CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

A bank is institution which accepts money in form of deposit & lends money in form
credit. A bank is considered as major pillar of economy. it has great role in capital
formation of nation which is essential to alleviate poverty and pool of funds for
investment. In a economy the bank is regarded as one of the economy backbone of the
country for its development. Bank is a financial institution that deals in money. The basic
function of bank is collecting deposit and granting the loans. It involves in creation
deposit and loan. In the economy, the banks collects small saving of generals people,
accumulative it and lands the productive sectors of the society for the overall economic
development.

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 has established in 1937 A.D Nepal bank has been
inaugurated by King Tribhuvan Bir Bikran Shah on 30 th 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 mind-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

1
makes various guidelines for the banking sector of the country. A sound banking system
is important for smooth development of banking system. It can play a key role in the
economy. It gathers saving from all over the country and provides liquidity for industry
and trade. In 1957 A.D. As the agriculture is the basic occupation of major Nepalese, the
Development of this sector plays in the prime role in the economy. So, separate
Agricultural Development Bank was established in 1968 A.D. This is the first institution
in agricultural financing. For more than two decades, no more banks have been
established in the country. After declaring free economy and privatization policy, the
banking sector is more liberalized and modernized and systematic managed. There are
various types of the working in modern banking system in Nepal. It includes central,
development, commercial, financial, co-operative and Micro Credit (Grameen) banks.
Technology is changing day by day. And changed technology affects the traditional
method of the service of bank. Banking software, ATM E-Banking, Mobile Banking,
Debit Card, Credit Card, Prepaid Card etc. Service are available in banking system in
Nepal. It helps both customer and banks to operate and conduct activities more efficiently
and effectively. For the development of banking system in Nepal, NRB refresh and
change in financial sector policies, regulations and institutional developments in 1980
A.D. Government emphasized the role of the private sector for the investment in the
financial sector. These policies opened the doors for foreigners to enter into banking
sector in Nepal under joint venture.

Liquidity is the status and part of the assets which can be used to meet the obligation
liquidity can be viewed in term of liquidity available through purchased fund. The degree
of liquidity depends upon the relationship between cash assets plus those assets which
can be quickly turned into cash and liability awaiting payment. Liquidity is an important
aspect of the study of furmenty management therefore the researcher has been chosen this
topic for the research work.

One of the sensitive factor or element in the bank is liquidity. Liquidity refers to the
convertibility assets into cash. It means how fast the assets can be change into cash.

2
There are many assets which are easily converted into cash by the bank, such as cash in
hand, cash at bank, cash at central bank, investment in government securities. But some
assets are difficult to get converted into cash as line and fixed deposit. Liquidity is also
defined as the position or capability of a bank to meet the current obligation of customers
such as payment of chaque payment of demand draft, disbursement of approved loan etc.

1.2 Introduction to Global IME Bank Nepal

global IME bank limited is a national level commercial bank promoted by highly
prominent business personalities groups and reputed individuals of the country who have
excelled in their field of business profession with very good integrity and social
standings. under the guidance of reputed board of directors and professional and dynamic
management team having extensive experience with proven track-record in the banking
industry, global IME bank is committed to offer a wide range of banking products and
services tailored with the state-of-the-art technology to meet the unique requirements of
all the customer clients and thereby delight them by exceeding their expectations.

with a shared vision of "The Bank for All", Global IME Bank Team is committed to
providing the quality products and services to its valued customers with utmost courtesy
and care. we at Global Bank believe that delivery products services designed customized
to best suit the customer need through continuous research development and innovation is
the foundation of build-up the trust and enhance the level of confidence between the
customer and bank. hence, Global IME Bank Team pledges its commitment to always
endeavor for delivery of innovative products services to all the customers to best suit
their requirements therefore ensuring the optimum benefit and value addition to the
customer as well as to all other stake holders.

1.3 Objective of the study

The main objective of the study is to analyze the Global IME Bank liquidity needs and its
management for the current year. The specific objectives can be listed below:

3
a) To measure the liquidity ratio of the bank.

b) To analyze the deposit of Global IME Bank.

c) To evaluate current, saving and fixed deposit ratio with total deposit of Global of
Global IME Bank.

1.4 Rationale of the study

The present study deserves some significant of it's own kind in this field. The study will
be concise practically usable and valuable to the major parties interested in the
performance of Global IME Bank. People concerned with banking, teacher, teacher and
students of the subject particularly from management faculty, chartered Accountancy and
institution of finance would also find it useful. The study concipious its importance as
explained under:

i. This report can be sources of the secondary data for researcher.

ii. Global IME Bank may acquire important suggestion as mention in the study.

iii. The BBS level would remain incomplete without this part of study.

iv. This document can be kept as valuable assets in the library.

v. The study can broaden the banking knowledge.

vi. This study will help to locate the area of investment.

vii. This study will help the bank to take corrective actions if errors are found.

viii. This study pertains to research report writing which is mandatory for the BBS
final year students of TU.

4
1.5 Review of Literature

This chapter deals with the theoretical aspects of the topic of liquidity analysis of Global
IME Bank Limited in more details and descriptive manner. For this study, journal
articles, and more research reports related with this topic have been reviewed. This study
has to refer almost all books related with this topic published. Some of the prior reports
by students of BBS regarding this topic have also been reviewed.

1.5.1 Conceptual review

One of the sensitive factor or element in the blank is liquidity . Liquidity refers to
the convertibility assets into cash .It means how fast the a change into cash. There are
many assets which are easily converted into cash by the bank. Such as cash in hand, cash
at bank cash at central bank, investment in marketable security government security,
government security. But some assets are difficult to get converted into cash such as long
and fixed assets.

Liquidity is also defined as the position or capability of a bank to meet the current
obligation of customers such as payment of cheque. Payment of demand drafts,
disbursement of approved lone and operation expenses of bank etc. Bank needs to
maintain some reasonable level of liquidity to fulfill different commitment such as
provide money to depositors when the demand administrative expenses, for bank's
capacity to granting approved lone. Liquidity is crucial in the business like banking.
Because of the bank his high liquidity, it can no profit and if the bank has the short fail of
the liquidity it cannot satisfy its customers. Inadequate liquidity may lead to collapse of
the banks while excess liquidity is detrimental to bank's profitability. In order to remove
demerits associated with maintaining inadequate and excess liquidity, banks should
maintain an optimum level of liquidity. This is possible only when bank's liquidity needs
is correctly predicted. Prediction covers in present outflow of liquidity. If prediction
shows more outflows, bank should be prepared to cover the shortfall by borrowing or by

5
liquidating assets. If inflow greater than outflow, bank should plan where to invest so,
that income can be increase. Banks attach great importance short term and long term
predictions. Prediction of liquidity need should be in the firm of primary and secondary
reserves so, that bank generates income and at the same time does not compromise to
liquidity.

1.5.2 Review of previous works

Bank needs to maintain some reasonable amount of liquidity to fulfill different

commitments. Such as provide money to depositors when they demands for
administrative expenses, for maintaining cash reserve ratio in the central bank etc. so,
liquidity is define as banks capacity to pay cash in exchange of deposits. Financial
analysis is the process of identifying the financial strength and weakness of the concerned
bank. It is the process of finding strength and weakness of the concerned bank. It is the
process of finding details accounting information given in the financial statement. It is
performed to determine the liquidity, solvency, efficiency and profitability position of an
organization. The function or the performance of finance can be broken down into three
major decisions i.e. the investment decision, the financing decision, and the dividend
decisions. an optional combination of the three decisions will be maximum value. Nepal's
first commercial bank, the Nepal Bank Limited, was established in 1937. The
government owned 51 percent of the shares in the bank and controlled its operations to a
large extent. Nepal Bank Limited was headquartered in Kathmandu and had branches in
other parts of the country. There were other government banking institutions.

Liquidity needs of Development bank are unique because in no other types of business
there will be such large portion of deposits payable on demand. Inadequate liquidity does
damage credits standing of other organization as will but banks fails to pay the deposits
on demands, the bank loose the faith of the public. Bank may maintain the liquidity in the
form of:

6
a. Cash and bank balance

b. placement money at short calls or short notice

c. Investments in gov. securities and other securities convertible into cash.

1.5.3 Review of article

International federation of Accounts conducted a research on liquidity management of the

bank. The study has been focused on the conditions of liquidity, liquidity management
strategies major finding/outcomes/conclusion of that study was liquidity of a bank is
strictly based on cash and liquid sets interbank deposits these two tools can help bank to
maintain effective balance between high liquidity position & law liquidity position.

Financial analysis is the process of identifying the financial strength and weakness of the
concerned bank. It is the process of finding strength and weakness of the concerned bank.
It is the process of finding details accounting information given in the financial statement.
It is performed to determine the liquidity, solvency, efficiency and profitability position
of an organization. The function or the performance of finance can be broken down into
three major decisions i.e. the investment decision, the financing decision, and the
dividend decisions. An optional combination of the three decisions will maximize the
value of the firm.

According to Prof. Dr Silvia Petrescu, "the author of the book the financial accounting
analysis and diagnosis, second edition issued at CECCAR publishing house, busuresti
2008, the liquidity measures the ability of the company to facto the short term obligations
and it reflects capacity to rapidly transform the current assets in cash."-(Prof.Dr. Silvia
Petrescu)

A company is considered liquid when the resources issued by the current operations of
the exercise supplies enough cash in order to face the short term payment setting day and
the liquidity degree expresses the quality of the financial balance of the company on short
term. The tools used for analysis are

7
a. Current ratio

b. saving ratio

c. saving deposit to total deposit ratio

d. fixed deposit to total deposit ratio

1.5.4 Research gap

Although some previous, studies have conducted in the similar topic the present research
has selected, there is fundamental difference between those and the present on the
previous researcher focused only on the liquidity and saving deposit to total deposit ratio
accept of selected development bank from investors prospective this research has further
tried to identify the fixed deposit to total deposit ratio of the development bank under
study which play signifies role in financial performance which is done by previous
researcher. This report based on the specified analytical tools for analysis of data.
Therefore come research gap also raised for the new researches these different are
estimate action of average.

1.6 Method of the Study

Research methodology refers to the various sequential steps adopted by a researcher in

studying a problem with certain objectives in view. It is way to solve research problem
systematically. Research methodology is the overall framework for how contract,
process, analyze and present data on table and diagram to find answer of the research
problem question/objective. It may be understood as a science of studying how research
is done scientifically. The basic objective of this study is to highlight the liquidity
position of GIBL.

Research methodology describes the methods or process applied in the entire study. This
research is concerned with secondary data. For the purpose of achieving the objectives
the following methodology has been purposed. This include research design, population

8
and sample, source of data, data collection technique and data analysis tools. After the
collection, data analysis is performed for the purpose of data ending, coding, tabulating.
The researcher makes descriptive and statistical tool are used to make the analysis more
effective, reliable and authentic. To evaluate the financial condition and solving the
problem of the analytical tools researcher used.

1.6.1 Research design

The present study is mainly based on two types of research design i.e. descripted and
analytical Descriptive research design describes the general pattern of the Nepalese
investor s, business structure, problem of investment policy etc. The analytical research
design makes analysis of the gathered facts and information and makes a critical
evaluation of it.

Finally research design in the plan, structure and strategy of investigation conceived so as
to obtained answer to research question and to control variance. To achieve the study
descriptive and analytical research design have been used.

1.6.2 Population and sampling

Population refers to the entire group of people events or things of interest that a
researcher has to study. The population of this study consists of the entire development
bank. All the development banks have to adequate liquidity position for smooth operation
of Global IME Bank Limited has been taken as a sample for the study. The liquidity
position of the Global IME Bank Limited is studies and analyzed as a sample in report.

1.6.3 Type of data

A research design is the arrangement condition, for the collection and analysis of data in
manner that aims to combined relevance to research purpose with economy in
procedures. This study aims on the financial analysis of the Global IME Bank Limited.
This study is mainly based on secondary data. Collected directly from the question
answer, direct interview with customer and office staff. The secondary data are collected

9
form respective annual respects especially from the Global IMW Bank Limited office,
web sites and various other journals and from security bond Nepal.

1.6.4 Data collection procedure

This study is based on secondary data secondary are collected from their respective
annual report other publication and journals of the related banks, Nepal Rastra Bank,
Nepal Stock exchange and other related magazines.

Research went to the branch office of Global IME Bank Limited. Get the important
information. Research collected the main annual reports of this bank directly from the
web site. And other various articles and journals from various publication and some
others from the SUBO, PEPSE and previous field reports are also taken into account.

1.6.5 Data analysis techniques

Data analysis tools means which tools the research used for present and analyzed the
data. The main tools of analysis are mathematical and statistical tools. In this reports
statistical and financial ratio tools is used for data analysis. Mean and correlation is
calculated for analysis of data as statistical tools. The first work of research is data
collection second work is to arrangement present the data in a logical order. After
managing the data in report, data were analyzed using financial tools to draw the
conclusion.

i) Ratios

 Current Ratio
 Quick Ratio
 Saving deposit to total deposit ratio

10
  Fixed deposit to total deposit ratio

ii) Statistical tools

 Tables
 Simple bar diagram
 Trend line analysis

1.7 Limitation of the Study

This study focused on backing sector of the country. The proposed study will try to
identify the status of liquidity of Global IME Bank Limited and there by studying its
impact on the bank.

a) The findings of this study will depend solely on the annual reports of Global IME
Bank Limited.
b) Primary importance will be given to secondary data.
c) This research will only be about liquidity analysis of Global IME Bank Limited.
d) Liquidity analysis well be done by studying liquidity position of Global IME Bank
Limited.
e) The main tools used for study are limited.
f) Analysis is based on the ratio and trend lines of the corresponding ratio only.
g) Only five years data will be taken for the study purpose.

11
 CHAPTER TWO

RESULT AND ANALYSIS

2.1 Presentation and analysis of Results

This chapter is basically concerned with the presentation and analysis of data. The data
collected for the study has been depicted in tabular from and analyzed with the help of
pictorial and diagrammatic presentation and trend analysis. Here the main data relevant to
GIBL are presented, discussed and analyzed using different statistical tools. Whole
preparing this report, data are taken from annual report of GIBL. Analysis and
interpretation using various accounting ratios give skilled and experienced analyst better
understanding of liquid. This is given in the forms of tables, charts, figure, trend line and
necessary description.

2.1.1 Liquidity ratio

A liquidity ratio is an indicator of whether a company's current assets will be sufficient to

meet the company's obligations when they become due. The liquidity ratio includes the
current ratio and the acid test ratio or quick ratio. The current ratio and quick ratio are
also referred to as solvency ratios.

a) Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term
and long-term obligations. To gauge this ability, the current ratio considers the current
total assets of a company (both liquid and liquidity) relative to that company's current
total liabilities. The current ratio is called "current" because unlike some other liquidity
ratios it corporate all current assets and current liabilities. Following bar diagram can help
us to understand it briefly.

12
 Current assets
Current ratio =
Current liability

Table 1

Current ratio (Amount in Rs.)

year current assets current liabilities current ratio

2070/71 35593951713 35625163138 0.99

2071/72 42577585706 44818482586 0.95

2072/73 62576398593 65884378154 0.94

2073/74 76251638685 76871457297 0.99

2074/75 87947592841 89200385062 0.98

Source: Annual report of GIBL

Above table shows current assets, current liabilities and their ratio fiscal year 2070/71 to
2074/75. In the fiscal year 2070/71, current assets are Rs. 35593951713 current liability
is Rs. 35625163138 and current ratio is 0.99 of GIBL. After the fiscal year 2071/72,
2072/73, 2073/2074 and 2074/75 the current ratio of GIBL bank is 0.95, 0.94, 0.99 and
0.98. The bank shows that, current liability is greater than current assets. Following bar
diagram and trend line can help us to understand it briefly.

13
 6

0
2070/71 2070/72 2072/73 2073/74 2074/75

Figure 1 Current assets and current liabilities

From the above diagram, in the fiscal year 2070/71, current assets are Rs. 35593951713
current liability is Rs. 35625163138 and current ratio is 0.99 of GIBL. After the fiscal
year 2071/72, 2072/73, 2073/74 and 2074/75 the current ratio of GIBL bank is 0.95, 0.94,
0.99 and 0.98. The bank shows that, current liability is greater than current assets. It
shows that, the bank of GIBL is not maintained of his liquidity position (i.e. 2:1). As a
conclusion, the researcher found that the liquidity position of the GIBL bank is so bad.

b) Quick ratio

The quick ratio is a measure of how well a company can meet its short term financial
liability. Quick ratio is also known as acid test ratio. It can be calculated as follows

Current assets−prepaid −stick

Quick Ratio =
Current liability

14
 Table 2

Quick ratio

(Amount in Rs.)

fiscal year quick assets current liabilities quick ratio

2070/71 4861029511 29200385062 0.17

2071/72 8407046364 35625163138 0.24

2072/73 6237789256 44818482586 0.14

2073/74 7225507364 65884378154 0.11

2074/75 10265272065 76871457297 0.13

Source: Annual report of GIBL

Table 2 shows quick ratio of Global IME Bank Limited. In fiscal year 2070/71 quick
assets is 4861029511 and current liability is Rs. 29200385062. After that fiscal year
2071/72, 2072/73, 2073/74 and 2074/75 the quick assets is Rs. 8407046364,
6237789256, 7225507364 and 10265272065 and current liability is Rs. 35625163138,
44818482586, 65884378154 and 76871457297. These data can be presented in following
bar diagram.

15
 6

0
2070/71 2070/72 2072/73 2073/74 2074/75

Figure 2 Quick assets and current liabilities

In above diagram, in fiscal year 2070/71 quick assets is 4861029511 and current liability
is Rs. 29200385062. After that the fiscal year 2071/72, 2072/73, 2073/74 and 2074/75 the
quick assets is Rs. 8407046364, 6237789256, 7225507364 and 10265272065 and current
liability is Rs. 35625163138, 44818482586, 65884378154 and 7687457297. As a
conclusion, the researcher found that, the liquidity position of bank is not good.

2.1.2 Saving deposit to total deposit ratio

A saving account is a deposit account held at a retail bank than pay interest but can not be
used directly as money in the narrow sense of a medium of exchange (for example by
writing a cheque). These accounts let customer set aside a portion of their liquid assets
while earning a monetary return. It can be calculate as follows:

Total saving deposit

Saving deposit Ratio =
Total deposit

16
 Table 3

Saving deposit

(Amount in Rs.)

Fiscal Year Saving Deposit Total Deposit Saving Deposit Ratio

2070/71 7385578203 28392822287 0.26

2071/72 9523215715 35414007591 0.27

2072/73 12418043803 44740731784 0.28

2073/74 19831625077 64934358551 0.30

2074/75 18020151712 76339485090 0.23

Source: Annual report of GIBL

From table no. 3, saving deposit is Rs. 73855788203 and total deposit is Rs.
28392822287. As on as fiscal year 2071/72, 2072/73, 2073/74 and 2074/75, the saving
deposit amount is Rs. 9523215715, 12418043803, 19831625077 and 18020151712. And
total deposit is Rs. 35414007591, 4474731784, 64934358551 and 76339485090.

17
 6

0
2070/71 2070/72 2072/73 2073/74 2074/75

Figure 3 Saving deposit

In above diagram, fiscal year 2070/71, saving deposit is Rs. 73855788203 and total
deposit is Rs. 28392822287. As on as fiscal year 2071/72, 2072/73, 2073/74 and 2074/75,
the saving deposit amount is Rs. 9523215715, 12418043803, 19831625077
and18020151712. And total deposit is Rs. 35414007591, 44740731784, 64934358551
and 76339485090. In conclusion the researcher found that, the saving deposit of GIBL
bank is good.

2.1.3 Fixed deposit to total deposit

A fixed deposit is a type of financial instrument offered by banks and it allow individual
to deposit sum of money for deposit period of time, like one month, six month, one year,
five year, ten year etc. In general fixed deposit account offer higher interest rates than
saving account. It can be calculate as follows.

¿
Fixed deposit Ratio = Total ¿ deposit Total deposit

18
 Table 4

Fixed deposit ratio

(Amount in Rs.)

FY Fixed Deposit Total Deposit Deposit Ratio

2070/71 10708836223 28392822287 0.38

2071/72 11876223355 35414007591 0.34

2072/73 14034643827 44740731784 0.31

2073/74 19633982453 64934358551 0.30

2074/75 33333642035 76339485090 0.43

Source: Annual report of GIBL

Table no. 4 shows fixed deposit ratio of GIBL from fiscal year 2070/71 to 2074/75. In
fiscal year 2070/71, the fixed deposit ratio is 0.38. And in fiscal year 2071/72, 2072/73
and 2073/74 , the fixed deposit ratio is decreasing order 0.34, 031 and 0.30. The last
fiscal year 2074/75, fixed deposit ratio increased i.e.0.43.

19
 6

0
2070/71 2070/72 2072/73 2073/74 2074/75

Figure 4 Fixed deposit ratio

In above diagram, In fiscal year 2070/71, the fixed deposit ratio is 0.38. And in fiscal
year 2071/72, 2072/73 and 2073/74, the fixed deposit ratio is decreasing order 0.34, 0.31
and 0.30. The last fiscal year 2074/75, fixed deposit ratio increased i.e.0.43. In conclude
the researcher found that, fixed deposit ratio of GIBL bank is not so good.

2.14 Current deposits to total deposit

A ratio that is used in determining the amount of loans that a bank has out versus the
amount of current deposits on hand at that same time. This is ratio is determined by
dividing the bank's loan amounts by its total amount of deposits.

20
 Table 5

Current deposit

(Amount in Rs.)

Fiscal Year Current Deposit Total Deposit Current Deposit Ratio

2070/71 6385578203 28392822287 0.22

2071/72 9923215715 35414007591 0.28

2072/73 14418043803 44740731784 0.32

2073/74 17831625077 64934358551 0.27

2074/75 19020151712 76339485090 0.24

Source: Annual report of GIBL

From table no. 5, current deposit is Rs. 63855788203 and total deposit is Rs.
283928822287. As on as fiscal year 2071/72, 2072/73, 2073/74 and 2074/75, the current
deposit amount is Rs. 9923215715, 14418043803, 17831625077 and 19020151712. And
total deposit is Rs. 35414007591, 44740731782, 64934358551 and 76339485090.

21
 6

0
2070/71 2070/72 2072/73 2073/74 2074/75

Figure 5 Current deposit ratio

In above diagram, fiscal year 2070/71, current deposit is Rs. 73855788203 and total
deposit is Rs.28392822287. As on as fiscal year 2071/72, 2072/73, 2073/74 and 2074/75,
the saving deposit amount is Rs.9523215715, 12418043803, 19831625077 and
18020151712. And total deposit is Rs.35414007591, 44740731784, 6493438551 and
76339485090. In conclusion the researcher found that, the saving deposit of GIBL bank
is good.

2.2 Major Finding

By studying the liquidity position of GIBL, following finding have been made:

a) The GIBL bank shows that the trend line is fluctuating mode. As a conclusion, the
researcher found that the current ratio of GIBL bank is not good.
b) In above trend line analysis, in fiscal year 2070/71, the quick ratio of the bank is
0.17. Than the fiscal year 2071\72, 2072/73, 2073/74 and 2074/75 the quick ratio
of bank is 0.24, 0.14, 0.11 and 0.13. For the above analysis the researcher
conclude that the liquidity ratio of the bank is not so good.

22
c) In above trend line analysis, In fiscal year 2070/71 to in fiscal year 2073/74 saving
deposit ratio is increasing mode i.e. 0.26, 0.27, 0.28 and 0.30. And in fiscal year
2074/75, saving deposit is 0.23 that is decreasing mode. For the above analysis the
searcher conclude that the saving deposit is good.
d) In above trend line analysis, In fiscal year 2070/71 to in fiscal year 2073/74 saving
deposit ratio is increasing mode i.e. 0.26, 0.27, 0.27 and 0.30. And in fiscal
2074/75, saving deposit is 0.23 that is decreasing mode. For the above analysis the
searcher conclude that the saving deposit is good.
e) In above trend line analysis, the fixed deposit ratio is 0.38 in a fiscal year 2070/71
of the bank. After that the fixed deposit ratio is decreasing order in fiscal year
2071/72, 2072/73 and 2073/74 the fixed deposit ratio is 0.34, 0.31 and 0.30. In
fiscal year 2074/75, the fixed deposit ratio is increased i.e. 0.43. From the above
analysis the researcher concluded that the fixed deposit ratio is not so good.
f) Current deposit to total deposit ratio of bank was 0.22, 0.28, 0.32,. 0.27 and 0.24
from fiscal year 2070/71 to 2074/75 respectively. Bank has highest deposit ratio in
2072/73 (i.e. 0.32) and lowest ratio was 0.22 in 2070/71. For the above analysis
the searcher conclude that the current deposit is good.

23
 CHAPTER THREE

SUMMARY AND CONCLUSION

3.1 Summary

Nepal is one of the least developed countries of the word. For most of the developing
process, it is financially depending upon the foreign countries. It is economically too
weak. Thus, the economic condition of the people is weak. In Nepal 85% of the people
are depended upon agricultural sector which is unable to provide full employment to the
people. Nepal government has to activate people in the nation's development thought
overall industrialization of nation. For this purpose, development of sound banking
system is essential. In Nepalese banking sector, development banks including share
holder operating at present. In the absences of modern banking any country cannot
develop the economic actively. Therefore, it is essential to find out whether or not the
banks are serving an important contribution to develop sector of economy. Liquidity is
said to be general business of fund, which shows the bank ability to meet cash
requirement. In this record, this study has been based upon the objective to evaluate the
liquidity of Shiddhartha bank limited.

Global IME Bank Ltd. (GIBL) emerged after successful merger of Global Bank Ltd (an
"A" class commercial bank), IME Financial Institution (a "C" class finance company) and
Lord Buddha Finance Ltd. (a "C" class finance company) in year 2012. Two more
development banks (Social Development Bank and Gulmi Bikas Bank) merged with
Global IME Bank Ltd in year 2013. Later, in the year 2014, Global IME Bank made
another merger with commercial and Trust Bank Nepal Ltd. (an "A" class commercial
bank).

24
3.2 Conclusions

All the ratios are not satisfactory but maximum ratios are good and satisfactory in bank.
For ratios are calculated under the study out of the Two are good but Two ratio is not
good the bank's liquidity position is good in overall. The bank can take cooperative
actions to improve the saving deposit to total deposit ratio saving deposits can be
increased to maintain sufficient liquidity position by analyzing the position. The saving
deposit account is nearly constant trend. The highest ratio is 0.30 times in final year
2072/73 and the lowest ratio is 0.23 times in final year 2072/74. But the ratio is not
satisfactory due to the last year ratio was decline. Fixed deposit is fluctuated the lowest
ratio is 0.31 times and highest ratio is 0.43 times on 2071/72. It is satisfactory.

The GIBL bank shows that the trend line is fluctuating mode. As a conclusion, the
researcher found that the current ratio of GIBL bank is not good. Therefore, bank should
maintain the current assets than the current liability. The quick ratio of the bank is 0.17.
Than the fiscal year 2070/71, 2071/72, 2072/73 and 2073/74 the quick ratio of bank is
0.24, 0.14, 0.11 and 0.13. For the above analysis the researcher conclude that the liquidity
ratio of the bank is not so good. So that, bank should manage the quick assets and current
liability. Saving deposit ratio is increasing mode i.e. 0.26, 0.27, 0.28 and 0.30. And in
fiscal year 2073/74, saving deposit is 0.23 that is decreasing mode. For the above analysis
the researcher conclude that the saving deposit is good. The fixed deposit ratio is 0.38 a
fiscal year 2069/70 of the bank. After that the fixed deposit ratio is decreasing order in
fiscal year 2070/71, 2071/72 and 2072/73 the fixed deposit ratio is 0.34, 0.31 and 0.30. In
fiscal year 2073/74, the fixed deposit ratio is increased i.e. 0.43. From the above analysis
the researcher concluded that the fixed deposit ratio is not so good. Thus, bank should
manage the efficiency of fixed deposit for increment.

25
BIBLIOGRAPHY

American Institute of banking (1972). Principle of banking operation. New York:

American institute of Banking.

Aryal, I.R, & Dhungyal, T.P (1975). A new history of Nepal, Kathmandu: Sangam press.

Bajracharya, B.C. (1996). Business statistics and business Mathematics. Kathmandu:

M.K Publishers and Distrubutiors.

Bhattarai, I. Gautam, A and Goet, J (2006). Budgeting New Delhi Lending Procedure and
control. Kathmandu: Asmita Books Publisher and Distrbutors Putalisadak.

Koirala, Dr. Y. R. Dahal Sushil, Gautam, Chintamani (2016). Budgeting and control of
profit, Kathmandu Asmita Book Publication and Distrbutors Pvt. Ltd.

Reports

Annual Report of Global IME Bank Limited, 2070/71 to 2074/75

Websites

http://www.gibl.com.np

http://www.quora.com/What-is-liquidity-in-banking

http://www.bankingnepal.com

26
APPENDICES

Current assets
Current ratio =
Current liability

35593951713
CR (2070/71) = =0.99
35625163138

42577585706
CR (2071/72) = =0.95
44818482586

62576398593
CR (2072/73) = =0.94
65884378154

76251638685
CR (2073/74) = =0.99
76871457297

87947592841
CR (2074/75) = =0.98
89200385062

27
28