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Background of The Study
Background of The Study
Growing from strength to strength, NMB managed to upgrade itself to a commercial bank in
12 years. It is the first finance company in Nepal to become a commercial bank. NMB is a
public limited company with NPR 1 billion in paid-up capital including 25% of the shares held
by the general public.
Ownership structure of the company
Individual promoters - 48.8%
Institutional promoters- 11.2%
Foreign investors - 13.6%
Public shareholders - 25%
Vision of NMB Bank is to become the leading player in the financial sector in the country and
to be a better bank. NMB Bank graduated as a commercial bank has successfully gained the
position in the market and aims to enhance the network extensively by providing access to
financial services to as many people as it is possible. NMB strives to remain close to its
customer and understand their needs. Advisory services attached to the packaging of products
and services have been the focus of the Company in servicing its clientele. Its strategic plan
guides the building of relationships that deliver enduring value for customers, shareholders,
staff and communities.
Joshi, D.(2002), “A study on Commercial banks of Nepal with Reference to Financial Analysis
of Rastriya Banjiya Bank” is the study conducted to direct the financial position of the bank and
recommended the essential suggestion to that bank.
Adhakari (2008), in his thesis paper, "A Study of Commercial Banks Deposit and Its
Utilization" got to notice that the percentage of the total credit supplied by commercial banks
within five years period (2000-2007) is more or less same while in the collection of deposits.
The percentage has increased too much. Thus, the increasing gap between collection and
utilization shows economic requirement and to contribute the economic upliftment of the
country, commercial bank should affair sector wise and planned policy, he suggested.
1.6 Research Methodology
Research is effort of search new fact, knowledge and principle in scientific ways. To generate
knowledge, investigation or enquiry in the phenomenon of the explored or unexplored area
necessitated the research work. The research requires different methodologies, tools, techniques,
etc. This chapter attempts to explain the methodology of the research undertaken. This chapter
contains research design, source of data, population and examples, method of data collection.
Research Design
"Research design is the plan, structure and strategy of investigation conceived so as to obtain
answer to research question and control variance. The plan means now researcher investigator
collects the data structure in term controlling the data in term of money and time. "We can say
that the research design is specific action of methods and procedures for acquiring the
information needed. It is the plan, structure and strategy of investigation conceived so as to
obtain answer to research questions and to control; variances. The main objective of research
design is to make analysis of financial performance of commercial banks with reference to NMB
Bank Ltd.
Financial Tools
Financial tools ar those which are used for the analysis and interpretation of financial data. These
tools can be used to get the prescribe knowledge of business which in turn are fruitful in
exploring the strength and weakness of the financial policies and strategies. For the sake of
analysis, various financial tools were used. In order to meet the purpose of study, following
financial tools have been used.
Ratio Analysis
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Ratio analysis is a widely used tool of financial analysis. A large number of ratios can be
generated from the components of profit and loss account and balance sheet. It is a powerful tool
of financial analysis. It helps to summarize the large quantities of financial data and to make
quantitative judgments about the firm’s financial performance. They are sound reasons for
selecting different kinds of ratios for different types of situations. For this study, ratios are
categorized into the following major headings:
A. Liquidity Ratios
Liquidity refers to the ability of a firm to meet its short- term or current obligations. So liquidity
ratios are used to measure the ability of a firm to meet its short-term obligations and from them
the present cash solvency as well as ability to remain solvent in the event of adversities of the
same can be examined
The types of liquidity used in this study are as follows:
i. Current Ratio
ii) Cash and Bank Balance to Current Asset Ratio
iii) Cash and Bank alance to Total Deposit Ratio(Cash Reserve Ratio)
Diagrammatic and Graphical Representation
Diagrams and graph are visual aids that give a bird’s eye view of a given set of numerical data.
They present the data in simple and readily comprehensive form. Diagrams are primarily used
for comparative studies and can’t be used to study the relationship between the variable under
study. That is done through graphs.
1.7 Limitation of the study
The study tries to find out the strategy and techniques of cash management of NMB. The
researcher will try to cover most of the information regarding the topic, but still there are certain
limitations. The limitation of the study is as follows:
Report covers a period of four fiscal years data due to the time constraint.
The study is based to know the techniques of cash management of NMB bank did not
disclose much.
Study is based on secondary data.
Time constraints are one of the main limitations of the study because it must be
submitted within stipulated period of time.