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1.1 Background of the study:

Bank is a financial institution, which deals with money by accepting various types of
deposits, disbursing loan and rendering various types of financial services. It is the
intermediary between the deficit and surplus of the financial resources. Banking when
properly organized, aids and facilitates growth on trade and considered not as dealers
in money but as the leader of development. Bank are not just the storehouse of the
country's wealth but are the reservoirs of resources necessary for economic
development. Sound-banking system is the crucial means to accelerate the
development of a country by strengthening the economic condition in today’s
globalized economy of the twenty-first century. This requires the well-developed
corporate culture, proper management of risk and return and healthy competitive
environment that facilitate mobilization of small saving in the commercial and
industrial sectors that will enhance the economic and social welfare of a country.
In Nepal, banking sector started in 1937 A.D. with the establishment of Nepal Bank
Ltd., Nepal Rastra Bank, and the central bank of Nepal, established in 1957 A.D.
followed by RastriyaBanijya Bank in 1966 A.D. As Nepalese government took liberal
economic policy, joint venture banks started to operate since 1982 A.D. with the
establishment of Nepal Arab Bank Ltd. Till December 2010; thirty-two commercial
banks have been operating in the country.

1.2 Profile of the organization:

Parbhu Bank was born in April 2002 as the 16th commercial bank in Nepal. In
2002 Parbhu Bank merged with HISEF Finance Limited, a first generation financial
company which was the first merger in the Nepali corporate history.Parbhu 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).

Parbhu Bank is a technologically driven progressive Bank with strong risk and
corporate governance foundations.Parbhu is known for our innovation and claim to many
“firsts” in the Nepalese financial market.Parbhu have the best asset quality among all
financial institutions in the country and our technology has been rated “Highly Secure”
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by an independent internationally accredited information system auditors.Parbhu ’s award

winning Annual Reports has set the standards for quality, presentation and disclosure for
the Nepalese corporate sector to follow since 2005.Parbhu Bank promotes a separate life
insurance company – Prime Life Insurance Limited which came into operation in 2009.

Shareholding Pattern 
(A) Local ownership 100%
1. Promoters 30.39%
2. General public 35.53%
3. Others 32 .07%
1.3 Objectives of the study:
Following are the objectives of this study:
 To examine and analyze the total loans and advances to total deposit.
 To examine the Non- performing loan to total loans and advances.
 To examine and analyze loan loss provision to total loans and advances
ratio.
1.4 Rationale of the study:
a. It is importance to the shareholders.
b. It is importance to the management bodies of the bank for the evaluation of the
performance of the bank.
c. It is importance to the outsiders which the customers, financing agencies, stock
exchange etc.
1.5 Review:
Lamsal (2002 ), in his Master’s thesis, “Credit Practices: A Study on NABIL Bank
Ltd., SCB Nepal Ltd. and Himalayan Bank Ltd.”, has the major objective of examining
the credit management in the selected banks. The specific objectives of the study are; to
determine the liquidity position, the impact of deposit in liquidity and its effect on credit
practices, to measure the bank's lending strength, to analyze the portfolio behavior of
credit and measure the ratio and volume of lending made in agriculture, priority and
productive sector, to measure the credit performances in quality, efficiency and its
contribution in total income.
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Paudel (2005), in his Master’s thesis, “Credit Policy of Commercial Banks in

Nepal”,has the objective to provide the credit practices in NIBL and SBI bank. The
specific objectives are; to examine the liquidity and assets management of NIBL and SBI,
to evaluate the investment policy of NIBL and SBI, to study the growth ratio of loan and
advances, to analyze the investment to total deposit and net profit NIBL and SBI.

His research findings are; both banks current assets have exceeded the current liabilities
therefore the ratio is considered satisfactory
1.5 Methods of the study:
Following methods is used for this study:
a. Total Loans & Advances to Total Deposit
b. Non-Performing Loan to Total Loans and Advances Ratio
c. Non-Performing Loan to Loan Loss Provision Ratio
d. Loan Loss Provision to Total Loans and Advances Ratio
e. Return on Loans and Advances Ratio

1.7 Limitations of the study:

 This study is concentrate only on the factors that are related with credit
practices.
 This study has focused on the credit behavior onlyParbhu Bank.
 Some of the statistical as well as financial tools of comparison & analysis
shall be used in this study.
1.8 Organization of the study:

Research report can be prepared in different ways. Researcher writes the styles of
arrangement of chapters in the thesis. This report is written following ways:
a. Introduction b. Results and Analysis c. Summary and Conclusion

First unit of the research report the background of the topic Is written. Introduction
creates interest over research issue or subject. This unit consists of background of the
study, purpose of the study, objectives of the study, significance of the study,
limitations of the study, organization of the study
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Second unit is used to present data in a systematic and understandable way like table,
chart, figure, diagram, etc. Such presented data are analyzed and interpreted using
various statistical, financial and mathematical tools.
Third unit of the research consist summary and conclusion. This part of the research
report shows the data findings in a briefly, logical and rational way to the problem
area research objectives and research questions within the framework presented in
unit 1. In concluding section, researcher should briefly summarize his major findings.