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Bank of Kathmandu (Internship Report)

Chapter 01- Introduction

1.1 Background of the Study


Any academic course of the study has a great value when it has practical application in the real
life. Only a lot of theoretical knowledge will be of little importance unless it is applicable in the
practical life. So we need proper application of our knowledge to get some benefit from our
theoretical knowledge in our practical life. Building a strong base of practical knowledge is
possible through thesis. When theoretical knowledge is obtained from a course of study, it is only
the half way of the subject matter. Thesis implies the full application of the methods and
procedures through rich acquired knowledge of the subject matter can be fruitfully applied in our
daily life, such a procedure of practical application is known as thesis. The case study is titled "An
Overview of General Banking on Bank of Kathmandu Limited" As a student of MBA, this study
will be more significant in my practical life, and I have worked at Kamalpokhari Branch of Bank
of Kathmandu Limited to complete the internship program as an academic requirement.

1.2 Research Problem


General Banking is the oldest banking in the banking history. The service of General Banking is
provided for general people, because it is the base of banking activities. This made the researcher
interested to study in this area. The General Banking Division represents the execution aspect of
the General Banking management process for the business. It defines the practices in terms of
process, competency, productivity, accuracy, and benchmarking & control for a business firm to
ensure that the standards are met & complied with. As a result, it is imperative that due diligence
is not compromised while increasing the volume of applications.

1.3 Research Objective


Objective of the study acts as a bridge between the starting point and the go of the study. To
illustrate the objectives properly, it is presented into two parts.

Main
To evaluate the Performance Analysis of Bank of Kathmandu limited and it’s services.

Specific:
* To know the major outlines of company profile of BOKL.
* To analyze performance regarding deposit mobilization in BOKL.
* To know about rendering various banking services of BOKL.
* To analyze the profitability performance of BOKL.
* To reveal the corporate social responsibility of the BOKL.
* To identify the problems hindering the performance of BOKL.
* To provide some suggestions for improving performance.

1.4 Research Methodology


Two types of data used this study:

The Primary sources of data:


* Face to face conversation with the respective officer of the branch.
* Face to face conversation with-the clients.
* Relevant file study as provided by the officers concerned.
* Observation.

The Secondary sources of data:


* Annual Reports of the BOKL.
* Periodicals published by the Bank.
* Different books, articles etc. regarding performance analysis operations.

1.5 Scope of the work


Although I have completed the internship study on Kamalpokhari branch of Bank of Kathmandu
Limited. I have prepared the internship report on the overall performance of Bank of Kathmandu
Ltd.

1.6 Rationale of the study


General banking represents the core of banking operations. Its performance can exert positive
impact on the growth of a bank. As such, I have become interested to conduct a study on the
performance of Bank of Kathmandu Limited. I suppose, the findings of this internship report will
provide invaluable inputs for further improvement in the performance of Bank of Kathmandu Ltd.
During the internship period, I have gathered valuable experience of conducting a research study.
This knowledge and experience may help me in building my professional career. Moreover, the
study will also make a meaningful contribution to enrich the literature of general banking
performance.
Chapter 02- Company Overview

2.1 The Origin of Bank of Kathmandu Ltd.


Banks are important financial institutions, which play a vital role in the economy of a country. It
deals with credit i.e., accepts deposit from the public and advances various loans. The system of
banking is very ancient. It was prevalent in India, Greece and Rome. It arose out of the logical fact
that people who possessed surplus money deposited them for safe keeping to whom they have
confidence, payable after a period of time when the need would arise. The holders of this surplus
money soon found out that it was profitable to lend out the money, the provided loans were repaid
before the date when the money would be demanded.
The bankers or the holders of the money give sign papers to their depositors as evidence of the
deposit money. As people had confidence in the integrity and the solvency of the banker their
signed papers would pass from hand to hand in the settlement of transaction. These papers were
the origin of notes as people had confidence in the credit of the bankers only, as small proportion
of notes/signed papers would be presented for encashment during a period. The later were able to
lend out the major portion of their deposits with safety, thus earning a decent profit with other
people’s money. As the business landing money became more and profitable, money holders began
to offer interest on the money deposited with then at a rate lower than that obtained on loans.
In course of time cheque were adopted and this imparted elasticity to the system. Thus came into
existence the system of commercial banking. A bank can be best by its functions, it collects the
savings of the public, it gives loans and advances and it creates media of exchanges through
cheque. A commercial bank is a dealer in short term credit. In addition to the above, bank performs
various other functions:
a) Financing of foreign trade b) agency services, c) general utility services. A bank is a big
substations center for liquidity, which takes the deposits from the public and supplies liquidity to
the economic system.

2.2 An Overview of Bank of Kathmandu Ltd.


Bank of Kathmandu Limited has become a notable name in the Nepalese banking scenario today
with a high ranking performance and we would like to express our sincere gratitude to our
shareholders, customers and other stakeholders for their constant belief, support and co-operation
in leading the bank to the present pinnacle of achievement. We would like to reiterate here that
whatever activity we undertake, we put in conscious efforts to glorify our corporate slogan, ‘We
make your life easier’.
We would also like to elucidate that Bank of Kathmandu Limited is committed to delivering
quality service to customers, providing best interest rates on products and services, generating
good return to shareholders, providing attractive incentives to employees, and serving the
community through stronger corporate social responsibility endeavors. We were awarded the
coveted title of ‘Bank of The Year’ in 2010 and strive to become the best bank in Nepal.
Bank of Kathmandu Limited today has created a milestone in the Nepalese banking sector by being
among the few commercial banks which is entirely managed by Nepalese professionals and owned
by the general public and by becoming one of the largest private sector commercial banks in the
country in terms of capital base, number of branch locations, ATM networks and customer base.

Core Values
The Bank has defined following core values for achieving the vision and mission:
 Embrace a commitment to excellence
 Develop knowledgeable, competent and professional employees
 Deliver quality services
 Provide value to the stockholders
 Be accountable for delivering what we promise
 Demonstrate honesty and integrity in all actions
 Be balanced in customer orientation and risk consciousness
 Be efficient and technology oriented

2.3 Vision
To become a significant contributor to the economic development of Nepal by distinguishing the
Bank as an efficient, competitive, safe and top-quality financial institution.
2.4 Mission
Mission Statement

To offer financial services and become the “Bank of Choice” by dedicating the progress and
growth of the institution to the community, customers, employees and stockholders by:

 Promoting economic growth and becoming a caring corporate citizen

 Providing excellent customer services by offering personalized quality services and


products

 Including modern technologies of banking that add value to customer services

 Following strict risk-control mechanisms

 Enhancing shareholders value

 Providing challenging career and learning opportunities for our employees

2.5 Company Highlights of BOKL:

Hierarchy of the Bank of Kathmandu Limited

Chairman
Board of Directors
Chief Executive Officer
Assistant General Manager
Deputy Manager
Assistant Manager
Senior Officer
Junior Officer
Senior Assistant
Assistant
Junior Assistant
2.6 Strategies of Bank of Kathmandu Limited:
The strategies that BOKL follows are as below:
To raise capital to eight billion.
To Manage and operate the Bank in the most efficient manner to enhance financial performance
and to control cost of fund.
To strive for customer satisfaction through quality control and delivery of timely services.
To identify customer’s credit other banking needs and monitor their perception towards our
performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the ability to extend better
services.
To trail and develop all employees and provide them adequate resources so that customers' needs
can be responsibly addressed.
To promote organizational effectiveness by openly communication company plans, policies,
practices and procedures to all employees in a timely fashion.
To cultivate a working environment that fosters positive motivation for improved performance.
To diversify portfolio both in the retail and wholesale market.
To increase direct contact with customers in order to cultivate a close relationship between the
Bank and its customers.
2.7 An Overview of Kamalpokhari Branch:
The study has completed at Kamalpokhari branch. There are some efficient and effective bankers
workers in this branch, the management of the branch always tries to provide better service to its
customer and behave well with them. As a result they have got a huge number of accounts in.

2.8 Marketing Aspects of BOKL:


The marketing aspects of BOKL cover the 7 P's of marketing. These are:
(1) Product
(2) Price
(3) Place
(4) Promotion
(5) People
(6) Process
(7) Packaging

1. Products and Services Offered By BOKL:


Bank of Kathmandu Limited has a variety of products offered for the retail customers as well as
for corporate clients. The different products and services for retail and corporate clients are given
below:
- Products for retail clients:
The existing products that are offered by BOKL are:
• Current Deposit Scheme.
• Savings Deposit Scheme.
• Short Term Deposit Scheme.
• Fixed Deposit (FD).
• Smart Banking.
• Visa Card
• Credit Card
- Products for corporate clients:
BOKL offered, products for its corporate clients are:
· Foreign Bill Purchase Documentary (FBPD).
· Sight Letter of Credit (SLC).
· Letter of Credit (LC).
· Letter of Guarantee (LG).
· Secured Overdraft (SOD).
· Demand Loan.
· Time Loan.
· Term Loan.
· Others.

2. Price Offered by BOKL:


Price is the main feature of a service-oriented organization like BOKL. But BOKL is offering very
non-competitively priced products compared to its customers.
Interest rates

DEPOSITS %p.a.

Savings Deposits 3.50 - 5.50

Call Deposits Up to 3.50

Fixed Deposits :

1. Fixed Interest Rate

A. Institutions

1 Month to Below 2 Months 6.50

2 Months to Below 3 Months 7.00

3 Months to Below 6 Months 7.50

6 Months to Below 1 Year 8.00

1 Year and above 8.50

B. Individuals

Upto 3 Months 8.50

Above 3 months up to 5 years 9.25


DEPOSITS %p.a.

C. Structured Fixed Deposits upto 1 year 8.50

2. Floating Interest Rate

A. Recurring Deposits (2 - 10 Years) 5.00

B. Kissan Banking Sewa (Recurring Deposit) (1 - 10


5.50
Years)

LOANS AND ADVANCES %p.a.

1. Working Capital loan Base Rate + upto 6.00

2. Term loan Base Rate + upto 6.00

3. Retail loans

(i) Housing Loan Base Rate + 0.50 to 6.00

ii) Education Loan Base Rate + 0.50 to 6.00

(iii) Hire Purchase Loan Base Rate + 0.50 to 6.00

(iv) Residential Real Estate Loan (Above NPR 10,000,000) Base Rate + 0.50 to 6.00
4. Development Credit Loan

(i) Direct Financing (Micro Loans) Base Rate + 0.50 to 6.00

(ii) Small Enterprise Loan Base Rate + 1.00 to 6.00

Base Rate + 0.50 to 6.00


(iii) Agri Business Loan

5. Loans against Government Bonds, Deposits of Financial Institutions


and first class foreign bank guarantee

(i) Loan against Govt. Bonds


Base Rate + 0.50 to 6.00

(ii) Loan against Fixed Deposits/Other local currency Deposit of BOK


Base Rate + Up to 6.00

(iii) Loan against Fixed Deposits of other Financial Institutions


Base Rate + 0.50 to 6.00

(iv) Loan against Foreign Currency Deposits


Base Rate + 0.50 to 6.00

v) Loan against First Class Foreign Bank Guarantee


Base Rate + 0.75 to 6.00

6. Other Loans
(i) Gold / Ornaments Financing (against Pledge)
Base Rate + 1.00 to 6.00

(ii) Loan Against Shares


Base Rate + 0.50 to 6.00

(iii) Personal Loan


Base Rate + 1.00 to 6.00

7. Unarranged Loans/Forced Loans and uncollected dues


Base Rate + 6.00

8. Foreign Currency Loans

(i) USD Loan


LIBOR + 1.50 to 4.00

(ii) Other Foreign Currency Loan


3.00 to 7.00

3. Place:
BOKL has 69 branches all over Nepal. 21 of them are located in Kathmandu. Most
of them are located in the city area. That's why all die depositors and borrowers are
the city dwellers.

4. Promotion:
BOKL's promotional aspects are under the supervision of die Brand Management
Department. This department looks after the advertisements of BOKL's product,
customer's feedback and increasing die brand image of BOKL. BOKL has entered
into a contract with an advertising agency that is looking after the advertising
activities of BOKL. BOKL's logo has also been changed into a more attractive one/
as explained earlier.

BOKL desperately needs a strong Brand Image to survive die competitive bank
environment. Previously due to lack of attention on the marketing and promotional
aspects, BOKL's brand image wasn't as strong as its competitors and there were no
advertisements in the newspapers expect for the recruitment's. But with the
introduction of a new department "Brand Management", BOKL is hoping to boost
up its Brand Image.

2.9 "SWOT" ANALYSIS


SWOT is the snap for the internal strengths & weaknesses of a firm & the environmental
opportunities & threats facing that firm. SWOT analysis is an easy technique through which
managers create comprehensive overview of Company's strategic situation. By having SWOT
analysis, manager can easily keep pace with the new challenge in the forth coming days. A good
firm maximizes firms’ strengths & opportunities & minimizes its weakness & threats.

Strengths
Strength is resource skill or other advantage relative to competitors & the needs of the markets a
firm serves or expects to serve.

a) Company republication:
BOKL, has already gained reputation in banking industry in this country particularly. With in a
period of 28 years, BOKL has already established affirm toting in the banking sector having
tendons growth in the profits & deposits.

b) Sponsors:
BOKL has been founded by a group of eminent entrepreneurs of the country having adequate
financial strength. The sponsor's directors belong large industry & conglomerates of the country.

c) Top management:
The top management of the bank is also a major strength for the BOKL & contributed heavily
towards growth & development of the bank. The top management officials all have reputed of
banking experience. Skill & expertise.
Weaknesses:
Weakness is a limitation or deficiency in resources skills or capabilities that seriously impedes a
firm’s effective performance. BOKL weaknesses are as follows.

a) Advertising & promoting:


Very low effort for Advertisement and promoting from BOKL team.

b) Disguised employment:
Currently, there are “from bone heads but few hands” and this is related to the problem or reference
appointment. There are people who are only drawing salaries at the end of the month but not have
a part of contribution towards the organization. On the country, there are people who worked hard
but are not appreciated accordingly.

c) Team work:
At BOKL having Mid-level & lower level management. There are no team works. But it is obvious
that many jobs are performed in groups of two or three in order to reduce the work load & enhance
the process of complication of the job.

Opportunities:
BOKL can purse a diversification strategy in expanding its current line of business. The
management considers options of starting merchant banking or diversifies into leasing& cons
odium business by expanding business portfolio in migraine possible for BOKL to reduce business
risk.

Threats
a) Multinational bank:
The repaid expansion of multinational bank poses a potential threat to the new private Banks. Due
to the booming energy sector, more foreign banks are expected to operate in Kathmandu. Since
the foreign banks have spectacular financial strength, it will poses threat to local banks to a certain
extent in terms of grabbing the in creative clients.
b) Contemporary banks:
The contemporary banks of BOKL like NIC Asia, prime bank, Sanima, Citizen, Siddhartha etc
banks are its major rivals. They are carrying out aggressive comparing to lucrative, corporate
clients as well as long time depositors. BOKL should recur vigilant absent the steps taken by these
banks as these will in turn affect BOKL strategies.
Chapter 03- General Banking
3.1 Introduction:
Out of three major sections, General Banking is important one. General banking is the head of
total banking system. Through this section, bank has to receive and disburse money, to develop
banker customer relationship by opening different types of account and providing prompt services
to the customers. This department collects money from the depositor and uses these deposits to
earn profit.

3.2 Functions of General Banking:


The functions of general banking department of Bank of Kathmandu of Kathmandu Ltd. are as
follows:

Ø Maintenance of different types Deposit A/C:


ü Saving Accounts
ü Current Accounts
ü Fixed Deposits
ü Short Term Deposits
ü Other Saving Schemes
Ø Receipts & payment of cash.
Ø Handling transfer transactions.
Ø Operations of clearinghouse.
Ø Maintenance of accounts with Kathmandu Bank & other banks.
Ø Collection of Cheques & Bills.
Ø Issue and payment of Demand Drafts, Telegraphic Transfers and Payment Orders.
Ø Maintenance of Safe Deposit Lockers.

Ø Maintenance of Internal Accounts of the banks.


Ø Reporting to the Head Office about daily position of the bank.

Ø Saving record of all transactions in computer.


Ø Closing and transfer of different types of accounts.
Ø Keeping good relation with valued customer.
Ø Providing necessary support to the customers.

3.3 Sections of General Banking:


During my practical orientation in Bank of Kathmandu, Kamalpokhari Branch, it came to the
observation that general banking section is divided with four areas. These are:

Ø Account opening section


Ø Remittance section
Ø Bills and clearing section
Ø Cash section
Ø Mail receive and dispatch section

3.4 Account Opening Section:


One of the vital sections under general Banking is the account opening section. Banker-customer
relationship begins through this section. Various tasks are performed in this section. Such as:
Ø Opening of different types of account.
Ø Issue of checkbook.
Ø Transfer and closing of account.
Ø Enquiry of account.
Ø Verifying the Signature of the client.

Various types of account offered by Bank of Kathmandu:


Bank of Kathmandu offers various types of account to its different types of customer .These are
as follows:
Ø Current deposit (CD) account
Ø Savings bank (SB) account
Ø Short term deposit (STD)
Ø Fixed deposit (FD)

Savings Bank (SB) Account:


This deposit is intended primarily for small-scale savers. The main objectives of this account, is
promotion of thrift. Savings account is meant for those who want to save a certain amount of their
income and earn interest on that for future needs. Number of withdrawals over a period of time is
limited. This A/C mainly opens on person name. SB account has the following properties:
Ø Opening Amount/ Initial Deposit NPR 100
Ø Minimum Balance Requirement NPR 100 to NPR 5000
Ø Interest rate 4.00% to 5.5%

Current Deposit (CD) Account:


A current account is an account, which is generally opened by business people for their
convenience. A current account is a running and active account, which may be operated upon any
number of times during a working day. There is no restriction on the number & amount
withdrawals from current a/c. It does not earn any interest.
It has the following properties:
Ø Opening Amount/ Initial Deposit NPR 5000
Ø Minimum Balance Requirement NPR 5000

Current a/c may be individual or joint or partnership or can be formed on any name. It provides
the following facilities:
Ø Overdraft facility,
Ø Other facilities like collection of transfer of money, rendering and general utility services.

Fixed Deposit Receipt (FD) Account:


In this category are included the deposit with the bank for a fixed period which is specified at the
time of making the deposit. Such deposits are therefore called fixed deposits or term deposits. A
fixed deposit is repayable on the expiry of a specified period, chosen by the depositor to suit his
purpose and to enable him to get back money us and when he needs it. The fixed deposit may be
made for 3 months, 1 year, and 2 year. As the date of repayment of fixed deposit is determined in
advance, the banker needs not keep more cash reserves against it and can utilize such amount more
profitably. The banker therefore offers higher rate of interest on such deposits. Fixed deposit has
grown in importance and popularity in our country during recent years. When a matured FD is
withdrawn, the principle amount along with the interest amount (deducting 5% tax from the total)
is paid to the client.

The rate of interest and the terms of the Fixed Deposit receipt are given below:

Various types of product offered by BOKL Bank:


BOKL Bank offers various types of product to its different types of customer. These are as follows:
• Monthly Income Scheme
• Super Salary Scheme
• FD against Loan
• Staff Loan.

3.5 Remittance Section:


The major function of commercial Banks is mobilization of fund. Other than this, banks provide
supplementary services to its clients. Clients need to remit money from one place to another for
their business or other purposes. Banks fulfill this need of customers by means of remittance
service. Money can be remitted domestically or internationally, which known as local remittance
and foreign remittance.
There are three ways of transferring fund domestically. The modes of transferring funds are:
• Pay-Order (PO).
• Demand Draft (DD).
• Telegraphic Transfer (TT).
• Mail Transfer (MT).
Payment Order / Pay Order (P.O)
This is an instrument issued by the branch of a bank for enabling the Customer/Purchaser to pay
certain amount of money to the order of a certain person/firm/organization/office within the same
clearing house area of the pay order-issuing branch.

Characteristics of P.O:
• The issuing branch and paying branch are same.
• Application for payment within the clearing house area of the issuing branch.
• This may be open or can be crossed.

Procedure of Issuing Payment Order:


• Obtain P.O, application from duly filled in and signed by the Purchaser/application.
• Receive the amount in cash/transfer with commission amount.
• Issue Pay Order.
• Enter in Pay Order register.

Demand Draft (D.D)


This is an instrument through which customer's money is remitted to another
person/firm/organization in outside the clearinghouse area from a branch of one bank to an
outstation branch of the same bank or to a branch of another bank (with prior arrangement
between that bank with the issuing branch): This is an order instrument in which the issuing
branch gives instruction to the payee/drawer branch to pay certain amount of money to the order
of certain person/firm/organization. Commission, vat and postage are charged for issuing DD.
Example: - To transfer money from Chittagong to Kathmandu

Procedure for issuing D.D.:


• Obtain D.D. application from duly filled in and signed by the purchaser/application.
• Receive the amount in cash/transfer with prescribed commission & postage amount
• Issue the D.D. duly in and signed by the authorized officer.
• Insert test number (where applicable)
• Enter in the D.D. issue register.
• Issue advices to the payee branch.

Procedure for payment of D.D.:


• Examine the D.D. by verifying the signature, test number, serial number etc.
• Enter the D.D. payable register.
• Verify with the IBCA number. Pass necessary vouchers.

Telegraphic/ Telephonic Transfer (T.T)


This is a mode of transfer of customer's money from a branch of one bank to another branch of the
same bank through telegraphic/telephonic message.

Characteristics of T.T
• Issued by one branch to other branch and message is telecommunicated.
• Remittance/ transfer of money are done through tested tale-messages.
• Remittance is a fleeted on the basis tested message.
• Test key apparatus is required.

Procedure for issuing T.T.:


• Obtain T.T. application from duly filled in and signed by the purchaser/application with full
A/C particulars of the beneficiary.
• Receive the amount in cash/transfer with prescribed commission, telephone/telex and postage
amount.
• Prepare T.T. message inserting the test no.
• Enter in T.T. issue register.

Mail Transfer (M.T.): This instrument is not available in BOKL.


3.6 Cash Section:
Cash section is an important section where cash transactions are made. Cash sections demonstrate
liquidity strength of a bank. It is also sensitive as it deals with liquid money. Maximum
concentration is given while working on this section. Tense situation prevails if there is any
imbalance in the cash account. There are various systems maintain by cash officer that is under:
• Vault
• Cash Payment
• Cash Receive
• Evening banking.

Vault
The cash department is the riskiest department of the bank. This is the section where tight security
is required to avoid any accident. There is a limit to be amount of cash that each counter can carry:
carrying of excess cash is avoided for safety reasons. If there is any surplus in the cash then the
excess amount should sent to the Nepal Rastra Bank or if there is any shortage in the cash then the
shortage amount should be borrowed by the bank from Nepal Rastra Bank.

Cash Receipt
When clients deposit cash in the bank, the bank officer should follow the following common
precaution:
• Check and count the received cash.
• Make sure that the amount in word and number in the deposit slip are same.
• Check the account title and the number.
• Both the deposit slip is in order.
• Depositor's signature is in the slip.
• Receive seal in the slip is a must.
• Write the domination of the currency at the back of the pay in slip or the credit voucher
and affix stamp in the slip/voucher,
• Enter particulars of in slip/credit voucher in the receiving cash officer book.
• At least, send the pay in slip/voucher to the deposit department or to the respective
department. . .
• Deposit slip must be signed by the respective officer.
• Carbon copy of the deposit slip must be handover to the client with proper seal and
signature.

Cash Payment
Cheques, demand drafts, pay orders, pay slips and debit cash vouchers etc. are received from
various departments for payment of cash to customers/payees. Prior payment of, cash it is the
officer's duty to make sure that the cheque/or the instrument has been genuinely passed. The
following common precaution is thoroughly practiced before honoring a cheque:
• The branch name in the cheque.
• The date in the cheque is very crucial. Cheques are normally valid for six months and
pre-dated cheques are asked to present after the date given.
• Amount in words and figure of the cheque is same.
• Balance in the account is available.
• The specimen card signature and signature in the cheque should match.
• Signature of recipient is obtained on the reverse of cheque.
• In case, where a prior arrangement has been made with the bank, a client may overdraw
against a cheque.

Books maintained by cash department


Vault Register: This is the book where amount of cash available in the branch is maintained. That
is, the amount in the vault register book.

Cash Receive Register: This register keeps record of all incoming cash.

Cash Payment Register: Similar to the cash register book, this books keeps tracks of all outgoing
cash that is all payments.

Cash Position Register: This is the book where cash balance is recorded by counting the notes and
coins that are physically available. The balance in this book is compare with the vault register,
which should be the same. In case there is an error, then the figures would not match but if no
discrepancy is found then anything is to be worried about.
Cash Section has two Automatic Machine
• Money Counting Machine: With the help of this machine officer can easily count the
money. It save time and also provide accuracy.
• Money Detector Machine: This machine helps officer to find out the fake money.

3.7 Clearing & Bills Section:


Clearing and bills section is an important section of General Banking. This is the section through
which branch has to clear it's inter branch and interbank transaction.

Clearing:
As far as safety is concerned, customers get crossed cheque for the transaction. As we know
crossed cheque cannot be encased from the counter, rather it has to be collected through banking
channel i.e. clearing. For example, a client of BOKL Bank received" a cheque of another bank,
which is located within the clearing range; deposit the cheque in his account at BOKL Bank. Now
BOKL Bank will credit his account and collected it. Though the amount is credited in the
customer's account but he will not get the money until he cheque is honored.

Types of Clearing:
1. Outward Clearing: Outward clearing means when a particular branch receives instrument
drawn on the other bank within the clearing zone and those instruments for collection through the
clearing arrangement is considered as outward clearing for that particular branch.

2. Inward Clearing: When a particular branch receives instruments which on them and sent
by other member bank for collections are treated as inward clearing.

Clearing house
Clearing House is a place in the Central Bank where different banks come to settle their interrelated
liabilities.

Clearing House System


The mechanism of working at a Clearing House in general is as follows:
• Every Rank of the locality, which is a member of (he clearinghouse, prepares Bank-wish
list of cheques after receive from customers and drawn on different Banks of the locality.
• An officer, in charge of clearinghouse, goes to the clearinghouse in the morning with the
cheques and their list. He delivers the cheques to the officials of the respective banks. Similarly,
he also receives the cheques drawn on his Bank from the officials of the other banks.
• The official of each bank computerizes the final balance, payable or receivable by his
Bank alter taking into account the various amount of receipt and payment.
• The official return of their respective Dank to meet again in the afternoon to return any
dishonored instruments to the officials of the respective Banks.
• The final settlement is effective by the supervisor of the clearinghouse by debiting or
crediting, as the case may be, the accounts of the respective Banks as maintained with the
clearinghouse.

Outward Bills for Collection (OBC):


Customers deposit cheque, drafts etc. for collection, attaching their deposit slip. Instruments within
the range of clearing are collected through local clearinghouse. But the other, which is outside the
clearing range, is collected through OBC. Then they will forward the bill to that particular branch.
OBC number given the on the forwarding letter.

Inward Bills for Collection (IBCA):


In this case bank will work as an agent of the collection bank. The Banch receives a forwarding
letter and the bill. Next steps are:
• Entry in the IBCA register, an IBCA number given.
• The instrument is sent to clearing for collection.
• An IBCA is dispatched in this regard.
• If dishonored in this case the instrument is returned to the collecting branch along with
return Memo indicating the cause of dishonored.

Mail Receive & Dispatch Section:


Banking is the business of correspondence. Lot of mail comes to the bank and dispatch from the
branch daily. Lot of my document causes much loss for bank. That is why bank has to record all
Mail received and dispatched through the bank.
Mail receiving:
All mail comes to the bank recorded in this desk. For this reason a register book maintained called
inward mail register. A number is given on receiving mail and records particulars of document in
the register book.

Mail Dispatching:
Before dispatching mail from the bank must record in outward mail register. A number is given
on the mail. Destinations, date of dispatch are recorded in that register book.

3.8 Loan Products Offered by the BOKL:


Generally the clients of BOKL enjoy two types of Loan / Credit facilities.
These are:
Funded facility includes:
1) Overdraft (Limit can enjoy within 1 year)
2) Term Loan
>> Personal Term Loan:
a) Personal secured
b) Auto loan
c) Staff loan
>> Corporate Term Loan:
a) BLC – Bills under Letter of Credit
b) TR- Trust Receipt
c) FBP- Foreign Bill Purchased
d) IBP- Inland Bill Purchased
e) Past Due Loan
Non-funded facility includes:
1) Export L/C
2) Import L/C
3) Back to Back L/C
4) Bank Guarantee
Deposits are invested in Trade, Commerce & Industries in term basis i.e., short, medium & long
term.

Deposits come from business, housewives, institutions & small income group etc. who has excess
or available money. It may be said that though banks are performing social responsibilities by
securing both small & large depositors money & also helping industrial, social & economic
development, but like others, prime objective of the institute is maximization it profit by
optimization of resources.
Chapter 04- Performance of BOKL

4.1 Introduction
Performance analysis is a tool for auditing an organization and its environment. It is the first stage
of plan and helps the marketers to focus on key issues. Performance analysis of deposits is for
maintaining the organization's continuous growth measurement. It ensures the effective way of
performance regarding deposit mobilization, which enables better performance level.

4.2 Highlight of Bank of Kathmandu at a Glance


Bank of Kathmandu Limited is a fast growing private sector Bank is already at the top slot in terms
of quality service to the customers and value addition for the shareholders.

Performance of the BOKL:


Analysis: The amount of operating profit of BOKL was increased huge in 2009 by 65.65 crore
from 2008 by 34.6 crore. And in 2010 it's up to 71.06 crore. In Kamalpokhari Branch the profit
was 34.52 lac in 2008, it increase in 2009 largely and the profit was 1.62 crore. In 2010 the profit
of the branch also rise and the amount of profit was 2.07 crore.

4.4 Analysis of Profitability Performance


Banks usually aim at attaining desired level of profitability performance. Financial statement
analysis may help to reveal important aspects of profitability and other financial performance.
Banks usually resort to financial statement analysis for measuring the following:
1. Profit Earning Capacity
2. Financial Spatiality/Solvency
3. Management Efficiency
More simply, the Bank analysts make attempt to analyze and interpret the operational and financial
performance standing of a concern with the help of following ratios.
1) Profit Earning Capacity:
1.a) Net Profit Ratio
l.b) Earning ratio
l.c) Equity ratio
l.d) Return on Total Assets
l.e) Time Interest Earned
1.f) Earning Per Share
l.g) Net Profit Ratio

2) Financial Stability/Solvency:
2.a)Working Capital Raito
2. b) Proprietary Ratio
2.c) Proprietor Fund to total liabilities

3) Management Efficiency
3.a)Working Capital Raito
3. b) Proprietary Ratio
3.c) Proprietor Fund to total liabilities

4.5 Financial Highlights of the Bank of Kathmandu Ltd.


Comments:
After getting above ratio under profit earning capacity, we see that of Net profit of the organization
is high in comparison with previous year that Net profit in 2010 is high from 2009 and Earning
ratio, Equity ratio in 2010 is low from 2009. This is why, Earning per share increased from 24.83
to 29.24 in 2010.But organizations, internal capacity which is return on Total Assets and Time
Interest Earned are not very much difference from the previous year. So if the bank can increase
the net profit of the organization in the next year it will have positive impact on the net profit and
earning ratios.
4.7 Total Viability of the Firm
Viability of the firm depends on some factors which influenced to calculate Total viability of the
firm and these are:
1) Profit Earning Capacity
2) Financial Solvency
3) Management Efficiency
Chapter 05 - CSR of BOKL
5.1 Corporate Social Responsibility of BOKL.
Financial Support to Build Library At Shree Bhanujan Madhyamik Vidhyalaya, Taplejung.
Financial Support to Bir Hospital for cleaning the hospital area.
6.1 Problems
As the general banking activities mainly deal with the mass people, it is very difficult to ensure
compliance and pure banking environment. But Bank of Kathmandu limited is in the level high
for providing the best customer service as it aspires to be the most admired financial institution in
the country, recognized as a dynamic, innovative and client focused company offering in array of
product and services in the search for excellence and to cater an impressive economic value.
Nevertheless, it is facing some problems in performing general banking activities, some of which
are listed below:

a) Terms and conditions


In case of account opening, terms and conditions are printed on the back of the account opening
form. If it is so, applicants open their account being fully unaware of the same.

b) Problems of deposit money for the people


There is a provision of depositing a minimum amount of money at the time of opening account
and also maintain a minimum balance all the time. But it is not possible to follow strictly,
particularly for financially handicapped customers.

c) Problem for requiring documents


All types of accounts require some documents Sometimes proper documentation cannot be
performed due to customer expectation and personal relationship.

d) Unconsciousness to renew trade license


Trade license must be renewed every year by the account holder and a copy should be submitted
to the bank branch and it is an ob-ligation for all institutional accounts. But it is usually seen that
cus-tomers are not so conscious enough to perform his duty. That is why, it is very difficult to
collect renewed made license from the custom-er to maintain compliance.

e) Problems in personal relationship


Letter of thanks is to be sent to the account holder to confirm the authenticity of address of account
holder. But it is not followed all the time due to personal relations or to manage the customer any
way.

f) Concentrated service
Service is concentrated in few alternatives. No efforts are seen to diversify the offerings.

g) Misuse of office time


Office environment is hampered during first quarter of office time. This problem happened mainly
indiscriminate use of cell phone, un-necessary people gathering and exchange of views among
them.

h) Failure of depositing installment in time


As BOKL transfers all installment of monthly deposit scheme on spe-cific date from respective
savings account, it is very difficult to mon-itor the customer those who failed to deposit the
installment in time. Bank may face unexpected situation at the time maturity of those account.

i) Problem of resection
No restriction for other officers of the branch to access to the cash counter.

j) Problem in monitoring transaction profile regularly


As per Kathmandu Bank guidelines, bank has to maintain transaction profile of all clients and
update the same at a regular interval. But it is very difficult job to monitor the transaction profile
of all clients and update regularly due to manpower shortage.

k) Problem in identification
The bank is bound to take proper identification of depositor and benefi-ciary of the instruments at
the time of on line transaction. But sometime it causes customer dissatisfaction, specially depositor
and beneficiary of small amount.

6.2Findings
Kathmandu’s foreign trade, both imports and exports, receive a considerable amount of assistance
from commercial banks and the direct participation of such institutions, a smooth flow of foreign
trade has been made possible through various facilities provided from time to time. The assistance
is forthcoming in different forms, both fiscal and financial, out of which assistance is of prime
importance. Thus, the role of the financial institutions is crucial in promoting exports and import.
The commercial banks finance the international trade directly by giving finance help and also by
supply to the importers and exporters. The commercial banks finance the international trade direct
by giving financial help and also by supplying to the importers and exporters information about
foreign buyers and overseas markets through market research.

Commercial banks are playing an important role in financing international trade by providing help
to the customers in pre import finance, post import finance and pre export finance, post export
finance and also giving support to the importers and exporters for smooth running of their business.
Chapter 07 – Recommendations

7.1Recommendations
a) In a scarce resource based economy like Nepal, economic use of domestically mobilized
resources is necessary to ensure growth and development. The foregoing analysis provides
evidences that the country’s financial system so far has not been able to provide credit to the export
sector that is necessary to allocate resources optimally. In view of the paramount of the export
sector, shifting more resources to this sector through banking channel is an urgent need. To achieve
these objectives we recommend the following steps;
b) Establishment of a specialized financial institution/bank to cater to the need of the export sector.
India has established EXIM Bank for this purpose. We may also consider the establishment of
such a bank in the country;
c) Like industrial/agricultural credit program banks may advised to prepare indicative export credit
program to be carried out on yearly basis. For various export oriented activities separate schemes
may be introduced;
d) However, to encourage banks to provide credit to the exporters at such a lower rate of interest,
arrangements for the subsidy may be made in such a way so that the effective rate of interest comes
close to that of the rate applied to the trading loan;
e) Working capital loan for the export-oriented industries must be ensured. Adequate provision
should also be made to provide credit of the export oriented production units;

f) The lending institutions should change their approach in providing loan to the export sector.
Promotion of export sector should be the guiding principle in extending loan and towards this end
friendly relation should be developed with the exporters. This will not only ensure and use of loan
but will also help recovery of loan and recycling mobilized resources;
g) Finally, it must be kept in mind that mere setting up of institution or issuance of guidance will
not help in improving the situation. Monitoring of export credit through off-site and on-site
supervision is urgently needed;
h) Service charges of BOKL are higher compare to other rivals. So it should be reduced &
competitive ones. For that cause bank has to emphasize on this variable as early as possible;
i) “Procrastination” for loan approval is the main concern for being dissatisfactory. It also
hampered the satisfaction of the valued client. That is why necessary steps should be taken as early
as possible. We all know “Procrastination is the thief of time”;
j) By considering the clients claim bank should provide the remittance to the concerned client in
time & their collection of money will have to be quick enough that they can easily gain customer’s
satisfaction;
m) Although most of the customers of BOKL are satisfied about consumer credit scheme
nonetheless they are to be expeditious enough to serve their best in the extent of CCS
n) Majority percent of Standard client are eagerly interested in the services that service that BOKL
offering towards their potential client. They got A/C’s statement & advice slip in time. For that
reason, Bank should provide proper training to the bank employees to develop their best & also
for delivering such prompt service. So That they can serve their best & also encourages the client
to open an account.
7.2 Conclusion
It was great pleasure for me to do my internship program in an esteemed organization like BOKL.
It provides me a wide range of scope to observe the factions of bank through the cordial assistance
of its members. I had the scope to focus on overall banking system.
The bank should maintain a well-structured communication from upper level to lower level. Each
official should be valued and treated as a part of the bank and they must have the privilege to
devote themselves for the betterment of services of the bank.

BOKL is a company, which has so far shown good performance and holds the strongest position
in the banking market. Overall, the bank must make a positive attempt to be more outward looking
in their goals and aware of what is happening.

I hope, in spite of my all limitations, this experience of sharing work is with such working
environment will help me a lot in professional life..

Bibliography

Ø Annual Report of the Bank of Kathmandu Ltd 2010.


Ø Working experience in Bank of Kathmandu Ltd.
Ø Bank of Kathmandu's Publications.
Ø Website: www.bok.com.np
Ø Previous internship report.
Ø Various Journals, booklets, vouchers published by Bank of Kathmandu Ltd.
Ø Banking law and practice