LIQUIDITY ANANYSIS OF NIC ASIA BANK

A Project Work Proposal

By

Priti Rana Magar

Tu Reg. No. 7-2-151-152-2018

Pushpalal Memorial College

Symbol No.

Submitted to

The Faculty of Management

Tribhuvan University

Kathmandu
In partial Fulfillment of the Requirements for the Degree of
BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu
Feb 2023
 Introduction

Background

Banks are important to the financial system and they are inherently fragile if they do
not have sufficient safety margins. Capital is possibly the most important safety
buffer, since it provides the resources to recover from substantial losses of any nature
and also gives those dealing with the bank confidence in its safety.

Nepal bank Ltd. is the first modern bank of Nepal. It is taken as the milestone of
modern banking of the country. Nepal bank marks the beginning of a new era in the
history of the modern banking in Nepal. This was established in 1937 A.D. Nepal
Bank has been inaugurated by King Tribhuvan Bir Bikram Shah Dev on 30th Kartik
1994 B.S. Nepal bank was established as a semi government bank with the authorized
capital of Rs.10 million and the paid -up capital of Rs.892 thousand. Until mid-1940s,
only metallic coins were used as medium of exchange. So the Nepal Government (His
Majesty Government on that time) felt the need of separate institution or body to issue
national currencies and promote financial organization in the country.

Nepal Bank Ltd. remained the only financial institution of the country until the
foundation of Nepal Rastra Bank is 1956 A.D. Due to the absence of the central bank,
Nepal Bank has to play the role of central bank and operate the function of central
bank. Hence, the Nepal Rastra Bank Act 1955 was formulated, which was approved
by Nepal Government accordingly, the Nepal Rastra Bank was established in 1956
A.D. as the central bank of Nepal. Nepal Rastra Bank makes various guidelines for
the banking sector of the country.

Liquidity position is a very important dimension of any commercial banks. Liquidity

is ability of a company to pay back its debts in the short term. Liquid assets are those
that can be converted to cash quickly if needed to meet financial obligations;
examples of liquid assets generally include cash, central bank reserves, and
government debt.

Objective of the study

The main objective of this study is to analyze the liquidity position of NIC Asia and to
fulfill the partial requirement of T.U. (department of management) for the Degree of
Bachelor in Business Study.
Other objectives of the study are:
 To find the liquidity position of the sample bank.
 To examine the liquidity.
 To review the level of current assets relative to current liabilities of the
sample bank.

Rationale of Study

The main rationales of this study are specified as below:

 The main purpose of this report is partial fulfillment of the requirement for
the Degree of Bachelor in Business Study (BBS).
 It is significant to the shareholders of the company. The study is helpful to
know the shareholders regarding the financial performance of NIC Asia.
 This study will be equally useful to the other readers, students of related
subjects and other people who are concern with banking field.
Literature Review

Review of literature means reviewing research studies or other relevant

proposition in the related area of the study so that all the past and previous
studies, their conclusion and perspective of deficiency may be known and further
researcher can be conducted or done. It helps to find out already discovered things.
Review of relevant literature implies putting new spectacle in old eyes to think in
new way by posting the problem with new data and information to see that what
results are derived.
For review study, the researcher uses different books and journal, reviews and
abstracts, indexes, reports, and dissertation or research studies published by
various institutions, encyclopedia etc.
Research Methodology

Research methodology is the process of arriving to the solution of the problem

through planned and systematic dealing with the collection analysis and interpretation
of facts and figures. As this research entirely considers about the financial analysis of
NIC Asia, those research methodology has been used which proves helpful to it.
For the purpose of achieving the objectives, the following methodology has been
purposed to follow, which included research design, nature of data, data gathering
procedure, presentation and analysis techniques.

Research Design

The research is purely for academic purpose. The analysis of the study is based on
certain research design. Because to accomplish any type of research, will set research
design is necessary to fulfill the objective of the study. The research design followed
for this study is analytical as well as exploratory. For the analytical purpose, the
annual report published by the organization and other data were collected from
different sources with published as on different years. Periods covered only 5 fiscal
years, so it covered from 2072/73 to 2076/77. The study is based on the facts and
figure collected from the profit and loss statement and balance sheet of NIC Asia.

Population and Sample

Currently 22 banks are being operated in Nepal. Among them one commercial namely
NIC Asia Bank has been taken as a sample and tried to find out objective by analysing
the data. The whole data available under the study is known as the population. A part
of the population selected from it is known as the sample. But unfortunately, due to
the time and resource factors, it will not be possible to study all of them regarding the
study topic.
Data Collection and Procedure

These data (collected from different sources) are in raw state form in the initial phase
judged independently does not help much. The data were processed for analysis and
interpretation. In course of that table and figures were prepared in the sequential
order. We used different types of processing like coding, editing, classification,
tabulation, etc. Ratio analysis is used as the required financial tools for this study. The
significance of these tools has been elaborated along with the presentation and
analysis of data. For preparing this report, I have been conducted to find out the
liquidity position of NIC Asia according to use mean, standard deviation and
Coefficient Variation. The main tools of analysis are mathematical statistical tools. In
this reports statistical and financial ratio tools is used for data analysis.

Data Analysis Tools

Liquidity position of the banks is analyzed with two important tools. The first most important
tool is the financial tool, which includes ratio analysis and another is a statistical tool.

Limitation of the Study

This study has some drawbacks which are as follows:

 This study is only based on quantitative data.

 Only primary data are used
 This study talks about profit and its management.
 BIBLIOGRAPHY

Cavery, R. (1997). Managerial Economics. Singapore: Irwin Publication.

Charles, J. W. (1999). Encyclopedia of Banking & Finance. New Delhi: S. Chand &
Company Ltd.
Chopra, V. (1989). Liquidity in Financial Institutions. New Delhi: Prentice Hall of
India.
Crosse, H. K. (1963). Management Policies for Commercial Banks. New Jersey:
Prentice Hall Inc.
Dahal, B. & Dahal, B. P. (2002). A Hand Book of Banking. Kathmandu: Asmita
Prakashan.