A STUDY ON

CAPITAL STRUCTURE OF PRABHU BANK LIMITED

A Project Work Report

Submitted By :

Sunita Gurung
Triveni International College
TU Reg NO. : 7-2-882-146-2019
Exam Symbol no: 708820070
Group : Finance

Submitted To:

The Faculty of Management

Triveni International College
Gandaki, Pokhara, Nepal

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Pokhara
July, 2024
 Introduction

1.1 Background of the study

The study is entitled as “A Study on Capital Structure of Prabhu Bank Limited”. The
main focus of this study is to analyse the capital structure of the bank.
According to Parmasivan & Subramanian (2009). “The term capital structure refers
to the relationship between the various long-term sources financing such as equity
capital, preference share capital and debt capital”.
In today’s competitive world banking sector has emerged as a key player and
contributing its bets to create employment and improving the financial sector of the
country. It has been necessary to conduct research to investigate and recommend
solutions that would help firms companies improve their position. Moreover, I have
selected Prabhu Bank Limited (PrBL) for the research, because of the fact that it is
formerly known as Kist Bank incorporated in 2002 as a Finance Company and
upgraded to Class A Commercial bank in May 2009, was renamed to its current name
after the merger of four financial institutions on 15th September 2014.

1.2 Statement of the problem

Capital structure is essential and useful for several reasons that impact the financial
health, strategic flexibility, and overall performance of a company. It is also a
fundamental aspect of financial management that influences a company's ability to
raise capital, manage risks, optimize costs, comply with regulations, and support long-
term growth. By strategically balancing debt and equity, companies can enhance their
financial resilience, operational flexibility, and overall competitiveness in the market.
Prabhu Bank Limited faces a challenge in optimizing its capital structure to achieve
an ideal balance between debt and equity financing. The current debt-to-equity ratio
suggests a higher reliance on debt capital, which may be impacting the bank’s overall
financial health and operational flexibility. This imbalance raises concerns about
potential risks associated with debt servicing costs, liquidity management, and
regulatory compliance. The study addresses the following specific research questions:
 What is the performance of the bank related to adequate capital ratio?
 What is the impact of cost of capital on profitability of the bank?
1.3 Objectives of the study
Each and every student has their own objective. The main object of this Fieldwork
report is to aligning financial goals with strategic priorities and market conditions. So
following objectives has been considered for doing the study.
 To study the weighted average cost of capital (WACC) of PrBL.
 To Ensure Capital Adequacy prescribed by NRB.
 To study the financial Flexibility of PrBL.
 To analyse impact of risk and tax on adequacy of capital.
 To align with corporate strategy.
1.4 Theoretical framework

1.5 Significance of the study

2.1 Review of Literature
2.2 River of Previous Studies
Research Methodology
3.1 Research design
3.2 Nature and sources of data
3.3 Population and sample
3.4 Data collection techniques
3.5 Reliability and Validity of data
3.6 Data Processing and Analysis
Chapter Plan
Chapter I- Introduction
Chapter II- Review of Literature
Chapter III- Research Methodology
Chapter IV- Data Presentation and Analysis
Chapter V- Conclusion and Recommendation
Reference