning of an era of formal

banking in Nepal. In that era, very few

understood or had confidence in this new

concept of formal banking. Rising equity

shares were not easy and mobilization of

deposits even more difficult. This was evident when the bank floated equity shares worth

NRs. 2,500,000, but was successful only in raising NRs. 842,000.

The total deposits for the first year was NRs. 17,02,025 where current deposits was about

NRs. 12,98,898 fixed was about NRs. 3,88,964 and saving was NRs. 14,163. Loan disbursed

and outstanding at the end of the first year was NRs. 1,985,000.

From the very conception and its creation, Nepal Bank Ltd, was as joint venture between the

government and the private sector. Out of 2500 equity shares of NRs. 100 face value, 40%

was subscribed by the government and the balanced i.e. 60% was offered for the sale to

private sector.

Since its establishment the bank has been providing banking through its branch offices in the

different geographical locations of the country. However during the beginning of 2000, NBL

was experiencing difficulty in terms of unpaid loan and decreasing profits. Nepal Rastra Bank

in its diagnostic review of the bank concluded that the bank is in need of complete

restructuring. Government of Nepal, in consultation and agreement with the World Bank

came forward to restructure the bank and reform its profitability. The bank was put under

control of Nepal Rastra Bank and hired the services of "The Bank of Scotland (Ireland) Ltd".,

ICC Consulting effective from July 22, 2002 for the management of the bank for an initial

period of 2 years. The contract was renewed up to July 2007. In its effort to restructure the

bank, the ICC team was successful in providing leadership to return the bank to its former

position of financial leadership within the country. Numerous systems in every functional

area of bank management e.g. Credit, Accounting, Human Resources, Internal Audit, and

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Treasury were modernized. Voluntary Retirement schemes were successfully launched

reducing the staff size by almost half. Large numbers of employees were trained in various

disciplines. Online computerization of 44 bank branches was completed. Sustainable

profitability was restored.

After the restructuring process, it has 108 branches in different parts of the country, out of

which about 50 are fully computerized and rest of them are in single computer networks. The

branch network in five different regions of the country is given below.

3.2 NBL Network Overview: The table below shows the number of different branches of

NBL located all over the country.

Table 3.1 Branches of NBL

Kathmandu Region 27

Biratnagar Region 28

Birgunj Region 17

Pokhara Region 20

Nepalgunj Region 16

Total no of Branches* 108

Currently, NBL employs 2200 number of employees out of which 1700 employees are

permanent and the remaining 500 employees are hired on contract basis.

3.3 Composition of Board of Directors

The bank is under the control of Central Bank of Nepal, Nepal Rastra Bank (NRB). NRB has

appointed a four members management committee. This management committee performs all

the functions as the board of directors of the bank.

3.4 Management Team

The bank is running under the leadership of Nepal Rastra Bank (NRB) appointed Chief

Executive Officer and Director of NRB. The vision statement, mission statement and the

objectives of Nepal Bank Limited are given below:

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3.5 Vision Statement:

“To remain the leading financial institution of the country”

3.6 Mission Statement:

Nepal Bank Limited seeks to provide an environment within which the bank can bring

unique financial value and services to all customers. It will be a sound institution where

depositors continue to have faith in the security of their funds and receive reasonable returns;

borrowers are assured of appropriate credit facilities at reasonable prices; other service-

seekers receive prompt and attentive service at reasonable cost; employees are paid adequate

compensation with professional career growth opportunities and stockholders receive

satisfactory return for their investment.

3.7 Objectives of NBL

Nepal Bank Limited has the following objectives

Continue to maintain leading share of banking sector with a significant presence in all

major geographical areas in the country.

Provide competitive and customer oriented banking services to all customers through

competent and professional staff.

Reclaim leadership within the national financial community.

3.8 Shareholding Composition

Table 3.2 Shareholding Composition of NBL

S.

N

Ownership Percent

1 Government of Nepal 40.49

2 'A' Class Financial Institutions 4.92

3 NRB Licensed Financial Institutions 3.42

4 Other Institutions 0.52

5 General Public 49.94

6 Others 0.71

Total 100

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Products and Services of NBLDepositCurrentFixed Saving OtherLoans and AdvancesCorporateConsortiumHypothecationWorking CapitalConsumerPersonal AutoMarginHomeEducationRemittanceswebswiftfaxdraftOther Servicessafe deposittrade financesms bankingABBSATM15


3.9. Products and Services of NBL

Figure 3.1 Products and Services of NBL

The above figure is categorized according to four major types of services that any

commercial bank provides. They are further categorized in sub-types that might constitute a

separate department or separate service. There might other services that may fall under these

categories. But the major types of product/services provided by NBL are as shown above.

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Likewise, some services like loan against gold/silver, customer care, customer inquiries,

payroll of other organization are not mentioned in the figure.

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CHAPTER FOUR-4

LEARNINGS AND CONTRIBUTIONS

4.1 Learning and Contributions

As my internship was for two months, I was posted in various departments. So accordingly, I

prepared my contribution and learning in the following manner. The department I worked

was in total six namely remittance, credit/loan, deposit, bills/clearance, gold/silver loan and

cash management, and last but not the least customer care. My two months passed on

learning and contributing these six departments. The details of each department are presented

below:

4.1.1DEPARTMENT-1: REMMITANCE [28 March- 6 April]

Contributions

Sodh Bharna Desk

Preparing schedules (sodh bharna) and journals for outward remittance.

Entry and readied the scheduled for dispatch schedules to respective branch of

NBL.

Checking of amount and schedule number of dispatched schedules either found in

the entry reports or not.

Debited the amount of outward remittance relative to fax, web or draft with code

2, 10, and 5.

Entry of dispatched schedules in DAK registers.

Typed the voucher schedule for faxing to outward remittance.

Faxed the voucher to the respective branch by printing the test key code.

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Web Remit Desk

Inward remittance of various customers through web is extracted.

Entry in excel sheet and submitted the form for print after verifying the respective

customer.

Customers who brought the secret key for money was verified (passport,

citizenship card, license as asked) as the authorized person and fulfilled the form

for payment.

Customers whose a/c was not in NBL but who endorsed the check of NBL were

paid through check draft and verification of check.

Prepared commission vouchers, journal vouchers with respective account and

customer name for web payment that are the a/c holder of other branch of NBL.

Big organizational web amount is extracted, preparing a journal and printed for

the deposit in their respective account.

Sent OBC checks through web.

Learning

How to fill up the forms of web, fax, and draft.

How to enter the web information in web using s/w of NBL i.e. Web Remit.

Learnt to check if the a/c number is right or wrong using NBL s/w i.e. NEWTON.

Learnt to prepare schedules (sodh bharna), DAK registers, and journals.

Learnt briefly about SWIFT procedure for payment and sending which included

major parts like SWIFT code, reference number, beneficiary’s name, payee and

payer bank’s name.

Learnt the processes involved in backward after a consumer deposits the money or

withdraws the money from remittance i.e. debit and credit process.

4.1.2 DEPARTMENT-2: CREDIT/LOAN [7 April-16 April]

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Contributions

Posted names, EMI amounts, a/c number, date of expiration, and other limits and

valuation of loan, type of loan that is shifted from old register to the new one.

Calculated the interest amount of respective (auto loan, housing loan, overdraft,

and margin lending) loan as per declared (quarterly, monthly using the days of

either 79, 83 as months indicates).

Calculated penalty interest and compound interest whose time for payment was

crossed over or become due.

Posted the calculated interest in respective loan holder’s a/c number.

Checked the balance in current a/c or saving a/c of the loan holder to withdraw the

equal amount of installment or interest payment at due date with prior notice to

the a/c holder. If sufficient, their interest/installment amount was withdrawn and

posted.

Prepared vouchers when payment of installment/interest amount is paid by the

loan holder to post in their account.

Prepared load statement in excel sheet for the month as required by the customer.

Checked either the available documents presented by the loan applicant is fulfilled

as per the requirement by the bank with their cross checks, ex- auto loan

documentation have cross check through chassis no, and license no.

Helped consumers who wanted to know their amount of loan, interest/installment

amount that they need to pay. Similarly, solved other queries like due date for

payment, new interest rates applicable, benefts of early payment.

Briefed consumers who wanted to know the information regarding loan and their

types (basically focusing consumer loans).

Learning

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About the requirements of documents for applying for various types of loans.

About how valuation of land, building, shares, jewels were made with the

contingency features like margins, insurance and limits

Learnt how entries are made for posting the entries of interest, installments, loan

clearing in the loan holder’s register.

How to calculate interest for different types of accounts with their given criteria of

SI, CI and penalty charge.

How to prepare loan statement in excel sheet consisting various columns of date,

amount, interest charge and balance.

Learnt to check the balance amount, name of a/c holder from relative s/w i.e.

NEWTON using code 1250, 210, and 1450.

Learnt to write vouchers for payment made by loan holders.

4.1.3 DEPARTMENT-3: DEPOSIT [18-23 April]

Contributions

Prepared vouchers, schedules of customer’s who deposited amount in their a/c.

Posted the installment amount of the loan taken by the employees for medical and

other accidental case.

Entry made in ledger for the records and circulated the schedules and voucher to

the officer level sir/madam for cross check and verification

Filed the posted schedules to their respective files for future reference.

Learning

Procedures of opening a fixed deposit account.

4.1.4 DEPARTMENT-4: BILLS/CLEARANCE [25 April- 8 May]

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Contributions

Bills Desk

Accepted other bank’s checks for the clearance and deposit in their respective

accounts.

Verified the check with the slip of deposit consisting check no, a/c name, amount,

name of bank, and a/c number.

Checked either endorsement in the backside of check is done or not, if it’s the

check of any organization stamp of the relative organization is present or not.

Stamped with for clearance and authorized sign in slip and check both.

Entry made in the register consisting clearing number, name of a/c holder, a/c

number, check number, bank’s name, and relative amount.

Provided the cutting slip with clearing number to the customer.

The check then entered in the computer s/w for an entry report according to the

respective bank is done fulfilling the required fields.

Prepared H.O. 10 voucher for check to send for clearing that comes through OBC

of various other NBL branches, similar entries made in the ledger and computer as

of above mentioned.

The checks that were of currencies like dollar, and IC were also posted

accordingly.

Printed the entry report of checks after 3 p.m. and presented to the senior

Sir/Madam for cross check.

If any wrong entries were made they were corrected and edited accordingly.

After all checking, final report is printed consisting of each bank having three

copies. One for clearing, one for attachment to bank, and one for NRB.

Detached all the checks and slips and re-attached the respective checks with their

copy of final report.

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Clearance Desk at Bank [3 p.m. onwards]

Checks that were printed as final report are again entered in the excel sheet

debiting the respective bank and crediting the Rastra bank for inward clearing and

for outward clearing vice-versa.

Entered the check no, check amount in the column of individual bank as required.

After entry the balance of total and final print of entry report is matched.

Gave for cross checking to the senior sir/madam.

Final print after cross checking showing the debit amount of inward clearing is

made and readied for the next day’s clearance to NRB.

Clearance at Central Bank [NRB at 11 a.m.]

Stamped signed with ‘clearance’ in front of all checks of NBL that were came for

clearing from other banks.

Returned the earlier day’s checks similar to ours’ for clearing to other banks as per

checks indication.

Returned dishonored checks were cancelled and the relative amount is deducted

from NRB’s advice report.

Took the advice of NRs and dollar $ from NRB and matched the debited amount

of respective banks with the credit amount of NRB.

Detached NBL checks and differentiated them according to KBO checks and NBL

branch checks.

Advice of the respective bank (as was 3 copies) detached two to NBL branch

bank, and one for KBO branch with attachment of checks. One copy submitted to

NRB representing NBL name and date of clearance.

After 3 p.m.

Collected the dishonored checks and returned.

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Clearance desk in Bank after Returning from Central Bank [at 12:30-3 p.m.]

All the checks that were cleared either of other branches or KBO were returned to

respective branch representatives.

Debited the NBL checks amount from respective a/c holder’s name, and account

number and credited the central bank. Similar entries were made by crediting

other bank’s check amount after clearance and debited central bank.

If any inward checks were dishonored, they were entered in excel sheet and

returned to respective branch or person.

Learning

Bills Desk

The procedures of depositing the checks by customer for clearance.

Procedures of entering in registers and computer software for future reference and

print of entry report.

Editing of entries that were mistaken.

Preparing vouchers and journals for OBC checks to send them through web, fax or

draft.

Clearance

Debit and credit process of NRB

Clearing process of checks of outward and inward.

How rectification of errors is identified through the entry in excel-sheet, and cross

checks.

How dishonored checks are retreated for clearance with charges.

How debit and credit of bank is matched in.

4.1.5 DEPARTMENT-5: LOAN AGAINST GOLD/SILVER, CASH INVENTORY

AND MANAGEMENT [9-14 May]

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Contributions

Gold/Silver Loan Desk

Prepared letter of demand for the payment of loan and or interest of the customers

whose date of loan/interest payment is about to expire.

Telephoned the customers informing their action towards loan agreement and

contact the bank as soon as possible.

Calculated interest of the customers’ loan against gold/silver on three months

installment basis.

Posted interest in their respective account.

Weighed gold/silver to calculate their valuation and amount of loan they will get.

Recorded new loan holder’s name in daily register and filed their contract

agreement accordingly.

Helped in finding the loan agreement paper of those customers who have come to

either renew or repay their loan amount.

Provided the terms and conditions to the customers who came for the information

regarding loan and also gave them the form and contract paper for fulfillment.

ATM Management Desk

Provided the ATM card to those customers whose card has been captured in ATM

machine due to either late emission, or wrong pin by fulfilling a slip and

authorized signature.

Helped in keeping cash management in ATM machine on daily basis in an

average of NRs.1 million that contained the notes of 500 and 1000.

Separated the old, tore, and new, fair notes from the bundles of notes to insert in

ATM machine.

Checked the rolls of ATM receipts recording number of transaction each day.

Cash Management Desk

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Counted bundles of notes (500 and 1000) with hand and machine both,

approximately NRs.5 million.

Recorded the amount that was provided to other departments like remittance,

deposit, withdrawal.

Bundled the counted note in terms of 100 notes each and covered with a slip and

punched it.

Checked the IC notes and NC notes with Note Detection Machine for note’s

originality verification.

Learning

The process of applying loan from collateral of gold/silver.

Process of valuation of gold/silver on the basis of weightage of market rate and

bank rate.

How to calculate the actual amount a loan holder will receive from after deducting

margin, insurance and cut off rates.

How gold is weighed in the weighing machine and how probable weight is

determined.

How notes are counted using hand and finger as well as machine.

How fake notes are checked using note detection machine.

How cash is kept in ATM, how captured card is protected from lost, how cash is

arranged in ATM boxes and so on.

How ATM generally works.

How gold is inventoried in vault.

How contract is made between bank and the loan holder.

4.1.6 DEPARTMENT-6: CUSTOMER CARE [16-28 April]

Contributions

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Print out the bank statement of the customers who brought their statement form or

check book or authorized sign on a slip generally for three months. The statement

of organization like HIMAL REMIT, IME, HULAS were very long and so printed

cautiously.

Checked balance of those customers who wanted to know their amount in their

account, usually to check the deposit of remit amount.

Received the slip for requirement of new check.

Verified the sign, a/c number, a/c name of the customer before providing a new

check.

Entries made in NEWTON for the issuance of new checks, and command it for

check print. The checks of current and saving a/c were different so they need to be

changed in printer.

Entered the name, a/c number, check number (range) and date of issuance in the

register.

Binding and wrote the name, a/c number, and date of issuance in the slip of new

check and in cover of check.

Presented to senior sir/madam for verification and signature.

Helped old aged customers in fulfilling the new forms, or closing the account.

Informed customers about the documents required for new account, new interest

rates, and new schemes.

Distributed ATM cards to the customers whose ATM was available after

verification and entry in the register.

Entry made in computer of new customers, ATM holders, and closing of account

as per required in fields.

Learning

Procedures for form’s fulfillment of new account, closing a/c and or for ATM

card.

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About the requirements of documents needed for opening, closing and applying

for ATM card.

Knew how balance of customers is checked and how balance statement is printed.

Knew how a/c verification from old a/c number is done and how printing of

checks is done.

To use scanner for scanning a/c holders photo, a/c number, phone number and

authorized signature.

In developing good interpersonal skill, patience, requirement of displayed

emotion, and harmonious relationship with customers.

Build up confidence in dealing with the customers efficiently.

June 2010

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CHAPTER FIVE-5

CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

After analyzing and interning in NBL, conclusions can be made on various grounds.

Commercial banks are the pillars for the development of any country. In Nepal the first stone

of the pillar was put when NBL was established on November 13, 1937.However, due to its

old management practices and internal inefficiency the bank was declared technically

bankrupt on 2000. Then NRB took over the control of the bank and was handed over to Bank

of Scotland (Ireland), ICC Consulting group on July, 2002 and remained until July 2007.The

new management changed the face NBL. Once declared bankrupt, NBL earned a net profit of

239,214,010 during the year 2007-08. The management changed the overall structure of the

bank, downsized it from 214 branched to 108 branches. Computerized the bank, hired

efficient staffs and laid off the inefficient under different schemes. Currently it employs

around 2200 people.

During the period the most considerable thing foreign management did was the recovery of

NPA of NBL. It was because of the aggressive NPA recovery that NBL was able to take itself

into profit. The NPA level declined from 56.3% in 2002 to just 14.8% in 2007. It is just

around 11% in April 2009. NPA of NBL is handled by RMD consisting of four division viz.,

cash recovery, and priority sector, legal and administrative, and

consortium/corporate/restructuring. These divisions of RMD handled different NPA as per

the directives of NRB. While RMD handles the NPA whole credit department and different

branches are equally working on preventing loan from becoming NPA by following a well

defined credit procedure and the requirements as per NRB directions.

Similarly, NBL has recently increased its interest rates on various deposit schemes. It has also

come up with various promotional and advertisement strategies. Launch of ATM card, web

remit, branches in every district of Nepal is also its strength point. Every department consists

of both young and old aged people, among which dissatisfaction is still exists. The weakness

of banking performance is the existence of various political groups that only seek their own

welfare in spite of banks future prospects. On the other side, NBL is providing various

motivational schemes to its employees both young and old aged like distribution of bonuses,

bringing Voluntary Retirement Scheme (VRS) and so on.

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5.2 Recommendations

NBL is a good success story in the Nepalese banking history being first bank and also being

able to revive itself once again into profitability from the state of bankruptcy. However, NBL

have a long way to go. After my study and stay in the bank for 6 weeks as an intern I have

found that NBL can consider following things for further improvement:

i. Similar size of bank like Nepal Banijya Bank employs only 2000 no of people and

is able to perform well. So 2200 is still a huge number for NBL and it is over-

staffed.

ii. NBL is lagging behind in training its manpower. Many employees due to the lack of

proper training are not able to perform their job efficiently especially the old staffs.

iii. Political unions in the form of unionization must be discouraged by management.

This hampers the working of bank and decreases the moral of employees. But still

in NBL there exist about five political unions.

iv. NBL is recovering its NPA at a faster pace but in order to reduce the number of

NPAs in future proper recording and documentation of each and every loan account

must be done. It has been seen that important documents related to many NPAs are

missing. So, proper documentation must be done.

v. NBL must look into boosting up the moral of its employees as in few cases

employees too are responsible for an asset to turn into NPA. So NBL must focus on

motivational techniques as well.

vi. NBL must be efficient enough to identify early signs of non-performance of asset

and must be able to take quick decisions.

vii. In such type of old organization due to the organizational structure itself is a

common problem. So decision making must be fast. For that delegation of certain

authority can also be done with modification of hierarchical structure.

viii. As every department is very crucial department for the organization, some special

facility (monetary and non-monetary) must be provided to the staffs of the

department.

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ix. When we look into the figures we find that KBO has the highest percentage of

NPA among other branches. So, assets of KBO must be handled more efficiently.

Efficient staffs must be placed in credit department of that branch.

x. Small sizes of loans are seen to occupy the largest percentage share of NPA so

proper care must be taken care regarding such assets. Waiver facility could be given

to facilitate payment.

xi. The software and equipments used in KBO are very older and is not compatible

with other changes that may arise in future. So they must be checked properly and

should be maintained in good condition.

xii. Efficient and effective IT management is also lacks in KBO. It has become integral

part in operation of activities. Thus, IT department must focus on such loops and

holes.

June 2010

helpful for management students for preparing internship report

Documents

various departments

months internship

bank officers

leaflets of bank

departments activities

working environment

months of internship

annual report