DEPOSIT AND ITS MOBILIZATION OF HIMALAYAN

BANK LIMITED

A Project Work Report

By

Rajiv Khadka
T.U. Registration Number: 7-2-251-12-2017
Symbol No.702510014
Jan Adarsha Campus
Shankhadhar Chowk, Madhyapur Thimi

Submitted to

The Faculty of Management

Tribhuvan University
Kathmandu

In the Partial Fulfillments for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Bhaktapur, Nepal

May, 2023
 DECLARATION

I hereby declare that the project work entitled “DEPOSIT AND ITS MOBILIZATION
OF HIMALAYAN BANK LIMITED” submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision of
Mr.Dhan Krishna Prajapati, faculty member, Jan Adarsha Campus, Shankhadhar Chowk,
Madhyapur Thimi and is submitted in partial fulfillment of the requirements for the
degree of Bachelor of Business Studies (BBS). This project work report has not been
submitted to any other university or institution for the award of any degree or diploma.

Signature:

Rajiv Khadka

Date: May, 2023

ii
 SUPERVISOR’S RECOMMENDATION

The Project work report entitled “DEPOSIT AND ITS MOBILIZATION OF

HIMALAYAN BANK LIMITED” submitted by Rajiv Khadka of Jan Adarsha
Campus, Shankhadhar Chowk, Madhyapur Thimi, is prepare under my supervision as per
the procedure and format requirements laid by the faculty of Management. Tribhuvan
University, as partial fulfilment of the requirements for the award of the Bachelor of
Business Studies (BBS). I, therefore, recommended the project work report for
evaluation.

……………
Ratna Krishna Shrestha
Supervisor
Jan Adarsha Campus
May, 2023

iii
 ENDORSEMENT

We hereby endorse the project work report entitle “DEPOSIT AND ITS
MOBILIZATION OF HIMALAYAN BANK LIMITED” submitted by Rajiv
Khadka of Jan Adarsha Campus, Shankhadhar Chowk, Madhyapur Thimi, Nepal, in
partial fulfillment of the requirements for award of the Bachelor of Business Studies
(BBS) for external evaluation.

……………….. ………………….

(Mrs. Sanita Shrestha) (Mr. Durga Mohan Shrestha)

Head of Research Department Campus Chief
May, 2023 May, 2023

iv
 ACKNOWLEDGEMENTS

This research report entitled “DEPOSIT AND ITS MOBILIZATION OF

HIMALAYAN BANK LIMITED" has been prepared to fulfill the requirement of
Bachelor of Business Studies (BBS). It is my great pleasure to have an opportunity to
prepare this project report under the direct supervision of my teacher Mr. Dhan Krishna
Prajapati sir. Similarly, a number of seniors and friends provided great support in
preparing this report and thus, I would like to thank all of them respectively.

 I am deeply obligated to Ms.Dil Maya Shrestha, and all others for their valuable support
and inspiration. I would like to thank Jan Adarsha Campus, In, and the administrator Mr.
Dhan Krishna Prajapati and other staffs of the department for their cooperation in
preparing this report. I would also like to thank my colleagues who participated in
discussion and helped me in analyzing the data and preparing the report. After all, I
would also like to express my heartfelt gratitude to my family member and all those who
made possible to complete and bring this report to the present state.

Sincerely,

Rajiv Khadka

May, 2023

v
 TABLE OF CONTENTS

Title Page i
Declaration ii
Supervisor’s Recommendation iii
Endorsement iv
Acknowledgements v
Table of Contents vi
List of Tables vii
List of Figures viii
Abbreviations ix
CHAPTER I: INTRODUCTION 1
1.1 Background of the Study 1
1.2 Profile of the Organization 2
1.3 Objectives of the Study 3
1.4 Rationale of the Study 3
1.5 Literature Review 4
1.6 Research Methodology 6
1.7 Limitations of the Study 11
1.8 Organization of the Study Report 11
CHAPTER II: RESULTS AND ANALYSIS 13
2.1 Data Presentation 13
2.2 Findings 32
CHAPTER III: SUMMARY AND CONCLUSION 33
3.1 Summary 33
3.2 Conclusion 34
BIBLIOGRAPHY 35
APPENDICES 36

vi
 LIST OF TABLES

Table Name of the Table Page

1 Deposit from Institutional Customers 13

2 Deposit from Individual Customers 14

3 Total Deposits 15

4 Term Loan 16

5 Overdraft Loan 17

6 Trust Receipt/Import Loan 18

7 Demand and Other Working Capital Loan 19

8 Personal Residential Loan 20

9 Real Estate Loan 21

10 Margin Lending Loan 22

11 Hire Purchase Loan 23

12 Deprived Sector Loan 24

13 Bills Purchased 25

14 Staff Loan 26

15 Other Loan 27

16 Total Loan 28

17 Credit Deposit Ratio 29

18 Non-performing Loan/Total Loan 30

19 Correlation of deposits and loans 31

vii
 LIST OF FIGURES

Figure Name of the Figure Page

1 Deposit from Institutional Customers 14

2 Deposit from Individual Customers 15

3 Total Deposits 16

4 Term Loan 17

5 Overdraft Loan 18

6 Trust Receipt/Import Loan 19

7 Demand and Other Working Capital Loan 20

8 Personal Residential Loan 21

9 Real Estate Loan 22

10 Margin Lending Loan 23

11 Hire Purchase Loan 24

12 Deprived Sector Loan 25

13 Bills Purchased 26

14 Staff Loan 27

15 Other Loan 28

16 Total Loan 29

17 Trend Line of CDR 30

18 Trend Line of Non-performing Loan/Total Loan 31

viii
 ABBREVIATIONS

% : Percentage

ABBS : Any Branch Banking Services

AD : Anno Domini

ASB : Accounting Standards Boards

ATM : Automated Teller Machine

CDR : Credit Department Ratio

CDR : Credit Deposit Ratio

CSR : Corporate Social Responsibility

FY : Fiscal Year

HBL : Himalayan Bank Limited

ICAN : Institute of Chartered Accountants of Nepal

KYC : Know Your Customer

LC : Letter of Credit

LTD : Limited

NFRS : Nepal Financial Reporting Standard

NO. : Number

NPLR : Non-performing Loan/Total Loan

NRB : Nepal Rastra Bank

RRB : Regional Rural Banks

Rs. : Rupees

TU : Tribhuvan University

ix
 1

CHAPTER I

INTRODUCTION

1.1 Background of the Study

A bank is a licensed and regulated financial institution that lends money, accepts deposits
and carries out other financial transactions for its clients. Bank is a financial institution
which deals with money. Bank collects the money from the surplus unit (savers) and
lends to deficit until (users). Now-a-day the word Bank refers to those institutions which
are established under law for dealing with monetary transactions. It means those
institution are treated as banks which accept the deposit of public and grant loan to the
needy person or organizations against security deposit. Bank provides money as loan to
other needy person or institution against security deposit or without security deposit.
According to C.R. Crowther. " A bank collect money from those who have it to spare or
who are saving it out of their income and lend this money to those who required it."

A deposit is money placed with some other entity. It is a credit for the party who placed
it, and it may be taken back (withdrawn), transferred to some other party, or used for a
purchase. It is often used with respect to banks, where deposits are usually their main
source of funding. Individuals and corporations need money to pursue their daily
business. They play the money on deposit to earn interest, using the money market. As
the raw material is necessary for the production, there is equal importance of deposits for
banking transaction. A deposit is a financial term that has multiple definitions. On the one
hand, a deposit is a transaction involving a transfer of funds to another party for
safekeeping. On the other, a deposit also refers to a portion of funds used as security or
collateral for the delivery of a good. Deposits are the main source of commercial banks.
The bank flows such deposit as loan and investment to gain interest bonus.

Deposit mobilization is an integral part of banking activity. Mobilization of savings

through intensive deposit collection has been regarded as the major task of banking in
Nepal. Acceptance of deposits is the primary function of commercial banks. As such,
deposit mobilization is one of the basic innovations in current Nepal banking activity.
Hence, in this paper, an attempt is made to evaluate the trend and growth in deposit
 2

mobilization of scheduled commercial banks. Deposit Mobilization is one of the primary

functions of a commercial bank. Deposits mobilized by banks play a key role not only as
an important source of funds for banks but also as instrument for promoting saving and
banking habit among the people. Deposits are essential raw material for the banking
industry. Commercial banks are expected to make efforts in both the rural and urban areas
for mobilizing savings in the form of their deposits which are beneficial to them and the
country as well.

1.2 Profile of Himalayan Bank Limited

Himalayan Bank Limited, established in 1993 as a Joint Venture of Habib Bank Limited
of Pakistan has been successfully reigning the banking industry since its inception.

The bank holds the legacy of introducing various banking services for the first time in
Nepal from the very beginning. Products such as Premium Savings Account, HBL
Proprietary Card and Millionaire Deposit Scheme besides services such as ATMs and
Tele-banking were first introduced by HBL which was able to win customers’ hearts
during that time. Since its establishment, the bank has been highly focused on innovative
approaches and customer satisfaction. The bank started its journey from Employees
Provident Fund Building, popularly known as Sanchayakosh Building at Thamel,
Kathmandu.

HBL has also been serving Nepali citizens living in the country and abroad through
remittance service. Presently, HBL is the biggest inward remittance handling bank in
Nepal. With its exclusive and proprietary online money transfer software – Himal Remit
TM, HBL is among the top remittance service providers in Nepal having ties with
financial institutions based in the Middle East, Gulf region, UK, Australia, USA, Japan,
Israel, South Korea, Malaysia, Singapore, Portugal, Spain and Hongkong. With respect to
the Merger and Acquisition Policy introduced by Nepal Rastra Bank, Himalayan Bank
Limited acquired Civil Bank Limited at 100:80.28 swap ratio (A shareholders holding
100 scrips of CBL will get 80.28 scrips of HBL) and commenced the joint operation as
“Himalayan Bank Limited” from February 24, 2023. After acquisition, the Banks has
been happily serving its customers from total of 189 Branch Offices, 20 Extension
Counters and more than 263 ATM Booths spread all over Nepal.
 3

1.3 Objectives of the Study

The main objectives of the study are to analyze the Deposit collection and its
mobilization. The following are the sub-objectives that help in elaborating and analyzing
the trend in deposit mobilization. Thus, the main objectives of the study are as below.

• To analyze the composition of bank deposits.

• To evaluate the deposits trended its mobilization of HBL.

• To assess the association between deposit and its mobilization of the bank.

1.4. Rationale of the study

Difficulties arise in trying to link dividend policy directly to share prices. The findings on
the effect of dividend policy directly to share prices of multinational and local companies
will be of great importance to the following stakeholders.

The senior managers and board of directors will be able to know the information content
of dividend policy hence use dividends to convey important information to 7
shareholders. When managers know the relationship between dividend policy and share
prices, they will be able to satisfy shareholders' expectations.

The study would be of great importance to scholars and academicians who may wish to
use its findings as a basis of further research on the subject matter thereby adding to the
existing body of knowledge in the area of the relationship between dividend policy and
share prices. This research paper will give them additional information on the effect of
dividend policy on share prices.

The report is to analyze the CDR of a bank. Through the study, we come to know about
the CDR of the Himalayan Bank Limited. This fieldwork is being prepared to fulfill the
objectives set forth by the newly designed courses of Bachelors of Business Studies
(BBS). This report will enrich those who are willing to know about the situation of CDR
of Himalayan Bank that is Himalayan Bank utilizing its resources at its optimum level.
The fieldwork report might be helpful for the library purpose and be useful for other
 4

students desiring to prepare a report on similar fields giving them basic ideas and
guidelines. It is most beneficial for those who are interested in taking a short-term loan.

1.5 Literature Review

This Chapter is concerned with the review of literature relevant to the topic "Deposit
collection and mobilization capacity of Himalayan Bank Limited." Every study is very
much based on past knowledge. A literature review can be done in three major forms,
Empirical Review, Conceptual Review, and Theoretical Review. Here in this research
report, we will discuss only Conceptual and Theoretical Reviews.

1.5.1 Conceptual Review

Needless to say, Deposit collection and its Mobilization is the major income generating
activity of any financial institution and is also one of the main functions of the banks and
other financial institutions. If loan is not distributed properly and cautiously then it may
be the main cause of the failure of the company. Flow of money is the life blood of any
financial institutions and bad loans may interrupt the flow. Thus, it should be well
analyzed beforehand to give out any loans. Below given are the factors whereupon any
prospect loan should be analyzed. There are two types of deposit. They are interest
bearing deposit and non-interest-bearing deposit. Deposit, fixed deposit call deposit is
interest-bearing deposit. Current deposit & margin deposits are non-interest-bearing
deposits.

A deposit is money placed with some other entity. It is a credit for the party who placed
it, and it may be taken back (withdrawn), transferred to some other party, or used for a
purchase. It is often used with respect to banks, where deposits are usually their main
source of funding. Individuals and corporations need money to pursue their daily
business. They play the money on deposit to earn interest, using the money market. As
the raw material is necessary for the production, there is equal importance of deposits for
banking transaction. A deposit is a financial term that has multiple definitions. On the one
hand, a deposit is a transaction involving a transfer of funds to another party for
safekeeping. On the other, a deposit also refers to a portion of funds used as security or
collateral for the delivery of a good.
 5

Mobilization of deposits is one of the important functions of banking business. It is an

important source of working fund for the bank. Deposit mobilization is an indispensable
factor to increase the source of the banks to serve effectively. Mobilization of deposit
plays an important role in providing satisfactory service to different sectors of the
economy. Performances of the bank depend on deposits, as the deposits are normally
considered as a cost-effective source of working fund. The success of the banking greatly
lies on the deposit mobilization. Performance of the bank depends upon deposits, as the
deposits are normally considered as a cost-effective source of working fund. Mobilization
of rural saving is one of the important objectives of the Commercial Banks. It helps to
expand banking operations.

Meyer and Hushak (1987) found five major factors that determine deposit function:
income, interest rate, access to banking facilities, transaction costs, and yields on
alternative investments.

Yusuf and Hakan (2011) described the short-term creditors of a company like suppliers of
goods of credit and commercial banks providing short-term loans are primarily interested
in knowing the company's ability to meet its current or short-term obligation as and when
these become due.

Bajracharya (2001) observed a relationship between bank lending behavior and a set of
macroeconomic indicators, industry, and bank-level characteristics. They concluded that
bigger banks seem to be in a better position to lend more than otherwise. This might be
due to the enough resources they have to cushion lending. Similarly, a high level of bank
capital is found to support much higher volumes of bank lending. In addition to the
above, the macroeconomic environment in which a bank operates matters for its lending
decision.

According to Paudel (2018), deposits play a pivotal role in bank funding, as a major
portion of a commercial bank's assets is usually financed through customer deposits. To
enhance deposit mobilization from the public, banks have used various strategies and
most increasingly adopt a market approach for deposits mobilization, which focuses on
the identification of customer needs and offering of products.

John (1998) commented that the ability of commercial banks to promote growth and
development depends on the extent to which financial transactions are carried out with
 6

trust and confidence and at least risk. It means that banks should operate banking
transactions safely and soundly. If they are involved in insecure and unsound banking
practices, they may lose public confidence and trust. In this situation, banks' sustainability
and overall financial stability will be at risk.

1.6 Research Methodology

1.6.1 Research Design

The degrees to which the methodology of this research can be structured two categories
are Qualitative and quantitative method. Quantitative methods emphasis on objective
measurement and numerical analysis of data collected through polls, questionnaires or
surveys. Quantitative research focuses on gathering numerical data generalizing it across
groups of people. I use quantitative methods for my research project. The research has
been carried out once and it represents a snapshot of one point in time. So, it is a
Descriptive study under the category of time dimension.

The research was designed for breadth rather than depth. Null Hypotheses were tested
quantitatively and the generalization of our findings was presented based on the
representativeness of the sample. So, it can be inferred that it is statistical study.

1.6.2 Population, Sample and Sampling Design

Population or Universe refers to the entire group of people, events, or things of interest
that researcher wishes to investigate.

A sample is a collection of items or elements from a population universe. Hence, a

sample is only a portion or subset of the universe or population. Sampling is an essential
part of any research investigation. Almost all research studies involve sampling. For the
comparative studies of the project report we can survey the people through sampling
techniques. Normally we cannot survey everyone in the population. The term
"population" of universe for research means the universe of research study in which the
research is based (part) at present there are 21 commercial banks operating in Nepal and
most of their stocks are traded actively in the stock market. All 21 commercial bank are
 7

the population of this study. Among them Himalayan Bank Limited is chosen as sample
for the present study on the basis of good financial performance.

1.6.3 Nature and Source of Data Collection

Data is the building block of any research. Information or facts collected through record,
observation and measurement is known as data. Data helps to find out accurate results.
Generally, data are classified as subjective and objective, qualitative and quantitative,
primary and secondary. The method of collecting the data depends upon the nature, object
and the scope of the enquiry. According to Seletiz. Wrights man and Cook as quoted by
Ritche (1989) the purpose of various data collection techniques are to produce true
worthy evidence that is relevant to the research question being stock asked. The study has
preferred only Secondary Data collection procedure.

Secondary data

Generally, information's gathered by someone other than the researcher associated with
the current study is known as secondary data. The secondary sources of data include the
data that have been prepared by others, for their use which are not original. Primary data
collection is possible when there is lack of time and resources. So as collections about the
bank the secondary data is well preferred. The annual reports of respective finance
companies were collected from their respective offices and also by post on request. NRB
report was collected from Research department of NRB. The numerical data collected
from different sources were used in whole numbers for the convenience of the study. The
internet also proved to be a very good source of data. Various sites were used for the
collection of data. The sites used are listed in the bibliography.

For the purpose for the study of the data that has been collected, various financial,
accounting and statistical tools have been used to achieve the objective of the study.
According to the nature of data, they have been inserted in meaningful tables, which have
been shown in annexes. Data have sorted in one table and similarly various tables have
been prepared in understandable manner odd data excluded from the table. Using
financial and Statistical tools data have been analyzed.

1.6.4 Methods of Data Analysis

 8

Financial Analysis Tools

a) Deposit from institutional customers

The term Institutional Deposit Corporation (IDC) refers to an organization that allows
investors to make large deposits and still receive Federal Deposit Insurance Corporation
(FDIC) insurance for the entire amount. Founded in 2000, the IDC oversees the Money
Market Account Xtra (MMAX) program, which provides depositors with an efficient way
to make large deposits and secure FDIC insurance. The IDC network essentially splits up
vast deposits of money among various banks to keep each bank under the protection limit
to stay insured by the FDIC.

b) Deposit from individual customers.

A customer deposit is cash paid to a company by a customer, for which the company has
not yet provided goods or services in exchange. When goods are custom designed to the
specification of the customers and so cannot be resold if the customer were to renege on
its purchase order.

c) Total Deposits

The sum of deposits from both institutional and individual customers is called total
deposits.

d) Term Loan

A term loan is a loan from a bank for a specific amount that has a specified repayment
schedule and either a fixed or floating interest rate. A term loan is often appropriate for an
established small business with sound financial statements. Also, a term loan may require
a substantial down payment to reduce the payment amounts and the total cost of the loan.

e) Overdraft Loan

An overdraft loan is an extension of credit from a lending institution that is granted when
an account reaches zero. The overdraft allows the account holder to continue withdrawing
money even when the account has no funds in it or has insufficient funds to cover the
amount of the withdrawal.

f) Trust Receipt/ Import Loan

 9

A trust receipt is a notice of the release of merchandise to a buyer from a bank, with the
bank retaining the ownership title of the released assets. In an arrangement involving a
trust receipt, the bank remains the owner of the merchandise in trust for the bank, for
manufacturing or sales purposes. An import loan is a short-term cash advance (with
resource) that enables the customer as an importer to meet the customer's immediate
payment obligations under a sight or Letter of Credit presentation or Import Documentary
Collection. Under such arrangements, Standard Chartered Bank finances the customer's
import commitments by making payment against the Letter of Credit or Documentary
Collection and receives payment from the customer at a predetermined date in the future.
Here, the credit period between the time that the bank provides finance and the time the
customer repays the bank should be sufficient for the customer to either manufacture
goods for final sale or direct sale to the end buyer.

g) Demand and Other Working Capital Loan

A working capital demand loan is the same as a business line of credit. It allows
businesses to use it in their everyday business when needed. Perhaps the biggest
difference between a line of credit and a working capital demand loan is the repayment.
The loan has a fixed date for repayment, usually 90 or 180 days. Additionally, banks
typically insist that this type of loan only be used for working capital needs. You can also
expect a higher interest rate on this kind of quick business loan.

h) Personal Residential Loan

A personal loan is an amount of money you can borrow to use for a variety of purposes. It
can be used to cover several personal expenses. It is a type of installment debt that allows
you to obtain a lump sum of findings.

i) Real Estate Loans

A real estate loan is a mortgage secured by a lien on commercial property as opposed to

residential property. It refers to any income-producing real estate that is used for business
purposes; for example, offices, retail, hotels, and apartments.

j) Margin Lending Loans

A margin lending loan can be defined as the amount in a margin account that is currently
available for purchasing securities on margin or the amount that is available for
 10

withdrawal. A margin account makes available to the customer of a brokerage firm using
the customer's securities in their account as collateral.

k) Hire Purchase Loans

Hire purchase is an arrangement for buying expensive consumer goods, where the buyer
makes an initial down payment and pays the balance plus interest in installments. The
term hire purchase is commonly used in the United Kingdom and it's more commonly
known as an installment plan in the United States. However, there can be a difference
between the two: with some installment plans, the buyer gets the ownership rights as soon
as the contract is signed with the seller. With hire purchase agreements, the ownership of
the merchandise is not officially transferred to the buyer until all the payments have been
made.

l) Deprived Sector Loan

A deprived sector lending is defined as the provision of microcredit to low income people
in an effort to uplift their socio-economic status. If a financial institution is found to use
these loans for other purposes, the institution will be required to pay 150 percent of the
loan amount to cover possible loan loss.

m) Bill Purchased Loan

Bill purchased is trade finance that allows a seller to obtain financing and receive
immediate funds in exchange for a sales document not drawn under a letter of credit. The
bank will send the sales documents to the buyer's bank on behalf of the seller.

n) Staff Loan

Staff loan is an advance to any employee made in the ordinary course of business and
consistent with past practices.

o) Other Loans

The remaining loan except the above-mentioned loan is included in this other loan.

Statistical Analysis Tools

a) Correlation
 11

Correlation is a statistical technique that can show whether and how strongly pairs of
variables are related. Correlation, in the finance and investment industries, is a statistic
that measures the degree to which two securities move about each other. Correlation is
used in advanced portfolio management. Correlation is computed into what is known as
the correlation coefficient, which has a value that must fall between -1 and 1.

n ( Exy )−( Ex ) (Ey)

r=
√{ ( nEx 2−( Ex ) 2 }−( nEy 2−( Ey ) 2 }

b) Credit Deposit Ratio

It is the ratio of how much a bank lends out of deposits it has mobilized. It indicates how
much of a bank's core funds are being used for lending, the main banking activity. A
higher ratio indicates more reliance on deposits for lending and vice-versa. The formula
to calculate Credit Deposit Ratio also known as Loan deposit ratio is given by:

Formula and Calculation for CDR

Total Loans
CDR =
Total Deposits

1.7. Limitations of the Study

Even though a full determination and effort has been given to the preparation of this
report, the report has various limitations which are:

• The project was fully dependent on secondary sources of data.

• This study is limited only to Himalayan Bank Limited, not all commercial banks.
• The report covers five years of data only.

1.8. Organization of the Study Report

Chapter I includes an introduction deals with the background of the study. It covers a
detailed analysis of the banking system starting from its background of the study,
introduction to banking, the background of HBL, the purpose of study, the importance of
the study, methodology, and limitation. Chapter 2 is the presentation and analysis of total
income and expenses, deposits, loans and investment, classification of loans. Under this
clarification it's further divided into a term loan, overdraft loan, trust receipt/import loans,
 12

demand and other working capital loans, personal residential loan, real estate loans,
margin lending loans, hire purchase loan, deprived sector loans, bills purchased loans,
staff loans, deposit from institutional customers, deposit from individual customers and
CDR of HBL. Chapter 3 is the summary and conclusion which incorporates the summary
of the total works of the field report prepared.
 13

CHAPTER II

RESULTS AND ANALYSIS

2.1 Data Presentation

This chapter includes the data presentation, analysis, and interpretation following the
research methodology presented in the previous chapter. Data presentation and analysis
are the main steps of the study. According to Wikipedia, data analysis is the process of
inspecting, cleansing, transforming, and modeling data to discover useful information,
suggesting conclusion and supporting the decision making.

2.1.1 Deposit of the Bank

Deposit from Institutional customers

The deposit from institutional customers is calculated by:

Table 1
Deposit from Institutional Customers of HBL
Year Amount (In Lakhs)

2017/18 149128
2018/19 314229
2019/20 360445
2020/21 4110247
2021/22 648294

Note. Annual report from fiscal year 2017/18 to 2021/22

From Figure 1, it can be seen that the deposit from institution customers is in increasing
trend over five years. In FY 2017/18 the deposit was Rs.149128 (in lakhs) and
subsequently Rs.314229, Rs.360445, Rs.411024 and Rs.648294 in the FY 2018/19,
2019/20, 2020/21, 2021/22 respectively.
 14

700000 648294
600000
500000
411024
Amount in Lakhs

400000 360445
314229
300000
200000 149128
100000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 1. Trend line showing the amount of deposit from institutional customers of HBL

Deposit from Individual Customers

The Deposit from individual customer is calculated by:

Table 2
Deposit from Individual Customers of HBL
Year Amount (In Lakhs)

2017/18 840759

2018/19 779640

2019/20 892198

2020/21 999186

2021/22 1035900

Note. Annual report from fiscal year 2017/18 to 2021/22

 15

1100000
1035900
1050000 999186
1000000
950000 892198
Amount in Lakhs

900000 840759
850000
800000 779640
750000
700000
650000
600000
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 2. Trend line showing the amount of deposit from individual customers of HBL

In Figure 2 reveals that the deposit from individual customers is decreased from
Rs.840759 to Rs.779640 from FY 2017/18 to 2018/19 and has increasing trend since then
with amount of Rs.892198, Rs.999186 and Rs.1035900 in the FY 2018/19, 2019/20,
2020/21, 2021/22 respectively.

Total Deposits

The sum of deposit from institutional customers and individual customers are called total
deposits. The total deposit of HBL is presented in Table 3.

Table 3
Total Deposit of HBL
Year Amount (In Lakhs)

2017/18 989,887

2018/19 1093870

2019/20 1252643

2020/21 1410210

2021/22 1,684,194

Note. Annual report from fiscal year 2017/18 to 2021/22

 16

1,800,000 1,684,194
1,600,000 1,410,210
Amount1,400,000
in Lakhs 1,252,643
1,200,000 1,093,870
989,887
1,000,000
800,000
600,000
400,000
200,000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 3. Trend line showing total deposits of HBL

From Figure 3, it can clearly be seen that the total deposit is in increasing trend over five
year. In FY 2017/18 the total deposit was Rs.989887 (in lakhs) and subsequently
Rs.1093870, Rs.1252643, Rs.1410210 and Rs.1684194 in the FY 2017/18, 2018/19,
2019/20, 2020/21, 2021/22 respectively.

2.1.2 Loan of the Bank

Term Loan

The term loan of HBL is calculated below:

Table 4
Term Loan of HBL
Year Amount (In Lakhs)

2017/18 142929

2018/19 167386

2019/20 218471

2020/21 298012

2021/22 385592
 17

Note. Annual report from fiscal year 2017/18 to 2021/22

500000
385592
400000
298012
Amount in Lakhs

300000 218471
200000 142929 167386

100000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 4. Trend line showing term loan of HBL

This Figure 4 reveals that term loan of HBL are increasing every year. The increase in
term loan in terms of amount are Rs.142929, Rs.167386, Rs.218471, Rs.298012 and
Rs.385592 in Lakhs in the year of 2017/18, 2018/19, 2019/20, 2020/21, 2021/22
respectively.

Overdraft Loan

The overdraft loan of HBL is calculated below:

Table 5
Overdraft Loan of HBL
Year Amount (In Lakhs)

2017/18 84079

2018/19 84760

2019/20 87768

2020/21 106597

2021/22 142535

Note. Annual report from fiscal year 2017/18 to 2021/22

 18

160000 142535
140000
Amount in Lakhs 120000 106597
100000 84079 84760 87768
80000
60000
40000
20000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 5. Trend line showing Overdraft loan of HBL

From Figure 5, it can clearly be seen that the overdraft loan is in increasing trend over
five year. In FY 2017/18 the overdraft loan was Rs.84079 (in lakhs) and subsequently
Rs.84760, Rs.87768, Rs.106597 and Rs.142535 in the FY 2017/18, 2018/19, 2019/20,
2020/21, 2021/22 respectively.

Trust Receipt/Import Loans

The trust receipt /import loan of HBL is presented in Table 6.

Table 6
Trust Receipt/Import loan of HBL
Year Amount (In Lakhs)

2017/18 141438

2018/19 133846

2019/20 139238

2020/21 216468

2021/22 84832
 19

Note. Annual report from fiscal year 2017/18 to 2021/22

250000
216468
200000
141438
Amount in Lakhs

150000 133846 139238 Figure 6.

84832 Trend line

100000
showing
50000 Trust
0 Receipt
2017/18 2018/19 2019/20 2020/21 2021/22
/Import loan
Fiscal Year
of HBL

In Figure 6 reveals that the trust receipt /import loan is increasing and decreasing over
this five year. In the FY 2017/18 the amount was Rs.141438 and has slight decrease in
FY 2018/19 with Rs.133846 and increasing trend in FY 2019/20 with Rs.139238, FY
2020/21 with Rs.216468. After this the trend drastic decrease with Rs.84832 in FY
2021/22 respectively.
Demand and Other Working Capital loan

The Demand and Other Working Capital loan of HBL is shown in Table 7.

Table 7
Demand and Other Working Capital loan of HBL
Year Amount (In Lakhs)

2017/18 265226

2018/19 332878

2019/20 363826

2020/21 425188

2021/22 616819

Note. Annual report from fiscal year 2017/18 to 2021/22

 20

700000 616819
600000
500000 425188
Amount in Lakhs

400000 332878 363826

300000 265226
200000
100000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 7. Trend line showing Demand and Other Working Capital loan of HBL

The Figure 7 reveals that demand and other working capital loan keeps on increasing
slightly more than previous year. The loan in term of amount are Rs.265226, Rs.332878,
Rs.363826, Rs.425188 and Rs.616819 in the FY 2017/18, FY 2018/19, FY 2019/20, FY
2020/21, FY 2021/22 respectively.

Personal Residential Loans

The personal residential loan of HBL is presented in Table 8.

Table 8
Personal Residential Loans of HBL
Year Amount (In Lakhs)

2017/18 44940

2018/19 42578

2019/20 41615

2020/21 38970

2021/22 39838

Note. Annual report from fiscal year 2017/18 to 2021/22

 21

46000 44940
44000 42578
41615
42000
Amount in Lakhs

39838
40000 38970
38000

36000
34000
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 8. Trend line showing Personal Residential loans of HBL

In Figure 8, it can clearly see that the personal residential loan is decreasing trend from
Rs.44940, Rs.42578, Rs.41615, Rs.38970 in the FY 2017/18, FY 2018/19, FY 2019/20,
FY 2020/21 and slight increase Rs.39838 in the FY 2021/22 respectively.

Real Estate Loans

The real estate loans of HBL is shown in Table 9.

Table 9
Real Estate loan of HBL
Year Amount (In Lakhs)

2017/18 38071

2018/19 37529

2019/20 39050

2020/21 51219

2021/22 77779

Note. Annual report from fiscal year 2017/18 to 2021/22

 22

90000 77779
80000
70000
60000
Amount in Lakhs
51219
50000 38071 37529 39050
40000
30000
20000
10000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 9. Trend line showing Real Estate loan of HBL

In Figure 9, It can be clearly seen that the real estate loan decreasing from Rs.38071 to
Rs.37529 from FY 2017/18 to 2018/19 and continuously increases Rs.39050, Rs.51219
and Rs.77779 in the FY 2019/20, 2020/21 and 2021/22 respectively.

Margin Lending Loans

The margin lending loan of HBL is shown in Table 10.

Table 10
Margin lending loan of HBL
Year Amount (In Lakhs)

2017/18 13440

2018/19 15056

2019/20 15895

2020/21 20568

2021/22 12958

Note. Annual report from fiscal year 2017/18 to 2021/22

 23

25000
20568
20000
15056 15895
Amount in Lakhs

15000 13440 12958

10000

5000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 10. Trend line showing Margin Lending loan of HBL

In Figure 10, it can clearly see that the margin lending loan is increasing trend from
Rs.13440, Rs.15056, Rs.15895, Rs.20568 in the FY 2017/18, FY 2018/19, FY 2019/20,
FY 2020/21 with Rs.12958 drastic decrease in the FY 2021/22.

Hire Purchase Loans

The hire purchase loan of HBL is in Table 11.

Table 11
Hire Purchase loan of HBL
Year Amount (In Lakhs)

2017/18 65066

2018/19 75240

2019/20 73947

2020/21 68902

2021/22 67344

Note. Annual report from fiscal year 2017/18 to 2021/22

 24

78000 75240
76000 73947
74000
72000
Amount in Lakhs
70000 68902
67344
68000
65066
66000
64000
62000
60000
58000
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 11. Trend line showing Hire Purchase loan of HBL

In Figure 11, it is clearly seen that the hire purchase loan increase from Rs.65066 to
Rs.75240 in FY 2017/18 to 2018/19 and continuously decreases to Rs.73947, Rs.68902
and Rs.67344 in the FY 2019/20, FY 2020/21 and FY 2021/22 respectively.

Deprived Sector Loan

The deprived sector loan of HBL is presented in Table 12.

Table 12
Deprived Sector loan of HBL
Year Amount (In Lakhs)

2017/18 4257

2018/19 3258

2019/20 3237

2020/21 2739

2021/22 2694

Note. Annual report from fiscal year 2017/18 to 2021/22

 25

4500 4257
4000
3500 3258 3237
3000 2739 2694
Amount in Lakhs

2500
2000
1500
1000
500
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 12. Trend line showing Deprived sector loan of HBL

From Figure 12, it can be seen that the deprived sector loan is decreasing trend over five
years. In FY 2017/18 the deprived sector loan was Rs.4257 (in lakhs) and subsequently
Rs.3258, Rs.3237, Rs.2739 and Rs.2694 in the FY 2018/19, 2019/20, 2020/21, 2021/22
respectively.

Bill Purchased Loans

The bills purchased loans of HBL is presented in Table 13.

Table 13
Bills purchased loans of HBL
Year Amount (In Lakhs)

2017/18 660

2018/19 915

2019/20 301

2020/21 294

2021/22 474

Note. Annual report from fiscal year 2017/18 to 2021/22

 26

1000 915
900
800
660
700
Amount in Lakhs

600
474
500
400 301 294
300
200
100
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 13. Trend line showing Bills purchased loans of HBL

In Figure 13 shows the bills purchased loan increases from Rs.660 to Rs.915 in FY
2017/18 to FY 2018/19, decreases to Rs.301 and Rs.294 in the FY 2019/20 and FY
2020/21 and drastic increase Rs.474 in the FY 2021/22 respectively.

Staff Loan

The staff loan of HBL is presented in Table 14.

Table 14
Staff loan of HBL
Year Amount (In Lakhs)

2017/18 5588

2018/19 6024

2019/20 6807

2020/21 8973

2021/22 7721

Note. Annual report from fiscal year 2017/18 to 2021/22

 27

10000 8973
9000
7721
8000
6807
7000 6024
5588
Amount in Lakhs

6000
5000
4000
3000
2000
1000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 14. Trend line showing Staff loan of HBL

In Figure 14 presents the staff loan increases Rs.5588, Rs.6024, Rs.6807 and Rs.8973 in
the FY 2017/18, FY 2018/19, FY 2019/20 and FY 2020/21 and decreases Rs.7721 in the
FY 2021/22 respectively.

Other Loans

The other loans of HBL is presented in Table 15.

Table 15
Other loan of HBL
Year Amount (In Lakhs)

2017/18 31502

2018/19 40528

2019/20 39215

2020/21 45612

2021/22 54254

Note. Annual report from fiscal year 2017/18 to 2021/22

 28

60000 54254
50000 45612
40528 39215
40000
Amount in Lakhs

31502
30000

20000

10000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 15. Trend line showing Other Loan of HBL

In Figure 15 shows the other loan increases Rs.31502 and Rs.40528 in the FY 2017/18
and FY 2018/19 respectively, slightly decreases to Rs.39215 in the FY 2019/20 and again
continuously increases to Rs.45612 and Rs.54254 in the FY 2020/21 and FY 2021/22
respectively.

Total Loan

The Total of HBL is stated in Table 16.

Table 16
Total Loan of HBL
Year Amount (In Lakhs)

2017/18 836900

2018/19 940003

2019/20 1035375

2020/21 1276346

2021/22 1492845

Note. Annual report from fiscal year 2017/18 to 2021/22

 29

1600000 1492845
1400000 1276346
1200000 1035375
940003
Amount in Lakhs
1000000 836900
800000
600000
400000
200000
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 16. Trend line showing Total Loan of HBL

Figure 16 states that the Total loan is in an increasing trend. The total loan amount was
Rs.836900, Rs.940003, Rs.1035375, Rs.1276346 and Rs.492845 in FY 2017/18, 2018/19,
2019/20, 2020/21, 2021/22 respectively.

Credit Deposit Ratio

It is the ratio of how much a bank lends out of the deposit it has mobilized. The credit
deposit ratio of HBL is presented in Table 17.

Table 17
Credit Deposit Ratio of HBL
Year Amount (In Lakhs)

2017/18 88.31

2018/19 87.37

2019/20 82.31

2020/21 89.8

2021/22 92.14

Note. Annual report from fiscal year 2017/18 to 2021/22

 30

94
92.14
92
89.8
90 88.31
87.37
88
Amount in Lakhs

86
84 82.31
82
80
78
76
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 17. Trend line showing credit deposit ratio of HBL.

In Figure 17 shows the CDR decreases Rs.88.31, Rs.87.37 and Rs.82.31 from FY
2017/18 to 2019/20 then increase Rs.89.8 and Rs.92.14 in the FY 2020/21 and FY
2021/22 respectively.

Non-performing Loan/Total Loan of HBL

The Non-performing loan/Total loan of HBL is presented in Table 18.

Table 18
Non-performing Loan/Total Loan of HBL
Year Amount (In Lakhs)

2017/18 1.4

2018/19 1.12

2019/20 1.01

2020/21 0.48

2021/22 1.59

Note. Annual report from fiscal year 2017/18 to 2021/22

 31

1.8 1.59
1.6 1.4
1.4
1.2 1.12
1.01
Amount in Lakhs

1
0.8
0.6 0.48
0.4
0.2
0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

Figure 18. Trend line showing Non-performing Loan/Total Loan of HBL

In Figure 18 shows the NPLR decreases Rs1.4, Rs1.12, Rs1.01 and Rs0.48 from FY
2017/18 to 2020/21 drastic increase Rs1.59 in FY 2021/22 respectively.

2.1.3 Correlation Analysis

The correlation have been computed and results are presented. The variables are Total
Deposit, Total loan, CDR and NPLR which is calculated from correlation is presented in
Table 19.

Table 19
Correlation of Total deposit, Total loan, CDR and NPLR
NPL
  Total Deposit Total Loan CDR R
Total
Deposit 1
Total Loan 0.9926 1
CDR 0.5234 0.6006 1
NPLR 0.0611 0.0115 0.2431 1
Note. Calculated from front data
 32

Table 19 shows the correlation of Total deposit, Total loan, CRD and NPLR.The
correlation of Total Deposit between Total Loan is 0.9926, CDR is 0.5234 and NPLR is
0.0611. Total Loan between CDR is 0.6006 and NPLR is 0.0115. CDR between NPLR is
0.2431.They all have positive correlation means they are directly related each others.

2.2 Findings

The findings from our research is based from 2017/18 to 2021/22 data. The data collected
is in the form of secondary data. The data we have collected are from the annual report of
the firm and Nepal stock exchange. Some of our major findings from above analysis are:

• The deposit analysis shows that the deposits from institutional customers as well
as individual customers have increased every fiscal year from FY 2017/18 to
2021/22.
• The term loan along with demand and other working capital loan have increased
every fiscal year.
• Personal residential loans have decreased four FY from 2017/18 to 2020/21 and
then increase in FY 2021/22.
• Overdraft loan have increased every fiscal year and real estate loan have
decreased in the FY 2017/18 to 2018/19 and then steadily increased upto FY
2021/22.
• Deprived sector loans have decreased every fiscal year.
• Trust receipt/ import loan decrease from FY 2017/18 to 2018/19 and increased
from FY 2019/20 to 2020/21 and again decrease in the FY 2021/22 and other loan
have increase in FY 2017/18 to 2018/19 and then decrease in 2019/20 and again
increase upto FY 2021/22.
• Hire purchase loan have increased from FY 2017/18 to 2018/19 and decreased
upto FY 2021/22 and bill purchased loan have increased from the FY 2017/18 to
2018/19, decreased upto FY 2020/21 and then increased in the FY 2021/22.
• Margin landing loan and staff loan have increased FY 2017/18 to 2020/21 and
then decrease in the FY 2021/22.
• The CDR of HBL on the basis of deposits and loans of last 5 FY.
• Total Deposit , Total Loan, CDR and NPLR , they are positive correlation means
they are directly related each others.
 33

CHAPTER III

SUMMARY AND CONCLUSION

3.1 Summary

The bank is the financial institutions performing a wide range of functions helpful for the
efficient and effective running of financial and economic sectors. Today's banking system
has risen higher than just accepting deposits and providing loans towards modern banking
products and services facilitating digitization of manual systems and e-commerce.

The competitive services are being provided by the bank through various schemes of
deposits and loans based on the individuals and business needs of it's customers. It has
been providing a competitive rate of interest on deposits and economical interest on loans
as per the direction of NRB. The account opening procedure is based on the KYC
approach as directed by NRB.

The present study has been conducted to examine the deposit collection and
classifications along with the mobilization through loans. The data has been collected for
five years FY 2017/18 to FY 2021/22 for the purpose of study.

The study analyzed the credits and deposits data of HBL using various charts and graphs
derived mostly from its annual accounts. The CDR ratio was calculated and been
expressed graphically using a table and line graph which shows the bank is moving from
average to good regarding the ratio.

The first chapter of this fieldwork report includes a background of the study, introduction
to HBL significance, objectives, limitations of the study, and the research methodology
used in the preparation of this fieldwork reporting brief. The second chapter deals with
the presentations, analysis, and result of the data. The graphical representation has made
the study even clear and more focused.
 34

3.2 Conclusion

The survey done regarding this project helps to learn a lot about the customer's opinion on
the bank's various deposit schemes. Most of the customers had positive opinions and were
satisfied with its services. HBL is expanding concerned which needs to inject a huge
amount of working capital of its operations for making profits for its shareholders. But if
we consider the long-term scenario then the bank should always consider its liquidity.
The bank makes the situation better by exploring alternative investment opportunities like
government treasury bills and other liquid national as well and international Euro bonds,
HBL has never let stone unturned introduction latest technology in the banking system
making it more flexible. The bank does not clearly show the sign of severe liquidity as
shown by CDR. The amount of collected deposit is increased by the year which shows
there is no effect of interest with collections of deposits. The deposit is increased due to
the increasing performance of Himalayan Bank as well as the high-interest rate. At some
year bank had higher CDR due to which the bank may not have enough liquidity to cover
required funds.
 35

BIBLIOGRAHPY

Adhikari, R. D., & Pandey, L. (2069). Business Research Methods. Kathmandu: Asmita
Publication and Distributers.

Agrawal, G. R. (2012). Project Management in Nepal. Kathmandu: M.K Publishers and

Distributors.

Bajracharya, B. C. (2001). Business Studies and Mathematics. Kathmandu: M.K

Publicaation and Distributors.

Himalayan Bank Limited. (2022). Annual Report 2021/22. Kathmandu: Himalayan Bank
Limited.

John, P. (1998). Adminstrat, A Practical Guide to Bank Lending and Adminstration.

University of Lagos Press.

Meyer, R. L., & Hushak, L. J. (1987). Deposit Mobilization in Bangladesh: Implications

for Rural Financial Institutions and Financial Policies. 15 (4) 85-117.

Paudel, R. B. (2018). Fundamental of Corporate Finance. Kathmandu: Asmita

Publication and Distributors.

S.A., H. (2008). Determinants of Islamic and conventional deposit in the Malaysian

Banking system. Managerial Finance., 34, 618-643.

Yusuf, P., & Hakan, B. (2011). Study of short term creditors of a company. Journal of
Finance, 1 (1).
 APPENDICES

Appendix I
Loan Details of HBL
Loans 2017/18 2018/19 2019/20 2020/21 2021/22
Term Loan 142929 167386 218471 298012 385592
Overdraft Loan 84079 84760 87768 106597 142535
Trust Receipt/Import loan 141438 133846 139238 216468 84832
Demand and working capital
loan 265226 332878 363826 425188 616819
Personal residential loan 44940 42578 41615 38970 39838
Real estate loan 38071 37529 39050 51219 77779
Margin lending loan 13440 15056 15895 20568 12958
Hire purchase loan 65066 75240 73947 68902 67344
Deprived sector loan 4257 3258 3237 2739 2694
Bills purchased 660 915 301 294 474
Staff loan 5588 6024 6807 8973 7721
Other loan 31502 40528 39215 45612 54254
103537 127634
Total Loan 836900 940003 5 6 1492845
Note. Annual Report of HBL 2017/18 to 2021/22

Appendix II
Deposit Details of HBL
Loans 2017/18 2018/19 2019/20 2020/21 2021/22
Deposit from Institutional
Customers 149128 314229 360445 411024 648,294
Deposit from Individual
Customers 840759 779640 892198 999186 1035900
Total Deposit 989,887 1,093,870 1252643 1410210 1,684,194

Note. Annual Report of HBL 2017/18 to 2021/22