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Research methodology.
Objective The primary objective of the research stands to determine the Market trends Of Deposits In The Nepalese Private Banking Sector, to consider the customer relationship management and their marketing strategy and the Nepalese Banking Sector is represented by 7 banks studied in the project. Hypothesis1: Sates that Nepalese banks have an upward trend of annual deposits. Hypotheis2: Tests the word of mouth and its relation with choosing of a bank. Descriptive and Exploratory in nature. Two-stage sampling technique Is all the Private banks in Nepal. About 99 private banks exist. Questionnairre1: one for testing CRM. For 350 customers.(50*7=350.) Questionnairre2:for interview purpose for the 7 individuals of the specified banks. 10 years of time series data of annual deposits of the 7 banks. Some may not have 10 years of deposit via annual reports.
Hypothesis
Secondary data
Sample
7 banks (5 commercial and 2 development banks): Ace Development Bank Ltd. Himalayan Bank Ltd. Nabil Bank Ltd. Sanima Bikas Bank Ltd. Nepal SBI Ltd Laxmi Bank Ltd. Nepal Investment Bank Ltd.
Objectives.
To determine the trend of deposits in the Nepalese private banking sector. To find out the market trend of deposits in the Nepalese private banking sector. To compare the market trend of deposits between commercial and development banks. To analyse some factors, i.e.; the degree of loyalty of customers towards the bank, power of word of mouth to win customers, factors that make them choose a bank, their level of satisfaction with the bank that have a direct or indirect effect on the deposit trend. To analyze the marketing strategies of various private banks that affect in their deposit trend. To see if word of mouth effects the selection of a particular bank or banks. To provide recommendations accordingly.
Introduction.
Banking in Nepal started in the 8th century in the reign of Gun Kama Dev. Nepal Bank Ltd. Was the first bank in Nepal estd in 1937. Nabil Bank was the first foreign joint venture in Nepal , with 50%shares owned by United Arab Emirates and 20% by financial institutions and rest by the general public. Liberalization of the financial sector begun in the 80s but speeded up in the 90s.
Facts
Banking sector in Nepal is one of the fastest growing industry.in the 1980s there were just 2 development and commercial banks only and in Mid-january 2010 there are altogether 99 commercial and development banks.And 254 banks and non-financial institute. Commercial bank are the strong backbone of the nepalese banking sector and alone holds more than 80% of the total assests and liabilities of the financial system. The deposits have had an upward trend from the year 2007. A sector with the highest level of competition and high level of market saturation. Banking sector today is facing bad liquidity-crisis, and their method of getting deposit is through interest wars.. Banks today follow the mantra survival of the fittest the strong gets to stay and the weak needs to leave the game. However government banks are preferred over private banks , due to its high credibility
Nepalese Private banks have been represented by 7 private commercial and development banks .
3. Good 3. Low fluidity of 3. To turn performance due to loans and advances. International via. heavy competition. Joint ventures, merger and acquisition. 4. Preference to 4. Poor monitoring Crm leading to of Nepal Rastra satisfied customers. Bank.
Analysis: As the graph above clearly shows that there is undoubtedly been an upward trend of deposit in the Nepalese banking sector, be it the commercial banks or be it the development banks all of these entities are showing an upward trend in the deposit pattern but its pace does vary from bank to bank some banks have been slow and constant in gaining deposits, whereas some have banks have had a tremendous increase in their deposit pattern.
Fig.13 Comparison of Annual Average Deposit and their Trend for Commercial and Development Banks
Analysis: As one can clearly see from fig.13 the annual average deposit trend between development bank and commercial has a vast difference though both have an upward trend. Development bank has a slow growth whereas; commercial banks have a rapid growth rate.
Recommendation
Certain recommendation could be :1) Firstly , the government needs to put in the unused 5 billion NPRS money that it has in its account at NRB (as stated in the finance and statistic in www.nrb.org.np ) into the economy to inject liquidity into the economy. 2) The banks must understand the pros and cons of the unhealthy interest wars that they are fighting and adopt other healthy measures like introduce innovative products, create awareness ,involve in (CSR and PR ) etc . 3) The banks must concentrate more on improving their credibility and services by training their employees well . 4) The officials must be trained in the banks to effectively handle and manage customer relation ,as the study states that existence of a bank and its deposits depends on loyal and satisfied customers . 5) The NRB should not issue fluctuating policies like it is doing at present as based on them . the banks frame their policies ,and policy making is an expensive job .Thus NRB should understand the situation and make favourable and stable policies accordingly.
6) There are way too many unnecessary entries of banks in the country which leads to a scenario where supply is way greater than the demand ,the NRB should make strict policies to reduce the number of entries of banks into the country. The number to be decided should be as per the required demand in the market this reduces unnecessary competition and unnecessary liquidation is also abolished . 7) The banks must understand , the needs of their customers and where their customers stand . Customers today are street-smart and knowledgeable .They are not just interest driven , today s customer demand credibility , good services and good brand-recognition of the bank they want to be associated with . Banks should understand their customer need for the hour and work accordingly. 8) Coming to the marketing strategy, a marketing strategy determines the market success of a bank: strategy of a bank today should be customer-oriented wherein the differentiation of the products and their specification should be clearly stated in the market and instead of interest rates the customers should be driven by the products of the banks , then a healthy competition could prevail in the banking sector. 9) The banks are concentrated just in the urban areas, the rural areas of the country are still untouched whereas the fact is rural areas constitutes a large section of the countrys economy. The market trends of deposit will be highly favourable and affected if the banks undertook expansion strategy in the rural untouched areas this would certainly reduce competition and also encourage savings in the rural society both highly beneficial for the economy. 10) As the study states that word-of-mouth is not really effective in driving the customers to select a bank , gone are the days when people were blindly influenced by others vie, now people are smart and personal choices based on knowledge and experience, thus banks should aware themselves to this fact and concentrate more on customer satisfaction and innovative products.
Limitations
Every researcher has to face certain limitation and obstacles during their process of completion of the research. The limitations faced during the completion of this research are as following: The time given (2 months) was too less for the completion of the research. It was difficult to collect data as banks were not too open to allow retrieving their intrinsic information. The customers were not very experienced regarding the working of the banking sector. The customers (few of them) were not very cooperative at the time of data collection. According to stratified random sampling, samples of Commercial bank and Development bank are not proportional as Development banks have strict policies and do not entertain outsiders. If secondary data was to be considered in development banks case, there was very little clarity regarding its financial highlight unlike the commercial bank? The research is limited to7 banks and 350 customers of these 7 banks in some of the areas of Kathmandu city. Therefore it is not accurate data because it is collected from only few people. Nepalese Banking System is the vast explanation therefore it is difficult to collect the accurate data, which is related to my topics.
Interest wars a curse to the Nepalese banking sector.(A case study on Ace.)
Recommendation
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