A STUDY ON INVESTMENT ANALYSIS OF NEPAL SBI BANK LTD
A Proposal Submitted By
Student Name (Your Name)
TU. Reg. No.: Your TU. Reg. No
Your Campus Name
Submitted to :
The Faculty of Management
Tribhuvan University
Kathmandu, Nepal
In Partial Fulfillment of the Requirements for the Degree of BACHELOR OF BUSINESS STUDIES (BBS)
Balaju, Kathmandu(your address)
April 2022 (submission date)
1.1. Background of the study :-
The business world is growing even more complex and competitive and financial or people who can give their establishment an extra edge as Nepal being a developing country, the people of Nepal are mainly poor and unemployed. They require bank to deposit their small earnings for the future security, for safety, etc. so that they can earn interest from the money deposited in the bank Bank is the one of the financial institution that helps in the economic development of the country.
Definition of Investment :
An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.
(https://www.investopedia.com/terms/i/investment.asp)
History of Investment :
The Code of Hammurabi (around 1700 BC) provided a legal framework for investment, establishing a means for the pledge of collateral by codifying debtor and creditor rights in regard to pledged land Punishments for breaking financial obligations were not as severe as those for crimes involving injury or death.
In the medieval Islamic world, the qirad was a major financial instrument. This was an arrangement between one or more investors and an agent where the investors entrusted capital to an agent who then traded with it in hopes of making profit. Both parties then received a previously settled portion of the profit, though the agent was not liable for any losses. Many will notice that the qirad is almost identical to the institution of the commenda later used in Western Europe, though whether the qirad transformed into the commenda, or the two institutions evolved independently cannot be stated with certainty.
In the early 1900s, purchasers of stocks, bonds, and other securities were described in media, academia, and commerce as speculators. Since the Wall Street crash of 1929 and particularly by the 1950s, the term investment had come to denote the more conservative end of the securities spectrum, while speculation was applied by financial brokers and their advertising agencies to higher risk securities much in vogue at that time. Since the last half of the 20th century, the terms speculation and speculator have specifically referred to higher risk ventures.(https://en.wikipedia org/wiki/Investment)
Concept/Introduction of Bank :
The term bank is either derived from old Italian word banca or from a French word banque both means a Bench or money exchange table in olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging.
A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it.
According to BAFIA 2073 "bank" means a corporate body incorporated to carry on financial transactions as referred to in Sub-section (1) of Section 47.
According to Kent "A Bank is an organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to other for expenditure."
Oxford Dictionary defines a bank as "an establishment for custody of money, which it pays out on customer's order"
The business of modern day banking is not confined in borrowing deposits and lending advances only, it performs a host of other financial activities which has immensely contributed to achieve industrial and commercial progress of every country. Bank is the life blood of trade, commerce and industry. Now-a-days, banking sector acts as the backbone of modern business. Development of any country mainly depends upon the banking system.
Development/History of Bank :
Banking practice is introduced from England The early goldsmiths used to have large vaults which were sonly built and heavily guarded. It is believed that banking was practiced at the time of "Manu" "as it's referred in Manusmriti. The history of banking begins in ancient Greece, Rome and Mesopotamia. The history of modern banks begins from Bank of Venice established in 1157 AD. Bank of Barcelona established in 1401, and Bank of England which was established in 1694.
Though there is much controversy as to the origin of the word "Bank". Some believe that it originated from the Latin word "Bancus" meaning a bench. Similarly some believe that it originated from the French word "Banque" and some to Italian word "Banca" all meanings a bench. Some have stronger belief that it originated from the German word "Banck" meaning collective fund Ancient money dealer used to deal on a bench.
History of banking in Nepal is believed to be started from the time of Prime Minister Ranoddip Singh in 1877 A.D. he introduced many financial and economic reforms. The Tejaratha Adda was established at that time and its basic purpose was to provide credit facilities to the general public at a very concessional interest rate The Tejarath Adda disbursed credit to the people on the basis of collateral of gold and silver. All employees of government were also eligible for this type of loan, which was settled by deducting form their salary. Tejaratha Adda extended credit only, it did not accept deposits from the public.
Nepal Bank Ltd. is the first modern bank of Nepal. It is taken as the milestone of modern banking in Nepal This was established in 1937 A.D. Nepal Bank has been inaugurated by King Tribhuvan Bir Bikram Shah Dev on 30th Kartik 1994 B.S. Nepal Bank was established as a semi government bank with the authorized capital of Rs 10 million and the paid - up capital of Rs. 892 thousand Until mid-1940s, only metallic coins were used as medium of exchange. So the Nepal Government (His Majesty Government on that time) felt the need of separate institution or body to issue national currencies and promote financial organization in the country.
Nepal Bank Ltd remained the only financial institution of the country until the foundation of Nepal Rastra Bank is 1956 A.D. Due to the absence of the central bank, Nepal Bank has to play the role of central bank and operate the function of central bank. Hence, the Nepal Rastra Bank Act 1955 was formulated, which was approved by Nepal Government accordingly, the Nepal Rastra Bank was established in 1956 A.D. as the central bank of Nepal Nepal Rastra Bank makes various guidelines for the banking sector of the country.
A sound banking system is important for smooth development of banking system. It can play a key role in the economy. It gathers savings from all over the country and provides liquidity for industry and trade. In 1957 A.D. Industrial Development Bank was established to promote the industrialization in Nepal, which was later converted into Nepal Industrial Development Corporation (NIDC) in 1959 A.D.
Rastriya Banijya Bank was established in 1965 A.D. as the second commercial bank of Nepal. The financial shapes for these two commercial banks have a tremendous impact of the economy. That is the reason why these banks still exist in spite of their bad position.
As the agriculture is the basic occupation of major Nepalese, the development of this sector plays in the prime role in the economy. So, separate Agricultural Development Bank was established in 1968 A.D. This is the first institution in agricultural financing.
For more than two decades, no more banks i established the country After declaring free economy and privatization policy, the government of Nepal encouraged the foreign banks for joint venture in Nepal.
Today, the banking sector is more liberalized and modernized and systematic managed. There are various types of bank working in modern banking system in Nepal In includes central, development, commercial, financial, co-operative and Micro Credit (Grameen) banks. Technology is changing day by day. And changed technology affects the traditional method of the service of bank.
Banking software, ATM, E-banking. Mobile banking, Debit Card, Credit Card, Prepaid Card etc services are available in banking system in Nepal It helps both customer and banks to operate and conduct activities more efficiently and effectively.
For the development of banking system in Nepal, NRB refresh and change in financial sector policies, regulations and institutional developments in 1980 A.D Government emphasized the role of the private sector for the investment in the financial sector. These policies opened the doors for foreigners to enter into banking sector in Nepal under joint venture.
Some foreign ventures are also established in Nepal such as Nepal Bangladesh Bank, Standard Chartered Bank, Nepal Arab Bank, State Bank of India, ICICI Bank, Everest Bank, Himalayan Bank, Bank of Kathmandu, Nepal Indo-Suez Bank and Nepal Sri Lanka Merchant Bank etc.
The NRB will classify the institutions into "A", "B", "C", "D" groups on the basis of the minimum paid-up capital and provide the suitable license to the bank or financial institution Group 'A' is for commercial bank, 'B' for the development bank, "C' for the financial institutions and 'D' for the Micro Finance.
Generally banks in Nepal are opened 10 am to 3 pm Sunday to Thursday and 10 am to 1 pm on Friday. But nowadays most of banks at city area of country provide service throughout the week.
1.2. Profile of the Nepal SBI Bank Ltd :-
Nepal SBI Bank Ltd (NSBI) is a subsidiary of State Bank of India (SBI) having 55 percent of ownership. The local partner viz Employee Provident Fund holds 15% equity and General Public 30% In terms of the Technical Services Agreement between SBI and the NSBL, the former provides management support to the bank through its expatriate officers including Managing Director who is also the CEO of the Bank Central Management Committee (CENMAC), consisting of the Managing Director & CEO, Chief Operating Officer & Dy. CEO, Chief Financial Officer, Two Senior Most AGMs, exercises overall control functions with the help of 3 Regional Offices, and oversee the overall operations of the Bank.
NSBL was established in July 1993 and has emerged as one of the leading banks of Nepal, with 994 skilled and dedicated Nepalese employees working in a total of 116 outlets that include 88 full-fledged branches, 19 extension counters. 7 Province offices, 1 Intouch Outlet and Corporate Office. With presence in 50 districts in Nepal, the Bank is providing value added services to its customers through its wide network of 118 ATMs (including 2 Mobile ATMs and 4 CRMS), internet banking. mobile wallet, SMS banking, IRCTC Ticket Online Booking facility, etc. NSBL is one of the fastest growing Commercial Banks of Nepal with more than 8.33 lakhs satisfied deposit customers and over 6.50 lakhs ATM/Debit cardholders. The Bank enjoys leading position in the country in terms of penetration of technology products, viz. Mobile Banking, Internet Banking and Card Services The Bank is moving ahead in the Nepalese Banking Industry with significant growth in Net Profit with very nominal NPA. As of 31st Chaitra, 2074, the Bank has deposits of Rs. 83.66 billion and advances (net) of Rs. 74.05 billion, besides investment portfolio of Rs. 17.93 billion.
State Bank of India (SBI), with a 211 year history, is the largest commercial Bank in India in terms of assets, deposits, profits, branches, customers and employees. The Government of India is the majority stakeholder and has controlling stake in SBI, a "Fortune 500" entity.
Our parent State Bank of India has an extensive network, with over 22,000 branches in India and another 206 foreign offices in 35 countries across the world.
Nepal SBI Bank has also established its wholly owned merchant banking subsidiary viz: Nepal SBI Merchant Banking Ltd. in the year 2016.
Vision of Nepal SBI Bank Limited :
"To be the most preferred bank for a transforming Nepal."
Mission of Nepal SBI Bank Limited :
"To provide high quality, reliable and innovative financial solutions."
Values of Nepal SBI Bank Limited :
"Service Transparency | Ethics | Politeness Sustainability"
Aspiration of Nepal SBI Bank Limited :
"To be the most trusted and preferred banking utility/financial service provider in Nepal."
Commitment of Nepal SBI Bank Limited :
"First in customer satisfaction."
1.3.Objectives of the Study :-
Every work has certain objectives. Work is done with the motive to achieve certain objectives. Thus, the objective of the study is to analyze the transactions of total amount of Investment made by NSBL
The specific objectives of the study are listed below:
- To analyze the investment sectors and trends.
- To show and analyze the trends of various investments.
- To analyze the correlations between total investment and total deposit.
1.4.Significance of the study :-
This study mainly fills a research gap on the study of investment policy of NSBL Definitely the study will provide a useful feedback to the policy makers of the banks and also becomes a useful reference for other banks of Nepal and central of Nepal (NRB) for the formulation of appropriate strategies This study evaluate the investment policy of and finds its loopholes and significantly contributes to make the policy sound.
1.5. Research Methodology :-
Research is categorized under various forms on the basis nature, scope and type of research They are; Applied and fundamental, Descriptive and Analytical, and Qualitative research and Quantitative research Among them descriptive research is applicable to prepare this research report.
1.5.1 Types of research :
The collected data will be simplified by using numbers of statistical tools and technique mainly; various ratios will be used to compare the investment.
1.5.2 Population and Sample :
A population is a complete enumeration of each and every unit of the universe as a whole. It is related to the total study of the material in detail. Descriptive research is used to describe characteristics of a population or phenomenon being studied.
Sampling is a process used in statistical analysis in which a predetermined number of actions are taken larger populations. There are 27 commercial banks licensed banks in Nepal but Nepal SBI Bank Ltd. is taken into consideration in sample using judgment sampling.
1.5.3 Types of Data :
The major research tools information, to know the activities and to make the management. To collect the relevant data and information regarding the analysis of investment, first of all the recommendation letter was received from college and taking or research tool in this study is survey which is developed and used to collect the recommendations for the letter the researcher had gone to the project work and necessary data and information were collected.
- Primary Data : Primary sources are original materials on which researched is based. They are firsthand testimony or direct evidence concerning a topic under considerations. They present information in its original form, neither interpreted nor considered nor evaluated by writers.
- Secondary Data : Secondary data is that data, which is not originally collected, obtained from different published sources. This type of data is not accurate. The secondary data were collected from annual report of the Nepal SBI Bank Ltd, secondary data are collected through
- Booklets available upon the subjects
- Magazines and newspaper
- Annual report of financial statement
- Media and internet
1.5.4 Data Collection Procedure :
The data used in this study is primary and secondary in nature. The study is based in secondary data provided by bank and other relevant sources. The data are collected from the balance sheet, investment statements, Nepal SBI Bank Ltd and informal enquires from the bank personal.
1.5.5 Techniques for analysis of data :
In order to achieve the objectives of the study, various data analysis tools and techniques are used. They are as to allow Ratio Analysis is one of the most powerful techniques of measuring the financial performances.
In the business and financial institutions, Analysis of various helps to determine the strength and weakness of the bank as well as its historical and current liabilities and investment (loan advances) are calculated to show the relationship between them.
- Total investment to the total deposit ratio.
- Total investment to the total assets ratio
- Total investment to total current assets ratio.
- Total investment to total current liabilities ratio.
Statistical tool :
Representation of numerical values in the form of various diagrams such as bar graph,trend line etc is the easiest means to study the effect of variables.
Trend Line :
It is the easiest way to show the increasing or decreasing affects of variables ratios in respect to the time period
Bar Graph :
This is the presentation of data in the form of graph. It helps to judge the variability of one variable in relation to variation of another variable.
Correlation Coefficient :
This shows the relationship between total investment and total deposit position of the bank.
1.6. Rationale of the study :-
This project work report is based on the topic "Investment Analysis". It helps on analyzing the investment pattern in different sectors, Investment means placing of money in the hands of other for their use in returns of profit. It is concerned with analyzing the amount and percentage of loans and advances that has been mobilized on what sector for what purpose. It also sacks to manage their wealth electively obtaining the most from it while protecting it from inflation, taxes and other risks This topic is related to the area of financial analysis. Investment is a part of finance. Financial analysis helps to analyze the financial position, management of assets and liabilities, mobilization of funds etc. for the proper important to analyze the investment made by bank.
1.7. Review of Literature :-
Review of literature means reviewing research studies or other relevant propositions in the related area of the study so that all the past studies, their conclusions and deficiencies may be known and further research can be conducted.
1.7.1 Conceptual Review :
Investment means using the time money and forth to earn interest and profit. In other words, it is the sacrifice of current rupees to earn future rupees An investment is simply any alternative into which fund can be placed with the expectations that they will generate positive income and that their value will be presented or increased If one person has advanced some money to another, he/she may consider his/her higher money as investment He/she expects to get back the money along with interest with a future date.
According to Fisher Jordan, "An investment is commitment of funds made in expectation of some positive returns. If the investment is properly undertaken, the return will be commensurate with the risks investors assume" (Source: www.google.com)
According to Sharpe, Alexander and Bailey, "Investment in its broadest sense means the sacrifice of current dollars for future dollars. Two different attributes are generally involved time and risk. The sacrifice takes place in the present and is comes later, if at all, and the magnitude is generally uncertain" (Source: www.google.com)
According to Ambling, "Investment may be defined as the purchase by an individual are institutional investor of a financial or real assets that produce a return proportional to the risk assumed over some future investment period. (Source: www.google.com)
Theories are formulated to explain, predict, and understand phenomena and in many cases to challenge and extend existing knowledge within the limits of critical bounding assumptions. The theoretical framework is the structure that can hold or support a theory of a research study
Conceptual framework this consists of concepts that are placed within a logical and sequential design represents less formal structure and used for studies in which existing theory is inapplicable or insufficient. Based on the specific concepts and propositions, derived from empirical observations and intuition may infer theories form a conceptual framework.
1.7.2. Review of Previous works :
The main objective of the review of literature is to find out what research study has been conducted and what should be done. The word investment includes the vision of profit, risk speculation and wealth. The investment policies of most financial institutions are regulated to some extend by public authority and customs. Portfolio investment is one of the important topics included in the conceptual review of investment. It is defined as the combination of assets.
Bhandari, (2009) conducted a fieldwork on Investment analysis of Nepal Bank Limited on the year 2009 and made following conclusions:
During Ashad, Shrawan and Bhadra the lending in the food production sector is higher than all other sectors It shows that Nepal Bank has concentrated in the productive sector than non-productive sector
The analysis of data shows that the lending in the consumable loan, fixed a/c receipt sector is very low as compared to other sectors.
The analysis also shows that with the new tending in each month increases the instalment amount i.e. collection from lending.
The relationship of repayment amount from loan lending amount in Ashad & Shrawan shows positive correlation but Bhadra shows negative correlation. Rastriya Banijya
Khanal, (2012) conducted a fieldwork on Investment analysis of Bank on the year 2012 and made following conclusions.
The investment to total current assets ratios are 76.46%, 79.84% and 74.40% in FY 2009/2010 to 2010/2011 and 2011/2012 respectively. The investment to total current assets ratio is in fluctuating trend The investment ratio analysis which includes investment to total deposit ratio is in fluctuating trend.
Khatiwoda (2010) conducted a fieldwork on Investment analysis of Sanima Bank Limited on the year and made the following conclusions:
- The investing analysis ratio which includes investment to total deposits ratio is in increasing trend. As compared to the deposit ratio, the bank has not become able to make investment in the profitable investment areas.
- The investment to total current assets ratio is in increasing trend which is favourable for bank.
- The investment to total current liabilities is also in increasing trend which is not good condition of investment of bank.
- The investment to total current ratio is also in increasing trend which shows the increase of investment in total assets.
Another important topic included in this topic is investment objective. The investment objective is focused in increasing the individual wealth defined as assets minus liabilities.
Investment means the sacrifice of current money to increase future money. Generally, when cash is needed, investment can be retired In investment, two attributes are generally involved: time and risk Risk is the fluctuation of actual returns and expected return The sacrifice takes place in the present and is certain. The reward comes later and is uncertain. Investor always tries to minimize the risk by investing two or more securities. In other cases, risk is the dominant attributes as call option on common stock. Like, financial institutions may find it desirable to choose banks. Life insurance companies and saving and loan association need investment which are almost likely exclusively payable in dollar. They must also have the items which are very safe and free from excessive marker price fluctuation because their obligation customarily total between 90 and 95% or their assets and relatively small shrink age in assets value would end anger their solvency.
1.7.3 Research Gap :
The studies are concerned with the research title "Investment Analysis" all considering other researches being carried out on the topic It becomes apparent that some researchers have selected various manufacturing components for the study while others have opted for only one company never the less most of studies have been commented to the enterprises. The studies on industries sector in connection to investment seem markedly limited most on the studies have used financial tools and secondary data. They have included only summary finding and conclusion study report but no concrete recommendation to solve the problem escorted.
1.8. Limitations of the study :
The field study is related to the analysis of loan investment of Nepal SBI Bank Ltd.The conclusion derived from the study may or may not be applicable to other commercial banks while collecting data and gathering information from NSBL, the report writer has aced many unfavorable situations. This study has been carried out limitations within assumptions.
- Data of three Fiscal Years i.e. FY 2073/074, FY 2074/075 and FY 2075/076 is used to analyze the investment of the bank. The round up figure in the study may not bring out accuracy calculation.
- Primary data through interview, secondary data from the internals records and other published articles and reports are used to prepare the report
- The report is based on the analysis of investment sector only Only the selected diagrams, bar diagrams, pie-charts are used to analyze the data.
- This report is prepared for an academic purpose and hence will not have expert analysis and conclusion is totally dependent on the reliability of data.
- The financial statement regarding investment has been basically considered as the subject matter of the study and they are assumed to be correct and true.
1.9.Report Structure :
This study is organization into three chapters. Each is devoted to the some aspect of the study. The rationale behind this kind of organization is to follow a simple each methodology approaches. The contents of each chapters of the study are briefly mentioned here.
Chapter 1 Introduction: Chapter one consists of introductory part of the study. This chapter consists of background, profile of the organization, objectives of the study, rational, report structure, literature review, research gap, methods and limitations of the study.
Chapter 2 Results and Findings: It includes design, sample selection, data collection procedure, data analysis and processing, necessary tools and techniques of the study.
Chapter 3 Summary and Conclusion: On the basis of the results from data analysis, the researcher concludes about the performance of the concerned organizations for better improvement It concludes research summary and conclusions
✍️ Annual Report of Nepal SBI Bank Limited, for the Fiscal Year 2073/074 to 2075/076.
✍️Agrawal, G.R. (2009): Project Management. Kathmandu: M.K. Publishing and Distributions.
✍️ Bhandari, R. (2015). "Investment Analysis of Rastriya Banijya Bank Limited, Itahari", A Project work report submitted to Vishwa Adarsha College, Itahari.
✍️ Dangol, RM (2061), "Financial analysis and planning". Kathmandu: Taleju Prakashan.
✍️ Jhingam, ML (2006); "Money banking international trade and public finance", India Varinda Publications Pvt. Ltd.
✍️ Khanal, A. (2012), "Investment Analysis of Rastriya Banijya Bank", Itahari: A project work report submitted to Kasturi College, Itahari.
✍️Khatiwoda, P. (2014), "Investment Analysis of Sanima Bank Limited." A project work report submitted to Kasturi College, Itahari.
✍️Kothari, CR (2004), "Research Methodology and Methods and Techniques", New Delhi: New age Publishers.
✍️ Mithani. D.M. (2002). "Money Banking, International Trade and public Finance" Mumbai: Himalaya Publishing House.
✍️ Pant, P R. (2009): "Social Science Research and Thesis writing", Kathmandu: Buddha Publication
✍️Thapa, K (2065); "Fundamentals of investment", Kathmandu: Asmita Books Publishers and Distributors.
✍️ Vaidhaya, S. (2058): "Money and Banking", Kathmandu: Taleju Prakashan.
Websites:
https://www.nepalsbi.com.np
http://www.nrb.com.np
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