Chapter-

INTRODUCTION
1.1

Introduction

1.1.1 Historical Background of Kist Bank Ltd.

The Kist Merchant Banking and finance limited (Bittiya Sanstha) was
incorporated in 2059 B.S. as a 55th company under the financial company Act,
licensed by the Nepal Rastraya Bank (Central Bank of Nepal) to undertake financial
service in the country. The company has commenced its operation from 21st February
2003 and the Kist Merchant Banking and Finance Limited (Bittiya Sanstha) has been
transformed in to Kist Bank Limited on dated 24th Baishak 2066 B.S. same company
Act, licensed by the Nepal Rastraya Bank (Central bank of Nepal) to undertake
Banking service in the country.
Kist Bank Ltd. has 51 branches with 451 staffs at the end of fiscal year 2066/067
in which 39.46% staffs are female and 60.54% staffs are male. Up to fiscal year of
Asar month, 133 staffs (29.49%) are holding Master degree, 7 staffs (1.55%) are
holding Charactered Accountant degree, 148 staffs (32.81%) are holding Bachelor
degree, 90 staffs (19.95%) are holding +2 degree, 33 staffs (7.31%) are holding S.L.C.
degree and 40 staffs (8.86%) are under S.L.C. of total staffs (451).
KIST Bank Ltd. is committed to provide various financial services to its
customers. The company encompasses a range of services, each catering to a specific
need or segment of the customer. The company has an unbroken track record of
dividend payment since its first public issue of share. The company has set out the
objective of reaching out to the general people with a host or product and services that
is expected to be helpful to them in their path to prosperity. Over the very short period
of time, the company has achieved significant success in executing this objective and
has created a tremendous sense of loyalty amongst its customers. Efficiency in
operation and has created a tremendous sense of loyalty amongst its customers.
Efficiency in operation, integrity and a strong focus on creating the needs of the
individual people through high quality and cost-effective product and services are the
values driveling the organization. The core values are deep-rooted with in the
organization and have been strongly adhered to over the period. The company operates
in a highly automated environment in terms of information technology and
communication systems, which enable it to offer speedy fund transfer and substantial
effort and investment in acquiring the best technology available to build the
infrastructure.

1.1.2 Objective of KIST Bank Ltd.

Every organization has been opened with a certain objective and KISt bank has
also some objectives.
a.

To provide competitive to all customer through competent and processional and

experienced staff.

b.

To reclaim leadership with in the national financial community and share its
experience to other financial institution or companies.

c.

To continue to maintain leading share of banking sectors with a significance

presence in all geographical areas in the country.

d.

To convenient to the people about the economics progression of the country and
their family to fulfilling that need by providing of the country.

e.

To render service to the people whether rich or poor and to contribute to the
nation's development with also need support and best wishes of all which it has
confident will be fourth coming.

f.

To provide technologically innovative services to its customer.

1.1.3 Services Provides by KIST Bank Ltd.

Kist Bank Ltd. is well-equipped with computerized system. Its have their own
computerized accounting system. The Bank has followed modern banking technology
to facilitate its customer much faster. After the up gradation into commercial bank, the
bank is able to provide different kind of banking and financial services permitted to a
commercial bank. As a commercial bank it issues traveler's cheque. Bank draft, credit
card and other electronic facilities, issue of letter of credit and international banking
facilities, provide to customer including opportunity in investing in hydro-power
generation project in coming days. It has its own services stated by below:
i.

Accept deposit from customer.

ii.

Grand loan and advance to customer.

iii.

Bank guarantee letters, credit creation as issue letter and credit cards etc.

iv.

Remittance facility for setting international and external payment

v.

Financing in both long and short term investment.

vi.

Invest in government services and treasury bills of its certain position of fund.

vii.

Cheque payment
2

viii. Investment advice.

ix.

Investment advice.

x.

Free ABBS facilities

xi.

Debit card facilities

xii

SMS Banking facilities

1.1.4 Activities of KIST Bank Ltd.

Kist has following major activities:
i.

Various deposit schemes

ii.

Various loan and advances

iii.

Market maker for government securities

iv.

Non-fund based services like issue of guarantee etc.

The professional and friendly services are extended by the depth and strength of
the entire KIST staff with access to the broad range of financial services for the
business and individual needs of the customers. KIST emphasizes long-term customer
relationship based on value-added services.

1.1.5 Board Members of KBL.

1.

Prof. Er. Hirendra Man Pradhan:

Chairman

2.

Kamal Prasad Gnawali

MD/CEO

3.

Chandra Kumar Rai

4.

Rajendra Shakya

5.

Gita Gautam for QED Investment

6.

Ram Prasad Dahal

Director

7.

Gyan Bahadur Jisi

Director

8.

Rachana Tuladhar

Director

9.

Dr. Dandpani

:
:

Director

Director

Director

Director (Specialist)

1.1.6 Management Team of the KBL

1.

Bhesraj Khatiwada

Chief Executive Officer (C.E.O.)

2.

Balan Singh Dharti

3.

Kamal Prasad Gawali

Managing Director/CEO

4.

Pragun Shrestha

Deputy General Manager

5.

Bal Kumar Pandey

Company Secretary

6.

Surendra Chandra

Finance Dept.-Head

7.

Ranjan Pandey

Branch Co-ordination-Head

8.

Mukund Subedy

Branch-Manager (Head Office)

9.

Rishi Ram Neupane

10.

Mahesh Bhattrai

Tracery Department Head

11.

Sudesh Devkota

Loan Dept.-Head

12.

Ishwar Karki

13.

Renu Prasad Pandey

Depots Marketing Dept. Head

14.

Madhusudan Sharma

Branch Manager Head Office

15.

Manjayraj Pandey

Credit Risk Officer

16.

Madhav Prasad Regmi

Legal Deposit Officer

Assistant Managing Director

Communication & Tech. Dept. Head

HRM-Head

1.1.7 Branches of the KIST Bank:

1. Main Branch

2. Butwal Branch

Anamnagar, Kathmandu

Milan Chowk, Butwal

Phone No.: 01-4232500

Phone No.: 071-543428

Fax No.: 01-4233646

Fax No.: 071-546990

3. Pokhara Branch

4. Lalitpur Branch

Sabhagriha Chowk, Pokhara

Jawalakhel, Lalitpur

Phone No.: 061-524044

Phone No.: 01-5533644

Fax No.: 061-521440

Fax No.: 01-5538550

5. New Road Branch

6. Sukhedhara Branch

New Road, Kathmandu

Sukedhara, Kathmandu

Phone No.: 01-4233713, 4233714

Phone No.: 01-4650509

Fax No.: 01-4227507

Fax No.: 01-4650504

7. Nepalgunj Branch

8. Biratnagar Branch

Surketh Road, Nepalgunj, Banke

Rangeli Road, Biratnagar

Phone No.: 081-527601

Phone No.: 021-440357

Fax No.: 081-527603

Fax No.: 021-440356

9. Manigram Branch

10. Gulariya Branch

Manigram, Rupandehi

Guleriya, Bardiya

Phone No.: 071-560239

Phone No.: 084-421171

Fax No.: 071-560239

Fax No.: 084-421173

11. Ithari Branch

12. Bhairwaha Branch

Biratnagar Road, Ithar

Siddharthanage, Bhairahawa

Phone No.: 025-587066

Phone No.: 025-587067

13. Khairani Branch

14. Damak Branch

Devdaha Khaireni, Rupandehi

Jhapa-10, Damal

Phone No.: 071-577533

Phone No.: 023-581776

Fax No.: 071-527324

Fax No.: 023-584436

15. Birtamod Branch

16. Bagar Branch

Hikkola Road, Birtamod

Bager Pokhara

Phone No.: 023-543245

Phone No.: 061-532914

Fax No.: 023-540754

Fax No.: 061-532915

17. Narayangadh Branch

18. Dolkha Branch

5

Narayangath Chitwan
Phone No.: 056-533526

Charikot,Dolkha

Fax No.: 056-533528

Phone No.: 049-421847

Fax No.: 049-421849

20. Koteshwar Branch

21. Sinamangal Branch

Koteshwor Kathmandu

Sinamangal Kathmandu

Phone No.: 01-4498767

Phone No.: 01-4499896

Fax No.: 01-4498768

Fax No.: 01-4484346

22. Dharan Branch

23. Damauli Branch

Mahendrapath, Dharan

Damauli, Tanahu

Phone No.: 01-4498767

Phone No.: 065-561803

Fax No.: 01-4498768

Fax No.: 065-561804

24. Tadhi Branch

25. Bhaktapur Branch

Tandhi, Chitwan

Suryabinayak, Bhaktapur

Phone No.: 056-563006

Phone No.: 01-6619390

Fax No.: 056-563008

Fax No.: 01-6616391

26. Darbarmarg Branch

27. Janakpur Branch

Darbarmarg, Kathmandu

Mills Area, Janakpur

Phone No.: 01-4223044/854

Phone No.: 041-527936

Fax No.: 01-4223694

Fax No.: 041-527937

28. Khichapokhari Branch

29. Jorpati Branch

People's Plaza Khichapokhari

Jorpati, Kathmandu

Phone No.: 01-4157509/10

Phone No.: 01-4484915

Fax No.: 01-4157511

Fax No.: 01-4464276

30. Bhaisepati Branch

31. Birgunj Branch

Saibu

Adarshnagar, Burgunj

Phone No.: 01-5592787/88

Phone No.: 051-530502

Fax No.: 01-5592789

Fax No.: 051-530572

32. Mangal Bazar Branch

33. Palpa Branch

Tangal, Lalitpur

Makhan Tole, Tansen

Phone No.: 01-5529604

Phone No.: 075-522731/32/33

Fax No.: 01-5552269

Fax No.: 075-522734

34. Mahendranagar Branch

35. Dhangadhi Branch

Main
Bazar,
Nagarpalika

Bhimdutta Godawari Road, Dhangadhi

Phone No.: 099-520277/78

Phone No.: 091-520970/71

Fax No.: 091-520972

Fax No.: 099-520279

36. Amarpath Branch

37. Kalimati Branch

Amatpath, Butwal

Kalimati, Kathmandu

Phone No.:

Phone No.: 01-4285457/18

071-541171/72

Fax No.: 071-541173

Fax No.: 01-4285090

38. Thamel Branch

39. Kalanki Branch

Narsingh Chow, Kathmandu

Kalanki Plaza

Phone No.: 977-4258766/8810

Phone No.: 977-4288823

Fax No.: 01-4268391

Fax No.: 01-4287453

40. Tulsipur Branch

41. Dohari Branch

Chandani Tole, Tulsipur

Bank Road, Dohari

Phone No.: 082-563186/87

Phone No.: 082-563186/87

Fax No.: 082-563188

Fax No.: 082-563188

42. Gonguwo Branch

43. Mahrajgunj Branch

Gonguwo, Kathmandu

Narayangopal Chowk, Kathmandu

Phone No.: 01-4389006/4389007

Phone No.: 057-526580/526581

Fax No.: 01-4389008

Fax No.: 057-526582

7

44. Hateuda Branch

45. Dhading Branch

Main Road, Hetauda

Dhading Besi, Nilkanth

Phone No.: 057-526580/526581

Phone No.: 010-521008/09

Fax No.: 057-526582

Fax No.: 010-521010

46. Swambhu Branch

47. Sauraha Branch

Halchowk, Kathmandu

Sauraha, Bacheuli

Phone No.: 01-4033542/83

Phone No.: 056-580443

Fax No.: 01-4033585

Fax No.: 056-580444

48. Sankhmul Branch

49. Satdobato Branch

Sankhmul, Kathmandu

Chapagow Chowk, Lalitpur

Phone No.: 01-4781277

Phone No.: 01-5552371

Fax No.: 01-4781638

Fax No.: 01-5552372

50. Kausaltar Branch

51. Baneshwor Branch

Kausaltar, Bhaktapur

Devkota, Kathmandu

Phone No.: 01-6631339/6633014

Phone No.: 01-4492218/19

Fax No.: 01-5552372

Fax No.: 01-4492212

1.2

Study Background:

This report is my assignment as a partial fulfillment of internship course for the

requirement of Bachelor of Business Administration Degree program. The main
objective of my report is to understand various organizational setting and various
services provided by the bank. It will allow me to compare and analyze the actual
working condition in various organizations with the academic courses and help me to
develop managerial skills for future.

1.3

Objective of the Study:

The foundation of any good study is based on a through understanding of the

objectives to be achieved and the uses to which it is going put. Such understanding
leads to economy of efforts as well as to a useful and the most relevant focus on the
points that needs to be clarified and the estimate and the projections that are required.
8

The main purpose and objective of this study is to know and acquire a proper
knowledge about the crux of the customer satisfaction with KIST bank services. The
salient objectives of selecting the topic can be well understood in the following points.
1.

Enable me to acquire a sound understanding of different organizational practices

and policies in the banking sector.

2.

Enable me to understand how the overall bank functions in the organizational

setting.

3.

Relate conceptual matter studied from the course of real life situation in the
work place and develop managerial skills.

4.

Help me to develop the conceptual and analytical knowledge about the financial
institution in Nepal and their functioning.

5.

To know about the customer's responses towards the services provided the bank.

6.

The determine the areas in the bank where it need to enhance its services to
improve relationship with customers and providing achievable solution to
increase the level of satisfaction.

7.

To explore the suggestion for improving and implementing them for better
services to its valued customs.

1.4

Statement of problem:

The main aim of the commercial bank is the maximization of profit and
minimization of the cost as far as possible the mobilization of resource they acquired.
If a commercial bank cannot adequate amount of deposit the result will be in loss.
Hence it will show to makes it changes in its policy, so that they can exit in the
competition of the commercial sector.
In reference of KIST Bank Ltd. due to some Nepal government policy that is
also called inactive policy, its French partner has to face difficulties in managing the
bank. Similarly Bank cannot open L/C of any customer without the permission of
Nepal Rastra Bank. Before opening the L/C, the customer must give their credit
information.
Bank should analyze in order to attract the depositors. Bank has to provide
different attractive facilities to the depositor so that a Bank can only run successful of
it can collect more deposit in the competition of the commercial sector.

1.5

Limitation of the Study:

This study has been conducted appropriately however there were several
complications which arose indigenously. At this research tries to justify the event in
accordance with the well known or already established tools and technique, emphasis
is not given to fundamental and decision oriented study.
Following limitation were observed during the course of study:
a.

The entire study is based on secondary data which has already been collected
and proceed by the bank employees so its reliability is questionable.

b.

Due to the confidential nature of banking sector, bankers do not give current or
relevant mainly based in the financial statement published by the bank.

c.

The data only focused on time period of the last 3 years i.e. from Fiscal year
2066/067 to 2068/069.

d.

The constraints or limited time has had an impact on shaping up the study
conducted.

e.

The analysis in the study has been conducted on the data available as of end of
this fiscal year. i.e. mid July of respective years. A change in this may affect the
conclusion of the study.

f.

This bank is newly opened as a commercial bank so the bank Ltd. statement is
very short.

1.6

Research Methodology:

Research methodology is a sequential procedure and methods to be adopted in a

systematic system. A systematic research study needs to follow a paper methodology
to achieve pre-determined objective. Thus, the nature of data, data processing
procedure, tools and techniques are major term of research.
Research design is highlighted for ascertaining the basis objectives of the study.
Research design includes definite procedure and techniques which is used for
analyzing and evaluating the study. This study is carried out by using both qualitative
and quantitative analyzing method. Mostly, the secondary data has been used for
analysis, but the discussion and personal interview with concerned employee of the
KIST bank are also used for quantitative analysis. Hence research design is based on
description and analyzed method. Attempts has been made to describes the
composition of the financial statement position of the KIST Bank from F/Y 2066/067
to 2068/069.

10

1.7

Research Design:

Research design is taken as less descriptive but more prescriptive because the
historical secondary data has been employed of analysis. For conceptual framework
literature part more partially purpose. Some questions has been asked to the concerned
personnel who are considered as primary data and the secondary data includes the
annual report published by KIST Bank Ltd., review material collected from different
magazine, newspaper, and library etc such as data's information have been proceed
through various process like auditing, tabulating, and result has been interpreted in the
form of ratio, percentage, and different types of diagram for clear view.

In the above diagram, the researcher at the very first hand develops the
conceptual framework and in order to support and justify this, researcher generates
some authentic research question. Again, to test the hypothesis the researcher collects
required data both from primary and secondary methods and those collected data are to
be analyze & interoperated with the help of various statistical tools.
Figure No. 1.2
Research Process
Research
Problem

Hypothesis
Building

Data
Collection

11

Testing of
Hypothesis

Research
Findings

The above diagram shows the Internship Report research process of study while
preparing on "Total Deposit of KIST Bank Ltd."

1.8

Data Collection:

There are several methods of data collection but most the common and uses
ones are primary and secondary methods. According to Seltiw, write the looks as
quoted by Ritche (1989), the purpose of the various data collection technique is to be
procedure truth worthily evidence that is relevant to the need of the research being
done in the research report, necessary materials and collected from KBL. The methods
of research is consists of the following:a.

Primary data collection:

The data required for statistical enquiries are sometimes collected by the
investigator himself or his agents is known as primary data, primary data is that
kind of data which is collected through questionnaire, direct observation, and
interviews. Primary data is also known as the first hand data. It is original and
not use by others.
For the report preparation the personnel of the bank like Mr. Pradeen
Sedia, Mr Prashant Joshi and Mr. Nitesh Srestha is regarded as the primary data.
They shared the most important and valuable ideas regarding the report to me.
Trend analysis is also done.

b.

Secondary data collection:The data use is already collected and used by others are known as
secondary data or we can say that all the external data outside the organization is
known the secondary data. It can be collected from various publication, internet,
or from the public views. I have uses the secondary data from:
Annual report of KBL
Using internet (ww.kistbankcom.np)
Financial formulae have been obtained from the book of different financial
management.

1.9

Limitation of the Research Study:

The research study has completed with various limitations. In the context of
Nepal, the data availability is the major problem for the research study. Besides this
following limitations are also found:
a.

The study is conducted by using final reports.

12

b.

The problem of non-availability of required data and information regarding

credit management limits the scope of the study.

c.

The time spent and cost is major limitation of the study.

d.

The study is based on secondary data.

e.

The study has used only three year data for the sample bank.

f.

This study is conducted in the partial fulfillment of the thesis for the course of
Bachelor of Business Administration (B.B.A.)

13

C h a p t e r -
PRESENTATION AND ANALYSIS of DATA
2.1 Meaning of Liquidity
Liquidity is the part of assets, which can be used to meet the obligation. The
degree of liquidity depends upon the relationship between cash asserts plus those asserts
which can be quick money stock of economy.
In the case of Nepal, Liquidity denotes the money in use, in the current A/c,
Saving A/c, Fixed A/c, & money in Margin A/c, of the economic system. In general term
the aggregate money stock existing in economic is called liquidity.
According to commercial Bank Act 2031, total deposits in bank, Balance in
NRB and asserts declared by NRB as Banks Capital to pay cash in exchange deposits.
The cash balance & security that can be converted into cash with a very short period are
called liquid assets. This all shows liquidity of the bank.
2.2 Importance of Liquidity
The importance of liquidity is concerned very sensitive because if it cant
maintain the liquidity, it has to pay fine. So, there is a no dispute that liquidity is the most
important key for respect of the management assets and liabilities. Hence, the importance
of the liquidity id briefly described in point wise:i.
To meet the expense for the banks daily administrative work.
ii.
To control the economic fluctuation & to keep safe from risk.
iii. To full fill the demand of the debtor.
iv.
Provide security to bank.
2.3 Criteria for measuring Banks Liquidity
Liquidity is a importance aspect of bank. The state of liquidity of a bank
depends upon a several external factors. i.e. going rate of interest, demand & supply
Loan, Saving, & Investments fluctuation in size of financial markets.
The bank should be able to keep the liquidity in balance. The banks liquidity can be
measured by the following criteria:i.
Deposit investment
ii.
Investment in Assets
iii. Investment in Loan
iv.
Cash Reserve Ratio
v.
Structure of Bank
2.4 Ratio Analysis (Calculation & Analysis for Liquidity)
Ratio analysis is used to interpret the financial statement i.e. strength &
weakness of a firm in context of historical & current financial condition. We have
different types of ratios. Among them following are used to present the liquidity : 14

2.4 .A Deposit Investment Ratio (DIR)

Deposit investment ratio shows the amount in the bank after providing loan out
of deposit collected. According to deposit mix strategy, current account, saving account
& fix account need 100%, 30-40% & 5-10% of liquidity assets respectively. But in cash
balance i.e. deposit investment ratio is required only 20% of liquidity.
DIR =

Total Deposit - Total Loan Providing

Total Deposit

* 100

Table No - 1
F.Y. / Particular
Deposit Collection
Loan Proving
Rate in %
2065/2066
511978
211220
58.74
2066/2067
532066
74611
43.50
2067/2068
127456
97251
33.70
2068/2069
438465
272736
37.78
2069/070
397054
224145
43.54
source : www.kistbank.com.np
Deposit Collection = Fixed Deposit + Current Deposit + Saving Deposit
Loan Providing
= Primary loan providing in different sector
The above table shows that the liquidity position of bank in different financial
years. In every year, there is no lack of liquidity, but is in excess quantity. The bank only
requires 20 % of liquidity. It shows that the excess liquidity money in bank is
unproductive for it.
Now the above mentioned data are presented in diagram bellow : Figure - 1

15

2.4.B Current Ratio

The relationship between current assets and current liabilities is known as
current ratio. High current ratio indicates better liquidity position. However, it also
indicates the excess investment in current assets which have less or no earning power.

Current Ratio =

current Assets
Current Liabilities = .. times

(Standard = 2:1)

Where,
Current Assets = Cash Balance + Balance with NRB + Balance with Bank
Current Liabilities = Bills Payable + Proposed & Dividend pay
Table N.- 2

Years
Current Assets Current Liabilities
Calculated Ratios
2065/2066
152507
224147
1.25
2066/2067
12128
164042
2.25
2067/2068
11385
264753
2.13
2068/2069
10784
108039
2.15
2069/070
8930
146449
8.25
source : www.kistbank.com.np
The Above table shows that the current ratios of
different F.Y. from 2065/066 to 2069/070 are higher than its standard. High current ratio
is better for the banks. The ratio is going an increasing trend per year till 2067/068 but
thereafter it decreases and again increases in last year 2069/070. High current ratio
indicates better liquidity position. However, it also indicates the excess investment in
current assets which have less or no earning power.

16

Figure- 2

In the given figure x-axis shows the years from 2065/66 to 2069/070 in which
the position of current ratios and y-axis shows the times of current ratios which is
calculated in above table. The current ratio is high in F.Y.066/067. So, it means this year
the liquidity position of KBL is better.
2.4.C

Fixed Deposit to Total Deposit

A fixed deposit is one where a customer is required to keep a fixed amount with
bank for a specific period. The bank pays a higher interest on such deposit. It time of
emergency, customer are permitted to borrow money on the security of his fixed deposit.
According to deposit mix strategy, fixed Deposit needs only 5-10% of liquidity assets
respectively.
Fixed Deposit to Total Deposit

F.Y. / Particular
2065/2066
2066/2067
2067/2068
2068/2069
2069/070

Fixed Deposit
Total Deposit

Table No - 3
Fixed Deposit
Total Deposit
152507
511978
12128
132066
11385
127456
10784
134808
8930
148848
source : www.kistbank.com.np

* 100

Ratio
0.30
0.10
0.09
0.08
0.06

The above table shows the decreasing ratio of fixed deposit with respect to total
deposit, which certified the declining liquidity condition of the bank.
17

The fixed deposit is long-term liability. Higher current liabilities cause lower
liquidity. The above mentioned data are polluted in diagram:Figure- 3

2.4.D

Saving Deposit to Total Deposit

Saving deposit is one of the deposits collected from small depositors and
low income depositors. The bank usually pays small interest to the depositors against
their deposit. The depositors are allowed to with draw their money by cheques to the
amount prescribed by bank. This account is called saving account. According to deposit
mix strategy, fixed Deposit needs only 30-40% of liquidity assets respectively

Saving Deposit to Total Deposit=

F.Y. / Particular
2065/2066
2066/2067
2067/2068
2068/2069
2069/2070

Saving Deposit
* 100
Total Deposit

Table No - 4
Saving Deposit
Total Deposit
318095
511978
113170
132066
111474
127456
124023
134808
139917
148848
source : www.kistbank.com.np

18

Ratio
0.61
0.86
0.88
0.92
0.94

The above table shows the decreasing ratio of Saving deposit with respect to
total deposit, which certified the declining liquidity condition of the bank.
The saving deposit is long-term liability. Higher current liabilities cause lower liquidity.
The above mentioned data are polluted in diagram:Figure- 4

2.4.E Current Deposit to Total Deposit

Current account is also known as demand deposit. Under this any amount
may be deposited in this deposited in this account There are no restrictions regarding the
number of withdrawals or the amount of the withdrawals. The bank does not pay any
interest on such accounts and the depositors are required to leave a minimum balance as
per bank rule. According to deposit mix strategy, fixed Deposit needs only 100% of
liquidity assets respectively.
Saving Deposit to Total Deposit=

F.Y. / Particular
2065/2066
2066/2067
2067/2068
2068/2069
2069/2070

Current Deposit
* 100
Total Deposit

Table No - 5
Current Deposit
Total Deposit
41376
511978
6768
132066
4596
127456
4044
134808
2976
148848
source : www.kistbank.com.np
19

Ratio
0.08
0.05
0.04
0.03
0.02

The above table shows the decreasing ratio of Saving deposit with respect to
total deposit, which certified the declining liquidity condition of the bank. The saving
deposit is long-term liability. Higher current liabilities cause lower liquidity. The above
mentioned data are polluted in diagram:Figure- 5

2.4.F Cash and Bank to Current Assets

This ratios is calculates to find out the percentage of the liquid money which is
necessary to make immediate payment to the account holders. Cash at Bank balance as
being the hot money are the most liquid assets. It is needed necessarily in the bank at any
time.
Cash at Bank to Current Assets =
Cash & Bank
* 100
Current Assets
Table No - 6
F.Y. / Particular
Cash & Bank
Current Assets
Ratio
2065/2066
170725
0.75
224147
2066/2067
125727
0.77
164042
2067/2068
175440
0.67
264753
2068/2069
74547
0.69
108039
2069/2070
108372
0.74
146449
source : www.kistbank.com.np
The above table shows the bank holds adequate cash. Cash at bank balance are
very significant to make immediate payment. But the cash and bank with NRB is too
20

much, which is not profitable for the bank. Now the above are presented as bellow in
graph: -

2.4.G Profitability
KIST Bank is a commercial institution having profit motive . I provides to
its customer and get services charge in return. Bank charges interest on its lending and pay
interest on deposit collected. But it accepts deposit at a low rate and provides Loan out
higher rate. This difference between amounts of interest is gross profit and residential
amount of after deducting operating expenses is net profit. Higher profit causes higher
liquidity.
Interest Rate of Acceptance and Lending
Particulars
Interest on Deposit
Interest on Loan
Current A/c
Saving A/c
2.5%
8.5 - 12%
Fixed A/c
4%
source : www.kistbank.com.np
2.4.H Return on Assets
The ratio of net income to total Assets is called return on total assets. It measures
the return on all firms assets after interest and tax. It also measures the profitability of all
financial resources invested in the firms assets.
ROA

Net Income *100

Total Assets

= %

(The increasing ratio is favorable.)

21

Table No - 7
F.Y. / Particular
2065/2066
2066/2067
2067/2068
2068/2069
2069/2070

Net Profit
Total Assets
Ratio in %
-18009
589334
-3.06
22320
659737
3.38
24017
560620
4.28
-6185
553751
-1.12
4437
436833
1.02
source : www.kistbank.com.np
The above table shows that ROE is some year increasing & some year
decreasing trend. It indicates that the firm got high gain in some year and in few year
very poor strength. The above mentioned data are polluted in diagram:Figure- 7

2.4.I Remittance
Different modes of remittance are available with bank to transfer money from
one place to other. The amount, which is developed in a bank to send it to another branch,
is called remittance outward. This money remains in bank as liquid assets for a specified
period as the other hand, the amounts of cheque or drafts which are deposited into the
bank for collection are remittance inward. As remittance inward increases, the liquidity of
bank decreases.
F.Y. / Particular
2065/2066
2066/2067
2067/2068
2068/2069
2069/2070

Table No - 8
Remittance inward
Remittance Outward
1355670
1176480
1347667
1076470
1420170
1180520
2546006
2226396
4724926
4443892
22

Net
179190
271197
239650
319610
281034

source : www.kistbank.com.np
According to above table, that represents the inward remittance is higher than
outward remittance. It means bank should be kept more liquidity to payment of inward
remittance. For liquidity purpose, remittance should not be more difference, but this bank
should balance the remittance to earn profit and liquidity. The table shows inward
remittance is grow coming year. The above data in diagram is plotted as follows.
Figure- 8

2.4.J Cash Reserve Ratio (CRR)

KIST Bank annually maintains a sum 8% its total deposit at cash reserve ratio.
This amount must be deposited in NRB, which is the most significant for its durable
future. Otherwise central bank charges penalty fees to the bank. This bank has also
maintained 4% at its deposit in its on reserve as cash in vault. This makes us clear that this
bank has sufficient liquid money maintain statutory liquidity ratio. Sufficient liquid ratio
is also a source of liquid in contingency.

23

C h a p t e r - I
S U M M A R Y, C O N C L U S I O N , A N D
R E C O M M E N D ATI O N
3 Summary Conclusion and Recommendation
3.1Summary and conclusion
This chapter deals in summary and conclusion of this study of liquidity
position of KIST BANK Janakpur. It deals the liquidity position about the KIST
Bank Janakpur. The financial statement of two years i.e.from2066 to2068 have
examined for the purpose of study. The liquidity position of KIST Bank is
admirable as its profit earning is increasing each year. This shows the bank is in
increasing trend best on the finding of analytical tools same conclusion have been
derived from the financial years, which are as follows.
i. Deposit investment ratio is favorable but is too much higher then required
standard. This excess liquidity is also responsible for low profit.
ii. Current ratio of KIST Bank shows the strong liquidity position but it
indicates the lower mobility of current assets, which is not good for a
financial institution.
iii.
The ratio of different deposit to total deposit shows an excellent result
because current deposit is eligible comparing with fixed a saving deposit.
iv.
Cash and bank balance has been rising by per F.Y. which creates a hopeful
situation.
v. Rate of profitability is low which is painful.But it is out come of marinating
more liquid assets as ideal than required standard.
vi.
There is not any question mark with respect to remittance with the help of
above analysis.we can conclude that the liquidity position of KIST Bank
,Janakpur is not satisfactory.Besides there mathematical tools,I have used
SWOT analysis which also indicates unsufficient but ineffective liquidity.
Here SWOTmeans:
S

strength

W =

weakness

Oppirtunity

Threat

24

Strength:
During my study period,I have found KIST Bank Janakpur, strength are as follows:
i.
It has moderately strong financial position.
ii.
Large no of account holder.
iii. Large market size.
Weakness:
i.
It has not computerized system.
ii.
Ratio modern is not introduced in branch.
iii. It has a rented building.
Opportunity:
Having good financial existence,this bank has not got any reasonable exploitation
opportunities.
Threat:
High competation,scattered Market size,sluggish economic growth,
political instability, wrong policies of KIST Bank, badwanes mushrooming of
financial institution are the threat of this bank.
3.2

Suggestion and Recommendation:

There are some suggestion and recommendation, which are being derived from

study.
As per availability facts:
i.

Since the liquidity from the viewpoint of profitability is not satisfactory, the
bank is suggestion to utilize its total assets effectively to earn adequate profit
because immobilized assets are also responsible for low profit.

ii.

To increase the efficiency of staff, the management should provide on the job
and off the job tranning methods.

As per comparision:
Newly established bank are over taking KIST Bank so precaution must be
made in time. Not only this, adequate publicity and advertising should be made to
inform and attract customers and people. Modern technology should be initiated for
the customers to rapid in work.

25

BIBLIOGRAPHY

Banking khabar patra,2066 (Shrawan/Bhadra)

Documents from department of planning and research,(KIST Bank)
Annual publication of NRB
Economic indicator of NRB, Mid July 2008
Credit manual of KIST Bank
Delli raj bhandari, Banking and Insurance
Prem raj panth, Field assignment & Report writing

APPENDIX
SCHEDULE(A):-

Current liabilities

SCHEDULE(B):-

Current Assets and total assets

SCHEDULE(C):-

Loan Advances and overdraft

SCHEDULE(D):-

Total Deposit

SCHEDULE (E):

Total cash Bank Balance

SCHEDULE (F):-

Organization structure and staff placement

of KIST Bank,city office, mills area with rank
wise placement.

26