Deposit Mobilization Essay

INTRODUCTION1.1 acquire BackgroundFor the phylogenesis of any country, the monetary sector of that country is responsible and must be strong. The financial sector is Brobdingnagian field, which comprises of wedge buildings, cooperatives, insurance companies, financial companies, stock exchange, foreign exchange markets, mutual funds etc. These institutions collect idle and scattered money from the general public and finally invest in variant enterprises of national frugality that consequently help in reducing poverty, increase in life style of people, increase troth opportunities and thereby developing the society and country as a whole. Thus, todays concept, the financial institutions and mercenary banks has become one of the bases for the measuring level of economic development of nation. mercantile banks argon the main microbe which motivates people to save their earnings. Bank deals in accepting the saving of people in the form of bind collection and invest it in th e productive area. They give the lend to the people against real and financial assets. They give monetary sources from savers to utilizers. In other words, they are intermediate between lender and receiver of fund they rebound the fixateor fund. Whereas in Nepal the authority of joint venture banks are still to be realized as an essentials railway car of mobilizing internal saving through various banking schemes in the economy. Hence, to uplift the backward economic condition of the country, the wait on of capital accumulation, among other prerequisites should be expedited.This project report has been prepared as an output of the look forers internship experience in Nepal Credit and Commerce Bank Limited. Nepal Credit and Commerce Bank Ltd. (NCC Bank) formally registered as Nepal- Bank of Ceylon Ltd. Commenced its operation on 14th October, 1996 as a Joint Venture with Bank of Ceylon, Srilanka. It was the start-off private sector bank with the largest authorized capital of NRS. 1000 million. The Head Office of the Bank is primed(p) at Siddhartha Nagar, Rupandehi, the birthplace of LORD BUDDHA, while its corporate office is placed at Bagbazar, Kathmandu.1.2 Statement of the taskNepal is underdeveloped country and rapid economic development is the basic need of the country. Development by its performer is not possible within a short period and it takes a long time for the proper development of a country, it has to build up infrastructure. In Nepal, the process of development started only after 1956 A. D. when the commencement five year plan came into practice.Capital in fact, plays the leading manipulation for the economic development of a country. But in Nepal, there is shortage of capital. There are various sources of accumulating capital internal and away sources. Under external sources aid, grants and loans are the main sources. In internal sources accumulating capital, taxes, public enterprises, public debt are the customary in our count ry. But due to underdevelopment, poverty, lack of banking agnizeledge the desired capital for the development of the country cannot be accumulated from those internal sources. So, it can be said that in Nepals present situation bank limit is dependable and permanent sources of capital accumulation. The need of deposit mobilization for economic development of a country is no more to question. But we are facing an acute problem of resources mobilization. We perplex 32 commercial banks in Nepal which are very much considered to be vital financial institution to spread domestic resources.1.3 Objective of the shootThe objective of the reading is to examine kindred between the list of supply deposit and amount of total credit granted by the bank. The main objectives of the knowledge are* To take apart the relationship between deposits and loans and advances. * To analyze the effectiveness of deposit mobilization of the bank. * To examine how far the interest rank of deposits h ave positive relationship with the deposit collection of the bank. * To measure the impact of interest rates of loan on the credit extended by the bank. * To draw suggestions and recommendations to the concerned bank for the further improvement.1.4 Significance of the StudyBanks and other financial institutions play Copernican role to increase economic standard for the development of the country. sparing development becomes slow if there are incomplete and unfair banking facilities. Especially commercial banks provide different economic and technical foul facilities to the people who involve in business activities. Commercial banks play subject role in collection of scared small savings form depositors and transfer these funds into productive sectors for the economic development.Mainly this study covers the deposit and credit position of commercial bank (NCC), so it helps to reveal the financial position of bank and study occupies an important role in the series of the studies o n commercial bank. The significances of the study are * serious to know how well the bank is utilizing its deposits. * Important to policy formulator and also be useable for academic professionals, students particularly those involves in commerce, CA and financial institutions to formulate policies and plans on the basis of the performance of the bank. * Important to the management party of the bank for the evaluation of the performance of their bank and comparison with other banks. * Important for the investors, clients (depositors, loan takers) and personnel of bank to take various decisions regarding deposits and loan advances. * This study will be equally important to the others who are interested to know about the area. It may encourage to researcher to research further.1.5 Relevance of the StudyCurrently, banks are gaining the stakeholders belief through their efficient management and professional services and playing an eminent role in the economy. The deposit mobilization for the bank is tough job. So, the study is focused on how the deposits are mobilized by the bank. The study attempts to interlink the financial performance and the deposit mobilization of the bank.The study is expected to be expedient to different stakeholders as 1. The study is expected to be effectual to the shareholders as they can analyze the try relating to credit. 2. The study is expected to be useful to the management bodies of the bank to improve the operations of the bank to resume more value to its service 3. The study is expected to be useful to the government body, NRB for further research is the area to formulate and implement juvenile policies and regulations. 4. The study is expected to be useful to the other stakeholders to know the practices made over the deposit mobilization by the bank 5. The study is expected to be useful to analyzes the internal strengths and weaknesses of the bank 6. The study is expected to be useful to anyone who is conducting a bank su rvey in the related topic.1.6 look for QuestionsThe study intends to reveal the following issues of deposit mobilization practices by the bank 1. What is the relationship between deposit and loans and advances? 2. What is the effectiveness of deposit mobilization of the bank? 3. How far the interest rates of deposits have positive relationship with the deposit collection of the bank? 4. What is the increasing or decreasing trend of deposit mobilization of the bank?1.7 Limitations of the StudyAs every research has its own limitation, this study is not biased. The research is done for the partial fulfillment of MBA. Therefore, this study has some limitations, which are listed below * This research study for the most part depends on the secondary selective information like annual reports (Profit and Loss Account, Balance Sheet and Financial Statements). * The study is based on only financial and statistical tools and technology. * The study mainly based on last(a) five years data (2 003 to 2008) that are not enough for the statistical calculation and cannot be infer for inviolate financial sectors.1. 8 Organization of the ReportChapter one deals with the general background of the study and the major issues which has governed the overall study, chapter two deals with the nature of Nepals banking industry and challenges of banking sector in Nepal, chapter three deals with the qualitative flavor of Nepal Credit and Commerce Bank Limited which gives the introduction of major products and services provided by NCC Bank and new innovative products recently launched by NCC Bank, chapter four deals with presentation and analysis of data and Finally chapter five deals with the findings of the study and the recommendations which have been given to the bank for improving its deposit mobilization.CHAPTER IIREVIEW OF LITERATURE2.1Review of Literature set up is the sum of money lodged with a bank, discount house or other financial institution. Deposit is zero more than th e assets of an individual which is given to the bank for safe-keeping with an obligation to get something (interest) from it. To a bank these deposits are liabilities. Commercial bank Act 2031 (1974) defines Deposits as the amount deposited in a current, savings or fixed accounts of a bank or financial institution. The deposits are subject to detachments by means of cheque on a short notice by customers. There are several restrictions on these deposits, regarding the amount of deposit, number of withdrawal etc. These are considered more as investments and hence they earn some interest. The rate of interest varies depending on the nature of the deposits. The bank attracts deposits from customers by offering different rates of interest and different kinds of facilities. Though the bank plays an important role in influencing the customer to save and open deposit accounts with it, it is ultimately the customer who decides whether s/he should deposit his surplus funds in current deposit a/c, saving deposits or fixed/time deposit a/c.Bank deposits arise in two slipway. When the banker receives cash, it credits the customers account, it is known as a primary or a simple deposit. People deposit cash in the banking system and thereby convert one form of money, cash, into another form, bank money. They cull to keep their money in deposit accounts and issue cheques against them to their creditors. Deposits also arise when customers are granted registration in the form of loans. When a bank grants a loan to a customer it doesnt ordinarily pay cash but simply credits the customers account with the amount of loan. Of course, there is nothing that prevents the borrower from withdrawing the entire amount of borrowing in cash but quite often s/he retains the amount with the bank as deposit.CHAPTER IIIRESEARCH METHODOLOGYTo solve the research problems, few systematic ways are adopted to collect the required data and information. Research methodology refers to the various s equential travel that are to be adopted by a researcher during the course of studying the problem with accredited objectives. It shows overall research method from the theoretical aspects to the collection and analysis of the data. This study covers quantitative methodology in a greater extent and also uses the descriptive part based on both technical and logical aspect. This study tries to perform a well designed, quantitative and qualitative research in a very clear and direct way by using both financial and statistical tools.3.1 Research DesignThis study is based on a descriptive research design and follows an analytical approach. To come through the study objectives, the required data are collected from secondary and primary sources and study through the use of different financial and statistical tools.3.2 Research ToolsIn order to collect the data, the researcher had visited the bank as an intern for 8 weeks of time period. The tools that are used for the study is through d irect observation at the time of internship, and discussions with the officers of the bank in concerned department.3.3 Data Collection MethodThe methods of collecting data are primary and secondary. Primary data includes personal observation, informal talk and also interview with officers whereas Secondary data includes Annual report of the bank, published and unpublished documents etc.3.4 Data Analysis ToolsThe processed data were analyzed and tested with the financial tools i.e. Ratio Analysis, Trend Analysis, graphs whereas Statistical tools are Karl Pearsons Coefficient of Correlation Analysis, Probable actus reus (P.E) and Hypothesis Testing.BIBLIOGRAPHYBooks* Annual Report of NCC Bank limited 2003/04 2007/08.* Kathmandu Frontier Associates (KFA), Professional Banking Course references. * Levin R. I and Rubin D.S. (2008), Statistics for Management (7th Ed.), Pearson Prentice Hall. New Delhi * Sharma, Pushkar Kumar and Chaudhary, Arun Kumar (2058), Statistical Methods, Kathman du Khanal Books Prakashan. * Van Horne, C. James (2005), Financial Management and constitution, (12th Ed.), Pearson Prentice Hall, New Delhi.Websiteswww.nrb.gov.npwww.google.comwww.wikipedia.comwww.nccbank.com.np