TABLE OF CONTENTS

page No

CHAPTER -1 : INTRODUCTION
(1-3)

1.1 Background of the study 1

1.2 Statement of the problem 1

1.3 Objective of the study 1

1.4 Significance of the study 2

1.5 Problem of hypothesis 2

1.6 Review of Literature 2

1.7 Limitation of the study 2

1.8 Organization of the study 3

CHAPTER – 2: RESEARCH METHODOLOGY (3-

4)

2.1 Research Design 3

2.2 Population and Sample 3

2.3 Data Collection Procedure 3

2.4 Data Analysis Tools 4

2.5 Method of Analysis and Presentations: 4

2.6 Research gap 4

 BIBLIOGRAPHY

Chapter 1: INTRODUCTION

1.1 Background of the Study:

Establishment of commercial bank is governed by commercial act
2031 BS, and company act 2053 BS. However ,Nepal Rastra Bank
(NRB), as a regulatory body for banks and other financial institution has
right to specify the capital requirements and other requirements. Being
the central bank of Nepal, NRB has a responsibility to give special
attention to the interest of depositors and their safeguard.

In March 2001 NRB issued various directives to be compiled by all

commercial bank of country .The directives consists of various volumes.
The NRB directives No.1 include the capital adequacy norms for
commercial banks indicating the requirements of maintaining capital
fund to the prescribed ratio.

So, I am going to describe or write thesis about that capital adequacy

directives and norms for commercial bank in Nepal ruled by Nepal
Rastra Bank.

Capital is a stock of resources that may be employed in the

production of goods and services and the price paid for the use of
credit or money respectively. And capital adequacy is legal
requirement that a financial institution (such as bank) should have
enough capital to meet all it’s obligations and fund the services its
offers .Capital adequacy aims at setting minimum level of capital as a
function of risks.

1.2 Statement of Problem

 We know that billions of amount are deposited in various banks by
depositors. If bank will go bankrupt, what will happen to the depositors
of such money. Thus an adequate capital fund and directives of central
bank is required to safe guard the money of depositors.

1.3 Objectives of the study:

- To study major roles of NRB to regulate and directives of commercial

bank.

- To study the capital adequacy or formation of commercial bank.

- To provide appropriate suggestions and recommendations on the

basis of major findings.

1.4 Significance of the Study:

The study will have significance importance to gain knowledge about

present situation of banking sectors of Nepal and role of NRB.

The study is need to give suggestion for the work for development of
commercial bank in future and role of commercial bank in the
development of country.

1.5 Problem of Hypothesis :

We can use two types of hypothesis:

Null Hypothesis(Ho): Possible of acceptance is called null hypothesis.

Alternative Hypothesis(H1): complementary hypothesis to null

hypothesis is called alternative hypothesis.
1.6 Review of Litreture:

This chapter includes conceptual review ,review of NRB capital

adequacy norms and review of empirical works. For this purpose,
various books journals, periodicals and internet have been utilize.

Capital is a stock of resources that may be employed in the

production of goods and services and the price paid for the use of
credit or money respectively. And capital adequacy is legal
requirement that a financial institution (such as bank) should have
enough capital to meet all it’s obligations and fund the services its
offers .Capital adequacy aims at setting minimum level of capital as a
function of risks.

1.7 Limitation of The Study:

This study is limited due to lack of availability of data of NRB and

commercial bank, time constraints. Because of time & resource
constraints ,we have to use secondary data rather than primary data.
so, it will limited survey.

1.8 Organization of The Study:

Basically the structure of thesis consists following chapter:

Chapter 1: Introduction

Chapter 2: Review of Literature

Chapter 3: Research Methodology

Chapter 4: Presentation and Analysis of Data

Chapter 5: Summary, Conclusion and Recommendation.

CHAPTER – 2 : RESEARCH METHODOLOGY

2.1 Research Design:

Research design means an overall framework or plan for the activities

to be undertaken during the course of a research study. The research design
serves as a framework for the study, guiding the collection and analysis of
data. The research instruments to be utilized and the sampling plan to be
followed truly speaking, research design describes the general plan for
collecting, analyzing and evaluating data. Research design are made on
following bases:

- Qualitative and Quantitative method are used.

- Secondary data are used.

2.2 Population and Sample:

Till the date 28 commercial banks are operating. The study of all over
28 bank regarded the population. We take the sample of 15 banks for the
study.

2.3 Data collection Procedure:

The data are collection through secondary sources, and use the sample
of 15 banks.

2.4 Data Analysis Tools:

Following tools are used for analysis:

- Financial Tools:

In Financial analysis, Ratio analysis is the best tools. By Ratios

analysis, we can find out the relationship between variables. Following
Ratios are related to the banks which ultimately used to analyzed the
data:

1) Capital Adequacy Ratio

 2) Core Capital Ratio

3) Supplementary Capital Ratio

4) Capital Deposit Ratio

5) Credit/Deposit Ratio

- Statistical Tools:

Following tools are used under statistical tools to analyzed the data:

1) Simple Correlation Coefficient Analysis

2) Multiple Correlation Coefficient

3) Least Square Method

4) Hypothesis

2.5 Method of Analysis and Presentations:

This Chapter focuses presentation of data in systematic format and

analysis of collected data through financial and statistical techniques.
Interpretation and analysis of data to be done.

2.6 Research Gap :

This study is different from others because I take most recent data of
commercial banks as the population of the study.
 BIBLIOGRAPHY

BOOKS:
Anthony M. Santomero & David F. Babble(2005), Financial
Market, Instruments, and Institutions.
Dahal Bhuwan and Sarita (2002), A Handbook of Banking.
Tim S. Campbell & William A Kracaw (2004), Financial
Institution and Capital Market.
Wolf, H.K. and Pant, P.R.(2006), A Handbook of Social Science
and Thesis Writing.
Rose Peter S (1983), Commercial Bank Management, Irwin
McGraw Hill, New Delhi.
Gupta S.P. (1987), Statistical Methods, Sultan Chand and Sons,
New Delhi

JOURNALS/REPORTS:
Bank and Financial Institution and Service quality to Their
Customer, K.N. Lamichhane
Banking and Financial Statistics, Quarterly Publication of
NRB, Various Issues, Nepal Rastra Bank
Commercial Act.2031, Nepal Rastra Bank.
Commercial Banking Statistics, Bank and Financial Institution
Regulation Department, Nepal Rastra Bank.
Economic Report, Annual Publication of NRB
Economic Review, Occasional Paper of NRB.
Economic Survey, Annual Publication of Government of Nepal,
Ministry of Finance.
Fifty years of Nepal Rastra Bank (1956-2006) , Golden
Jubilee Publication of NRB, Nepal Rastra Bank.
Microeconomic Indicators of Nepal, Various Issues, Nepal
Rastra Bank.
Main Economic Indicators of Nepal, Monthly Report of NRB,
Various Issues, Nepal Rastra Bank.
Nepalese Financial Sector : Challenges and Some Solutions,
Rewat Bahadur Karki
Superior Consumer Service is the one Forward for Bank,
Suman Joshi
World Bank and Nepal, Research Department, International
Finance Division, Nepal Rastra Bank.

UNPUBLISHED THESIS:

Depesh Pokhrel (2009), A study on role of Nepal Rastra Bank

in the development of financial market in Nepal
Joshi, Jit Bhadur (1982), Lending Policies of Commercial
Banks in Nepal.
Panta, Uttam Raj (1976), A Study of Deposit and Utilization
Commercial Banks.
Shahi, Prem Bhadur (1999), Investment Policy of Commercial
Banks.
Timilsina, Rajesh Kumar (2008), Problems and Prospect of
Commercial Banks in Nepal.

INTERNET:
Nepal Rastra Bank, Website : http:// www.nrb.org.np
Ministry of Finance, Website : http://www.mof.gov.np