ANALYSIS OF FIXED DEPOSIT OF

SIDDHARTHA BANK LTD.

BY
Dipesh Prajapati

A Summer Project Report Submitted to

Faculty of Management, Tribhuvan University
in partial fulfilment of requirements for the degree of
Bachelor of Business Administration

at the
Thakur Ram Multiple Campus
Tribhuvan University

Birgunj
February, 2022
 STUDENTS DECLARATION

This is to certify that I have completed the summer project entitled “ANALYSIS OF
FIXED DEPOSIT OF SIDDHARTHA BANK LIMITED” under the guidance of
“Hiralal Yadav” in partial fulfilment of the requirement for the degree of Bachelor of
Business Administration at Faculty of Management, Tribhuvan University. This is my
original work and I haven’t submitted it earlier elsewhere.

Date : Signature :
Name :
 CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled “Analysis of Fixed deposit of Siddhartha
Bank Ltd.” is an academic work done by “Dipesh Prajapti” submitted in the partial
fulfilment of the requirements for the degree of Bachelor of Business Administration at
Faculty of Management, Tribhuvan University under my guidance and supervision. To the
best of my knowledge, the Information presented by him in the summer project report has
not been Submitted earlier.

..........................................
Signature of the supervisor
Name
Designation
Date
 ACKNOWLEDGEMENT

This summer project report entitled “Analysis of Fixed deposit of Siddhartha Bank
Limited” has been prepared in partial fulfilment for the Degree of Bachelor of Business
Administration under the course designed by Faculty of Management, Tribhuvan
University. This study is based on the Prescribed format involving the use of financial
ratios in banking sector.
At the time of preparing this project report, I have discussed with various Personalities. So l
would like to say thanks to all whose works & Ideas helped me In conducting the study.
Sincerely, I would like to pay my sincere gratitude to Report supervisor “Hiralal Yadav” of
Thakur Ram Multiple Campus who Guided through research work with providing valuable
suggestions, supports and Supervision.
Finally, I would like to offer my profound gratitude to my family members, my Friend,
colleagues, well wishers for their encouragement and support during the Entire period of
my study.
 Executive summary
Siddharth bank limited is the first commercial bank to initiate banking services from the
western region of the country, which started its service from October 2000 and proved as a
milestone in the development of banking sector of Nepal. The commercial banks though are
profit oriented and invest the resources in those sectors from where they could gain
maximum profit, but Siddhartha bank is initiated not only with profit oriented, the deposit
collected from the costumer’s savings are the main source of the required funds of the bank.
SBL has been successful in collecting adequate deposits providing effective and reasonable
interest rate on them.
The fieldwork examines the position of SBL past 6 years records have been taken for this
case study. The resources of data are both primary and secondary. Individual interviews of
bank personnel are taken as primary source of data. The fixed deposit also shows the
decrement and increment in the fiscal year 2073/74 B.S. to 2077/78 B.S. The mean
percentage of investment is ....%. From all the report study it is found that the bank has
been able to maintain its CRR and if it is taken into consideration from profitability point of
view, we can say that CRRA shouldn’t be high. The bank has maintained CRR Upton ....%
in the fiscal year ...... Year shows that many collected funds have been remained idle which
if invested would generate profit. Therefore, bank should maintain CRR nearly ... % not
more than that .
 CHAPTER I
INTRODUCTION

1.1 Context information

Fixed deposit means a deposit in local currency accepted in under the condition to repay on
Completion of stipulate the period. Fixed deposits are the most rigid in terms of
withdrawals. The Deposit remains with the bank for the fixed time and can’t be withdrawn
unless the time matures. The type of deposit is also known as time deposit. The rate of
interest in fixed deposit is comparatively higher and differs according to the duration of
deposit period but at the renewal new interest rate as well as other terms and condition may
be altered.
People who want higher consideration from their surplus money don’t want to invest in
shares and debenture and are scared of business uncertainties; generally open fixed deposit
account. There should be current account or saving account existing previously in the bank
to open the fixed deposit account. Interest will be calculated and credited to the depositor’s
current or saving account automatically on timely basis. Principal amount of deposit will be
automatically credited to the depositor’s current or saving account on final maturity. The
fixed deposit account holder is provided only with a fixed deposit receipt and does not get
passbook or cheque book. Fixed deposits are the principal source of working capital for
loan and advances and investments.
Bank provides slightly higher interest on fixed or time deposit because they are certain that
the amount of deposit is not oblige to repay or demand of depositor’s like saving deposits.
If deposits are need money before defined time period, they will have to take loan by
submitting the deposit and be obliged to pay higher interest on loan then the interest
received on time deposit.

1.1.1 Meaning and definition of bank

A bank is a financial dealing with the money which plays vital role in the field of economy.
So, it is known as the backbone of the strong economy. In the present days, various types of
bank are opened, for instance joint venture commercial bank such as Siddhartha bank
limited, Nabil bank limited, modern banks are more advanced than the ancient bank. This is
because of the growth in population. Changes occurred in the industrial field and trade, the
beginning of the competitive age and change in people’s ideology and due to the
dependence on each other.
In fact, present banking system is the result of development of many centuries. Generally,
an institution established by law, which deals with money the function of accepting deposit
providing loans, and other intermediates.
1.1.2 Meaning and concept of deposit
People eam money spends it for various purposes and the remaining other difference
between the income and expenditure is the savings. One can use that portion of income in
various ways like investing in securities, lending to others, keeping it in the safe lockers or
simply depositing it in the banks. Deposits are the excess money of the individual’s
deposited in the banks and financial institutions in different types of accounts. Commercial
Bank act defines deposits 'as the amount deposited in current, saving or fixed accounts of a
bank or financial institution. Deposits are the starting point of banking transaction. Deposits
are the source of the funds for its operations and for the word individuals it is the safeguard
of money with certain percent of return . The functioning and the growth of banks depends
upon the size and the growth of its deposits. Deposits are like the blood for any commercial
banks, Without adequate amount of deposits no commercial banks and operate and survive.
Banks collects deposits through various accounts. The major types of deposits are
explained below
Types of deposit
Bank takes deposit from individuals and institutions in different types of accounts. The
deposits of commercial banks can be classified as follows
A. Interest Bearing Deposits
B. Interest Free Deposit

a) Interest Bearing Deposits

Deposits in which banks are required to pay certain rate of return is known as interest
bearing accounts. The return is known as interest. The depositors get certain percent of
return depending on bank's policy. The interest bearing deposits include Saving, Fixed, Call
and recurring deposits.
 Saving Deposits
Saving deposits are for the saving purpose. Generally individuals which who have
wishes to save something out of their income for future uses this type of deposits. This
type of deposit encourages the habits of saving of the people. Banks accepts deposits
from individuals and non profit making organizations. In this type of deposit interest is
paid with certain restriction in the withdrawal amount.
  Fixed deposit
This is a kind of deposit in which banks offer fixed interest rate on the deposit and
repays principle together with interest at fixed maturity or pays interest on regular
interval. So, the money deposited in this account can be utilised by banks for medium
or long term credit freely being confident that the dip writers will not come to claim
until the time lapses. Normally higher interest rate is offered for long term deposits and
lower interest rate for short term deposit. the time deposit is the main source of
commercial banks for their credit operation. investment in medium term and long
purposes is possible only through this type of deposit. However, the diputer loan under
security. in this context of Nepal, fixed a deposit has been classified on 21 st the basis of
quarterly, semi-annually, annually and above (kishakisi, 1990).

 Call deposit
Call deposit incorporates the characteristics of current saving deposit in the sense. The
compression not entitled to open savings accounts can open call account. interest rate
on call deposit each negotiable between the bank and the depositors and hence, is
normally not published in public. interested is applied on daily average balance.
withdrawal restriction is not important on call deposit but the balancer should not go
below on a grid level (kishakisi, 1990)

b) Non-Interest banking deposit

It is the deposit in which the bank need to pay interest for the customer of their savings. it
is because in this type of deposit customers can withdraw the money at anytime or can we
draw daily and the bank could not employ the amount in interest in this type of account.
Current end margin deposit are non interest bearing deposit. X current deposit the current
deposit account generally opened by the business person. They are allowed to withdraw and
deposit the money according to their needs. There is no limitation of withdrawing the
money. Therefore, this type of deposits are for those people who may need money at
uncertain times.
 Current Accounts
It is the widely used interest free deposit which is also known as demand deposit .This
type of deposits is normally operated by business organisation and People who have to
withdraw funds any time. No withdrawal restrictions are Imposed and no interests are
paid on these types of deposits.
  Margin Deposits
Banks issue guarantees, letter of credit and accepts safe deposit lockers . Banks require
certain amount as security for the above actions. Such amount held as security for
different purposes as put in the different types of margin account of respective
customers. Separate margin accounts are opened for different customers according to
the requirement. Interest is not paid on the amount deposited in such accounts. The
amount in the margin accounts are refunded once the conceded tasks are completed.

1.2 Purpose of the study

The main objectives of this field work report “Fixed deposit of Siddhartha bank limited” is
to analyse part and present trend of fixed deposit along with other accounts and Siddhartha
bank limited regarding deposit collection. An objective of fieldwork is as numerated
under :-

 To find out present correction of position of fixed deposit of SBL

 to analyse the part in present trends of deposit made under SBL scheme.
 To find out the share of fixed deposit out of total deposit in SBL.
 To examine whether SBL is utilising its fixed deposit fund efficiently or not
deposits SBL.
 To analyse the composition of total loan.

1.3 Significance of the study

The proposed study provides the most needed information about the customer satisfaction,
which is collected by the researcher by way of primary data from the source itself i.e. the
customer. The study will highlight the application of marketing principles to the marketing
of banking services. the study can be useful to private sector banks as well as two public
sector banks. , this study will become a source of information for future researchers to
collect the data and information to the marketing of bank services, and customer
satisfaction. The study also gives clear cut idea of the methodology required to collect and
analyse the data. this is also helpful to the customer.

1.4 Literature review

1.4.1 Conceptual framework
A fixed deposit is a financial product offered by banks and other financial institutions,
where an individual or entity can deposit a lump sum of money for a fixed period of time,
typically ranging from one month to five years. The deposited amount earns a fixed rate of
interest, which is generally higher than the interest offered on a regular savings account.
The interest rate is determined by the financial institution and is based on factors such as
the duration of the deposit and prevailing market rates.
The conceptual framework of a fixed deposit includes the following elements:

 Principal amount: The principal amount refers to the amount of money that is
deposited in the fixed deposit account. This is the amount on which the interest is
calculated.

 Interest rate: The interest rate is the rate at which the deposited amount earns
interest. The rate is fixed at the time of deposit and remains constant throughout the
tenure of the deposit.

 Tenure: The tenure of the fixed deposit is the duration for which the deposit is
made. It can range from one month to five years, depending on the financial
institution’s policies and the investor’s preference.

 Maturity value: The maturity value of a fixed deposit is the amount that is paid to
the investor at the end of the deposit tenure. It includes the principal amount and the
interest earned.

 Premature withdrawal: Premature withdrawal refers to the option of withdrawing

the fixed deposit amount before the maturity date. In such cases, the financial
institution may charge a penalty fee or reduce the interest rate on the deposit.

 Renewal: At the end of the fixed deposit tenure, the investor can choose to renew
the deposit for another term. The interest rate for the renewed deposit may be
different from the previous rate.

 Safety: Fixed deposits are considered a safe investment option as they are backed by
the government’s deposit insurance program, which guarantees repayment of
deposits up to a certain limit in case the financial institution fails.

In summary, the conceptual framework of a fixed deposit includes the principal amount,
interest rate, tenure, maturity value, premature withdrawal, renewal, and safety.
Understanding these elements can help investors make informed decisions about investing
in fixed deposits.

1.4.2 Review of Books Articles and interview

In this section, the effort has been made in this present section to examine and review the
some related articles published in different related books, economic journals , bulletins,
magazines and newspapers.

Dilli Raj Bhandari in the book Ban king & insurance (Principle & Practice);
People in general deposit, the businessman, industrialists and other individuals deposit
money in a bank. Actually, such amount is the main sources o capital for the commercial
bank. Banks flows such amount as loan and advances and invests in different sectors to
earn profit. Usually a bank accepts three types of deposit. I hey are current, saving and
fixed deposits. (Banking & Insurance (Principle & Practice)”, Aayush publication,
Kathmandu,2002)
Bhuvan Dahal & Sarita Dahal in the book ‘A Hand book to Banking ;
A bank takes various types of deposits from individuals, business organization and other
types of institutions. Normally they are classified into two types: Interest Bearing Deposit
and Interest Free Deposit. Loan and advances dominate the assets side of the balance sheet
of any bank Similarly earnings from such loan and advances occupy a major space in
income statement of the bank. Lending can be said to be the raison d’etre of the bank. (A
Handbook to Ban kin g, Asmita Books an d Station ery. 2002)
Madhu Sundar Shrestha in the book Fundamentals of Banking;
Banks open various types of accounts having different features. Broadly speaking all
accounts can be classified into interest bearing and non-interest bearing accounts. The
accounts differ depending on the customer’s constitution. One of the basic functions of
commercial banks is to provide credit. Out of total income on an average 60-70% of
income consists from lending activities. (Fundamentals of Banking, Buddha Academic
Publishers and Distributors Pvt Ltd, Kathmandu, 2007)

In an interview Jyoti Pandey, Managing Director of Nepal Investment Bank clarified

the question of Annapurna Post that competition among commercial banks has increased to
attract deposit. Banks has risen the interest rate of attract deposit to them. This has led to
the decrease in the decrease in the difference of interest rate between deposits and
investment.(Annapurna Post,22 Sep 2008)

1.4.3. Review of Previous Thesis

In this section various thesis submitted by T.U. student which are relevant to the study are
briefly reviewed .
In the thesis entitled , “Deposit mobilization in Commercial banks in Nepal”,(2011)
Ibrahim Concluded that Banks accept deposits to lend the same at a higher rate of interest.
Deposits and credits are just like inflow and outflow of funds of the bank. Credits (loans
and advances) Are the largest income earning assets of the and the, multiple profitable and
high risk associated item on the asset side of the bank balance sheet. Banks utilise its funds
in suitable area and right sector. Cannot achieve its goal until and unless it mobilises it
deposit in right And by performing different activities. Much kind of activities and other
things can origin for the purpose of receiving interest from the bank. But banks should
separate the useful and profitable sector for mobilisation its deposits. Bank or been only a
financial intermediary, will not be able to make any profit unless it has to pay interest on
deposits, meet establishment expenses, meet liquidity of cash balance, and it allows from
balance from out of which it can build re job and pay dividends to the shareholders .
In the thesis by Krishi, “Analysis of deposit mobilization of Commercial Banks in Nepal”
(2010) Be concluded commercial banks are expected to make profit. if there is no
profit,there will be adverse criticism against public sector banking, both in and outside the
parliament when these banks are asked to open new branches in areas which do not allow
profits for years .Or asked to grant loan to the priority sectors such as a small industries and
agriculture with a high incidence of bad debts, there is need for counterbalancing profit
from elsewhere. Therefore, those banks will have to sue and ascending order of profits in
order to ensure growth with stability. For this purpose, the bank will have to allocate land
able resources to different segments in such a manner these banks can ensure adequate
profitability while at the same time responding to policies laid down In accordance with
national objectives. Therefore, banks should mobilize its deposits in suitable and
profitable banking activities and right sector. Generally, banks mobilised its deposit in
following activities.
 Liquid Funds
A bank gives a volume of amount in liquid fund. liquid funds helps banks to meet
liquidity requirement. The funds have so many responsibilities In banking activities
 liquid funds includes; Cash in hand, balance with NRB, Balance with other domestic
banks and call deposits.
 Investment
Banks invests its funds in different banking activities and different fields. Many
types of fields are shown in market for investment. Bank should invest its funds in
profitable and safety activities. Bank invests its funds in corporate shares and
debentures, share of foreign banks, and in government securities. According to
(NRB 2012) the share of loans and advances to total assets of commercial banks in
Nepal remained 58.3 percent in mid July 2012. Similarly, share of investment and
liquid funds to total assets registered 17 perfect and 15.2 percent respectively.

1.5 Research methods used for data collection and analysis

Siddharth bank limited Has also been adversely affected by such conditions. Increasing
deposit position and decrease in investment opportunities, Banks are compelled to invest in
low yielding, governments bonds treasury bills. It contains Research design, sampling ,
sources of data , data analysis tools.

1.5.1 Research design

A research design encompasses the methodology And procedures employed to conduct
scientific research. is last design means an overall framework for the activities to be taken
during the course of research study. it enables the way of research providing the tools and
techniques for the data collection analysis and sampling plan to be followed. Generally, is
such design describes the general plan for collecting analysing and evaluating data. it is an
integrated system that guides the researcher in formulating, implementing and controlling
their study through as to obtain answer to research questions and to control variance.
Present historic is diagnostic and exploratory in nature and makes use of secondary data to
attend the overall activities.
1.5.2 Population and sampling
This study is related with fixed deposit of commercial bank. Population: Population refers
to the industries of the same nature of its service and product. It is the collection or the
aggregate of objects or the set of results of an operation. The will-specified or identifiable
group of people, events or things of interest that the researcher wishes to investigate is
known as the population. Population is whole aggregate number in which the researcher has
to study. According to young “The entire group from which a sample is chosen is known as
the Population.” Population may be finite or infinite. A finite population is one where the
entire member can be easily counted or one containing a fixed number of elements.
Sample: sample means the representative parts of populations selected from it with the
objectives of investigating its properties .It is the part of the population that we actually
examine in order to gather information. Population is a large unit so it is time consuming,
tedious and nearly impossible to analyse each and every individual of the population. So,
only a part of population is considered.
The population for this study comprises all the commercial banks of Nepal. There are 21
Commercial banks in Nepal. Since all the 21 commercial banks cannot be studied so
Siddhartha bank is taken as a sample for study.

1.5.3 Source of data

The study is based on secondary as well as primary source of information . The method of
allocation the data and information about fixed deposit. Secondary data are previously
collected data and are not the first hand data . The main source of secondary data is primary
data the are generally obtained from public or private sources. Secondary data includes the
following method :-
 Book of bank
 Annual statement of bank
 Cash flow statement
 Income statement
 Balance sheet
 Journal and news published by NRB
 Libraries

1.5.4 Data analysis tools

The collected data are analysed by using various financial tools as well as statistical tools,
which are given and defined as below:
A. Financial tools
Financial tools basically help analyse the financial strength and weakness of a firm. Ratio
analysis is a part of the whole process of analysis of financial statements of any business or
industrial concerned especially to take output and loan management decision. Ratio
analysis is used to compare form's financial performance and status that of the other forms
or to it overtime. Even thought there are many ratios of analyse and interpne financial
statement, those ratios that are related to the investment to the investment operation of the
bank are have been covered in this study. the following types of ratios have been used in
this study.
I. Liquidity Ratios:
This ratio measures the liquidity position of a firm. It measures the firm’s ability to
meet its short term obligations or its current liabilities. It measures the speed with
which a bank's assets can be converted into cash to met deposit withdrawal and
other current obligation. As a financial analytical tool following liquidity ratios has
been used to come in to the acts and finding of the study. Cash and Bank balance
and NRB balance to total deposit ratio

II. Asset Management Ratios:-

Assets management ratio measures the proportion of various assets and liabilities in
balance sheet The proper man agreement of assets and ability ensures its effective
utilization. The banking business converter the liability in to assets by way of its
efficiency by multiplying various liabilities and performing assets. The following
are the various ratios relating to asset an d liability management, which are used to
determine the efficiency of the bank concerned in managing its assets an deficiency
in portfolio management.
 Loan and advance to total deposit ratio
 Investment to total deposit ratio
 Other investment to total deposit ratio

III. Activity Ratio:-

Activity ratio measure the performance efficiency of an organisation from various
angles of its operations. These ratios indicate the efficiency of activity of an
enterprise to utilize available funds, particularly short term funds. These ratios are
used to determine the efficiency quality and the contribution of loans and advance
in the total profitability. The following activity ratios measure the performance
efficiency of the bank to utilize its funds.
 Loan loss provision to total loan and advance ratio.
 Non performing loans to total loans and advance ratio

IV. Profitability Ratios:-

 Profitability ratios are used to indicate an d measure the overall efficiency of a firm
in term of profit and financial performance. For better performance, profitability
ratios of firm should be higher.
 Interest income to loan and investment ratio
 Return on loan and advance ratio
 Return on investment ratio

B. Statistical tools
There are different statistical tools , here few statistical tools are used to analyse the study
as per requirement .
i. Arithmetic mean :-
Arithmetic mean represents a number that is obtained by dividing the sum of the
elements of a set by the number of values in the set.

ii. Correlation and regression :-

Correlation is defined as the “relationship” (of association) between (Among) the
one dependent variable (or factor) and one (or more than one) independent variable
(s) or factor(s). In the other words, correlation is the relationship between (or
among) two or more variables (i.e. Only one variable dependent and one or more
variable (s) independent).
Regression is the statistical tool which is used to determine the statistical
relationship between two (or more) variable and to make estimation of one variable
on the basis of the other variable (s). In the other words, regression is that statistical
tool with the help of which the unknown value of one variable can be estimated on
the basis of known value of thee other variable. Assuming that the two variables are
closely related.

1.5.5 Limitation
This study gives general information about the Siddhartha Bank limited(SBL) and its
function. It also give the basic ideas deposit collection and trend especially fixed deposit. I
tried to get much more information about SBL and also want to analyse them appropriately,
but there are some limitations which could not be crossed. Limitations are as below:

 Due to time constraints, this study was done only within one organisation.
 The studies focus on fixed deposit account.
 It can’t be compared with fixed deposit of other commercial.
 Chapter II
Data Presentation and Analysis

2.1 Profile of Siddhartha Bank limited

Siddhartha bank limited established in 2022 and promoted by prominent
personalities of Nepal today stands as one of the consistently growing banks in
Nepal. While the promoters comes from a wide range of sectors, they possess
immense business acumen and share their valuable experiences towards the
betterment of the bank.
Within a short span of time, Siddhartha bank has been able to come up with a
wide range of products and services that best suits its clientele. Siddhartha
bank has been posting growth in its portfolio size and profitability consistently
since the beginning of its operation. The management of the bank has been
truly professionals.
Siddhartha bank has been able to gain significant trust of the customers and all
other stakeholders to become one of the most promising commercial banks in
the country in less than 15 years of its operation. The bank is fully committed
towards customer satisfaction. The range and scope of modern banking
products and services the bank has been providing each an example to its
commitment toward customer satisfaction. It is this commitment that has
helped the bank register quantum growth every year. And the bank is
confident and hopeful that it will be able to retain this trust and move even
further towards its mission of becoming one of the leading banks of the
industry.

Vision
Siddharth bank runs with a vision to be financially sound, operationally
efficient and keep abreast with technological developments.
Mission
The bank desires to be one of the leading banks of the industry by fulfilling
the interests of their stakeholders and also aims to provide total customer
satisfaction by way of offering innovative products and by developing and
retaining highly motivated and committed staff. It directs all its effort to move
ahead with increased profits. The following mission statement is a guide to
meet the vision of the band.

• Be one of the leading banks of the industry in terms of

profitability, productivity an innovation.

• Aim at total customer satisfaction by rendering if you see and end

diversified financial services through improved technology

• Build a highly motivated and committed team of staff by

nurturing a good work culture to achieve superior individual
performance aiming to enhance organisational effectiveness.

• Be the place of pride to all its stakeholders.

Core value of the bank

• Customer focus
• Shareholders prosperity.
• Employee growth
• Economic welfare
2.2 Data presentation
Presentation of data is an important stage of the research study. The main purpose of study
the data is to change it from an unprocessed form into an understandable presentation. The
analysis of data consists of organizing data by tabulating and then placing that data in
presentable form by using figures and tables.
The main objective of the study is to Examine the fixed deposit of SBL, For this purpose
financial tools have been massively used. as financial tools, ration analysis has been the
major in the research basically
This chapter contains the interpretation of the available and relevant data of Siddhartha
bank limited selected as the sample bank. Five years data period covering

From the F/N 2059/60 A.D. to 2063/64 B.S.(2002/03 A.D to 2006/07 A.D) have been

Analysed and interpreted as per the research methodology defined in chapter two. In the
following section, the relevant and generated data (i.e. both primary an d secondary)
relating to the study is presented in tabular form and analysed it in systematic way. To
analyse the data, various financial as well as statistical tools are employed.