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CHAPTER I
INTRODUCTION
1.1 Background:
This study is related to credit creation of Kumari Bank Ltd. because the title of this field
work report is related to Credit Creation. Credit Creation is one of most important function
of commercial banks. Without credit creation, there is not possible to operate an any kind
of commercial bank.
Kumari Bank is a joint venture bank of Nepalese investors and State Bank of India. This
bank is one of the financial companies in Nepal with the largest number of shareholders.
There are about commercial banks and financial institutions in Nepal, which are actually
in business. There is growing competition among banks and financial institutions which
helps in guaranting business and increase efficiency of each and everyone.
Bank business is totally customer oriented. There are so many functions of commercial
bank, but the most important function is to create credit. If which bank can not create
credit, that bank can not provide any kind of service to customers. So Banking
organizations focus entirely on Credit Creation, as this is one of the factors, which
influence the growth of market share. So I was assigned with this study, titled “A case
study on Credit Creation of Kumari Bank Ltd.”.
1.2 Profile of Kumari Bank Ltd
Kumari Bank is established in 2050 B.S. to aiming provide banking services to the people.
Kumari Bank provides various services concerned with deposits, remittances, loans and
advances, sales and encasement of foreign currencies, traveler’s checks etc. Kumari Bank
Ltd. Is the first leading joint venture of an Indian Bank in Nepal. The objectives of Kumari
Bank is to provide a wide range of international banking services to facilitate Nepal’s
trade and tourists and to serve its clients, offering a reliable, cost-effective and
developmental banking services in Nepal.
The mission of Kumari Bank is to play an important role in facilitating Indo-Nepal trade,
which is growing, with the support of large network of branches of SBI in India.
The Kumari Bank Ltd. is a joint venture of Nepalese investors and State Bank of India,
managed by State Bank of India through a team of managerial staff including the
Managing Director deputed under the Technical Services Agreement.
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1.3 Objectives:
This study was carried out to inform to all customer and all people that how a bank create
credit and mange created credit, what techniques and methods is use to create credit and
also find out the limitations of credit creation.
The objectives behind the study as follows:
 To help the organization to have better insights in improving the techniques to
create credit.
 To analyze the credit creation of Kumari bank ltd.

1.4 Rationale

Nepal is a landlocked and under developed country, where limited resources are available

to develop the business. The infrastructures developed in the country are not promising for

the growth of business. In this backdrop, the businessmen of the countries like Nepal have

to be more careful while doing business. Some of the decisions in respect to the business

have to be taken which may change the overall situation of the business. The competition

has also made the business very tough.

Kumari Bank is most important and inevitable material of construction sector, which is

used in large volume. A huge fund of the country has been going out of the country for the

import of Kumari Bank. There were a few governments owned companies in the country

but they were unable to meet the national consumption. For last few years, some of the

private owned companies have been established and some of outgoing fund is block..

Thus, some of additional new projects for this sector is to be established, for which a

proper assessment to be made.

Realizing all above, a study on this sector, which provides appropriate information and

teaches its pros and cons etc, is most important. The overall feasibility study is required.
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1.5 Review
Review of literature is a way to discover what other research studies have been conducted
in the one's chosen field by other researchers and their conclusion. It is the way of
discovering what other research in the area of our problem have uncovered. And also
various newspaper and other books related to subject are too be reviewed and analyzed.
Fieldwork Procedure
This study is derived into three main parts: firstly, observation of process and procedures
of Kumari Bank Ltd. The collection of secondary data's like organization prospectors,
brochures reports, publications of KBL reports etc. Secondly, attached with the
organization for two weeks and study about the credit creation for Kumari Bank. In the
other hand to gather the ideas and information of Kumari Bank staff and customers
through interviews and questionnaires respectively. Thirdly, analyze those data's and
information and present them in a report.
1.6 Methods:

This study is done in Kumari Bank Ltd. especially in corporate office of Kumari Bank Ltd.
Hattisar, Kathmandu. This study is carried out the credit creation of whole bank. In this
study, the tools is used to collect data's are: Primary data and Secondary data.
Primary Data
Questionnaires were developed to gather primary data. Those questionnaires were
designed for the staffs of Kumari Bank and some customers. Questionnaires were
structured into a closed as well as open questions for collecting specified information. One
of the staffs of Kumari Bank, Mr. Deepak Kumar Shrestha was my favorite person who
helped me to prepare whole report of Kumari Bank. He is involved in corporate office of
Kumari Bank Ltd. Hattisar, Kathmandu. So, I distributed the questionnaires in the
corporate office of Kumari Bank by him and another Main Branch of Kumari Bank
Durbar Marg. through orally. The study also included and observation of the procedure of
the Kumari Bank, where staff of two different departments were interviewed with
unstructured questions. Statistical tools like arithmetic mean, percentage, are used to
present the large data in a single figure. Similarly, pie-chart, horizontal and vertical bar
diagrams are used for graphical presentation of data.
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Secondary Data
We could study two kinds of secondary data. Internal as well as external. In internal
secondary data, there were organization is prospectus and brochures, report prepared by
the department on different issues, workshop reports by staffs, periodicals published by
different branch offices of Kumari Bank Ltd. External secondary data were collected from
the different branch offices working to provide services to customers, who supports
customers to take services and advantages from the recognized bank.

1.7 Limitation:

Deposit collection is one of the main problems of under-developed county like Nepal. Due
to various difficulties or even ignorance of the people of under-developed countries such
resources have not been utilized such as by hoarding. Hoarding, the bad habit of the
society, is one of the main problems. So, bank like Kumari Bank Ltd. plays vital role for
accepting and, in turn, mobilizing the resources and removing the habit of hoarding in
pursue of rapid economic growth, and make them habit of banking. The scattered
resources are collected in one bulk and mobilizing them in production purpose and even
for providing other services to its member and to the society. The main function of the
Kumari Bank Ltd is to:
1.8 Organization of the study
This study has been organized in the prescribed pattern with the guidelines of the
concerned teacher. In the given format the study has been organized.
Chapter 1: Introduction
 Background
 Profile of the organization event activities
 Objective of the study
 Rational
 Review of Literature
 Limitation of the study
Chapter 2: Data Presentation and Analysis
Chapter 3: Summary and Conclusion
 Summary
 Conclusion
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