Chapter 1 EXECUTIVE SUMMARY
This paper presents the study of market trends of deposits as prevalent in the Nepalese Banking Sector. The study examines the trends of deposits as it is occurring over the last 10 years in the banking sector of Nepal represented by 7 randomly chosen commercial and development banks.
5 being commercial banks and 2 being development banks. The study also draws a comparison between the commercial and development banks. This paper also highlights how Customer relationship management has a direct effect on the deposits of the bank and also evaluates if word-of-mouth influences individuals from selecting a bank.
It also draws an attention towards the market strategy adopted by the banks to allure customer’s to deposit in their banks in the present market scenario. The paper is quantitative as well as qualitative in nature. Quantitative as it analyses the CRM and deposits relations via. Responses of the questionnaire distributed to 350 customers of the 7 chosen banks and the qualitative as the paper generalises the view amd opinion of eminent individuals of the concerned 7 banks regarding their marketing strategy and that the strategy are directed towards encouraging deposits.
The findings clearly state that the market trends of deposits in the Nepalese Banking Sector has an upward trend and that there is a positive relation between CRM and deposits; i. e. better CRM leads to larger loyal customer-base and more deposits and vice-versa, regarding the word of mouth the hypothesis that word-of-mouth is an effective means of selecting a bank for the customers is proven to be wrong. And also that the marketing strategy are all focused upon increasing of deposits of the bank. Finally, it also studies how Ace has been affected by the interest wars and what can be done to overcome the phase of Interest war.
Chapter 2 Research methodology
2. 1 Primary objectives: The purpose or objective of every report should be determined before it is initiated and the success and failure of the report is determined by measuring the result against predetermined objectives. So, this report also has some objectives which are short listed below: General objective: The main objective of the study is to determine the market trend of deposits in Nepalese private banking sector, to consider the customer relationship management and factors affecting their marketing strategies.
Specific objective: a. To find out the market trend of deposits in the Nepalese private banking sector. b. To compare the market trend of deposits between commercial and development banks. c. To analyse some factors, i. e. ; the degree of loyalty of customers towards the bank, power of word of mouth to win customers, factors that make them choose a bank, their level of satisfaction with the bank that have a direct or indirect effect on the deposit trend. d. To analyze the marketing strategies of various private banks that affect in their deposit trend. e.
To see if word of mouth effects the selection of a particular bank or banks. f. To provide recommendations accordingly. For fulfilment of objectives some hypotheses have been designed. Hypothesizes for this study are given below
2. 2 Hypothesis: Hypothesis1: Hypothesis states that Nepalese private banks have an upward trend of annual deposits. (Null hypothesis)H0: The bank does not have an upward trend. (Alternative hypothesis)
H1: The bank has an upward trend.
Hypothesis2: This hypothesis tests the word of mouth and its relation with the choosing of a bank.
H0: There is no significant relation between word of mouth and choosing of a bank. H1: There is a significant relation between the word of mouth and choosing of a bank.
2. 3 Research Design Descriptive and exploratory studies are employed to find out the market trend of annual deposits of Nepalese private banks. Under these studies, quantitative and qualitative researches are applied, where they are necessary.
2. 4 Sample Design To collect a more representative data for the quantitative research, the ollowing operational definitions are used: Population All the Nepalese private banks are taken as a target population. There are about 99 private banks including both commercial and development banks (Banking and Financial Statistics, Mid-January, 2010, No 54, Nepal Rastra Bank, Nepal). Sampling Frame The up-to-date sampling frame consists of Sampling Technique Two-stage sampling technique In the first, a stratified random sampling technique was employed to select banks from Commercial and Development banks. commercial banks and 2 development banks were selected by using simple random sampling technique from each stratum. However, the sizes of the samples selected are not proportional in nature due to shortage of time and difficulty to access to permission to collect data. In the second stage, Cluster sampling technique is employed to each bank selected in the first stage such that 7 banks constitute a cluster of 50 customers (being of equal size) visiting during an office hour selected on first cum first serve basis.
The sampled banks are Nabil Bank Ltd, Himalayan Bank Ltd, Laxmi Bank Ltd, Nepal SBI Bank Ltd, Nepal Investment Bank Ltd, Ace Development Bank Ltd, and Sanima Bikas Bank Ltd. Primary Data On the basis of above mentioned technique, there are 350 customers in a sample who give responses for a primary data through a questionnaire and 7 eminent individuals were interviewed ibn accordance to a set of questionnaire prepared for all 7 banks being studied. Secondary Data This data constitute 10 years of time-series data of annual total deposits. Some banks have data less than 10 years due to their late establishment.
5 Scope of Study This study shall be a useful source to all financial institutions ,students, researcher’s and any institution or individual who are interested in knowing the current situation of the banking sector in Nepal, as it reflects the current scenario of the Nepalese banking sector. The study undoubtedly will also provide me with a better understanding of the banking sector’s operation in Nepal. It will state the clear picture of the inside details of where the banking sector which looks perfect from the outside stands, and will help differentiate between fact and illusion .
The study will help in understanding the various marketing strategy that companies are using to get deposits in times of interest wars. The study will also state the importance of maintaining CRM and to see if word of mouth influences people/customers in selecting a bank. However, the scope of the study stands to answer all queries regarding “Market trend of deposits in Nepalese Banking Sector. ” 2. 6 Limitation Every researcher has to face certain limitation and obstacles during their process of completion of the research. The limitations faced during the completion of this research are as following:
a. The time given (2 months) was too less for the completion of the research.
b. It was difficult to collect data as banks were not too open to allow retrieving their intrinsic information.
c. The customers were not very experienced regarding the working of the banking sector.
d. The customers (few of them) were not very cooperative at the time of data collection. e. According to stratified random sampling, samples of Commercial bank and Development bank are not proportional as Development banks have strict policies and do not entertain outsiders.
If secondary data was to be considered in development banks case, there was very little clarity regarding its financial highlight unlike the commercial bank? f. The research is limited to7 banks and 350 customers of these 7 banks in some of the areas of Kathmandu city. g. Therefore it is not accurate data because it is collected from only few people. h. Nepalese Banking System is the vast explanation therefore it is difficult to collect the accurate data, which is related to my topics. Chapter 3 Critical Review of Literature Everywhere in this world, banking industry is playing a vital role in the economic development.
The banking sector in Nepal was considered dry in the last several years. But the trend has changed. Since recent past, the industry has succeeded to draw attention of investors towards it by its steady performance and tremendous prospects to grow. Goldsmith (1969) (1) observes that financial development in different countries of the world starts with Banking Financial Institutions (BFIs). Bank as the principal source of credit to millions of individuals, families, businesses & many units of government, has attached its own pace of advancement in the development path of economy.
According to several studies by various economists around the world, they have come to a strong find that this financial sector is very vital in facilitating economic growth and development. According to the exponents of financial repression (McKinnon, 1973; Shaw, 1973)
(2), financial liberalization can foster economic growth. They argued that the financial sector of the economy matters in economic development as it assists in the breakaway from repetition of repressed economic performance to accelerated growth of the economy (Shaw, 1973).
The McKinnon–Shaw hypothesis postulates that government interventions in various forms in less developed countries lead to financial repression. The economies in these countries have been characterized by control of interest rates, imposition of credit ceilings, use of credit rationing, high levels of inflation and high public sector deficits. The interest rates on deposits have been low and negative and savings have been confined to a narrow range of financial instruments. Government control of interest rates on loans and deposits tends to raise the demand for and curtail the supply of funds.
According to Aryeetey, et al. (1997)(3) unsatisfied demand for investible funds forces financial intermediaries to ration credit by means other than the interest rate while the informal market develops at uncontrolled rates.
All the superscripts represent reference citation code. (Listed in Reference Section) The role of an efficient banking system in economic growth and development lies in savings mobilization and intermediation.
Banks, as financial intermediaries, channel funds from surplus economic units to deficit units to facilitate trade and capital formation (Soyibo and Adekanye, 1992)
(4). As some scholars argued that an efficient financial system is critical not only for domestic capital mobilization but also as a vehicle for gaining competitive advantage in the global markets for capital. Another reason for a change in the banking sector is that there has been a great influence of the changes in the globalization process, and at the same time it has been highly internationalized.
So today, most banks face a market that is extremely dynamic. In this intense competitive market if a bank has to survive successfully, it needs to attract and retain the customers by offering them wider range of services. Zineldin (1995)
(5) further states in his writings that banks are no longer in the business of buying & selling money. They are rather in the business of offering complete financial services. Commercial banking also has expanded its range of products & services into what is known as universal banking, thus motivating into new areas.
According to Goldsmith (1969), financial development is the outcome of continuous proliferation and diversification of financial institutions as well as financial instruments. But to sell this wide range of products & services, a bank needs to employ different promotions to attract the customers and to make them purchase from the banks. In recent time, increasing competition in the business world has forced firms to become more aware of price and costs, which has resulted in a shift in the promotion mix to a greater use of promotion tools that are cost effective in reaching the customers (Boyd, et. al. 1998)
(6). According to Rowly (1998)
(7), promotion is used by organizations to communicate with customers regarding their product offerings, and also to ensure that customers are aware of the available products. Boyd, et. al. (1998), describe the promotion strategy as a controlled & integrated programme of communication methods and materials designed to present the organization and its products to customers, and to contribute to long run profit. Grankvist, Kollberg & Person (2004)
(8) state that with the growing importance of the financial sector, pressures are escalating for more effective marketing management of the financial services.
(9) argues that despite the recent recession, the financial services sector is continuing to grow in terms of turnover and profits and thus, has a supreme impact on the other spares of the economy. Consequently there is a growing interest in applying marketing techniques and tools in financial services. The role of promotion has been redefined by Dawes & Brown (2000)
(10) into managing long term relationship with carefully selected customers, including construction of a learning relationship where the arketer maintains a dialogue with an individual customer. Due to this fact, the personnel are one of the most important resources of a bank. Their competence will determine the quality of the bank and how well it operates (Marquardt 1994)
(11). Taking a deeper look at the Nepalese banking industry, it has significantly changed over past decades as a result of liberalization, deregulation, advances in information technology and globalization.
The financial sector liberalization resulted into entry of new firms in the market, deregulation widened the scope of activities and delimited the banking activities, advancement in technology resulted into new ways to perform banking activities and globalization added more pressure on competitiveness of individual banks. Moreover, the banks, nowadays, are entering into non-banking markets and other financial institutions are entering into the banking markets that have traditionally been served by the banks. These changes have changed the structure and market behaviour of Nepalese banking industry.
Today, there are almost 31commercial banks, 75 development banks & 84 Finance Companies in Nepal and a further few are in pipeline. Alone in Kathmandu there are more than 100 private commercial banks involved in the competition. Opening of branches and the installation of ATM machines has led to more idle cash lying around at branches and machines. Gibson and Tsakalotos (1994)
(12) say that competitive pressures that result from conditions of free entry and competitive pricing will raise the efficiency of their intermediation by decreasing the spread between deposit and lending rates.
The literature on how foreign bank entry affects the deposit share of domestic banks is rather limited. One line of literature assumes that foreign banks bring new lending resources and do not depend on domestic deposits to support their lending activities in the host country. A second strand of literature, assumes domestic deposits to be highly elastic. As foreign banks offer better financial services and attractive deposit rates, they encourage more savings and mobilize new deposits. Domestic banks are not worse off, it is argued, as foreign banks largely pick up new and additional deposits that they mobilize in the host country.
Crystal, et al. (2002) (13), for example, claims that foreign banks generally rely less on deposit-based funding than private domestic banks. According to their research, the most likely explanation is that foreign banks largely rely on alternative funding sources in their home countries. Another study, however, shows that domestic depositors can punish poorly performing and risky domestic banks by transferring their deposits to more reliable and efficient foreign banks. Martinez-Peria, et al. (1998)
(14), for example, says that depositors shifted their deposits to more reliable foreign banks in Argentina, Chile and Mexico.
Other studies claim that on-shore presence of foreign banks can facilitate the flight to quality and safety. Clarke, et al. (2000)
(15) studied that foreign bank deposits in Argentina increased during the financial turmoil of the mid-1990s, while Kraft (2002)
(16) finds that foreign bank subsidiaries acted as havens for depositors during the 1998 Croatian banking crisis. Looking at the balance-sheet data of 1334 banks in 101 countries, Demirguc-Kunt and Huizinga (2009) (17) find strong evidence that banks increasingly rely on non-deposit-based or wholesale funding and non-interest income.
They show that reliance on non-deposit-based funding can increase bank fragility and instability as the supply and terms of wholesale funding can be highly sensitive to the perceived riskiness of a bank. They also find that reliance on non-deposit funding can lower the return on assets and bank profitability. The paper, however, does not explain why banks are forced to rely on non-deposit-based funding or how the reliance on such funding can increase volatility in the supply of loans.
In our analysis, we will show that foreign bank entry, and their market share of deposits, is a key determinant for increased reliance on non-deposit-based funding. At present, a number of different conceptual understandings are associated with the term “Customer Relationship Management (CRM)”. There understanding range from IT driven programs designed to optimize customer contact to comprehensive approaches for the establishment and design of long-term relationships. The effort to establish a meaningful relationship with the customer is characteristic of this last understanding (Barnes 2003) (18).
In marketing literature, the term customer relationship management and relationship marketing are used interchangeably. As Nevin (1995) (19) points out, these terms have been used to reflect a variety of themes and perspectives. Some of these themes offer a narrow functional marketing perspective while others offer a perspective that is broad and somewhat paradigmatic in approach and orientation. A narrow perspective of customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts (Bickert, 1992) (20). CRM is a holistic process of acquiring, retaining and growing customers.
It includes all in-line and off-line relationship management. As Gray and Byun (2001) (21) expound; CRM is an abbreviation for customer relationship management, not customer relationship marketing. Management is a broader concept than marketing because it covers strategic management, human resources management, marketing management, service management, knowledge management, sales management and research management and development management. Thus CRM requires organizational and business level approaches, which are customer centric, to doing business rather than a simple marketing strategy.
The banking industry is facing an ever-increasing level of competition around the world as the dynamics of the business change. Technology, commoditization, deregulation and globalization forever changed the face of banking (Joyner 2002) (22). Banks have understood the need to take advantage of on the new technologies to gain an upper hand in the competition by exploiting their customer base, brand value and costly infrastructure investments in order to increase profits, as there’s a direct link between the customer satisfaction and the profitability.
CRM is the strategy which enables the banks to analyze the customer profiles, to detect their needs and potential profitability areas and establish the necessary actions the achieve customer satisfaction, competitive advantage and thus the profitability. From the customer’s points of view, the competition brings them various choices and increases their bargaining power. Today, customers are looking for various benefits from a bank; better service, lower transaction fees, higher interest rates, a sign of prestige, new products access from different channel and etc. his scheme forces the banks to look for new ways a satisfy customers before any other bank or financial institution does. Glazer (1997) (23) defines CRM as a strategic bridge between information technology and marketing strategies aimed at building long-term relationships and profitability. This requires “information-intensive strategies” (Glazer, 1997). CRM has often been seen, though incorrectly, as being synonymous with technology (Reinartz et al. , 2004) (24). As suggested earlier, opinions that CRM is more similar to service marketing, the difference between them perhaps being in the use of technology.
But efforts to incorporate CRM technology have not always resulted in success. A key reason for this failure is viewing CRM as a technology initiative (Kale, 2004) (25). Apart from technology, employees of an organization form an important part of CRM, where employees’ interaction with the data and technology processes and systems is critical in determining the return on investment on these processes and systems (Boulding, et al. , 2005)(26). Payne and Frow (2005) (27) identified a shift in CRM perspectives from a technology-only focus to a holistic customer-oriented approach that incorporates other strategic aspects of CRM as well.
The above brief suggests that CRM activities cover all aspects that fall within four major areas: strategy, people, processes and technology, which is similar to the observation made in service marketing literature. McKenna (1991) (28) has professed a more strategic view by putting the customer first and shifting the role of marketing from manipulating the customer (telling and selling) to genuine involvement with the customer (communicating and sharing knowledge).
Berry (1995) (29), in somewhat broader terms, also has a strategic viewpoint concerned with CRM. He has stressed that attracting new customers should be viewed only as an intermediate step in the marketing process and that developing closer relationship with these customers and turning them into loyal ones should be equally important aspects of marketing. Another important facet of CRM is “customer selectivity. ” As several research studies have shown, not all customers are equally profitable for an individual company (Storbacka, 2000) (30).
The company therefore must be selective in tailoring its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, the “outsourcing of some customers” could be called for so that a company allocates its resources to those customers it can serve the best in order to create mutual value. However, the objective of a company is not really to prune its customer base but to identify the programs and methods that would be the most profitable as it creates value for the firm and the customer.
As is implicit in the above definition, the purpose of CRM is to improve marketing productivity. Marketing productivity is achieved by increasing marketing efficiency and by enhancing marketing effectiveness (Sheth & Sisodia, 1995) (31). In CRM, marketing efficiency is achieved because cooperative and collaborative processes help in reducing transaction costs and overall development costs for the company. Two important processes of CRM include proactive customer business development and building partnering relationships with the most important customers.
Previous studies have examined the influence of CRM on intermediate metrics, such as customer satisfaction and loyalty (e. g. , Jayachandran, et al. 2005 (32); Mithas, Krishnan, and Fornell (2005)) (33). However, the impact of CRM implementation on firm profitability has not received sufficient attention from academics (Kumar 2008) (34). More important, an examination of the influence of CRM on firm performance using longitudinal data has been lacking (Boulding, et al. 2005) (35), thus limiting researchers from making assessments about the causal relationship between CRM and firm profitability.
In addition, prior research has not established a clear relationship between CRM implementation and organizational efficiency, a measure of how well a firm uses its resources in producing outputs. This is particularly surprising because industry analysts predict that 70% of CRM spending in the coming years will be justified by its potential to increase efficiency (Thompson and Maoz 2005) (36). If CRM implementation improves a firm’s efficiency in addition to enhancing customer value, the case for its wider adoption can be bolstered.
Indeed, considering the issue of dual value creation expected from CRM implementation, enhancement of firm efficiency could be an additional aspect of value creation for firms, supplementing the value extracted from customers by providing more effective solutions to their needs. In general, the academic literature suggests that CRM offers a firm strategic benefits, such as greater customer satisfaction and loyalty (Kumar and Shah 2004) (37), higher response to cross-selling efforts (Anderson 1996) (38), and better word-of-mouth publicity.
Overall, there is a strong sense that CRM efforts improve firm performance. It also has a great effect on deposits in the bank and later the report shows various studies and surveys that were carried out to see a deep relationship between CRM and Deposits and how effective CRM Practices in Banks leads to better relationship with its customers and also enhance the amount of deposits in the bank. Chapter 4 Company Profile 4. 1. Industry Profile Introduction: Bank is an institution involved in monetary transaction. Generally, an institution established by law which deals in money and credit is bank.
A bank is a financial intermediary that collects deposits from ordinary people with the provision that amount is refunded on demand by issuing cheque and provides loan to the interested parties. Origin of the word Bank: The term is derived from the Latin word “Bancus”, Italian word “Banco” and French word “Banque”, which means “a bench” and a German word “Bank” which means Joint Stock Company. In simple words, it is as old as the authentic history. The early bankers, the Jews in Lombardy, transacted their business at benches in the market place.
When they were unable to meet their liabilities, they used to break the benches. When a banker failed, his “Banco” was, broken up by the people from which derived the word bankrupt. History of Banking: The history of banking is closely related to the history of money. With the civilization of the society, the need for more efficient methods for barter was developed. Most origins of money can be traced back to the building of large structures such as temples, or large undertakings by leaders, such as wars.
The concept of an “I owe you” (IOU) preceded the idea of a paper check by several thousand years. The very first banks were probably the religious temples of the ancient world where the gold were stored so that it would be easy to carry compressed plates. Their owners justly felt that temples were the safest places to store their gold as they were constantly attended, well built and were sacred, thus deterring would-be thieves. There are extant records of loans from the 18th Century BC in Babylon that were made by temple priests to merchants. Ancient Greece holds further evidence of banking.
Greek temples as well as private and civic entities conducted financial transactions such as loans, deposits, currency exchange, and validation of coinage. Interestingly, there is evidence too of credit, whereby in return for a payment from a client, a money Lender in one Greek port would write a credit note for the client who could “cash” the note in another city, saving the client the danger of carting coinage with him on his journey. The earliest banking originated in mediaeval Italy, despite strong Christian prohibitions against usury according to canon low.
First of all the “Bank of Venice” was established in Venice, Italy in 1157 A. D. Originally, it was not a bank in real sense being simply an office for transfer of public debt. Subsequently the “Bank of Barcelona” and “Bank of Genoa” were established in 1401 and 1407 respectively. Banking slowly spread to the rest of the Europe. In England, banking began with the English goldsmith only after 1640. After the establishment of “Bank of England” in 1694 there came a remarkable change in the process of developing the banking institutions. This was a big landmark in the history of banking development.
After the establishment of this bank the idea of CBs rapidly spread all over the world. The first Indian Bank established so far was the “Bank of Hindustan” in 1770 A. D. and “Nepal Bank Limited”, established in 1937 A. D. was the first Nepalese bank. Evolution of Banking Industry in Nepal: In comparison to other nations, the history of banking industry in Nepal is relatively a new one. Banking in Nepal can be traced in the form of money lending in the reign of Gun Kama Dev in the early 8th century. According to historical evidence in 723 A. D, Gun Kama Dev, the King of Kathmandu had borrowed money to rebuild and to rule Kathmandu.
In around the 12th century, Sadashivadev brought out silver coins that were called as dam. Later on in the 14th century, King Jayasthiti Malla divided the people into 64 castes according to their occupations amongst which “TANKADHARI” were the one that dealt with the lending of money to the public. Since the main objective of the “TANKADHARI” was to earn profit, they used to charge the people with higher interest rates. Later, Tejarath Adda was established during the tenure of the Prime Minister Ranoddip Singh (B. S. 1933) which was most probably the first step towards the institutional development of banking in Nepal.
It was a government financial institution supplying credit to the people. It was not established to accept the deposit from the public but to provide them with loans. Later with the establishment of Nepal Bank Limited in kartik 30, 1994 B. S. , the Tejarath Adda was replaced. Nepal Rastra Bank (NRB), fully subscribed by His Majesty’s Government of Nepal (HMG/N), was established on Baisakh 14, 2013 B. S. , as the Central Bank of the country under the Nepal Rastra Bannk Act 2012 B. S. The banking system of Nepal functions under the overall guidelines of this bank and it has contributed a lot to the growth of the financial sector.
For the competitive banking service, it has to reach in every corner of the nations. So keeping this thing in mind, the first government owned commercial bank was established as Rastriya Banijya Bank in Magh 10, 2022 B. S. Industrial Development Center (IDC) was established in 2013 B. S. which was converted into Nepal Industrial Development Corporation (NIDC) in 2016 B. S. Similarly to assist in agriculture development, Agriculture Development Bank (ADB) was established in Magh 7, 2024 B. S. to provide finance for agricultural sector so that the agricultural productivity could be enhanced by introducing modern agricultural techniques.
HMG/N established five regional rural development banks, one each in Eastern, Central, Western, Mid-Western, and Far-Western development regions. In 2041 BS, Nepal adopted liberal economic policy and allowed joint venture banks under the collaboration with different foreign banks and hence in Asadh 29, 2041 B. S. Nepal Arab Bank, the first foreign joint venture bank was set up with 50 % shares owned by United Arab Emirates and 20 % by financial institutions and rest by the general public which was later known as Nabil Bank Limited. It gave a new ray of hope to the entire sluggish financial sector.
The success of Nabil Bank and its marketing concept really influenced other bank to be customer oriented. As the name suggests, commercial banks are to carry out commercial transaction only. Moreover, security exchange center was renamed Nepal stock exchange in 1990. NEPSE opened its trading floor on 13 January 1994. After the institutionalization and restoration of democracy, consequently a number of joint venture banks have been emerged. Currently there are 25 commercial banks with their many branches operating in different parts of the country. So on 23rd January, 2001 A. D. DCBL was established as a development bank. After maintaining itself as a number one development bank for years it transformed itself to the commercial bank on 25th May, 2008. OR 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 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 Agricole Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan (National Insurance Corporation), and the Nepalese public. Then Nepal Grindlays Bank was the third foreign joint venture to be established in Nepal which was co-owned by a British firm called Grindlays 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-five commercial banks have been established in Nepal. SECTORS Table 1 Number of Banks opened over the given years. | Types of Financial Institution| Number of Institutions in Mid – July. | Year| 1980| 1985| 1990| 1995| 2000| 2005| 2006| 2007| 2008| Commercial Banks| 2| 3| 5| 10| 13| 17| 19| 20| 25| Development Banks| 2| 2| 2| 3| 7| 26| 29| 29| 58|
Highlights on Performance of Banks and Non-Bank Financial Institutions Financial Sector at a Glance 1. The Nepalese Financial Sector is composed of Banking sector and non-banking sector. Banking sector comprises Nepal Rastra Bank (NRB) and Commercial Banks. The non-banking sector includes: * financial institutions licensed by NRB viz. Development Banks, Finance Companies, Micro-finance Development Banks, Co-operative Financial Institutions, Non-governmental Organizations (NGOs) performing limited banking activities and * financial institutions other than licensed by NRB viz.
Insurance Companies, Employee’s Provident Fund, Citizen Investment Trust, Postal Saving Offices and Nepal Stock Exchange. However, this bulletin contains information of those financial institutions, which are licensed by NRB up to Mid – January, 2010. 2. During the last two and half decades the Nepalese Financial System has grown significantly. At the beginning of 1980s, there were only two commercial banks and two development banks in the country. After the adoption of economic liberalization policy, particularly the financial sector liberalization that paved the way for establishment of new anks and non-bank financial institutions in the country. Consequently, by the end of Mid – January 2010, altogether 254 banks and non- bank financial institutions licensed by NRB are in operation. Out of them, 26 are “A” class commercial banks, 73 “B” class development banks, 78 “C” class finance companies, 17 “D” class micro-finance development banks, 16 saving and credit co-operatives and 45 NGOs as shown in table below: Table 2: Growth of Financial Institutions 3. The structure of financial assets/liabilities shows that Commercial Bank alone holds more than 80 percent of the total assets and liabilities of the financial system.
As of Mid – January 2010, Commercial Bank group occupied 80. 8 percent of total assets/liabilities followed by Finance Companies 9. 6 percent, Development Banks 8. 0 percent and Micro-finance Development Bank 1. 6 percent. In Mid – July 2009, the respective shares were 82. 1, 8. 8, 6. 9 and 1. 6 percent respectively. 4. The composition of the total liabilities shows as usual, deposit held dominant share of 68. 11 percent followed by capital fund 6. 02 percent and borrowings 5. 40 percent respectively in Mid – January 2010. Likewise in the assets side, loan and advances accounted the largest share of 57. 5 percent followed by liquid funds 10. 82 percent, investments 6. 21 percent and other assets 5. 25 percent in the same period. 5. Commercial Banks held dominant share on the major balance sheet components of financial system. Of the total deposits Rs. 715859. 10 million in Mid – January 2010, the commercial banks occupied 81. 91 percent. Similarly, finance companies held 9. 49 percent, development banks 8. 29 percent and micro finance development banks 0. 31 percent. Likewise, on the loans and advances the share of commercial banks stood at 77. 05 percent, development banks 9. 49 percent, finance companies 11. 9 percent and micro finance development banks 1. 57 percent in Mid – January 2010. In the same year the share of commercial banks in the borrowings, liquid funds and investments constitute 65. 9 percent, 74. 3 percent and 96. 7 percent respectively. 6. The capital fund, one of the components of liabilities, witnessed a significant growth of 20. 03 percent and reached to Rs. 63232. 2 million in Mid – January 2010 from Rs. 52681. 8 million in mid July 2009. The borrowings and deposit increased by 63. 16 percent and 6. 12 percent respectively, while other liabilities decreased by 28. 12 percent compared to Mid – July 2009.
Similarly loans and advances, the major component of assets increased by 17. 56 percent and reached to Rs. 601630. 0 million in Mid – January 2010 from Rs. 511752. 8 million in mid July 2009. While, liquid fund and investment decreased by 20. 01 percent and 13. 73 percent in Mid – January 2010 compared to the previous period Table 3: Growth of Major Balance Sheet Indicators Commercial Banks 7. The number of commercial bank branches operating in the country increased to 850 in mid – January 2010 from 752 in mid July 2009. Among the total bank branches, 50. 59 percent bank branches are concentrated in the central region alone.
By the end of Mid – January 2010, total 430 branches are being operating in this region. However, in the western, eastern, mid-western and far- western region are 18. 94 percent (161), 17. 65 percent (150), 7. 41 percent (63) and 5. 41 percent (46) respectively. 8. Entry of new banks in financial system along with increased in the business, the total assets i. e. sources of fund of commercial banks went up by 4. 59 percent compared to 43. 30 percent in the previous year. By the end of this fiscal year, the total assets of commercial banking sector reached to Rs. 849412. 40 million from Rs 812165. million in the last period. 9. The share of loans and advances to total assets increased to 54. 58 percent in Mid – January 2010 from 49. 02 percent in mid July 2009. Similarly, share of investment and liquid funds to total assets registered 7. 43 percent and 9. 95 percent respectively. In the preceding year, the respective shares were 16. 11 percent and 13. 05 percent. 10. The composition of liabilities of commercial banks shows that, the deposit has occupied the dominant share of 69. 03 percent followed by borrowings 4. 48 percent and capital fund 3. 94 percent in the Mid – January 2010.
The respective shares of deposit, borrowings and capital fund in the previous period were 69. 40 percent, 2. 26 percent and 3. 74 percent respectively. 11. In the Mid – January 2010, the loans and advances increased marginally at lower rate of 16. 43 percent compare to 31. 44 percent in mid – July 2009. By the end of Mid – January 2010, the total outstanding amount of loans and advances of commercial banks reached to Rs. 463574. 8 million. It was Rs. 398143. 0 million in mid – July 2009. 12. The total investment of commercial banks in Mid – January 2010 decreased by 8. 46 percent and remained to Rs. 119784. 8 million from Rs. 130856. million in Mid – July 2009. Similarly liquid fund decreased by 20. 28 percent and amounted to Rs. 84496. 2 million. 13. In the Mid – January 2010, total deposit of commercial bank increased by 4. 04 percent compare to 32. 28 percent growth in the Mid – July 2009. As of Mid – January 2010, it reached to Rs. 586356. 8 million from Rs 563604. 5 in the Mid – July 2009. Among the component of deposit, current deposit increased with rate of 6. 09 percent compare to 27. 74 percent in last year. Similarly, saving deposit and fixed deposit increased by 4. 25 percent and 11. 55 percent respectively. Fig. 1: Deposit Ratio of Commercial Bank 4. The saving deposit comprises the major share in total deposit followed by fixed deposit and current deposit. As of Mid – January 2010, the proportion of saving, fixed, and current deposits are 46. 21 percent, 26. 87 percent and 12. 96 percent respectively. In the last year the respective share of saving, fixed and current deposit were 46. 12 percent, 25. 06 percent and 12. 71 percent. 15. In the Mid – January 2010, the borrowing increased by remarkably higher rate of 107. 77 percent compared to 27. 15 percent in the previous year. By the end of Mid – January 2010, it reached to Rs. 38063. 4 million from Rs. 8320. 2 million in the Mid – July 2009. 16. Capital fund of commercial banks is increased by 10. 11 percent compared to previous year and reached to Rs. 33473. 0 million in mid – January 2010. It was Rs. 30399. 5 million in Mid – July 2009. 17. Out of the Rs. 466664. 3 million outstanding sector wise credits in Mid – January 2010, the largest proportion of the loans and advances is occupied by manufacturing sector. The share of this sector is 20. 60 percent followed by wholesale & retailers 18. 70 percent, other sector 16. 88 percent, finance, insurance & fixed assets by 11. 62 percent and construction 10. 8 percent. Similarly, transportation, communication & public services comprise 4. 96 percent, consumable loan by 4. 36 percent, other service industries by 3. 94 percent and agriculture by 2. 92 percent in the same period. 18. The outstanding of deprived sector credit of commercial banks in the Mid – January 2010 increased by 17. 40 percent compared to 76. 36 percent in the Mid – July 2009. By the end of Mid – January 2010, it reached to Rs. 15925. 8 million from Rs. 13565. 1 million in Mid – July 2009. The ratio of deprived sector credit to total outstanding of product wise loans and advances stood at 3. 3 percent in the current period. Last year it was 2. 96 percent. 19. In Mid – January 2010, the credit to deposit ratio of the commercial banks significantly increased to 79. 06 percent compared to 70. 64 percent in Mid – July 2009 and 71. 09 percent in Mid – July 2008. The non-performing loan of commercial banks declined to 3. 01 percent in Mid – January 2010 from 3. 53 percent in the Mid – July 2009. The total amount of NPA remained to Rs. 13954. 9 million from Rs. 13574. 6 million in the Mid – July 2009. Development Banks 21. The total number of development banks increased to 73 in Mid – January 2010 from 63 in Mid – July 2009.
Out of them, twelve are national level and rests are district level development banks. 22. The total assets/liabilities of development banks increased by 23. 51 percent and reached to Rs. 83998. 85 million in the Mid – January 2010 from Rs. 68009. 3 million in Mid – July 2009. The entry of new development banks along with business expansion resulted to increase in the total assets and liabilities. 23. Among the component of liabilities, deposit constituted 70. 63 percent followed by capital fund 14. 22 percent and borrowing 5. 88 percent in mid – January 2010.
In the previous year the respective share of deposit, capital fund and borrowing were 70. 58 percent, 13. 71 percent and 3. 86 percent. On the assets side, loans and advances constituted to 67. 97 percent, liquid funds 17. 13 percent and aggregate investment 7. 26 percent in mid – January 2010. 24. During the period of current fiscal year, the deposit collection of Development Banks increased by 23. 6 percent and reached to Rs. 59332. 15 million from Rs. 48001. 6 million in mid – July 2009. Similarly capital fund increased by 28. 05 percent and reached to Rs. 11940. 60 million in the same period and borrowings increased remarkably by 88. 9 percent and reached to Rs. 4935. 58 million compared to Rs. 2622. 6 million in last fiscal year. Fig. 2: Deposit Collection of Development Banks 25. Based on un-audited financial figures, development banks incurred the remarkable profit of Rs. 1063. 91 million during the period from Mid-July 2009 to Mid – January 2010 as against the 1243. 4 million in the last fiscal year ending Mid – July 2009. 26. The proportion of non-performing loan to total outstanding loan of development banks remained to 1. 04 percent in mid – January 2010 from 1. 50 percent in Mid – July 2009. Total amount of NPL as end of the Mid – January 2010 is Rs. 84. 98 million. It was Rs. 598. 7 million in the Mid – July 2009. Finance Companies 27. The total number of finance companies increased to 78 in Mid – January 2010 from 77 in Mid – July 2009. During this period, Narayani Finance Ltd. and National Finance Ltd. get merged to Narayani National Finance Ltd. and two new finance companies are started operation. 28. The total assets/liabilities of the finance companies increased by 15. 59 percent in mid -January 2010 and reached to Rs. 101062. 47 million from 87430. 08 million in Mid – July 2009. Among the total liabilities deposits held the largest share of 67. 3 percent followed by other liabilities 8. 91 percent, capital funds 15. 58 percent and borrowings 5. 32 percent. The respective share of deposit, capital fund and borrowing were 65. 28 percent, 12. 06 percent and 5. 94 percent in the previous year. 29. On the assets side, loan and advances held 70. 79 percent of total assets followed by liquid funds 13. 22 percent, investments 5. 58 percent and other assets 3. 65 percent in mid – January 2010. 30. The total deposit mobilization by the finance companies in the current fiscal year increased by 19. 05 percent in Mid – January 2010 and reached to Rs. 67946. 14 million from Rs. 7073. 4 million in Mid – July 2009. Similarly, capital funds increased by 49. 37 percent over 41. 58 percent in Mid – July 2009 and reached to Rs. 15744. 59 million from 10540. 9 million. Likewise, borrowing increased by 3. 42 percent and reached to Rs. 5371. 52 million in mid – January 2010. 31. In the Mid – January 2010, liquid fund declined by 18. 57 percent and remained to Rs. 13360. 64 million. Likewise, loan & advances observed growth of 19. 4 percent over 16. 37 percent in Mid – July 2009. The total outstanding amount of loan and advances reached to Rs. 71546. 17 million in Mid – January 2010 from Rs. 59921. 2 million in Mid – July 2009. Likewise, the investment is increased by 72. 67 percent and remained to Rs. 5638. 54 million in mid -January 2010. 32. Credit deposit ratio of finance companies increased to 105. 3 percent in Mid – January 2010 from 104. 98 percent in the Mid – July 2009. Fig. 3: Deposit/Credit Ratio of Finance companies 4. 2 Swot analysis of the Nepalese private banking sector Strength: 1. Increase in level of awareness about the banking sector in the public’s mind, leading to increase in the volume of deposit in Nepal. 2. Apart from the food and beverage industry banking sector is the next largest growing industry in Nepal. . The performance of the banks in Nepal is good as stiff competition prevails in the market. 4. Concentration in CRM which results in happy and satisfied customer’s beneficial both for the banks as well the general public. Weakness: 1. Weakness of banks in Nepal is their urban centered approach. It is evident that cream of creams lies in towns and cities. Despite security concern in the country, banks have more to do for rural development. 2. Existing Interest wars. 3. High rate of loans and advances, leading to low fluidity of loans and advances. 4. Low knowledge about IT and its usage as compared to other countries. . Poor monitoring of NRB (Nepal Rastra Bank. ) 6. Poor mobilization of funds. Opportunities: As banks concentrate in the urban areas a wide opportunity of growth lies in the rural area and its development which shall prove to be beneficial for the banking industry as well as the economy. The Nepalese banking sector has the opportunity to undertake a lot of Merger and Acquisition by doing so it will strengthen the customer-base of the banks and also their market coverage. Opportunity to expand its geographic reach and become international via. Joint-venture, merger and acquisition.
Threats: 1. Due to informal interest wars and cut throat competition there is always a fear of banks that weak to liquidate. 2. Survival of the fittest exist in the Nepalese banking sector there is a little space for the new and weak banks to exist and grow. 3. Instability of the political conditions and poor economic performance also proves to be a threat to the Nepalese banking sector’s development. 4. Instable NRB directives impose changes that are drastic to the policies of all banks operating in the country thus leading to loss of customer and fund generation.
In this study the market trends of deposits in the Nepalese banking sector is being represented by the 7 chosen banks namely : 1. Ace Development Bank Ltd. 2. Himalayan Bank Ltd. 3. Nabil Bank Ltd. 4. Sanima Bikas Bank Ltd. 5. Nepal SBI Ltd 6. Laxmi Bank Ltd. 7. Nepal Investment Bank Ltd. 1. ACE DEVELOPMENT BANK LTD. Ace Development Bank Ltd. has been a leading player in the financial market of Nepal. It was founded in August 1995 as Ace Finance Company Ltd. and was upgraded to Ace Development Bank. Over the years, customers and regulators have been in appreciation of the many financial products and innovations developed by us.
Our diversified risk asset portfolio has served the economy in every sector as have the wide choices of deposit account schemes. Our wholesale banking initiatives have assisted numerous commercial banks and private enterprises with risk management. Our resolve to provide client-centric solutions and surpass the expectations of our stakeholders remains firm and unyielding. We are now in a position to provide various products to serve all our customers’ needs under one umbrella. We are now more competitive than ever with new products and innovations in the pipeline.
Corporate Governance is another aspect which we strongly believe in. The Institute of Chartered Accountants of Nepal has awarded us the “Best Presented Account Award” . Our employees are all qualified with a minimum of a Bachelors’ Degree. All our managerial level personnel have a minimum of an MBA degree. Employees are constantly upgraded in seminars, workshops and training programs in the country and internationally. Ace Development Bank prides itself in having the highest productivity in ratio to its size. 2. Himalayan Bank Ltd
Himalayan Bank was established in 1993 in joint venture with Habib Bank Limited of Pakistan. Despite the cut-throat competition in the Nepalese Banking sector, Himalayan Bank has been able to maintain a lead in the primary banking activities- Loans and Deposits. Legacy of Himalayan lives on in an institution that’s known throughout Nepal for its innovative approaches to merchandising and customer service. Products such as Premium Savings Account, HBL Proprietary Card and Millionaire Deposit Scheme besides services such as ATMs and Tele-banking were first introduced by HBL.
Other financial institutions in the country have been following our lead by introducing similar products and services. Therefore, we stand for the innovations that we bring about in this country to help our Customers besides modernizing the banking sector. With the highest deposit base and loan portfolio amongst private sector banks and extending guarantees to correspondent banks covering exposure of other local banks under our credit standing with foreign correspondent banks, we believe we obviously lead the banking sector of Nepal. The most recent rating of HBL by Bankers’ Almanac as country’s number 1 Bank easily confirms our claim.
All Branches of HBL are integrated into Globus (developed by Temenos), the single Banking software where the Bank has made substantial investments. This has helped the Bank provide services like ‘Any Branch Banking Facility’, Internet Banking and SMS Banking. Living up to the expectations and aspirations of the Customers and other stakeholders of being innovative, HBL very recently introduced several new products and services. Millionaire Deposit Scheme, Small Business Enterprises Loan, Pre-paid Visa Card, International Travel Quota Credit Card, Consumer Finance through Credit Card and online TOEFL, SAT, IELTS, etc. ee payment facility are some of the products and services. HBL also has a dedicated offsite ‘Disaster Recovery Management System’. Looking at the number of Nepalese workers abroad and their need for formal money transfer channel; HBL has developed exclusive and proprietary online money transfer software- HimalRemitTM. By deputing our own staff with technical tie-ups with local exchange houses and banks, in the Middle East and Gulf region, HBL is the biggest inward remittance handling Bank in Nepal.
All this only reflects that HBL has an outside-in rather than inside-out approach where Customers’ needs and wants stand first. 3. Nabil Bank Limited Nabil Bank Limited, the first foreign joint venture bank of Nepal, started operations in July 1984. Nabil was incorporated with the objective of extending international standard modern banking services to various sectors of the society. Pursuing its objective, Nabil provides a full range of commercial banking services through its 47 points of representation across the kingdom and over 170 reputed correspondent banks across the globe.
Nabil, as a pioneer in introducing many innovative products and marketing concepts in the domestic banking sector, represents a milestone in the banking history of Nepal as it started an era of modern banking with customer satisfaction measured as a focal objective while doing business. Operations of the bank including day-to-day operations and risk management are managed by highly qualified and experienced management team. Bank is fully equipped with modern technology which includes ATMs, credit cards, state-of-art, world-renowned software from Infosys Technologies System, Banglore, India, Internet banking system and Telebanking system. | 4. Sanima Bikas Bank Limited Sanima Bikas Bank Limited (Sanima) was established in 2004 by the enterprising and dynamic Non Resident Nepalese (NRN) with a vision to mobilize required resources for the national development process. Sanima is the first private sector national level Bikas Bank in the country to be capitalized at NPR 320 million (equivalent to USD 4. 5 million). The current shareholding pattern of the Bank constitutes of promoters holding 70% and general public holding 30%.
We value our customers and our policies are adapted to meet the best interest of our costumers and our stakeholders by catering pragmatic and reliable services. As our slogan suggests, we have put in all our efforts to insure that our customers make the best out of our services, in the simplest way possible. Hassle free banking is what we are proud to be offering. The Bank has been in forefront in the country for mobilizing its resources in financing hydro power projects. Its objective stands to provide banking and financial solutions in a simplified way with customer focus while adding value to stakeholders’ interests.
It has an authorised capital of Rs. 2, 10,00,00,000,an issued capital of Rs. 2,01,60,00,000 and paid-up capital of Rs. . 2. ,01,60,00,000. | 5. Nepal SBI Ltd Nepal SBI Bank Ltd. (NSBL) is the first Indo-Nepal joint venture in the financial sector sponsored by three institutional promoters, namely State Bank of India(SBI), Employees Provident Fund(EPF)and Agricultural Development Bank Ltd. (ADBL)through a Memorandum of Understanding signed on 17th July 1992. NSBL was incorporated as a public limited company at the Office of the Company Registrar on April 28, 1993 under Regn. No. 17-049/50 with an Authorized Capital of Rs. 2 Crores and was licensed by Nepal Rastra Bank on July 6, 1993 under license No. NRB/l. Pa. /7/2049/50. NSBL commenced operation with effect from July 7, 1993 with one full-fledged office at Durbar Marg, Kathmandu with 18 staff members. The staff strength has since increased to 511. Under the Banks & Financial Institutions Act, 2063, Nepal Rastra Bank granted fresh license to NSBL classifying it as an “A” class licensed institution on April 26, 2006 under license No. NRB/I. Pra. Ka. 7/062/63. The Authorized,Issued and Paid-Up Capitals have been increased to Rs. 200 Crores,Rs. 186. 93 Crores and Rs. 86. 93 Crores, respectively. In terms of the Techhnical Services Agreement concluded between SBI and the Bank, SBI provides management support to the bank through its 3 expatriate officers including Managing Director who is also the CEO of the Bank. A core management team viz. Central Management Committee (CENMAC) consisting of the Managing Director, Chief Operating Officer, Chief Financial Officer and Assistant General Manager(Credit) oversees the overall banking operations in the Bank. ADBL divested its stake in the Bank by selling its entire 5% promoter shares to SBI on 14th June, 2009.
Consequently,the Bank’s corporate status has undergone change from its previous status as a Joint-venture Bank to a Foreign Subsidiary Bank of SBI. Presently fifty five percent of the total share capital of the Bank is held by the SBI, fifteen percent is held by the EPF and thirty percent is held by the general public. 6. Laxmi Bank Ltd Laxmi Bank was incorporated in April 2002 as the 16th commercial bank in Nepal. In 2004 Laxmi Bank merged with HISEF Finance Limited, a first generation financial company which was the first and ever merger in the Nepali corporate history.
Laxmi Bank is a Category ‘A’ Financial Institution and re-registered in 2006 under the “Banks and Financial Institutions Act” of Nepal. The Bank’s shares are listed and actively traded in the Nepal Stock Exchange (NEPSE). We are a technologically driven progressive Bank with strong risk and corporate governance foundations. We are known for our innovation and claim to many “firsts” in the Nepalese financial market. We have the best asset quality among all financial institutions in the country and our technology has been rated “Highly Secure” by an independent internationally accredited information system auditors.
Laxmi Bank’s award winning Annual Reports has set the standards for quality, presentation and disclosure for the Nepalese corporate sector to follow since 2005. Laxmi Bank promotes a separate life insurance company – Prime Life Insurance Limited which came into operation in 2009. 7. Nepal Investment Bank Ltd. (NIBL) Nepal Investment Bank Ltd. (NIBL), previously Nepal Indosuez Bank Ltd. , was established in 1986 as a joint venture between Nepalese and French partners. The French partner (holding 50% of the capital of NIBL) was Credit Agricole Indosuez, a subsidiary of one the largest banking group in the world.
With the decision of Credit Agricole Indosuez to divest, a group of companies comprising of bankers, professionals, industrialists and businessmen, has acquired on April 2002 the 50% shareholding of Credit Agricole Indosuez in Nepal Indosuez Bank Ltd. The name of the bank has been changed to Nepal Investment Bank Ltd. upon approval of bank’s Annual General Meeting, Nepal Rastra Bank and Company Registrar’s office with the following shareholding structure. * A group of companies holding 50% of the capital * Rashtriya Banijya Bank holding 15% of the Capital. * Rashtriya Beema Sansthan holding the same percentage. The remaining 20% being held by the General Public (which means that NIBL is a Company listed on the Nepal Stock Exchange). * We believe that NIBL, which is managed by a team of experienced bankers and professionals having proven track record, can offer you what you’re looking for. We are sure that your choice of a bank will be guided among other things by its reliability and professionalism. Chapter 5 Data Data Out of the 99 banks including both commercial and development banks this report flashes specific attention to 7 best working banks selected randomly from the population being studied.
Data that is considered here represents the scenario for the entire Nepalese private banking sector. 5. 1 Data Collection Procedure 1. Creation of questionnaire for analysing the concept of Customer relationship management. The questionnaire contains 12 questions each question testing the relevance of CRM and its effect on the Trends of annual deposit. 2. Visited the selected banks to collect data /response over the questionnaire. 3. Personally asked the customers the questions in the questionnaire. 4. Took personal interviews of eminent individual in the banks selected to analyse the marketing strategy.
In accordance to the set of questions prepared in a questionnaire. 5. For details about the deposit pattern over the years for the banks selected secondary data was referred to i. e. through websites and annual reports of the selected banks. 5. 2 Primary Data: a. Questionnaire. On the basis of above mentioned sampling technique, there are 350 customers in a sample who give responses for a primary data through a questionnaire that were personally interviewed. b. Personal interview. Done for the 7 eminent individuals of the selected banks for analysing the market strategy through a q