CHAPTER I

INTRODUCTION

1.1 Background of the Study

The concept of banking has been developed from the ancient history with the effort of
ancient goldsmiths who develop the practice of storing people's gold and valuable under
such agreements the depositions would have their gold for safe keeping and given a
receipt by the goldsmith. Whenever the receipt was presented the depositors would get
back their gold and valuables after a small amount as a fee for safe keeping and serving.
For the development of any country, the financial sector of country is responsible and
must strong. Financial sector comprises of bank, financial companies, co-operatives,
insurance companies, stock exchange markets and mutual fund etc. Financial institutions
play a major role in the proper functioning of an economy. These institutions collect idea
and scattered money the general public and family invest in different enterprise of the
national economy that consequently help in increasing employment opportunities
increasing in life style of people decreasing poverty and thereby developing the nation as
a whole. Banking institutions are inevitable for the resources utilizations and all round
development of the country. It is resources for the economic development: it maintains
economic confident of various segment and extend credit of people.
The relative proportion of various sources long-term funds used in business is called
capital structure. If Short term financing added in capital structure then makes financial
structure of the company. It is the permanent financing of a firm represented by long-
term debt, preferred stock and net worth. So it is relates to arrangement of capital and
excludes short-term borrowing. Capital structure is essentially concerned with how the
firm decides to divide its cash flow into equity capital and debt capital. It is necessary for
 2

decision relating to financing the assets of the firm are very crucial in financial structure
is usually designed to serve the interest of the equity shareholders. Every the financial
manager is often caught in the dilemma of what is the optimum proportion of debt and
equity should be. As a general rule there should be a proper mix of debt and equity
capital in financing the firm's assets. Therefore instead of collecting the entire fund from
shareholders a portion of long-term fund may be raised as loan in the form of debenture
or bond by paying a fixed annual charge. Though these payments are considered as
expenses to an entity, such methods of financing is adopted to serve the interest of the
ordinary shareholders in a better way. Capital structure maximizes the market value of a
firm. Capital structure minimizes the firm's cost of capital or cost of financing. The
appropriate proportion between debt and equity financing is depends on the financial
policy of the individual firms. In one company debt capital may be nil while in another
such capital may even be greater than the owned capital. The proportion between the two,
usually expressed in terms of a ratio, denotes the capital structure of a company. For the
progress of the company, it has to maintain optimal capital structure. Optimal capital
structure is the points where the cost of capital is lowest and value of the organization is
highest. The financial structure has been made from various components of financial
sources. Share capital, reserve funds, deposits, debenture and long term debt and other
liabilities are the major components of the financial structure.
This study is concentrated about the capital structure of bank. Bank is the profitable
organization which is engaged in financial transaction. There are four types of financial
institution in Nepal as Commercial bank, Development bank, financial company and
micro finance. Commercial bank also known as 'A' class bank. It has got 'A' class license
from Nepal Rasta Bank. According to current policy, commercials bank's paid-up is
Rs800 crore. There is slightly different between commercial bank and development bank.
Having 'B' class license from Nepal Rasta Bank is Development bank, 'c' class license is
finance company and’d’ is microfinance. Capital structure is the lifeblood of the bank.
Strength of the bank is depends on the capital structure. Capital structure is the
proportionate mix of debt capital and equity capital. The capital structure has been made
from various components. The composition of total share capital and long term debt
 3

required for running organization is called capital structure. In simple language the total
mix of capital required by a business firm is known as capital structure.
This study deals the " Capital Structure of MEGA Bank Nepal Limited," The
components of capital are as:
Common stock
This is a type of securities that represents the ownership of a company. It is also known
as common stock or equity share. Buyer of the common stock becomes owner of the
company, depending upon his/ her investment. The holder of the common stock is known
as shareholders. Common stockholders received dividends on their investment. Dividend
is a part of profit. Only a company in profit can distribute dividend. But there is no
obligation to the company to distribute profit as a dividend to the shareholders.
Debenture and Long-term Debt
Debenture and long term debt is the major sources of fixed capital for the business
organization. The organization may not be able to raise its required fund only by issuing
ordinary and preference shares. Debenture holders don’t have any ownership right over
the company
Reserve
The company also can fulfill its financial requirement by utilizing the profit earns by the
firm. Reserve is the useful for the fulfillment of long term as well as short term fund
required by an organization.
This study deals the capital structure of Machhapuchhere Bank Limited .MEGA Bank
Nepal is a popular and well reputed bank in Nepal. It's head office is located in Rising
Mall Kamaladi, Kathmandu. It has 203 branches all over in Nepal until 2078. The MEGA
is in
Rapidly growing stage. It has playing vital role in Nepalese economy for improving. Rs
14,654,964957,000 is the current issued capital and Rs14,654,964957, paid up capital of
bank according to the financial report (audit report) for F/Y 2077/078. The historical
background of the Mega Bank Nepal is it has got "A" class license from NRB and started
his transaction from7thShrawan 2067 BS. In the date13 thBaishakh 2073Pashchimanchal
Development Bank merged with MEGA Bank Nepal. Similarly Tourism Development
Bank Limited merged with the Bank on 30thBaishakh 2075.Likewise Mega Bank has
 4

acquired Gandaki Bikash Bank Limited a national level B class financial institution and
commenced joint operation from 21stAsar 2077. Now it's known as Mega Bank Nepal
which is the rapidly growing bank and it established itself as a high rank commercial
bank.
Currently the bank has 203 Branches, 25 extension counters and 140 ATM throw out the
country addition to 59 Branchless banking and 3200+ mega remit agent. Mega Bank
offers a wide range of Banking product and financial services to the corporate mid-
corporate; SMEs consumer and micro consumer through a variety of delivery channels.
The seed planted by the Bank's Promoters in their initial deliberations form the core of
Mega Bank's Vision, Mission and Values. The ethos driving the institution forward today
is the vision and mission of being the Banker of every Nepali, from Halo to Hydro
(Plough to Power). With this value of inclusive banking forming the core of the Mega
culture, the institution aims to deliver Service Excellence to create mutually beneficial
relationships with all our stakeholders.

1.2 Objectives of the Study

Objectives are the expected result of the study. The main objective of this study is to
analyze capital structure of Mega Bank Limited. The study is more concentrate to achieve
the goals. Following are the objectives of the study.
 To determine the source of capital.
 To identify the composition of capital structure.
 To examine the growth of different sources of capital.

1.3 Rationale of the Study

This study covers the issue of capital structure of Machhapuchhere Bank Limited. After
completion of this study, the references will achieves the degree of Bachelor of Business
Studies. This study will fruitful for the bank to formulate future plan and policies. It may
provide some idea about future research. Any other interested people may use this work
as reference.
 5

1.4 Limitations of the Study

Every research work has certain limitations. This small project work has the following
limitations;

 It does not covers all the commercial bank.

 It studies only five years data.

 This study is based only on secondary data.

 This study is just for academic propose.

1.5 Literature Review

Briefly review the theoretical aspects of cost of capital and review the previous work on
cost of capital. I have studied many books, institutional reports and field reports which
help me to prepare this report. Which are given follow:-
Khan S (2077), On the study report topic “A STUDIES OF LOAN AND
INVESTMENTS OF NMB BANK LIMITED, BENI BRANCH MYAGDI” he help on
theoretical meanings in the topic of research. Some objectives are as follows;
 To analysis the loan of NMB Bank Limited.
 To analysis the criteria of provide the loan.
 To analysis loan and investment of five years.
Paudel P (2075), on the study report topic “THE CAPITAL STRUCTURE OF PRABHU
BANK LIMITED” he found that the sources and structure of financial and capital of the
organization. Some objectives are as follows;
 To identify earning per share.
 To know the return on assets.
 To analyze the return on shareholder equity.
 6

 To know actual net profit margin.

PARAJULI S(2076) on his study report on topic "LOAN ANALYAIS OF MALLAJ EX-
ARMY MULTIPURPOSE CO-OPERATIVE SOCIETY LTD" found that capital
structure of the co-operatives was unsatisfactory with the lower return of assets and lower
market value of shares. Some objectives are as follows;
 To know the status of Co-operative.
 To analysis the Growth of Loan of Co-operative.
 To Analysis of Composition of Loan Mix of Co-operative.
 To analysis of Non-performing Loan of Co-operative.

1.6 Method of the Study

This chapter deals with the methodology to be followed in the study. This chapter
provides the overall framework or plan for the collection; analysis and presentation of
data required for fulfill the objectives of the study. It also specifies the methods and
procedures for acquiring the information needed to solve the research problems.
Research design
Research design is a plan of collecting, presentation and analyzing of the data. This study
is based on descriptive research design.
Population and sample
The population of this study is the” Machhapuchhere Bank Limited.’’ This research work
is based on whole population i.e Machhapuchhere Bank Limited. But the study of capital
structure covers only five years data. Five years data are taken as convenient sampling
method.
Types of data
It is based on quantitative data and collected through secondary sources from published
annual report of the bank. Few primary data are collected using questionnaire.
Data collection procedure
Especially the annual report of Mega Bank Nepal and the website of concern bank
limited are taken as a main source of data collection for purpose of study. NRB
 7

publication such as an economic report and bulletin, banking and financial statistics,
annual report of NRB etc. Other main source is website of NRB and website of Nepal
share markets. Most of the data and substance are obtain from above source.

Instruments

For analyzing the data there are used the different instrument like statistical and financial
instrument. Under this field work, primary data are collected through personal interview
method and secondary data are collected through annual reports and websites of Mega
Bank.

Techniques of analysis
For the purpose of the study all collected primary as well as secondary data are arranged,
tabulated under various heads and then after disunities and statistical analysis have been
carried out to enlighten the study. Mainly financial methods are applied for the analysis
of the data. Appropriate statistical tools are procedure, arithmetic mean. To make the
study more specific and reliable, the researcher uses two types of tools for analysis.
 Statistical tools
 Financial tools
 8

CHAPTER II
RESULT AND ANALYSIS

This chapter needs the analysis, presentation, interpretation and major finding of relevant
data of Machhapuchhere Bank Limited in order to fulfill the objectives of research study.
To obtain better result, the data have been analyzed according to the research mythology
as mentioned in third chapter. The purpose of this chapter is to introduce the mechanics
of data analysis and interpretation. With the help of this analysis, effort has been made to
highlight capital structure management of Machhapuchhere Bank Limited as well as
other problem or cases also. For analysis, different type of analytical methods and tools
such as financial ratio analysis as well as statistical analysis are used.

2.1 Presentation and Analysis of Data

The main part of the study is presentation of data and their analysis. The main purpose of
this chapter is to convert all raw data in understanding form. It is the process of
tabulation, presentation, summarizing, analyzing in to various chart, tables and bar. It
makes easy for understanding to reader about data, their result and sources.
2.1.1 Source of Capital
The major sources of capital of any organization are share capital, long term debt,
reserves and surplus, preference share capital etc. Table No. 2.1 shows the sources of
capital of Machhapuchhere Bank Nepal Limited.
 9

Table No. 2.1

Sources of Capital

S. N Source of Capital
1 Share Capital
2 Reserve Funds
3 Long-term Debts

Table No. 2.1 shows the sources of capital of Machhapuchhere Bank Limited. There are
three sources of capital which are share capital, reserve fund and Long-term debt.
Without capital organization can’t run. It is the lifeblood of the organization. Share
capital refers to the fund that a company raises from selling shares to investors. For
example, the sale of 1,000 shares at @15 per share raises 15,000 of share capital. Also, if
the company is dissolved, the owners of preference shares are paid back before the
holders of common stock.
Reserve fund refers to a type of fund in which you can set aside money to cover your
routine, scheduled and unscheduled expenses, which you would otherwise draw from
your available savings. You can create a general reserve fund for your family and use it
to pay for your planned and unplanned expenses. Reserve funds usually are set aside in
an account separate from the general operating funds.
Long-term debt is debt that matures in more than one year. Values of long-term debt are
more sensitive to interest rate changes. Long-term liabilities are also called long-term
debt. Government debt, mortgages, and bond and debentures are major examples of long-
term debt.
2.1.2 Composition of Capital Structure
The capital structure refers the financial framework of corporate entity which
compromise of the debt and equity employed to finance the assets and overall operations.
 10

The decision on capital composition has been a continuous process, mostly when the
need for financing projects emanates.

Composition of Capital Structure in Fiscal Year 2073/074(Rs.000)

Table No. 2.2 and figure No. 2.1 show the composition of capital of Machhapuchhere
Bank Limited in the year 2073/074 B.S.
Table No. 2.2
Composition of Capital Structure in Fiscal Year 2073/074(Rs.000)

S.N. Sources of Capital Amount Percentage

1 Share capital 5279415 12%
2 Reserve fund 585984 1%
3 Long term debt 38936864 87%
Total 44802263 100%
Source: - Annual report 073/74of Machhapuchhere Bank Limited

Figure No. 2.1

Compositions of Capital Structure in F/Y 073/74

F/Y 073/74

12%

1% Share capital
87% Reserve fund
Long term debt
 11

Table No. 2.2 and figure No. 2.1 shows the composition of capital structure of F/Y
073/74. The composition of capital includes share capital Rs. 5279415, reserve fund Rs.
585984 and long term debt Rs. 38936864.Machhapuchhere Bank Limited has 87%long
term debt, 1% in reserve fund and 12% in share capital as capital in the fiscal year
2073/074.

Composition of Capital Structure in Fiscal Year 2074/075

Table No. 2.3and figure No. 2.2show the composition of capital of Machhapuchhere
Bank Limited in the year 2073/074 B.S.
Table No. 2.3
Composition of Capital Structure in Fiscal Year 2074/075(Rs.000)

S.N Sources of Capital Amount Percentage

1 Share capital 10285526 14%
2 Reserve fund 1637511 8%
3 Long term debt 63299234 84%
Total 75222271 100%

Source: - Annual report 074/75 of Machhapuchhere Bank Limited

Table No. 2.3 shows the composition of capital structure of F/Y 074/75 there given
amount are in thousand. Share capital is Rs10285526, Reserve fund is 1637511 and
Long-term debt is 63299234 as a capital in the fiscal year 2074/075.
 12

Figure No. 2.2

Compositions of Capital Structure in F/Y 074/75

F/Y 074/075

14%
Share capital
2%
Reserve fund
Long term debt

84%

Figure No. 2.2 shows the portion of different capital. The pie chart illustrate the Mega
Bank Nepal has 84% long term debt, 2% in reserve fund and 14% in share capital in F/Y
2074/075.
Composition of different sources of capital structure as on F/Y 075/76
Table No. 2.4and figure No. 2.3shows the composition of capital of Machhapuchhere
Bank Limited in the F/Y 2075/076 B.S.
Table No. 2.4
Composition of different sources of capital structure as on F/Y 075/76(Rs.000)

S.N Sources of Capital Amount Percentage

1 Share capital 10388621 11%
2 Reserve fund 1901409 2%
3 Long term debt 78684859 87%
Total 90974889 100%
 13

Source: - Annual report 075/76 of Machhapuchhere Bank Limited

Table No 2.4 shows the composition of capital structure of F/Y year 074/075, where
share capital is Rs10388621, reserve fund is 1901409 and long-term debt is 78684859
and total amount is rs.90974889 as a capital in fiscal year 2075/076.

Figure No. 2.3

Compositions of capital structure in F/Y 075/76

F/Y 075/76

11%
2% Share capital
Reserve fund
Long term debt

86%

In figure No. 2.3 shows the portion of different sources of capital where there is long
term debt is 87%, share capital is 11%, and reserve fund is 2% in F/Y 2075/076.

Composition of Capital Structure F/Y 076/77

Table No. 2.4and figure No. 2.3shows the composition of capital of Machhapuchhere
Bank Limited in the year 2076/077 B.S.
 14

Table No. 2.5

Composition of Capital Structure F/Y 076/77 (Rs.000)

S.N Sources of capital Amount Percentage

1 Share capital 13138621 9%
2 Reserve fund 2926265 2%
3 long term debt 127894614 89%
Total 127894614 100%

Source: - Annual report 076/77 of Machhapuchhere Bank Limited

Table No. 2.5 shows the composition of capital structure of F/Y year 076/77,where share
capital is rs.13138621, reserve fund is 2926265 and long term debt is 127894614 and
total amount is rs.127894614 as capital in F/Y 2076/077.

Figure No. 2.4

Compositions of Capital Structure in F/Y 076/77

F/Y 076/77

9%
2% Share capital
Reserve fund
long term debt

89%
 15

Figure No. 2.4 shows the composition of capital structure of F/Y year 076/77 shows the
portion of different sources of capital. There is long term debt 89%, 9% share capital, 2%
reserve fund in F/Y 2076/077.

Composition of Capital Structure F/Y 077/78

Table No. 2.6 and Figure No. 2.6 shows the composition of capital of Machhapuchhere
Bank Limited in the year 2077/078B.S.
Table No. 2.6
Composition of Capital Structure F/Y 077/78 (Rs.000)

Percentage
Sources of capital Amount
S.N
1 Share capital 14654964 10%
2 Reserve fund 3672432 2%
3 Long term debt 136893588 88%
Total 155220984 100%

Source: - Annual report 077/78 of Machhapuchhere Bank Limited

Table No. 2.6 shows the composition of capital structure of F/Y 077/78 where share
capital is R.s14654964, Reserve fund is rs.3672432 and Long term debt is rs.136893588
and total amount is rs.155220984 as a capital in F/Y2077/078.

Figure No. 2.5

 16

Compositions of Capital Structure in F/Y 077/78

F/Y 077/78

9%
2% Share capital
Reserve fund
Long term debt

88%

Figure No. 2.6 shows the composition of capital structure in percent of F/Y 077/78 and
we can find the portion of different sources of capital. In this pie chart the long- term debt
is 88%, share capital is 10% and reserve fund is 2% in F/Y 2077/078.
2.1.3 Growth of Different Sources of Capital
The composition and growth of different source of capital show the capital structure of
any firm.
Growth of Share Capital
Table No. 2.7 and Figure No. 2.6 shows the growth of share capital of Machhapuchhere
Bank Limited.
Table No. 2.7
Growth of Share Capital

F/Y Amount(Rs.000) Growth %

073/074 5279415
074/075 10285526 95%
075/076 10388621 1%
076/077 13138621 26%
077/078 14654964 12%
 17

Table No. 2.7 shows the growth rate of share capital in F/Y 2073/74 to F/Y 2077/78 of
Mega Bank Nepal where, F/Y 074/75 growth rate is 95% when the amount is
rs.10285526, F/Y 075/76 growth rate is 1% when the amount is rs.10388621, F/Y 076/77
growth rate is 26% when the amount is rs.13138621 and F/Y 077/78 growth rate is 12%
when the amount is rs.14654964. Here F/Y 074/75 the growth rate is largest due to
merge between Mega Bank Nepal and Tourism Development Bank and undervaluation of
the share price.

Figure 2.6
Growth of Share Capital for 5 years (FY073/74 to FY 077/78)

100 Growth % of share capital

90
80
70
60
50
Growth %
40
30
20
10
0
073/074 074/075 075/076 076/077 077/078

In this Figure No. 2.6 chart shows yearly growth of share capital. According to the chart
the share capital increases in F/Y 073/74, 95% in F/y 074/075, 1% in 075/076, 26% in
076/077 and 12 % in 077/078

Growth of Reserve Fund for five years

 18

Table No. 2.8 and Figure No. 2.7 shows the growth of reserve fund of Machhapuchhere
Bank Limited.

Table No. 2.8

Growth of Reserve Fund for Five Years

F/Y Amount(Rs.000) Growth %

073/074 585984
074/075 1637511 179.45%
075/076 1901409 16.12%
076/077 2926265 53.90%
077/078 3672432 25.50%
Table No. 2.8 shows the reserve funds of F/Y 2073/74 to F/Y 2077/78 of
Machhapuchhere Bank Limited. In this table, growth rate of F/Y 074/075 is 179.45%
when the amount of reserve is rs.1637511000, growth rate of F/Y 075/076 is 16.12%
when the amount of reserve is rs.1901409000, growth rate of F/Y 076/77 is 53.90% when
the amount of reserve fund is rs.2926265000 and growth rate of F/Y 077/078 is 25.50%.,
when the amount of reserve is rs.3672432000. Here F/Y 074/075 growth rate is largest
(i.e 179.45%) due to merge between Machhapuchhere Bank Limited and Tourism
Development Bank and undervaluation of reserve price.

Figure 2.7
Growth of Reserve Fund for 5 years (F/Y073/74 to F/Y077/78)
 19

Growth % of reserve fund

200
180
160
140
120 Growth %
100
80
60
40
20
0
073/074 074/075 075/076 076/077 077/078

In figure no. 2.7 chart shows yearly growth of reserve funds. According to the chart the
reserve fund highly increases 179.45% in F/y 074/075,in this year merge two bank
16.12% in 075/076, 53.9% in 076/077 and 25.5% in 077/078
Growth of Long Term Debt for the F/Y 073/74 to F/Y 077/78
Table No. 2.9 and figure no. 2.8 shows the growth of long-term debt of Machhapuchhere
Bank Limited.

Table No.2.9
Growth of Long Term Debt for the F/Y 073/74 to F/Y 077/78

F/Y Amount(Rs.000) Growth %

073/074 38936864
074/075 63299234 62.57%
075/076 78684859 24.31%
076/077 127894614 62.54%
077/078 136893588 7.04%
 20

Table No. 2.9 shows the long-term debt of F/Y 2073/74 to 2077/78of Machhapuchhere
Bank Limited where growth rate of F/Y 074/75, F/Y 075/76, F/Y 076/077and F/Y
077/078 is 62.57%, 24.31%. 62.54% and 7.04% respectively. Here the growth rate of
F/Y074/75 (i.e62.57) as compare as other F/Y.

Figure no.2.8
Growth of Long-Term Debt for 5 years (FY074/75 to FY 078/79)

Growth % of long term debt

70

60

50

40 Growth %

30

20

10

0
073/074 074/075 075/076 076/077 077/078

Figure No. 2.8 shows yearly growth of deposits. According to the chart the long term
debentures 62.57% in F/y 074/075, 24.31% in 075/076, 62.54% in 076/077 and 7.04% in
077/078.

2.2 Major findings

The major findings of the study of capital structure of Machhapuchhere Bank Limited are
:

The major sources of capital are share capital, reserve funds, deposits and other liabilities.
All the sources are is an increasing trend year by year which is positive signal for bank.
 21

Now the bank runs to reach his destination and achieve his goal on speed of rabbit. The
bank has not use long-term debt, used only short-term debt. The main source of capital is
the deposit. It shows the bank's uncertainty. The bank must increase the share capital
with the ratio of deposit.

In F/Y 2074/75 is95% growth rate which is largest growth rate of five fiscal year and the
growth rate of share capital in F/Y 2075/76 is 1% which is lowest growth rate than other
F/Y.

The growth rate of reserve fund in F/Y 2074/75 is 179.45%, F/Y 2075/76 is 16.12%, F/Y
2076/77 is 53.90% and F/Y 2077/78 is 25.50% respectively. In F/Y 2074/75 is highest
growth rate which is 179.45% and fiscal year 2077/78 is lowest growth rate which is
25.50%.

The long-term debt in F/Y 2074/75 is 62.57%, F/Y 2075/76 is 24.31%, F/Y 2076/77 is
62.54% and F/Y 2077/78 is 7.04% respectively. In fiscal year 2074/75 is highest growth
rate which is 62.57% and fiscal year 2077/78 is lowest growth rate which is 7.04%.

By analyzing the growth rate of bank, we can easily say it is a plus point. All the sources
of capital are increasing every year. It is a good signal for bank. Increasing capital is
directly related with profitability.

CHAPTER III

SUMMARY AND CONCLUSION

 22

3.1 Summary

The concept of banking has been developed from the ancient history with the effort of an
ancient goldsmith who developed the practice of storing people’s gold and valuable under
such agreements the depositions would have their gold for safe keeping and given a
receipt by the goldsmith. Whenever the receipt was presented the depositors would get
back their gold and valuables after a small amount as a fee for safe keeping and serving.

This report aimed at studying about the capital structure of Machhapuchhere Bank
Limited. From the study of different books, and the scholars, about the financial structure
we can say that the total capital need to run any business organization in smooth way is
known as the capital.

The main objective of the study is to determine the source of capital, to identify the
composition of capital structure of the bank, and to examine the growth rate of different
source of capital.

The capital structure should be determined by considering the nature of organization

future plan and validity of the sources. At the time of preparation of this project work
report, the required information and data are collected by interaction with manager of the
organization, account of same organization and some other staffs as primary data
collecting methods. And annual reports, audit reports of last five years are used to collect
data as secondary data. In this way the collected primary and secondary data are
presented with the help of table and graph.

The capital of these organizations is in increasing trend annually. Share capital, reserve
funds, bond or debentures and long-term deposit are the sources involved in capital
structure.

The amount of share capital of Machhapuchhere Bank Limited in F/Y 2073/074 to F/Y
2077/078 is Rs. 5279415000,10285526000,10388621000,13138621000 & 14654964000
respectively.
 23

The amount of reserve fund of Machhapuchhere Bank Limited in F/Y2073/074 to

F/Y2077/078 is Rs. 585984000, 1637511000, 1901409000, 2926265000 & 3672432000
respectively.

The amount of long-term debt of Machhapuchhere Bank Limited in F/Y2073/074 to

F/Y2077/078 is Rs. 38936864000, 63299234000, 78684859000, 127894614000 &
1368933588000 respectively.

3.2 Conclusion

From the analysis of the capital structure of the bank, some results are abstracted. The
bank collects necessary capital from several long term and short-term sources. They all
are in increasing trend, but the trend of increasing of deposit is high. The growth of share
capital and long-term debt is slow. There is less equity portion as whole capital. The bank
should increase share capital and must use debt on his financing. For the strength of
organization there must high portion of equity which is the owner's investment of
business.

The main objective of the study is, to determine the source of capital, to identify the
composition of capital structure of bank and to examine the growth of different sources of
capital.

The major findings of the study are as follows:

 In F/Y 2074/75 is 95% growth rate which is largest growth rate of five fiscal year
and the growth rate of share capital in F/Y 2075/76 is 1% which is lowest growth
rate than other F/Y.
 The growth rate of reserve fund in F/Y 2074/75 is 179.45%, F/Y 2075/76 is
16.12%, F/Y 2076/77 is 53.90% and F/Y 2077/78 is 25.50% respectively. In F/Y
2074/75 is highest growth rate which is 179.45% and fiscal year 2077/78 is lowest
growth rate which is 25.50%.
 24

 The long-term debt in F/Y 2074/75 is 62.57%, F/Y 2075/76 is 24.31%, F/Y
2076/77 is 62.54% and F/Y 2077/78 is 7.04% respectively. In fiscal year 2074/75
is highest growth rate which is 62.57% and fiscal year 2077/78 is lowest growth
rate which is 7.04%.
 By analyzing the growth rate of bank, we can easily say it is a plus point. All the
sources of capital are increasing every year. It is a good signal for bank.
Increasing capital is directly related with profitability.

Bibliography

Journal, Official and relevant studies, Interview

- Audit report of Mega Bank Nepal 2073/74

- Audit report of Mega Bank Nepal 2074/75
- Audit report of Mega Bank Nepal2075/76
- Audit report of Mega Bank Nepal 2076/77
- Audit report of Mega Bank Nepal 2077/78
 25

- internet
- Pandey D, and Adhikari D (2073), business research methods (BBS 4 Th year
book).
- Poudel R, Baral K, Joshi P, Gautam R and Rana S (2073), fundamentals of
corporate finance.
- Previous field report of BBS 4th year of Prisapaudel and Sameer Khan.
- Respected staff of Mega Bank NepalBeni branch, Myagdi.
- Parajuli, S (2073) previous field work report in the title of "Financial structure of
KDBL".
- www.megabanknepal.com.np

Appendices

Questionnaire

 What are the main objectives of the company?

 What is the company's debt equity ratio?
 What is the main source of capital?
 Have the company applied any scheme for the depositors?
 What are the current policies for the management of capital?
 26

-
- What is the bank's efficiency in utilizing available capital sources?
- Ans…………………………………………………………………………………
………………………………………………………………………………………

- What is the financial strength and weakness in term of capital structure of the
MBNL?

- Ans…………………………………………………………………………………
………………………………………………………………………………………

- How many portions of shareholder funds in the bank capital structure?

- Ans…………………………………………………………………………………
………………………………………………………………………………………

- What are the main sources of capital?

- Ans…………………………………………………………………………………
………………………………………………………………………………………