ACKNOWLEDGEMENTS

First of all, I would like to express my sincere gratitude to my report supervisor

and guide Mr. Baburam Rawat, head of department of Management, Janajyoti Multiple
Campus, Bhasi 18, Kanchanpur, who guided me through my study. This report would
remain incomplete without his valuable and creative instructions, suggestions and guidance.

I would like to offer my gratitude to my Guru Mr. Bholanath Sharma, Campus

Chief, Janajyoti Multiple Campus, Bhasi 18, Kanchanpur for his encouragement,
support affection from the beginning of this research work.

I would like to express my profound gratitude to my Guru Mr. Yagyaraj Upadhya for
his help to prepare this report and all other Gurus and Gurumas who taught me at different
levels.

Similarly, I would like to thank Mr. Dinesh Singh Karki who did entire computer
work of this study.

Last but not least, I would like to express heartily thanks to all my colleagues
who directly or indirectly helped me in completing this report.

I can never miss this opportunity to extend my heartily thanks to my parents who
have always been with me in every hardship.

Manmohan Joshi
 ABSTRACT

The report is based on GLOBAL IME bank limited. What is its business in Nepal?

And the main thing is that the report contains about analysis of GLOBAL IME bank

which consist of the financial ratio analysis. Report makes the reader to know about the

financial position of GLOBAL IME bank limited. The report provides a brief introduction of

the bank, GLOBAL IME bank in Nepal and shows the financial statement to the readers or

investors. This report is mainly written for those people who are ready to invest among any

one bank and provide the information that the bank is beneficial for the investment

purpose or not. And it also includes tables and graphical representation of the

information as a whole. The report includes information about the financial position of

GLOBAL IME bank and draws the conclusion based on analysis.

The report highlights financial position of bank in today's competitive business

environment. The report provides a brief introduction of the bank, its policies and also

examines the products as well as facilities provided by the bank to know how much the

customers are satisfied with the services provided. It also visualizes reader with the prosperity

of GLOBAL IME bank during the five year.

 ENDORSEMENT

We hereby endorse the project work report entitled "INVESTMENT POLICY OF

COMMERCIAL BANKS OF NEPAL" submitted by ManmohanJoshi of Janajyoti

Multiple Campus, Bhasi 18, Kanchanpur, in partial fulfillment of the requirement for

the award of Bachelor of Business Studies (BBS) for external evaluation.

……………… …………………… …………………...

Mr.Baburam Rawat …………………... Prakash Datt Joshi

Supervisor Research Committee Head Campus Chief

Janjyoti Multiple Campus Janjyoti Multiple Campus Janjyoti Multiple Campus

Date:…………... Date:…………... Date:…………..

SUPERVISOR'S RECOMMENDATION SHEET

The Project work report entitled "INVESTMENT POLICY OF COMMERCIAL

BANKS OF NEPAL" submitted by Manmohan Joshi of Janajyoti Multiple

Campus, Bhasi 18, is prepared under my supervision as per the procedures and

format requirements laid by the Faculty of Management, Tribhuwan University,

as partial fulfillment of the requirements for the award of the degree of Bachelor

of Business Studies (BBS). 1, therefore, recommend the project work report for

evaluation.

Mr. Baburam Rawat

Janajyoti Multiple

Campus, Bhasi 18,

Kanchanpur
Date....................................
 DECLARATION

I hereby declare that the project work entitled "INVESTMENT POLICY OF

COMMERCIAL BANKS OF NEPAL" submitted to the Faculty of Management,

Tribhuvan University, Kathmandu, is an original piece of work under the supervision of Mr.

Baburam Rawat, faculty member Janjyoti Multiple Campus, Bhasi 18, Kanchanpur and is

submitted in partial fulfillment of the requirements for the award of the degree of Bachelor of

Business Studies (BBS). This project work report has not been submitted to any other

University or institutions for the award of any degree.

Manmohan Joshi

Date....................................
INVESTMENT POLICY OF COMMERCIAL BANKS OF
NEPAL
(With reference to GLOBAL IME BANK Ltd.)
A Project Work Report

Submitted By:
ManmohanJoshi
T.U. Roll No.: 704040036
T.U. Reg No.: 7-2-404-185-2016
Janjyoti Multiple Campus,
Bhasi 18, Kanchanpur

Submitted to
The Faculty of Management
Tribhuvan University,
Kathmandu

In partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)
Kanchanpur, Mahendranagar
Push, 2077
 TABLE OF CONTENTS
TABLE OF CONTENTS

Title Page

Declaration ii

Supervisor's Recommendation iii

Endorsement iv

Abstract

Acknowledgement vi

Table of Content vii

List of Tables ix

List of Figures

Abbreviations xi

CHAPTER I: INTRODUCTION 1

1.1 Background of the study 1

1.1.1 Overview of the Nepalese Commercial Banks 1

1.1.2 Introduction of GLOBAL IME Bank Ltd. 2

1.2 Statement of the problem 4

1.3 Research questions 5

1.4 Objectives of the study 5

1.5 Significance of the study 5

1.6 Organization of the study 6

CHAPTER II: LITERATURE REVIEW 7

2.1 Conceptual Review 7

2.1.1 Review of supportive text 8

 2.1.2 Principles of sound Lending and Investment policy 9

2.1.3 Sources of funds for the Investment 10

2.2 Research Gap 11

CHPTER III: RESEARCH METHODOLOGY 13

3.1 Research Design 13

13
3.2Population and Sample

3.3 Types of Data 13

3.4 Data Collection Procedure 14

14
3.5 Method of analysis
14
3.5.1 Financial tools
17
3.5.2 Statistical tools

3.6 Limitations of the study 17

CHAPTER IV: DATA PRESENTATION AND ANALYSIS 18

4.1 Financial Analysis 18

4.1.1 Liquidity Ratio 18

4.1.2 Assets Management Ratio 20

4.2 Major Finding 25

CHAPTER V: SUMMARY, CONCLUSION AND RECOMMENDATION 26

5.1 Summary 26

5.2 Conclusion 27
5.3 Recommendation 27

REFERENCES 29
 LIST OF TABLE

Details Page no.

Table no. 4.1: Cash & bank balance to total deposit ratio 19

Table no. 4.2: Loan & Advance to total deposit ratio 20

Table no. 4.3: Total investment to total deposit ratio 22

Table no. 4.4: Return on Loan & Advance ratio 23

Table no. 4.5: Credit risk ratio 24

 LIST OF FIGURE

Details Page no.

Figure no 4.1: Cash & bank balance to total deposit ratio 19

Figure no 4.2: Loan & Advance to total deposit ratio 21

Figure no 4.3: Total investment to total deposit ratio 22

Figure no 4.4: Return on Loan & Advance ratio 23

Figure no 4.5: Credit risk ratio 24

 ABBREVIATION

AR = Annual Report

BBS = Bachelor of Business Study CB = Commercial Bank

CRR = Cash Reserve Ratio

E.g. = Example
FY = Fiscal Year
Ltd. =Limited
NEPSE = Nepal Stock Exchange No. = Number

NRB = Nepal Rastra Bank

Org. = Organization
Pvt. = Private

RBB = Rastriya Banijya Bank T.U. = Tribhuwan University

WWW = World Wide Web

 CHAPTER - I

INTRODUCTION

1.1 Background of the Study

Nepal is a small country with unique physical setting surrounded by India in South, East and
West and by China in the North. It is a landlocked country. Nepal is one of the least developed
and poorest countries in the world. It has been laying emphasis on the upliftment of its economy.
The process of economic development depends upon various factors. Financial institutions
among others are viewed as catalyst in the process of economic development and growth.
They play an important role in mobilizing saving, and put them into productive use.
Commercial banks are major financial institution, occupying an important place in the
economy of a country because the deposits collected by them provide much needed
capital for the development of industry, trade and commerce and other sectors, thereby
contributing to the economic growth of the nation. However, investment activities are not
without risks. They have to follow sound Principles of investment policy, the rules and
regulations, directives issued by the Central Bank. Investment policy should incorporate
several elements such as regulatory environment, the availability of funds, the selection of risk,
and loan portfolio balance and term structure of the liabilities. The loan provided by
commercial bank is guided by several principles such as length of time, their purpose,
profitability, safety etc. These fundamental principles of commercial bank's investment
policy are needed to be considered while making investment decisions.

1.1.1 Overview of Nepalese Commercial Banks

In Nepal, the modern banking system started after the establishment of Nepal Bank
Limited on 30th Kartik 1994 B.S. Then on 14th Baishakh 2013 B.S. Nepal Rastra Bank was
established as the central bank of Nepal under the central Bank Act 2012 B.S. In the year 2022
B.S. Rastriya Banijya Bank was established under Banijya Bank Act 2020 B.S. This was the first
commercial bank of Nepal.
 Commercial banks can play a vital role directing the economy's development over
time by financing the requirements of trade and industry in the country. They draw the
community's scattered savings into organized sector and allocate among the different
economic activities according to the priorities laid by planning authorities of the country.
The number of commercial banks has been increasing. Since then, various financial
institutions like JVBs, Domestic Commercial Banks, Development Banks, Finance
Companies, Co-operative Banks, Credit Guarantee Corporation, Employee Provident
Funds, National Insurance Corporation, and Nepal stock Exchange have come into
existence to cater the financial needs of the country thereby assisting financial development of
the country.
1.1.2 Introduction of Global IME Bank Ltd

Global IME bank limited is a national level commercial bank promoted by highly prominent
business personalities groups and reputed individuals of the country who have excelled in their
field of business profession with very good integrity and social standings. under the guidance of
reputed board of directors and professional and dynamic management team having extensive
experience with proven track-record in the banking industry, global IME bank is committed to
offer a wide range of banking products and services tailored with the state-of-the-art technology
to meet the unique requirements of all the customer clients and thereby delight them by
exceeding their expectations.

With a shared vision of "The Bank for All", Global IME Bank Team is committed to providing
the quality products and services to its valued customers with utmost courtesy and care. we at
Global Bank believe that delivery products services designed customized to best suit the
customer need through continuous research development and innovation is the foundation of
build-up the trust and enhance the level of confidence between the customer and bank. hence,
Global IME Bank Team pledges its commitment to always endeavor for delivery of innovative
products services to all the customers to best suit their requirements therefore ensuring the
optimum benefit and value addition to the customer as well as to all other stake holders.
1.2 Statement of Problem

As it has been said that there is stiff competition among the banks in the banking sector, so every bank is
trying to perform at its best in order to sustain in the market. Besides achieving a sound financial position
they are also aiming to meet their social obligation by developing trade, industries, agriculture etc. Nepal
is a poor country. Many of its places are still backward and remote. Banks have an important role to play
in the development of these places. Banks by financing the artisans, craftsmen, self-employed person,
entrepreneurs, businessmen, innovators, skilled persons, farmers etc can help to mobilize the unused
resources of these places for the development of the economy. A well-developed banking system provides
a firm and durable foundation for the economic development of the country. Banks have the obligation of
fulfillment of socio-economic objectives. They are called upon to develop special innovative schemes of
credit to help small agriculturists, village and cottage industries, retailers, artisans through loans and
advances at concessional rates and interests.

Banks can only develop the society if they are in good financial position. It means only
those banks can serve the public whose overall financial structure is good. A well overall
performance of the banks will show effective policy, sound managerial ability, mobilization of
funds, development of trade and industry, upliftmant of the people, employee satisfaction,
consumers satisfaction shareholder's satisfaction etc.
1.3 Research Questions

 What are the assets Management efficiency, Profitability and risk position of GLOBAL
IME BANK?

 Is the trends of deposits utilization towards total investment, loans and advances are
satisfactory?

What are effects of the investment decision to the total earning of GLOBAL IME BANK?

1. 4 Objectives of the Study

Commercial Banks are established with the intention of earning profit and economic development
of the country through providing investment facilities. Financial Analysis is tools for
measuring the success of any business performance. All the detail financial information of bank is
shown by the financial analysis. The basic objectives of the study are to examine and evaluate
the investment policy of GLOBAL IME Bank Limited.

 To analyze assets management efficiency, Profitability and risk ratio of the bank.
 To analyze the deposit utilization and its relationship with total investment of the
bank.
 To explore the investment policy of GLOBAL IME BANK.

1.5 Significance of the Study

This study mainly fills a research gap on the study of investment policy of GLOBAL IME
BANK. Definitely, the study will provide a useful feedback to the policy makers of the bank
and also becomes a useful reference for other commercial banks of Nepal and central bank
(NRB) for the formulation of appropriate strategies. This study evaluates the investment
policy of GLOBAL IME BANK and finds its loopholes and significantly contributes to
make the policy sound. A sound investment policy of a bank is such that funds are
distributed on different types of assets with good profitability on the one hand and
provide maximum safety and security to the
depositors and banks on the other hand. Moreover, risk in banking sectors tends to be concentrated
in the loan portfolio. When a bank get into serious financial trouble, its problem usually spring
from significant amount of loans that have become uncollectible due to mismanagement,
illegal manipulation of loan, misguided lending policy or unexpected economic downturn.
Therefore, the bank investment policy must be such that it ensures that it is sound.

. Investment activity is the one of the major activity of any financial institution because only
deposit collection carries no meaning. So, the investment policy of commercial banks
should be in accordance with the spirit of the economic advancement of the people.

1.6 Organization of the Study

The whole study is divided into following five chapters:

Chapter I: First chapter deals with introduction. This includes background of the
study,overview of Nepalese Commercial Banks, Introduction of GLOBAL IME Bank Ltd.,
statement of the problem, research questions, objective of the study, significance of the study
and organization of the study.

Chapter II: Second chapter deals with the review of available literature. It includes review of
related books, journals, articles, and previous unpublished Dissertation etc.

Chapter III: Third chapter explains the research methodology used in the study. It includes
research design, Population and sample size, data collection procedure and method of data
analysis.

Chapter IV: The fourth chapter is the important chapter of the study will be the presentation
and analysis of data of the study.

Chapter V: The last chapter covers the summary of the study, the main conclusion of the
study and offers some recommendations for further improvement.
 CHAPTER- III

RESEARCH METHODOLOGY

This chapter refers to the overall research method followed by us in analyzing the objectives
outlined in 1.4. This study covers quantitative methodology in greater extent and also uses the
descriptive part based on both technical aspects and logical aspects. This research tries to
perform a well-designed quantitative and qualitative research in a very clear and direct way
using both financial and statistical tools.

3.1 Research Design

The study basically follows the descriptive as well as analytical research design. Financial and
statistical tools have been applied to examine facts and descriptive techniques have been
adapted to evaluate investment performance of CBs. Besides these, some simple questions
have been asked to the concerned personnel in the course of visiting the bank. This report also
contains other primary data. This report is mainly based on secondary data, which include
annual reports published by the concerned banks and other publications related to the concerned
topic.

3.2 Population and Sample

Total population of the study includes all 28 banks under operation and registered within the
guidelines of Nepal Rastra Bank. Due to the time constraint, Global IME Bank Ltd. has been
taken as sample for the study. The bank under study is selected under convenient sampling.

3.3 Type of Data

The data used in the study is mainly secondary data. Various data and information are collected
from the economic journals, periodicals, bulletins, magazines and other published &
unpublished reports and documents from various sources.
3.4 Data Collection Procedure
To prepare this field work data collection method is a basic work. Such data are taken from two ways
while preparing this field work report.

They are :

a. Primary Data :

The data which is first time collected for an investigation by an investigation or his/her agent or
research organization is known as primary data. It is original in character and just like raw material.

Method of collection Primary Data are:

 Direct personal interview.

 Indirect oral interview
 Observation method
 Mailed questionnaire method
 Information from local correspondents
b. Secondary Data

The data which is not originally collected but obtained form published and unpublished sources
are called secondary data. These data are not original in character. The sources helping as secondary data
for this field work reports are the annual book published by Nepal SBI Bank office record, Journals,
bulletins and magazines etc.

3.5 Method of Analysis

Various financial, accounting and statistical tools are used to make the analysis more effective,
convenience, reliable and authentic. The analysis of data is done according to the pattern of
data available because of limited time and resources. Some accounting tools such as
ratio analysis and trend analysis have also been used for financial analysis. The various tools
applied in this study have been briefly presented as under:

3.5.1 Financial Tools

Financial tools are used to examine the financial strength and weaknesses of bank in this
study.

Ratio Analysis

Ratio analysis is the relationship between two accounting figures expressed

mathematically. It is computed by dividing one item of relationship with the other. Management
itself can use these parameters to improve the organization's performance. The
knowledge regarding strengths and weakness is necessary
forexploiting maximum benefits and to repair the weaknesses to meet the challenges. The
financial ratios, which are calculated and analyzed in this study, are as follows:

A) Liquidity Ratios

Liquidity ratios measure the firm's ability to meet current obligations. It reflects the short-
term financial strength of the business. It is the measurement of speed with which a bank's
assets can be converted into cash to meet deposit withdrawal and other current obligations. A
bank should ensure that it does not suffer from lack of liquidity and also it does not have
excess liquidity. Both condition of liquidity are not in favor of the banks. The following ratios
are evaluated under liquidity ratios.

Cash and Bank Balance to Total Deposit Ratio (Cash Reserve Ratio)

Cash and Bank Balances are the most liquid current assets. This ratio measures the percentage
of most liquid fund with the bank to make immediate payment to depositors. This ratio
is calculated by dividing the cash and bank balance by the amount of total deposits.
Mathematically, it is expressed as,

Cash Reserve Ratio = Cash and Bank Balance /Total Deposit

Hence, cash and bank balance includes cash on hand, foreign cash, cheque and other cash
items, balance with domestic and abroad banks whereas the total deposits include current
deposits, saving deposits, fixed deposits, money at call and short-term notice and other
deposits.

B) Assets Management Ratio (Activity Ratios)

Activity ratios are employed to evaluate the efficiency with which the firm manages
and utilizes its assets. Assets management ratio measures how efficiently the bank manages its
resources. The following ratios are used under asset management ratio.

i) Loan and Advances to total Deposit Ratio

This ratio is calculated to find out that which banks are able to utilize their total deposits
on loans and advances for profit generating purpose. This ratio can be obtained by dividing
loan and advances by total deposits, which can be stated as,

Loan and Advances to Total Deposit Ratios = Loan and Advances /Total Deposit
 ii) Total Investment to Total Deposit Ratio

This ratio implies the utilization of firms deposit invested in government securities and share &
debentures of other companies and bank. This ratio can be calculated by dividing total investment
by total deposit. It can be stated as,

Total Investment to Total Deposit Ratio = Total Investment/ Total Deposit.

C) Profitability Ratios

Profit is the difference between revenues and expenses over a period of time. A company
should earn profit to survive and grow over a long period of time. Therefore, the financial
manager should continuously evaluate the efficiency of its company in terms of profits. The
profitability ratios are calculated to measure the operating efficiency of a company. It is the
indicator of the financial performance of any institution. This implies that higher the
profitability ratio, better the financial performance of the bank and vice versa. The following
ratio is taken into account under this heading.

Return on Loan & Advance Ratio

This ratio indicates how efficiently the bank has employed its resources in the form of loan and
advances. This ratio is computed by dividing net profit by loan and advances. This ratio can
be expressed as, Return on Loan & Advances Ratio = Net Profit/ Loan & Advances.

D) Risk Ratios

Risk taking is the prime business of banks' investment management. It increases effectiveness
and profitability of the bank. These ratios indicate the amount of risk associated with the various
banking operations, which ultimately influences the banks' investment policy. The
following ratio is taken into account under this heading.
Credit Risk Ratio

This ratio measures the possibility that loan will not be repaid or the investment will deteriorate in
quality or result in loss to the bank. By definition, it is expressed as the percentage of Total Loan &
Advances to Total Assets. Mathematically it is presented as,

Credit Risk Ratio = Total Loan & Advances/ Total Assets

3.5.2 Statistical Tools

a) Trend Analysis

This topic analyzes the trend of loan and advances to total deposit ratio and trend of total
investment to total deposit ratio of Global IME Bank from 2012\13 to 2016\2017 and. Under this
topic following sub- topic have been presented.

i) Trend analysis of loan and advances to total deposit ratio.

ii)Trend analysis of total investment to total deposit ratio.

3.6 Limitations of the Study

There are some limitations while undergoing this study. The main limitation of the study will
be:

 The study is mainly based on secondary data collected from the bank.
 Being a student time and resource of study are to some extent limited.
 The study covers only last five years data.
 Out of numerous factors, only those factors related to investment policy are considered.

 Study has been limited to the investment policy of GLOBAL IME BANK among all
the 28 Commercial Banks.
 CHAPTER — IV

DATA PRESENTATION AND ANALYSIS

In this chapter an attempt has been made to analyze and evaluate major financial items, which
have an impact on investment, management and fund mobilization of Global IME Bank. A
number of financial ratios that are crucial in evaluating the fund mobilization system of
commercial banks have been calculated and analyzed in this chapter. After this, the investment
policy of the banks has been explored.

4.1 Financial Analysis

We have tried to analyze and evaluate those major financial items, which are mainly related to the
investment, management and fund mobilization of Global IME Bank. The ratios are designed and
calculated to highlight the relationship between financial items and figures. It is a kind of
mathematical procedure to derive relationship between two or more variables. The important
financial ratios, which are to be calculated for this study, are as follows:

4.1.1 Liquidity Ratio

This ratio measures the ability of the firm to meet its current obligations. A commercial
bank must maintain its satisfactory liquidity position to meet the credit need of the community, to
meet demands for deposits, withdraws, pay maturity obligation in time and convert non-cash
assets into cash to satisfy immediate needs without loss to bank and consequent impact in long run
profit. In fact, it analyzes liquidity needs, which is helpful for the preparation of cash budget and
fund flow statement. The following ratios are evaluated and interpreted under liquidity ratio:

I) Cash and Bank Balance to Total Deposit Ratio (CRR Ratio)

Cash and bank balance are the most liquid assets. This ratio measures the ability of the bank to
meet the unanticipated cash and all types of deposits. We have, Cash and Bank Balance to Total
Deposit Ratio = Cash and Bank Balance /Total Deposit. Where,
Cash and bank balance includes cash on hand, foreign cash, cheque and other cash items, balance
with domestic and abroad banks whereas the total deposits include current deposits, saving
deposits, fixed deposits, money at call and short-term notice and other deposits.

Table 4.1 Cash and Bank Balance to Total Deposit Ratio (%)

S. N. Fiscal Year Cash and bank balance Total deposit Ratio

(in million) (in million)
1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

Source: Annual Report of GLOBAL IME BANK

Figure 4.1 Cash and Bank Balance to Total Deposit Ratio (%)
Above table and trend line exhibits that in FY 2013/14, Global IME Bank had higher cash & bank
balance to total deposit ratio of 1.95%. In FY 2016/17 this ratio was lower (i.e. 1.41%). It means the
bank has highest investment of that FY.

Ratio
2.5

2
1.5
1 --Ratio

0.5

2012/13 2013/14 2014/15 2015/16 2016/17

 4.1.2 Asset Management Ratios (Activity Ratio)

Asset management ratio measures the efficiency of the bank to manage its asset in profitable and

satisfactory sector. This indicates the ability of the bank to utilize their available resources. Following

ratios are discussed under this topic.

I) Loan and advances to Total Deposit Ratio

It shows the relationship between loans and advances to total deposit. This ratio measures the

extent to which the banks are successful to mobilize their total deposit on loan and advances. We

have, Loan and Advances to Total Deposit Ratio = Loan and Advances/ Total Deposit. Where,

loan and advances include loans, advances, cash credit, local and foreign bill purchased and

discount. Total deposit include saving, fixed current call at short deposit and others.

Table 4.2 Loan and Advances to Total Deposit Ratio (%)

S.N. Fiscal year Loan and Advance Total deposit Ratio

(in million) (in million)
1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

Source: Annual Report of GLOBAL IME BANK

Figure 4.2 Loan and Advances to Total Deposit Ratio (%)

Ratio

8
0
7
0
6 -----Ratio
0
5 I
0
4
2012/13 2013/14 2014/15 2015/16 2016/17

Above

table and trend line exhibits that in FY 2014/15; the Global IME Bank had lower Loan & . Advance to

Total Deposit ratio of 62.84%. In FY 2016/17, Loan & Advance to Total Deposit ratio is higher of

75.59%. It means Global IME Bank is able to utilize its total deposit in investing in loan & advance

in FY 2016/17.

ii) Total Investment to Total Deposit Ratio

A commercial bank mobilizes its deposit by investing its fund in different securities issued by

government and other financial or non-financial companies. This ratio measures the extent to

which the banks are able to mobilize their deposit on investment in various securities. We

have, Total Investment to Total Depos. io = Total Investment/ Total Deposit. Where, total

investment includes investment on government securities, investment on debenture and bonds,

shares in subsidiary companies, shares in other companies and other investments.

Table 4.3 Total Investment to Total Deposit Ratio (%)

S.N. Fiscal year Total investment Total deposit Ratio

( in million) (in million)
1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

Source: Annual Report of GLOBAL IME BANK

Figure 4.3 Total Investment to Total Deposit Ratio (%)

Ratio

3
5
3
0
—Ratio
2
5
2
0
1 2012/13 2013/14 2014/15 2015/16 2016/17

Above table and trend line exhibits that in FY 2013/14; the Global IME Bank had lower Total

investment to Total Deposit Ratio of 17.53%. In FY 2015/16, the Global IME Bank had higher

total investment to total deposit ratio of 32.74%. It means the bank had highest investment with

respect to total deposit in that fiscal year.

Table 4.4 Return on loan and advance ratio(%)

S.N. Fiscal year Net profit Loan and Advance Ratio

(in million) (in million)
1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

Source: Annual Report of GLOBAL IME BANK

Figure 4.4 Return on loan and advance ratio(%)

Ratio
6543

—Ratio

2
1

0 ___________

2012/13 2013/14 2014/15 2015/16 2016/17

Above table and trend line exhibits that in FY 2014/15; the Global IME Bank had lower return
on loan and advance ratio of 3.2%. In FY 2012/13, the Global IME Bank had higher return on
loan and advance ratio of 4.78%. It means the bank was able to earn higher return on loan and
advance in that fiscal year. In fiscal year 2016/17, the Global IME Bank has higher return on
loan and advance ratio of 4.02% than that of fiscal year 2015/16 of 3.70%.
 Table 4.5 Credit risk ratio(%)

S.N. Fiscal year Loan and Advance Total Assets Ratio

(in million) (in millions)
1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

Source: Annual Report of GLOBAL IME BANK

Figure 4.5 Credit risk ratio(%)

Ratio
6
6
6

6
2
6
0
5 — Ratio
8
5
6
5
4
5
2
2012/13 2013/14 2014/15 2015/16 2016/17

Above table and trend line exhibits that in FY 2014/15, the Global IME Bank had lower credit risk

ratio of 56.47%. In fiscal year 2016/17, the bank has higher credit risk ratio of 64.05%. After the

fiscal year 2014/15, credit risk ratio of the Global IME Bank is in increasing trend.
4.2 Major Findings

On the basis of above data presentation and analysis, following findings are derived:

 Global IME Bank has provided different facilities such as ABBS, SMS-banking,

ATM card, traveler cheque issuance, Locker facility, health and accidental insurance,

remittance; call account, internet-banking, etc. to its customers.

 In FY 2Q1k17, cash and bank balance to total deposit ratio is lower than FY

2015/16 which implies that, Global IME Bank is able to utilize its total deposit.

 In FY 2014/15 Loan and advance to total deposit ratio is lower and in FY 2016/17

this ratio is higher which implies that Global IME Bank successfully mobilize its

deposit in loan and advance.

 In FY 2013/14 total investment to total deposit ratio is lower and in FY 2015/16

this ratio is higher which implies that Global IME Bank had highest investment of

their total deposit.

 In FY 2014/15 return on loan and advance ratio is lower and in FY 2012/13 this ratio

is higher which implies that Global IME Bank was able to earn maximum return from

loan and advance in FY 2012/13.

 In FY 2014/15, credit risk ratio is lower and in FY 2016/17this ratio is higher which

implies that Global IME Bank invest more in loan and advance to earn higher return

in FY 2016/17.
 CHAPTER-V

SUMMARY, CONCLUSION AND RECOMMENDATION

In this chapter we present the summary and conclusions flown form the analysis in the preceding
chapter. Then, based on the finding and our conclusion we recommend certain measures for
further improvement. With the help of some important financial as well as statistical tools, the
researcher has tried to make a comparative analysis of various investment policies of the
concerned commercial banks. After completing the basic analysis required for the study, the
researcher has tried to point out some problems and errors and also has some suggestions for
further improvement. This study may be helpful for the management of concerned bank to initiate
the action and achieve the desired result.

5.1 Summary

The objective of the commercial banks is always to earn more profit by investing or granting loan
& advances to the profitable, secured and marketable sectors. But they should be careful while
performing the credit creation function; the banks should never invest its funds in those
securities, which are of fluctuating nature. And, commercial banks must follow the rules and
regulations as well as different directions issued by central bank and ministry of finance while
mobilizing the funds. For the purpose of the present study one commercial bank namely Global
IME was taken. Nepal encourages foreign investment as joint venture operations with Nepalese
investor's or in certain circumstances as fully owned subsidiary just because of government's
encouragement for joint venture operations. GLOBAL IME was established in the year 1984
A.D. GLOBAL IME has access to the worldwide through correspondent network for letter of
credit and any other banking services anywhere in the world. Within a short span of time
GLOBAL IME has expanded its activities. In these few years of successful operation it has
always aimed to adopt the policy of healthy competition and proactive management
through which it believe to provide best service and get positive result and succeed to do so.
5.2 Conclusion

The present study has been undertaken to examine and evaluate the financial performance
of GLOBAL IME as well as investment policy of Global IME Bank. The financial statements of
five years i.e. from fiscal year 2012/13 to fiscal year 2016/17 have been examined for the purpose
of the study. The study has resorted mainly to secondary data that has been first processed
and analyzed comparatively. This study is exploratory as well as analytical sometimes.

In comparison with fiscal year 2015/16 the total deposit ratio of Global IME Bank in fiscal year
2016/17 is increased. This might be due to the reason of good safe and security of the country.
We can still hope that in near future stabilization may be quite good for the bank.

Securities issued by government are considered to be free of risk of default that's why they yield
the lowest interest rates of any securities of a particular maturity. But NABILbank has prove
that it is the safe area of investment regarding safely risk and interest and is trying to make
people short their priority from government securities.

Branches existing in some limited areas will not enable a bank to boost up its campaign of
deposit mobilization and credit disbursement as desired. Therefore Global IME Bank is
recommended to open further new branches at certain different places in future.

5.3 Recommendation

After completing the research entitled "Investment policy of commercial bank of Nepal" and
presenting, analyzing, concluding the data and information, some recommendation are
presented below:

 The investment position of Global IME Bank out of its total deposit is not
satisfactory. The study shows minimum of total deposit is used for investment. So, it is
recommended that the bank should give priority to invest in profitable investment
opportunity.
 NAB IL Bank has provided more loan and advance from its fixed and total deposit. So, bank

should review its loan policy.

 Global IME Bank should improve overall efficiency by investing in more returnable

sectors i.e. risky area through proper risk analysis.

 It will be better for Global IME Bank to open branches in other cities and rural areas in

order to find profitable opportunities.

 REFERENCES

Adhikari, D.R. and Pandey, D.L.(2067) Anusandhan Paddati. Kathmandu, Sunrise publication (P) Ltd.

Joshi, P.R.(2064) Anusandhan Paddati. Kathmandu, Buddha Academic Enterprises.

Kent, Y.(1996). A Bank is an Organization. New York: David Mckay co.

Poudyel R.B. (2073). Foundation of Financial Market and Institutions. Kathmandu, Asmita Publications.

Journal and website

Annual Report of Global IME Bank (2019-2020)

Annual Report of Global IME Bank (2018-2019)

Annual Report of Global IME Bank (2017-2018)

Annual Report of Global IME Bank (2016-2017)

Annual Report of Global IME Bank (2015-2016)

www. globalimebank.com