Chapter 1

Introduction
1.1 Background of the Study
The School of Management, Tribhuvan University (TU) with an aim of producing
competent international standard managerial professionals started the Masters of
Business Administration (MBA) program under the supervision of Faculty of
Management (FOM). MBA is a pr ogram that integrates theoretical knowledge into
pragmatic ambiance. It is a dynamic course that includes subjects relating to core
management, management allied courses, information technology and specialization
courses. A part from the theoretical knowledge the degree also develops the student's
practical managerial skills, communication skills and business decision-making
capability via incorporation of training and practical experience, in the form of case
studies, projects, presentations, internships, industrial visits, and interaction with
experts from the industry. Further, the program aims at producing masters level
graduates of international accreditation in management education with applied and
pragmatic philosophies of acquiring knowledge. Above all, the program is directed to
prepare the people to face successfully in the field of ever expanding and challenging
knowledge economy. Hence the MBA program extends to its students management
oriented skills whereby the students not only acquire theoretical knowledge but also
get an opportunity to learn the practical aspects of the study.
The MBA program under Tribhubhan University in the third semester attaches
students to the organizations for the internship where they have to work for the period
of ten weeks. Each student should prepare an individual internship report in the
prescribed format based on his/her work in the respective organization selected and
recommended by college and student himself/herself.
The objectives of the internship program can be discussed as:
Apply the theoretical know how on a practical basis.
Gain first hand knowledge on the working of financial sector.
Gain working experience so as to be able to face such endeavors in the future.
Development of career related skills and knowledge.
Acquire the ability to deal with people in professional life.
1

Enhance personal as well as professional qualifications so as to become

competent to face the challenges in the working field.

This report A Study on Operation of Sunrise Bank Ltd. is in fulfillment of the

requirements for the degree of Masters of Business Administration. The internship
work is necessary to earn the degree as required by the University. This report and the
internship program is a part of the academic program that assists the students to
promote their professional activities by the applying the class room theories and the
concepts which the students have learnt in the formal class room hours. This approach
helps the students to be acquainted with the working environment beforehand they
actually start working in any organization. This report is prepared on the basis of the
internship done at Sunrise Bank Limited for a period of ten weeks and incorporates
the analysis of the entire operation activities of the bank. This report is useful to any
individual or institution interested to know about the operations in Sunrise Bank
limited. This report can also be useful to any individual who wishes to work as an
intern in Sunrise Bank Limited to have a beforehand knowledge of the operations of
the bank.
The term bank is ordinarily applied to an institution which receives deposits of money
or of credit and which seeks profit through the extension or sale of its own credit. The
general operations that are performed at banks are deposits, withdrawal, account
opening, providing various types of loans, international trade facilitation like issue of
Letter of Credit and Guarantee, clearance of cheque and remittance.

1.2 Objectives of the Study

The primary objective of the internship program of any academic course is basically
to bridge the gap between theoretical lessons learnt in the classroom and practical
understanding of the subject matter. Thus the general objective of the MBA internship
programme is to help the internee get an understanding of how a business
organisation functions in the real world, to expose the internee to real business
projects and problems, and to help the internee in developing various managerial
skills so as to applying them in his/her career development.

This report has been prepared for the partial fulfillment of MBA (TU) on the basis of
ten weeks internship training at Sunrise Bank Ltd. The primary objectives of the study
have been summarized as followings:
To understand the general operation of a commercial bank.

To be familiar with the principles, manuals, provision, guidelines, regulations of

the operational activities.

To observe the organization culture.

To know the work division and working procedures in the organization setup.

To know how the bank is actually helping its customer to fulfill their needs.

To enhance skills required for banking operations.

Acquire information about the functions of HRD and its role in SrBL.

To understand the role of IT in banking industry.

To know about the customers responses towards the services provided by the
bank.

To develop the conceptual and analytical knowledge.

To observe and analyze the various problems that arises in the processes.

To find out the effectiveness of resource mobilization of the banks.

To build up confidence in corporate dealings.

To get connected with the corporate world people for future need.

To make recommendation on the operation of activities as well as on other

pertinent areas that deemed to be necessary.

1.3 Methodology and Sources of Data

The purpose of the internship program is to gain the professional experience through a
direct contact with the organization i.e. being part of the organization, working
fulltime at the organization as interns for a stipulated period of time. The present
internship study focuses in the direct involvement in the process and personal
observation, which helps the students to get a better insight. This internship report is
prepared on the basis of exploratory and descriptive study of Sunrise Bank Limited.
The exploratory study explores the day to day operation of the bank. Exploration is
done for the better understanding of vital functions performed by various departments
3

within the bank and how these departments operate in co-operation with each other.
The descriptive study adds more to the existing knowledge of the individual carrying
out the study. Descriptive study describes certain characteristics or functions that a
management student is likely to be interested in. Both primary and secondary data
have been used in this report.
Primary Source: Primary data have been collected through the means of field
observation (i.e. Internship Period) and also through interaction with the concerned
authorities. This includes my interactions with the bank staffs and customers. My
personal experience during the period of internship is also a source of primary data. I
have also used my opinion and general conception as per my observation and
academic knowledge.
Secondary Source: Secondary data have been collected through various published
journals, newspapers; annul reports, unpublished data, and the official website of the
bank and other websites.
Thus the overall study can be observed as intermingle of descriptive, explanatory as
well as quantitative and qualitative study. However this report is specifically describes
my personal understanding of Sunrise Bank Ltd., New Road Branch during my
internship period.

1.3.1 Organization Selection

Being a student of Banking and Finance our school of management recommended se
a commercial bank for the completion of my internship. Therefore, I dropped my
resume along with a written motivation application along with a recommendation
letter from the college in few banks including Sunrise Bank Ltd. SrBL replied to the
application with an offer to be an intern at their main branch, Gairidhara. Although I
didnt get chance to work in their Branch A, I got an opportunity to work at one of
their main and most busy branch i.e. New Road Branch. I needed to select an
organization which could help me to learn the various aspects of the banking
operation and the general working environment and where I could enhance my
knowledge of understanding of knowledge regarding the banking industry and thus
heighten up my confidence, extend my interpersonal skills and managerial skills.

Being at the branch I had an opportunity to get involved in the overall banking
operation and have categorically been proved to be the proper choice for me.

1.3.2 Placement
I was placed at the branch located at New Road. During my ten weeks internship
period I was placed at different departments where I got to acquire knowledge about
the working of different departments and how they contribute to the overall prosperity
of the Bank. The first placement was for three weeks in the Business Desk
Department under the supervision of Mrs. Sushma Pandey. The next appointment was
at the Remittance and Clearing Department under the supervision of Mrs. Sabina
Khadka K.C for the following 6 weeks. Following placement was at the Credit
Department under the supervision of Mrs. Tara Bhandari for remaining one week.
1.3.3

Duration of Internship

The duration of internship was ten weeks as defined by the School of Management,
Tribhuvan University. I started my internship from 7th of July, 2013 and it spanned till 10th
of September, 2013.The working hours started from 9:30 AM till 5:30 PM, i.e. 8 hours a
day on regular working days while on Fridays it started from 9:30 AM to 2:00 PM.
Placement under different departments and their time period is given in the following
table:
Table No.1.1: Placement and Duration of Internship
Departments
Business Desk (CSD)
Remittance
and

Start Date
July 7, 2013
Clearing July 28, 2013

Department
Credit Department

September

End Date
July 26, 2013
September 3, 2013
4, September 10, 2013

2013

1.3.4 Activities Performed Under Different Departments

1.3.4.1Business

Desk Department

Opened and closed accounts.

5

 Arranged account opening forms that consisted of six individual cards/forms:

application form, signature card, account opening form, sms banking form, internet
banking form and debit card form.
Opened Corporate and Savings account under different schemes offered by SrBL using
T24 (banking software), and maintained the record of the same in the register.
Took request for the debit card of the customers and requested to the card department
regarding the same.
Informed the customers whose debit cards have been printed.
Arranged the debit cards in the cabinet.
Entered information on the register about the debit cards that have reached the BD and
need to be issued. The information included name of the customer and the

corresponding account number.

Issued cheque books and debit cards.
Requested the authorities to activate the issued cards.
Issued account statements.
Made cheque books.
Printing Pin no. for internet banki
Printing transaction list of the bank staffs.
Entering multiple entry for fines regarding cheque books lost, balance certificate issued.
Issuing Balance Certificate.
Issuing Tax Deductible at Source Certificate.

1.3.4.2Remittance

and Clearing Department

Receiving the calls and solving the problems.

Remitting and paying on behalf of the agent by logging into their account.
Settlement of payment made by the agents.
Making tickets of transaction cancellation, remittance in GBP.
Proper filing of documents and updating the files.
Preparing letter for account credit.
Cheque Clearance.
Salary Transfer.
Electronic Cheque Clearing and Approval.
1.3.4.3Credit

Department

Bridge Gap Loan

Consortium Financing or Loan.
Overdraft.
Business Loan for financing their working capital.

Mortgage home Loan/Vehicle Loan.

Others.

CHAPTER 2

INTRODUCTION OF THE BANKING INDUSTRY

2.1 Meaning of Bank
Banks are the part of the overall financial system. A bank is a financial intermediary that is
empowered to accept and hold money from the public. A bank collects deposits from small
savers (like household, business firm, other public, etc.) and changes the characteristics of
amount collected in terms of maturity, risk and liquidity, and makes it available to users (like
household, business firm, government, other parties, etc.). It provides certain interest to
depositors and charges higher interest from the borrowers. The spread between interest on
loan and interest on deposit is the banks profit. It can play useful role in the economy by
stepping between the firm and the individual savers. In the process, the bank eliminates the
mismatches between the requirements of business firms and the savers.
Some definitions from renowned scholars and institutions are worth studying for the purpose
of understanding banks and their functions.
Banks are financial institutions that accept funds in the form of the deposits repayable on
demand or in short notice." - World Bank
A bank is a manufacturer of credit and a machine for facilitating exchanges.- Horace
White
A bank is an organization whose principal operations are concerned with the accumulation
of the temporarily idle money of the general public for the purpose of advancing to others for
expenditure. Kent
Bank is an institution which collects money from those who have it to spare and who are
saving it out of their income and lends this money out to those who require it.

Crowther

Bank is an organization established for the purpose of exchange money deposit lending
money and participation in transactions-Commercial Bank Act of 2031 (Nepal)
A bank is thus a financial intermediary that accepts deposits and channels those deposits into
lending activities. The lending can be done either directly or through the use of capital
markets. Apart from accepting deposits and providing loans, a bank performs an array of
8

functions like discounting of promissory notes, providing letter of credit service, overdraft
service, netting and settlement of payments, underwriting shares etc.
Banks play a vital role in the development of any nation. The overall development of any
nation depends on the economic development of the nation which is not possible without the
support of infrastructure of that country. In this regard, banks play the vital role of
transforming savings or investible resources into actual investment. They provide the much
needed capital for the development of business, trade and industry, assuring the surplus unit a
safe and profitable utilization of their surplus fund. A bank can generate revenue in a variety
of different ways including interest, transaction fees and financial advice. The main method is
via charging interest on the capital it lends out to customers. The bank profits from the
difference between the level of interest it pays for deposits and other sources of funds, and the
level of interest it charges in its lending activities. This difference is referred to as
the spread between the cost of funds and the loan interest rate.
A narrower and more common definition of a bank is a financial intermediary that accepts
transfers and most important creates deposits. This includes such depository institutions as
central banks, commercial banks, savings and loan associations, and mutual saving banks.

2.2 Importance of Bank

Bank plays crucial role for the economic development of the country. The importance of bank
are summarised below;
Banks finances priority sectors, thus helping in economic development of the country.
Bank help the optimum utilization of resources by acting as an agent who collect
saving from general people and grant them to the entrepreneurs in the form of loan.
Banks help to promote capital formulation by mobilizing the scattered saving of
people and making these available for investment in productive sector.
Bank is useful in productive services, agency service, remittance services, issuance of
letter of credit etc.
Banks actively participate in credit expansion and contraction which immensely
influence the economy of the country.

 Banks provide Letter of credit and Guarantee facilities which contribute in boosting
international trade.
Banks help to stabilize the economy.
Banks provide lockers for safekeeping of valuable documents and precious articles in
rent.
Banks offer different types of loan and advances enabling manufacturers to undertake
new ventures adopt new techniques and introduce new means of production.
Banks provide various card services, which has eliminated the difficulties and risks of
carrying money.

2.3 Economic Functions of Bank

Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
Netting and settlement of payments banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect, present,
be presented with, and pay payment instruments. This enables banks to economize on
reserves held for settlement of payments, since inward and outward payments offset each
other. It also enables the offsetting of payment flows between geographical areas,
reducing the cost of settlement between them.
Credit intermediation banks borrow and lend back-to-back on their own account as
middle men
Credit quality improvement banks lend money to ordinary commercial and personal
borrowers, but are high quality borrowers. The improvement comes from diversification
of the bank's assets and capital which provides a buffer to absorb losses without
defaulting on its obligations. However, banknotes and deposits are generally unsecured; if
the bank gets into difficulty and pledges assets as security, to rise the funding it needs to

10

continue to operate, this puts the note holders and depositors in an economically
subordinated position.
Maturity transformation banks borrow more on demand debt and short term debt, but
provide more long term loans. In other words, they borrow short and lend long. With a
stronger credit quality than most other borrowers, banks can do this by accepting
deposits, issuing banknotes and withdrawals & redemptions of banknotes, maintaining
reserves of cash, investing in marketable securities that can be readily converted to cash if
needed, and raising replacement funding as needed from cash markets & securities
markets.

2.4 Types of Bank

1. Central Bank
Central bank is the supreme bank of monetary and banking system of the nation. In Nepal,
Nepal Rastra Bank is the central bank, which was established in 2013 under the Nepal Rastra
Bank Act 2012. It keeps monetary system stable, develops banking system, issues coin and
notes and controls the credit of money. It provides loan and accept the credit of government,
commercial banks and financial institutions. It is called the bank of banks.
2. Commercial Bank
Commercial banks are established to improve peoples economic welfare & facility, to accept
deposit, to provide loan to the agriculture, industry & commerce and to offer banking services
to the people in the country. In Nepal, there are many commercial banks: Nepal Bank Ltd.,
Rastriya Banijya Bank, Sunrise Bank Ltd., Standard Chartered Bank Ltd. etc.
3. Industrial Bank
A bank which is opened to support the industrial field of country and its all around
development and expansion is an industrial bank. It provides loans, capitals and technical
services to establish industries and their expansion. This bank has great important in the
industrialization of country.
4. Agriculture Development Bank
Specially, agriculture development banks are established with the objective of developing
agriculture sector. In Nepal, the Agriculture Development Bank was established in 2024 for
11

the purpose of improving peoples economic welfare and the facilities with dynamic changes
and to provide capital & loan to the agriculture sector.
5. Saving Bank
A bank established with the objective of managing a huge amount of capital by collecting the
little amount of money saved by people of urban and village areas is called saving bank. Such
banks encourage the saving habit of the people. This bank can be recognized in different
forms and appearances like post office, saving bank, stock saving bank and mutual saving
bank. In Nepal, the functions of such banks are performed by commercial bank, agriculture
bank and the district post offices.
6. Exchange Bank
Exchange bank exchanges different foreign & indigenous currencies and transfers the fund to
the foreign countries. So, it is called the exchange bank. This bank provides financial
assistance for international trade. It buys and sells the foreign exchange bills.
7. Indigenous Bank
The bankers who follow the banking profession in traditional custom & culture are called
indigenous bank. Indigenous bankers provide loan in a fixed interest; accept deposit .For
example gold smiths, landlords, merchants are called indigenous. This system has its own
characteristics and is found in developing countries.
8. Rural Development Bank
A rural development bank is established with the objective of up-lifting the living standard of
the people of rural areas by encouraging them to start the possible income generating
occupation, by providing loan without security, providing necessary training and bank
servicing. These banks are established to improve the economic condition of the farmers,
laborers, masons: Eastern Rural Development Bank, Far-Western Rural Development Bank,
Western Rural Development Bank, Mid-Western Rural Development Bank, Central Rural
Development Bank.

2.5 Origin of Bank

Banks are among the most important financial institutions whose principle operations are
concerned with accumulation of the temporarily idle money with the general public purpose
12

of advancing it to others for expenditure. Thus, the word banking has been used to denote a
certain kind of trading in money. A bank is therefore a corporation that deals in credit i.e.
accept from the public, withdrawing by cheques and advances loans of various sorts. The
history of banking is nearly as old as civilization. In the ancient Rome and Greece, the
practice of storing precious metals and coins at safe places and loaning out money for public
and private purpose on interest was prevalent. In England, banking had its origin with the
London goldsmith who in the 17th century began to accept deposits from merchants and
others for safe keeping of money and other valuables. As public enterprise, banking made its
first appearance in Italy in 1157 A.D. when the Bank of Venice was founded so the bank of
Venice is supposed to be the first public banking institution. Following it established the bank
of Barcelona and Bank of Geona in 1407 A.D. The bank of England, first English bank, was
established in 1694 A.D. The bank of Hindustan established in 1770, was the first Indian
bank. The history of banking is closely related to the history of money. As monetary
payments became important, people looked for ways to safely store their money. As trade
grew, merchants looked for ways of borrowing money to fund expeditions. The ancestors of
modern day banks have been attributed to the merchants, the goldsmiths and the money
lenders.
The modern economic system cannot function without bank. According to the modern
concept, banking is a business that not only deals with borrowings, lending and remittance of
funds, but it is also important instrument for fostering economic growth as economic
development cant be imagined without development of banks. Presently there are various
types of banks are established for instance, industrial bank, commercial bank, agricultural
bank, joint stock bank, co-operative bank and development bank with different purpose.
The first bank to offer most of the basic banking functions known today was the Bank of
Barcelona in Spain, founded by merchants in 1401. This bank held deposits, exchanged
currency and carried out lending operations. It also believed to have introduced the bank
cheque. Three other early banks, each managed by a committee of city officials, were the
Bank of Amsterdam (1609), the bank of Venice (1587) and the Bank of Hamburg (1619).
These institutions laid the foundation for modern banks of deposit and transaction.

Oldest Private Banks

o Barclays, which was founded by John Freame and Thomas Gould in 1690 was
renamed to Barclays by Freames son-in-law, James Barclay in 1736.
13

o Hope & Co., founded in 1762.

o Barning Bank founded in 1806.

Oldest National Banks

o Bank of Sweden- The rise national banks.
o Bank of England- The evolution of modern central banking policies.
o Bank of America- The invention of centralized check and payment processing
technology.
o Swiss banking.
o United States Banking.
o The Pennsylvania Land Bank founded in 1723 receiving the support of
Benjamin Franklin who wrote Modest Enquiry into the Nature and Necessity
of a Paper currency in 1729.
o Imperial bank of Persia- History of banking the Middle East.

2.6 Development of Banking Industry in Nepal

Like in other countries, moneylenders, goldsmiths, and merchants acted as bankers in ancient
Nepal. It is believed that Gunakamdev burrowed money in 723 BS to build Kathmandu. The
record of banking system in Nepal gives detail account of mixture of evolution in the
financial and the global economy. Though the establishment of banking industry is very
recent, some crude bank operations were in practice even in the ancient times. In Nepalese
chronicle it was recorded that the new era known as Nepal Sambat was introduced by
Shakhadhar a Sudra merchant of Kantipur in 879 or 880 AD after having paid all his
outstanding debts. This shows the basic of money lending practice in ancient Nepal. Towards
the end of 8th century, Guna Kam Dev borrowed money to rebuild the Kathmandu valley. In
the 11th century, during Malla regime there was an evidence of professional money lenders
and bankers. The money lending business particularly for financing the foreign trade with
Tibet became popular during Malla reign.
With the establishment of Tejarath Adda during the year 1877 AD it was fully subscribed
by the government of Kathmandu valley, which plays a major role in banking system. This
establishment helped the general public to provide the credit facilities at a very low rate of
interest. It also helped in the distribution of credit facilities to the public especially on the
14

collateral of gold as well as silver. Hence, it could be regarded as the pioneer foundation of
banking in Nepal.
The main defects of the institution soughed as there was no other financial institution set-up
and there was no effort to expand the services. Because of all the above defects, this
institution did not accept any deposits from the public. Due to the absence of saving
mobilization the Adda faced the financial problems. After that again for a long time several
unorganized bankers and indigenous money lenders continued to flourish as a sole provider
of the credit and services to the general public.
At the same time, the government started trade with India and Tibet. And the various
indigenous bankers handled the trade because transfer of money could be safely made only
through these banjers in the absence of modern banking institutions. This was strongly
supported by the situation caused during 1934 AD earthquake where there was a need of
finance for the reconstruction of works.
Nepal Bank Limited, the first commercial bank of Nepal, was established on 30th Kartik 1994
BS (1937 A.D), sixty years after the establishment of the Tejarath Adda. Right from its
inception, Nepal Bank Limited started performing the functions of a commercial bank. It
established branches in the rural areas and concentrated on profit generating activities.
Nepal Rastra Bank was established on 14th Baisakh 2013 BS (1956 AD) under the NRB act
2012. Since then, it has been operating as the governments bank.
Rastriya Banijya Bank was established on 10th Magh 2022. Two years later, on 7th Magh
2024, Agricultural Development bank was established with the objective of uplifting the
agricultural sector of the nation by providing financial services to the farmers.
NRB and RBB continued to be the only commercial banks of the nation till the early 1980s.
After the liberalization of the financial sector in the mid 80s, the banking sector saw a
remarkable change through foreign investment and use of modern technologies in banking.
Nepal Arab Bank (now SUNRISE Bank), the first joint venture bank of the nation, was
established in 1984 AD. One year later, on 1985 AD, Nepal Investment Bank was established.
Standard Chartered Bank Nepal (then Grindlays Bank) was established in 1987. In 1993 A.D.
, Himalayan Bank Ltd was established as a joint venture with Habib Bank Ltd Pakistan and
Nepal SBI under a joint venture between employees provident fund and State Bank of India.
15

Nepal Bangladesh Bank Ltd. was established under a joint venture with IFIC Bank Ltd. of
Bangladesh in 1994.
After 1995 A.D, banks like Bank of Kathmandu, Nepal Credit and Commerce Bank Ltd.,
Nepal Industry and Commerce Bank, Lumbini Bank, Machhapuchhre Bank Ltd., Kumari
Bank Ltd., Laxmi Bank Ltd., Siddhartha Bank Ltd., etc were established.
In the mean time, the new NRB Act, 2002 was enacted. In place of various acts governing
financial institutions (commercial bank act, finance company act, development bank act), an
umbrella act Banking and Financial Institutions Act (BAFIA) was introduced in 2006.
Currently there are 31 commercial banks and a plethora of other financial institutions in the
nation.The banking sector remained still for a long period of time but as the time passed
many developments occurred. In the present scenario, Nepal banking system is evolving itself
as a powerful instrument for planning and economic growth of all the developed and
underdeveloped sectors. The scope and scale of banking too have undergone substantial
changes in response to the saving and credit needs of people.

2.7 Commercial Banks

A financial institution that accepts demand deposits and makes loans and provides other
services for the public. A commercial bank is a type of financial intermediary and a type of
bank. It raises funds by collecting deposits from businesses and consumers via checkable
deposits, savings deposits and time deposits. It makes loans to businesses and consumers. It
also buys corporate bonds and government bonds. Its primary liabilities are deposits and
primary assets are loans and bonds. A bank whose principal functions are to receive demand
deposits and to make short-term loans.
Commercial banking activities are different than those of investment banking, which include
underwriting, acting as an intermediary between an issuer of securities and the investing
public, facilitating mergers and other corporate reorganizations, and also acting as a broker
for institutional clients.
A financial institution authorized to provide a variety of financial services, including
consumer and business loans (generally short-term), checking services, credit cards and
savings accounts. Certain deposits at most commercial banks are insured by the Federal

16

Deposit Insurance Corporation. Commercial banks may be members of the Federal Reserve
System.
Bank that makes loans to businesses, consumers and non business institutions. Early
commercial banks were limited to accepting deposits of money or valuables for safekeeping
and verifying coinage or exchanging one jurisdictions coins for anothers. By the 17 th
century most of the essentials of modern banking, including foreign exchange, payment of
interest, and granting of loans were in place. It became common for individuals and firms to
exchange funds through bankers with a written draft, the precursor to the modern check.
Because a commercial bank is required to hold only a fraction of its deposits as cash reserves,
it can use some of the money deposited by its customers to extend loans. Commercial banks
also offer a range of other services, including savings accounts, safe deposit boxes and trust
services. Some of the major functions of the commercial banks are listed as bellow:

a. Accepting Deposit
It is the most important function performed by commercial banks. Commercial banks
basically accept the following types of deposits:
i)
Current or demand deposits:
ii)
Savings deposits
iii)
Fixed or time deposits
iv)
Margin deposits
v)
Call deposits.
There is no provision of interest on the current account. Similarly interest on savings
accounts is usually less than that in fixed deposit accounts. Margin deposits are used as
margins on lending especially in the case of vehicle loan and other hire purchase loan. Call
deposits are also called money at call and short notice. This kind of deposit is preferred by
business communities that need liquidity.
b. Providing Loans and Advances
Another important function of commercial banks is to provide loans and advances to different
sectors of the economy. Loans may be provided in many forms like loans and advances,
overdrafts, and discounting of bills. Loans may be provided against the security of
government securities, share, insurance policies, and export bills, fixed deposit receipts etc.
c. Investments
17

Commercial Banks also make investment in various securities, especially during times when
demand for loan in low. Banks may opt to purchase government treasury bills, government
saving bonds, corporate shares, corporate bonds and debentures and other investments.
Nepalese Commercial banks have invested mainly in government securities in order to
minimize risk and maximize liquidity.
d. Secondary Functions
Apart from the above mentioned primary functions, commercial banks also perform some
secondary function. Some of them are:
i)
ii)
iii)
iv)
v)
vi)

Safety of valuable goods.

Agency functions
Dealing of foreign exchanges
Issue Credit Instruments
Work as referee
Government transactions

The commercial banks that have been established till date are listed below:
Table No.2.1: List of Commercial Banks in Nepal
(Source: http://bfr.nrb.org.np/List_Banks_n_Non_Banks.php)
S. No

18

Name

Operation Date
(A.D.)

Paid Up Capital
(Rs in million)

Nepal Bank Ltd.

11/15/1937

3804

Rastriya Banijya Bank Ltd.

1/23/1966

3853

Agriculture Development Bank Ltd.

1/2/1968

94375

Nabil Bank Ltd.

7/16/1984

20298

Nepal Investment Bank Ltd.

2/27/1986

24091

Standard Chartered Bank Nepal Ltd.

1/30/1987

16102

Himalayan Bank Ltd.

1/18/1993

20000

Nepal SBI Bank Ltd.

7/7/1993

18693

Nepal Bangladesh Bank Ltd.

6/5/1994

20103

10

Everest Bank Ltd.

10/18/1994

11196

11

Bank of Kathmandu Ltd.

3/12/1995

13595

12

Nepal Credit and Commerce Bank Ltd.

10/14/1996

13997

13

Lumbini Bank Ltd.

7/17/1998

13000

14

Machhapuchhre Bank Ltd.

10/3/2000

16272

15

Kumari Bank Ltd.

4/3/2001

14850

16

Laxmi Bank Ltd.

4/3/2002

16140

17

Siddhartha Bank Ltd.

12/24/2002

15610

18

Global IME Bank Ltd.

19

Citizens Bank International Ltd.

6/21/2007

19223

20

Prime Commercial Bank Ltd

9/24/2007

22457

21

Sunrise Bank Ltd.

10/12/2007

18554

22

Grand Bank Nepal Limited

23

DCBL Bank Ltd.

5/25/2008

19209

24

NMB Bank Ltd.

6/5/2008

16517

25

Kist Bank Ltd.

5/7/2009

20000

26

Janata Bank Nepal Ltd.

4/5/2010

14000

27

Mega Bank Nepal Ltd.

7/23/2010

16310

28

Commerz & Trust Bank Nepal Ltd.

9/20/2010

14000

29

Civil Bank Ltd.

11/26/2010

12000

30

Century Commercial Bank Ltd.

3/10/2011

10800

31

NIC Asia

30/06/2013

32

Sanima Bank Ltd.

15000

05/2008

2000

03/2013

2016

CHAPTER 3

INTRODUCTION OF SUNRISE BANK LTD

3.1 Overview
Sunrise Bank Limited launched itself as the 23rd commercial bank of Nepal on Ashwin 25th,
2064 (October 12th, 2007), and entered a banking industry that had several mature and
dominant players securing significant percentage of the banking industry.
19

The Authorized Capital of the Bank is Rs. 5000 million. The share capital structure is 70% of
the individual investors and 20% of the general public. The paid up capital is Rs. 875 of
which Rs. 375 million was into initial public offering. The shareholders pattern can be
formatted under a table as:
Table No. 3.1: Ownership Capital
S.No
1
2

Shareholders
Group of Investors
General Public

Percentage
70
30

Source: www.sunrisebank.com.np
Chart No. 2.1
Pie Diagram Presentation of the Shareholders Structure of SrBL

SrBL is operating with the motto: Rising to serve. Customer satisfaction is the paramount
driver at Sunrise Bank. The bank constantly interacts with existing and potential customers to
get feedback and suggestions that in turn help to design products and services to suit the
requirements and expectations of customers.
SrBL has 49 branches spread in the capital as well as all over the country. The bank has
established 27 branches outside the valley and 22 branches in the valley.
SrBL, which is managed by a team of experienced bankers and professionals having proven
track record believes, can offer what the customers are looking for. They are sure that your
choice of a bank will be guided among other things by its reliability and professionalism.
20

3.2 Mission Statement

Continuous Offering of tailor made banking services to all levels of society, with no
constraint on time, location, size of transaction and all aspirations.

3.3 Strategic Objectives

To continuously expand Bank's operation in systematic manner

To become a major innovative Bank and provide top of the line services

To build an HR team that continuously supplements the growth of the organization

To be vigilant to the evolving economy and align our operations accordingly

3.4 Branches of SrBL

The registered office of SrBL is located at Gairidhara, Kathmandu. This is also the head
office of the bank and all the major functioning including making rules and policy making,
issuance of securities, treasury operations, payment and settlement, international banking are
done through this branch. The banking facilities of SrBL is not only limited to Gairidhara but
also spread over 49 more locations within the country. The branch offices of SrBL including
their Branch Managers name are:

Table No. 3.2 Branches of Sunrise Bank Ltd.

Branches Inside Valley
Sno.
1
2
3
4
5
6
7
8
9
10
11
21

Name
Mr. Alok Sharma
Mr. Hari Prasad Acharya
Mr. Ganesh Regmi
Mr. Khagendra Baskota
Mr. Rajendra Prasad Timsina
Mr. Suman Pokhrel
Mr. Neeraj C. Amatya
Mr. Deepak Raj Adhikari
Mr. Pramesh Dahal
Ms. Rabina Acharya
Mr. Uma Shrestha

Office
Main Branch
Newroad Branch
Kalimati Branch
Chabahil Branch
Tinkune Branch
Boudha Branch
Bhaktapur Branch
Gabahal Branch
Bhaisepati Branch
Maharajgunj Branch
Buddhanilkantha Branch

12
13
14
15
16
17
18
19
20
21
22

22

Mr. Sudarshan Khatiwada

Mr. Neeraj C. Amatya
Ms. Devaki Pant
Mr. Upendra Bir Bajracharya
Mr. Ram Kumar Giri
Ms. Panna Wagle
Mr. Sujit Kr. Karn
Mr. Amod Shrestha
Ms. Somi Malla
Mr. Kautilya Dhungana
Mr. Subarna Regmi

Pharping Branch
Jyatha Branch
Gothatar Branch
Harisiddhi Branch
Thamel Branch
Baniyatar Branch
Kalanki Branch
Luvu Branch
Gaurighat Branch
Taukhel Branch
Sankhamul Branch

Branches Outside Valley

Sno.
1
2
3
4
5

Name
Mr. Deepak Raj Joshi
Mr. Dev Chandra Bhatta
Mr. Sudhir Agrawal
Mr. Kamal Bahadur Adhikari
Mr. Kapil Agrawal
Mr. Surya Bahadur

Office
Dhangadi Branch
Birgunj Branch
Biratnagar Branch
Pokhara Branch
Dharan Branch

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

Balampakhi
Mr. Yogendra Bhattarai
Mr. Visan Niraula
Mr. Sujan Paudel
Mr. Bisheshwor Nayak
Mr. Gyanendra Dutta
Mr. Peshal Dahal
Mr. Umesh Gajurel
Mr. Suman Bhattarai
Ms. Yogesh K. Bhatta
Mr. Hemant Awasthi
Mr. Santa Kumar Karki
Mr. Bipat Chaudhary
Mr. Choodamani Chapagain
Mr. Yadav Khatiwada
Ms. Rajan Prasad Pokhrel
Mr. Bhim Narayan Shrestha
Mr. Rudra Jung Gurung
Mr. Sunil Rana
Mr. Bikesh K. Shrestha
Mr. Anil Babu Adhikari
Mr. Krishna Prasad Timilsina

Bardibas Branch
Dadeldhura Branch
Ilam Branch
Birtamod Branch
Gaur Branch
Rajbiraj Branch
Narayanghat Branch
Sundar Bazar Branch
Duhabi Branch
Mahendranagar Branch
Sukhad Branch
Kakarvitta Branch
Udayapur Branch
Surunga Branch
Biratchowk Branch
Sunwal Branch
Damauli Branch
Besisahar Branch
Bhairahawa Branch
Nepalgunj Branch
Bhadrapur Branch
Jhumka Branch

3.5 Board of Directors of SrBL

Board of directors that is constituted by & members manages SrBL. The details of present
board of directors and management team is given below:
23

Table No: 3.3 Board of Directors of SrBL

Name
Mr. Motilal Dugar

Designation
Chairman

Mr. Shreeniwas Sharada

Director

Dr. Bhogendra Guragain

Director

Er. Bachh Raj Tater

Director

Mr. Shrawan Kumar Goyal

Director

Mr. Malchand Dugar

Director

Mr. Hikmat Bahadur Mali

Director

Mr. Suresh Kumar Basnet

Director

3.6 Management Team of SrBL

The management team of SrBL consists of all the managers and department heads. They are
the one who supervise their sub-ordinates and guide them to accomplish their work
efficiently. Management of the organization plays a major role in achieving organizational
goal. As the board of directors formulated the vision, mission and objective for the
organization where as managers formulate action plan to achieve those objectives. The
members of management team of SrBL are represented in the chart of SrBL included in
appendix 2.

3.7 Services provided by SrBL

SrBL aims in providing a comprehensive range of flexible and innovative products and
services. The bank has been constantly making efforts to provide customer focused
products with a view to meet the changing needs and expectations of the customers. The
products and banking services are as follows:

24

3.7.1

Remittance:

The fund can be transferred from one place to another, both domestically and internationally.
This facility is used for import/export trade. The payment and receipt in Nepalese and foreign
currency can be performed.

3.7.2

Bills Purchase:

When exporter receives cheques from importer, which is to be paid only after the certain time
duration, then importer in need of money requests the bank to accept the cheques like security
and give him the money. The bank after completion of the time period receives amount from
the importer through cheques.

3.7.3 Clearing/Collection:
SRBL provides the services of inter-banking transaction. Cheques of various other banks are
accepted and cleared, as SrBL is also the member of clearinghouse.
3.7.4

Bank Guarantees:

It is a non-funded facility provided by the bank for its valued clients. There are bank
guarantees such as bid bonds, performance bond, advance payment guarantee, custom
guarantee, back-to-back letter of credit and credit guarantee.

3.7.5 Export Credit:

This service is provided to exporter who needs to export goods both at national and
international level. SrBL has been providing pre-shipment credit and post shipment credit
according to their requirement.

3.7.6 Loans and Advances:

Bank provides loans to different sectors such as loan to company/firm, personal loan, hire
purchase loan, housing loan etc. it advances credit against cash pledge, personal guarantee,
corporate guarantee, gold & silver by following the direction of Nepal Rastra Bank.

25

3.7.7 Debit Card:

A debit Card is a payment card, which enables people with the option of making purchases at
merchant locations as well as cash withdrawals from ATMs with access to a bank account. It
is a convenient management tool, which offers many benefits, however at the same time also
carries many responsibilities to the card holder. It provides people with freedom from the
burden of carrying cash as well as the risk associated with it. Thus, debit card have a wide
associations, wider than the currency notes and safer then them too.

3.7.8 Deposits:
SrBL accepts various kinds of deposits providing interest rate according to the nature of
deposits such as, saving account, current account and fixed deposit account. It provides
various deposit schemes like Normal Savings, Fat Savings, Pink Deposit, Exclusive Bachat,
Remittance Account, Bal Bachat, Share Lagani Khata, Current Account, Call Account and
SME Account.
3.7.9

Tele-Banking Service:

An account holder of this bank can use his/her own password from his/her convenient place
to access by telephone to make enquiry of account balance and to order statement of account.

3.7.10Any Branch Banking Services (ABBS)

This facility enables the customers of SRBL to deposit or withdraw money and acquire any
information from any branch of SRBL.

3.7.11 Locker Facility

SRBL provides lockers for its customers at Gairidhara Branch. The advantages for having
lockers is that the bank is open 365 days a year with a safe environment, ample parking
space, strategic location, choice of locker sizes and only 50% key deposits for Fat Savings
Account holders.

26

3.7.12ATM Services:
The ATM service provided by the bank is open 24 hours a day, 7 days a week and 365 days a
year. The ATM service of SRBL also provides the facility of depositing through ATM
machines SrBL provides the following services through ATM:

Cash withdrawal

Deposits

Fast cash

Statement Request

Mini Statement

Balance Inquiry

Pin Change

3.7.13E-banking Services:
SrBL has introduced the e-banking service, which allows people to avail online banking
transactions from any part of the world. E-Banking is a tool that allows you to use personal
computer with an internet connection to conduct your banking online. Through e-Banking
one can view account balances and transaction statement, transfer money between ones own
account in the bank, and pay utility bills and much more. With the change in technology,
Sunrise Bank Ltd, more than ever, felt the need for banking convenience for their clients.
SrBL account holders can now access and have full control over their accounts 24 hours 7
days a week. SrBLs web site is www.sunrisebank.com.np. This facility provided by SrBL is
secure and free of charge for the SrBL account holders.

3.7.14365 Days Banking Service

SRBL provides its customers 365 days banking services through all its branches in
Kathmandu valley. It provides unstoppable service from Sunday to Thursday (9:30 am to
7:00 pm) and on Friday from 9:30 am to 3:30 pm. On Saturdays and public holidays also
customers can enjoy the banking service. The banks Main Branchs cash counter operates
from 8:00 A.M to 8:00 P.M.
27

Chapter 4

ANALYSIS OF ACTIVITIES DONE

This chapter mainly deals with activities done in SrBL during internees 12weeks internship.

4.1 Business Desk Department (CSD)

Business Desk department mainly focuses in helping in day to day transaction. Customer
service is the commitment to providing services to external and internal customers, including
providing information, technical support and quality of service in a timely manner. Customer
service department basically give priorities to following tasks:

Giving information to all customers regarding banking operations.

Since CSD is the first department where customer visits first so it is the responsibility
of CSD to provide assistance with the needed information to the customers regarding
the product and services that bank is delivering. Its the duty of CSD to make them
understand about banking process filling up the forms, counseling the procedures
required for banking transaction in the bank, providing suggestions and advices
whenever they required.

Opening accounts is the duty of CSD. While opening the account, all the necessary
details to be filled by customers in form conveyed by CSD. After reconciliation it is
entered in the system. And also CSD carries out the functions of closing accounts in
the same way

Receiving orders of bank statement and cheque and making necessary arrangement
before issuing. It should keep records in the register before issuing it.

To keep track of the returned cheque. In case if the cheque is returned, its the duty of
CSD to inform the concerned person/firm/company about the dishonor of cheque so
the problem can be solved or any other action can be taken on time.

Resolve customer problem, complains and inquires including the more complex and
difficult accounts, by interpreting policies and regulations and taking follow up action
as required.

28

Review customer accounts records for completeness and accuracy; maintains

customer account files and related records.

CSDs function is to distribute the Debit Card issued by the bank by informing
through telephone to collect it. Receiving application for internet banking and SMS
Banking and Forward the application for Internet and SMS banking.

It is responsible for cheque clearance, which is recorded in the cheque clearing

register.

It is also responsible for the preparation of monthly bank statement as well as the
annual bank statement in order to submit to its head office.

Customer service is the front desk of any organization. For any organization it is very place
which makes an early impression to the clients. The image and the reputation of bank depend
upon effective functioning of this department. It is very important to know that a highly
satisfied customer stays longer, buys more as the organization introduces new product, pay
less attention to competing brands and is less sensitive to price. Having a significant number
of this kind of customers is only possible through the efficient functioning of customer
service department of any organization. It would then not be inappropriate to say that this
department is the key to success of any organization. Under the supervision of the department
head, the activities carried out by the internee in this department are:

4.1.1 Customer Counseling

The success of the bank depends upon success of customer service department. This is the
most important function of customer service department. The efficiency of the customer
service department or an organization is the outcome of the quality of the customer
counseling that it provides .This department is concerned with counseling the new as well as
the existing clients regarding the products and services provided by the bank.

4.1.2 Account Opening

One of the major functions of customer service department is account opening. Under the
supervision of departments supervision, firstly the internee need to inquire the customer and
help them fill the account opening form correctly with every details including the customers
signature in the required fields. After that internee had to stick the photos of the customer and
had to attest a copy of citizenship certificate in the form. Internee had to open account in the
29

computer system. The name of the customer had to be recorded in the register book. After
opening the account internee had to fill up the cheque requisition form along with the
signature of the customer. Then all the new account application forms along are filed
sequentially on the folder on the basis of the customer id.

4.1.3 Cheque Book Printing and Distribution

Cheque Book printing and Distribution is another Function performed by CSD where there is
necessary to prepare new cheque book for existing accountholder who request for it in
exchange of old cheque book requisition slip with valid signature and account number. For
new customers new leaves of cheque book is provided. Internee had to first issue cheques
through the system and sends it to Operation In charge (OIC) for verification. After
verification from the OIC the cheques had to be printed. Names of the customers are to be
written in the cover of Cheque book. Same had to be recorded in the cheque book delivery
register. Before issuing the cheque book to the customers they are suppose to sign in the
cheque requisition slip and the register. Based on the type of account, the cheque book is
distributed to accountholder.

4.1.4 Issuance of Account Statement

On demand of customer bank issues the bank statement as required by customer. To know the
total balance amount the customer have to fill up the statement request form including his
name, account number, statement from the period he/she wants to know and signature. If the
statement request is filled up by the corporate firm then the stamp of the firm is compulsory,
similarly for joint account all the signatories are required to sign the form. Before providing
the statement of accounts the customers are required to sign the register book and the
statement form.

4.1.5 Issuing Debit/ATM Card

ATM cards are issued to the customers upon their request. The customers have to fill up the
application form requesting for a card. Internee had to help the customers fill up the form and
had to issue it to the customers. ATM card is issued along with the PIN number. The
customers should sign in the register book of ATM card and PIN register book before
receiving the card. The card must be renewed every year and the renewal fees are charged as
per the banks policy.

30

4.1.6 Signature Scanning

Scanning of the signatures to be done and to be approved by OIC on the same day of account
opening. Internee was allowed to scan the signatures on the supervision of department head.
Signature and the photo of the customer have to be scanned. After scanning the signature it
has to be uploaded into the system. After scanning and uploading the signature it has to be
approved by the OIC.

4.2 Remittance Product of Sunrise Bank Limited

Sunrise Bank Limited has network of branches in the country and very big network of
correspondent and agency relationship all over the world. The business of remittance fund
transfer into Nepal, from Nepal and within Nepal through this bank is most reliable, timely
at the minimum of charges.
4.2.1

Introduction

Transfer of money from one place to other is an important function of banking which is
called remittance. Internal remittance contribute in banking income by transferring money
through scattered branches of bank, works as supplementary part of other financial
activities and works as a key of services promotion.
Internal remittance means transferring of money within a country and external remittance
means transfer of payable money from one country to another country. External remittance
is controlled and regulated by current foreign exchange acts and directives issued by Nepal
Rastra Bank with respect to the contemporary economic trend
Incoming of money from other banks or branches of banks is called inward remittance
while sending of money to other banks or branches is called outwards remittance.
4.2.1.1Inward

Remittance (Receiving of Money in Nepal)

SWIFT

Through this system the remitter anywhere in the world can remit or transfer the fund in
Nepal very easily, securely and quickly. The remitter can transfer the money in Nepal
through Sunrise Bank Limited just by mentioning this bank's SWIFT identity, that is,
SRLNPKA and beneficiary details. The widest network of branches of this bank can take
care of your need very efficiently and at the minimum of cost.

31

TT and Mail transfer

The arrangement is made with major banks in financial centers as well as with banks in
neighboring counties to receive funds through tested telegraphically transferred funds. We
also honor the mail transfer from major banks.

Drafts

We have system of honoring drafts drawn on us by many banks denominated in major

currencies such as USD, Euro and GBP.
Remittance from Gulf Countries: We have maintained special relationship with banks,
financial institution and exchange houses in Gulf countries where majority of Nepali
workers are working so that their hard earned money can be received by family members in
Nepal.

Western Union Money Transfer Service

Due to the arrangement made by our bank with this fund transferring institution through
Hulas Remittance, the beneficiary in Nepal can receive money very quickly and the
beneficiary does not need any account to receive the fund.

Remittance from Gulf Countries

We have maintained special relationship with banks, financial institution and exchange
houses in Gulf countries where majority of Nepali workers are working so that their hard
earned money can be received by family members in Nepal.

Remittance from India

The arrangement is made with many banks in India by which remitter in India can remit the
fund through SWIFT, TT, Mail Transfer, Drafts etc.
All remittance into Nepal through Nepal Bank Limited is quick, dependable and cheap
because the beneficiary anywhere in the Nepal can receive the money without needing
services of other banks because Nepal Bank Ltd has largest network of branches in Nepal in
important places.

4.2.1.2 Outward Remittance

SWIFT
32

Through this System we can cater the need of customer to remit the fund anywhere in the
world, denominated in major currencies.

Drafts

Draft drawing arrangement made with our correspondent banks in many countries of the
world where Nepalese individual and institution need to transfer fund due to any reason.

TT and Mail Transfer

Because of our international banking relationship we can handle the outward remittance
business though this method.

Remittance to India

We can cater the need of business community and individuals to transfer the fund
denominated in Indian Rupee In India very efficiently and at the minimum of commission
compared to any bank in the Nepal.
4.2.2

Fund Transfer

This is one of common services banks provide to its customers. This service is getting more
importance among banks due to increasing volume of trade and tourism. Thus, efficiency
and speed of fund transfer is one of important parameter in judging Bank's customer service
standard. An efficient fund transfer service is a great image builder for Bank, as it is also
major customer interface point. Fund transfers through banks are safe, fast, inexpensive and
very simple. There are various instruments used for funds transfer service: Normal
consideration for choice of one particular instrument is based on factors such as speed, cost,
safety, purpose, etc. following are instruments generally used in our Bank for fund transfer:

4.2.3 Demand Draft

Demand draft is an instrument which is issued by a bank to give noted amount of money to
the specified person/firm/company without any condition. Demand drafts consists three
parties as drawer drawee and payee. The branch of bank that issues draft is called the
drawer. The bank which gives the payment is called drawee and the payment received
person is called payee. Demand draft is a kind of bills of exchange.
Demand Draft is cost effective as compared to TT/ SWIFT transfer. Issuance of a demand
draft in currencies or than Nepalese Rupee is regulated by central Bank (Nepal Rastra
33

Bank). Issuance of D/D in Indian Currency for more than certain amount is regulated by
NRB. It requires certain documents to produce to ensure its use for purpose intended. NRB
Circular No.255 dated 2058 with amendments time to time need to be referred for issuance
of D/D in other currencies.
The procedures are as follows

34

Demand drafts are a written order by a band to give the specified amount to the
written person.

The person or firm which want to issue demand draft should apply fill voucher
according to index 7%

The voucher should be of 2 copies and the following details should be completed.

Name, address and contact number of two applicants.

Name and address of the drawee.

Purpose

Amount in number and in words.

Full name, address and contact number of the payee.

Method of payment.

Signature of the applicant.

There should be provision of drawing of drafts between the banks.

Fee should be paid to the bank and the commission amount should be mentioned in
the firm. But in case of bank staffs, the demand draft can be issued free of cost
within the boundary of the directives issued by the central department of finance
separate report should be prepared for the inspection supervision.

In case of bank account holders customers, the demand draft can be made in
subsidy note but the payee must be the account holder. His/her signature must
match with signature in bank account. For the account payee draft, loan account
number must be mentioned in the demand draft.

The customer should thoroughly check the amount fee, commission delivery
charges and he should pay the total sum to the drawer.

In case of demand draft that should be issued after receiving the amount from the
customer, the teller must the amount and he/she must mention the description of

the notes in the backside of the application firm. The stamp of cash received should
be marked and sign there and half part of the paper should be given to the
customer.

4.2.4

If the applicant places cheques or other payable instrument the customer account
should be debited and the deposited voucher should be praised. The drafts should
be written neat and clean. Authorized person should sign if there is any mistake.

If the applicant asks to write account expenditure in spite of cheque his account
should be debited and stamp and signature should be marked.

After the completion of application of firm and determination of method of

payment original copy of demand draft and schedule account manual should be
prepared.

Required information of the demand draft should be registered in the drafts issued
register copy and should mention limitation after checking.

If the amount in the draft is more than Rs. 50000/- the demand draft must be made
as account payee. In case of foreign currencies, it must be account payee.

There should be signature of two authorized person in the demand drafts and
schedule.

Half part of the demand drafts should be given to the applicant after signing him. If
a branch as bank has to issue huge amount of money from another branch, it should
co- ordinate with them and it should be informed to the treasury department.

The H.O. advice should be send to the drawer branch in the same day as possible, it
not, it must be send within 3 days.

The accounting method of draft in the Kathmandu is some what different from the
banks outside the valley. They should be recalculated according to the account
directive

Draft of Foreign Currency

To issue demand draft in Foreign currently, it is directed and regulated under the Foreign
exchange act and directives issued by Nepal Rastra Bank. The corresponding should
consider the following falls:-

35

If the commercial banks do not need to take permission and limitation and given, the
demand draft can be issued on the banks of submitted document and within the
boundary of directives of Nepal Rastra Bank. If the demand draft amount is more than
the limitation, they should take the permission from HRB.

To make drafts within the limitation of NRB, required document should be submitted.

To make drafts in Indian currency more than the limitation of NRB, attested document
should be submitted. Incase of imports goods, the draft can be issued by obtaining bill
and letter of credit.

For making draft in foreign currency required amount of foreign currency should be
stock in Nastro account and so the drafts description should be submitted in the
central department of finance.

Other processes to issue drafts in foreign currency are as on 11.2.1 but amount should
be denoted in the related foreign currency.

The accounting procedure should be done on the basis of accounting manual.

The draft should be neat and clean.

4.2.5 Change of Drafts Description

Once a draft is issued, it can not be changed or modified. The applicant should thoroughly
check the return terms and sign there carefully. If any correction is required due to mistake
of customer, it should be done on the same day if possible. If the drafts to be corrected on
the next day, the previous one should be canceled and new draft should be prepared.

4.2.6 Cancellation of Demand Drafts

In some cases, demand draft needs to be cancelled if not utilized for the purpose intended,
procedures for the same is described below:
1. Written application letter and original copy of demand drafts should be submitted.
2. If the demand draft is issued in the name of government office, public limited
company or semi government organization, the authorized letter from the related
office should be submitted.
3. The signature should be verified from the original application letter of the applicant.
4. After the verification of signature the account should be paid or deposited in the
account or another draft can be issued.
5. The demand drafts should be cancelled by using red ink. The related officer should
order to pay cash/to credit the account. The cancelled draft should be acted as debit
voucher. These facts should be noted in the remarks column of draft issue register.
6. Cash should be paid after the proper identification of the customer. If the amount is to
be transferred in the customers account, the word 'transferred' or 'cash paid' should be
written in the draft. Incase of cash payment, description of notes should be written in
the back side if the draft paper.
36

7. Accounting of draft cancellation should be on the basis of Account directives. Outside

the kathmandu valley, H.O. office account should be debited.
8. After receiving of demand draft cancellation letter, there should be determined
whether payment is paid or not. If the cash is previously paid, there may be fraud so
immediate action should be taken.
9. If the payment is not done, the given amount should be reserved.
10. Cancellation fee should be charged to cancel the demand draft

4.2.7 Payment of Demand Draft

Demand draft is a means of exchange. For payment of demand drafts following
procedure should be taken.
Following terms should be checked if the demand draft is submitted for payment
1. The bank is related for payment or not.
2. Validity period of the demand draft.
3. Authorization of the draft.
4. Signature of the both parties.
5. Name, address, amount and date should coincide with the schedule in bills payable.
6. If advice is received from other banks, they should be matched with the demand draft
description.
7. If the draft schedule is previously registered it should be entire in expenditure. If the
schedule is not received, payment expenditure should be forwarded to related officer
of payment.
8. The amount written in the draft should be matched in word number and in protect
graph. If any variation occurs, immediately informed to the related branch.
9. After tasting above facts, if the draft is found payable the authorized officer should
write 'Pay/Transfer '.
10. If the draft is found new/unique, the branch should contact with the

issuer.

11. If the draft is bear draft there should be clear identification off payee.
12. If the payment is stopped or not should be checked in the register.
13. The signature of payee should be taken on the back side of the draft. The cash
payment stamp should be marked. The description of notes should be written.
37

14. All description in the demand draft should be recorded in the draft payment register.
15. The transaction schedule should be submitted in the head office.
16. Accounting of draft transaction preparation of schedule for reconciliation H.O.
accounting payment account bills payable account, agency account reconciliation,
update etc should be implemented on the basis of account directives.

4.2.8 Payment of Draft in Foreign Currency

All international banks that issue demand draft of USD1000 or more should provide
advices of tested telex or swift draft. However the advice is not received, payment can be
made if the agency account is credited.
1. Draft issue advice can be forwarded by the domestic banks. In case of remote area,
the advices received from fax can be accepted.
2. Other procedure should be performed in the basis of annex 12.2.5.
3. Accounting procedure will be as on account directives.

4.2.9 Messing of Demand Draft

1. Written application should be submitted in the bank if the draft is lost.
2. Identity card and signature of the applicant should be verified.
3. if the payee is an organization, the confirmation of not received payment should be
taken.
4. If the demand draft is not paid previously, written and immediate information should
be given to the drawer to stop payment.
5. After receiving information from the issuer, payment register and bills payable
register should be checked. If the drafted amount is previously paid, it should be
notified to the issuer. In the bills payable register, draft lost information should be
noted in the format of
6. "DD No..........., dated ..............., for amount Rs. ................ payable to .................
reported lost."
7. Written confirmation letter should be pasted to the drawer about cancellation of draft
payment.
8. After the receiving of confirmation letter from drawee.
9. If the draft owner is the account holder of the bank and he want to another draft, new
draft can be issued as on annex 7.4. If time period is less then 6 months and he is not
38

account holder of the bank, any account holder person of the bank should provide
indemnity bind to the bank.
10. If the draft holder wants cash payment or deposit in his account, it can be paid after
the guarantee of reputed person and filling of indemnity bond.
11. Required fees are to be paid to the bank in both conditions.

4.2.10

Stop Payment of Demand Draft

Obtain request from client in writing stating the reason for stop payment and
ensure that
1. Verify signature in stop payment request with specimen signature in Bank in case of
account holder.
2. Verify signature in stop payment request with signature in original draft application
form, in case of non-account holder.
3. Please note that only purchaser of draft (ordering party to prepare draft) can instruct
Bank for stop payment.
4. Ask Treasury Department, Corporate Office to check Nostro account to find out
whether the draft has already been paid or not.
5. If Nostro account shows no debit, then put remarks in related Draft Issuance Register
as "stop payment".
6. Recover swift / telex charge applicable while sending message to Drawee Bank for
stop payment passing following entry:
For Account Holder:
DR. Customer's account
CR. Telex / SWIFT charges
CR. Stop Payment Charges
For Non-Account Holder:
DR. IDT
CR. Telex / SWIFT charges
CR. Stop Payment Charges
39

Prepare a Telex / SWIFT message to dispatch to correspondent Bank without delay,

requesting them for "Stop Payment" giving full details like -draft number, issued date,
currency, amount, payee's name, reason for stop payment, etc.
1. Get approval of two authorized signatory to that SWIFT / Telex message and hand
over message to -relex / SWIFT unit for actual transmission of message.
2. Wait for the confirmation of Drawee Bank that draft is still unpaid and they have
executed "stop payment" remark in their system.
3. Update Stop Payment Register (specimen #) making entry of details of draft to be
stopped for payment. The stop payment register indicates when draft will be stale (i.e.
completion of 6 months from the date of draft) and draft amount becomes payable to
client.
4. After draft becomes stale, re-confirm the status of payment of draft in Nostro account
with Treasury Department. If the draft is still unpaid, refund amount to the customer.
5. For refunding the amount and inter branch entry, incase of branch, follow same
procedure given in procedure for draft cancellation.

4.2.11

Other Mediums of Money Transfer

Except demand draft money can be transferred on the request of customer by using other
available means. they are as follows:
a. Swift Transfer
b. Telex Transfer
c. Fax/ Telegraph Transfer

4.2.11.1

Swift Transfer

SWIFT stands for Society for Worldwide Interbank Financial Transaction. A group of banks
came together to create common facilities for fund transfer and to share commercial
information which is very efficient both service as well as cost wise. SWIFT is the easiest
way available for transfer of funds anywhere in the world. Anyone can get the money
within 24 hours worldwide. Its authentication mechanism is in-built in system itself which
is gets operative after BKE (Bilateral Key Exchange) arrangement. Messages among
subscribers are transmitted with standardized code. Certain Bank officials only are given
access to authorize messages through SWIFT.
40

Swift transfer is a fast and reliable source to send and receive money. Money can be sent
from the central department of finance.
Procedures are as follows
1. The swift transfer message should be faxed to the swift branch of the central
department of finance. Message and faxed report should be filed with the application.
2. The swift branch should record all the message. Received fax message should be
immediately registered.
3. The original copy of swift message should be stamped as message Transmitted with
the authorized signature. This authorized message should be faxed or mailed to the
related branch.
4. Date and transfer of swift message should be recorded in the register.
5. After receiving the swift message the message should be checked and approved.
There should be stamped as massage found correct. The serial no register should be
noted in the message and keep with the application firm.
6. If the message differs and it affects payment it should be notice to the branch
manager.
7. The swift message can be mailed if such provision is predetermined.
8. The swift transfer is done through central department of finance only. There should be
double test key arrangement.
Table 4.1 Essential details for SWIFT remittance to Nepal (from any country / bank)
Sunrise Bank's SWIFT Code
for remittance to Nepal

SRBLNPKA
Please give full detail of Bank, Branch and its

Account with Institutions:

complete postal address, where the beneficiary is

maintaining account
Please give account number, name, address and

Beneficiary Customer

phone / fax number (if available) of the

beneficiary

(Source: www.sunrisebank.com.np)
41

4.2.11.2

Telex Transfer

This is the most widely used mode of fund transfer in international trade. In case of TT,
originating branch sends telegram / telex message to its branch/ correspondent to make
payment to the beneficiary either by crediting beneficiary's account with m or with any or
Bank in local center. TT is expensive mode of fund transfer as compared to Demand Draft.
It involves remittance charge plus cost of telex / telegram message. It is much faster. TT
messages are always coded with certain numbers to enable receiving branch/ Bank to
satisfy about authenticity of message. This coding and decoding is done based on certain
key numbers exchanged between banks. This is a mutual agreement between Banks and
popularly known as test key agreement. test keys are strictly entered by Bank allowing
access to authorized person.
Telex transfer facility is available in the limited branches of the bank. All the procedure of
the swift transfer is implemented for the telex transfer.

4.2.11.3

Fax Transfer

For transferring the amount through telegraph, money can bee transferred by sending the
telegraph from the telegraph office to the related branches. Due to the developments of new
medium, telegraph transfer is limited places. Other procedures are some as above.
Descriptions should be entered in the money transfer register. The serial number of message
register, the telegraph message, and its transmission report are to be stitched and filed.
If the customer request for the urgent transfer, the urgent facility should be charged to the
customer. Only transaction accepted branches with tests key ca transfer money. Other
required steps are :
Outward: Beneficiary should have an account in the branch where the fund is to be
transferred. The request form" (specimen # ) for fax transfer consists of following details:

42

Date

Beneficiary's name and account number

Branch where fund is to be transferred

Applicant's name and address along with telephone no.

Mode of payment -Cash, Cheque or Debit account

Authorized signature of applicant.

Procedure

Verify the details in he request form.

If mode of payment is through cash, prepare miscellaneous deposit receipt

for the

amount to be transferred plus charges, get it approved and hand over it

to the

customer for cash deposit over the cash counter. If I payment is through

cheque or

through account, n verify the signature with specimen signature available

with Bank. Enter detail in Fax Transfer Register (specimen # ).

Prepare Outward Fax Transfer Letter (specimen #

), which consists of following

details

Date

Branch name

Amount in figure and in word.

Test No.

Beneficiary's name and account no.

Applicant's name and address.

IBCA No.,

Settlement mode.

Authorized Signature(s) and test codes.

Prepare inter-branch credit advice for responding branch and enter following entries
into computer

Mode of payment -Cash

DR. IDT (NRS)

CR. Commission (as per Bank's rule)

CR. NCC Gen. A/C (Bills and Remittance)

Description: Fr No.:IBCA No. -Name of branch, beneficiary's name. Mode

of payment -Cheque Debit account:

43

DR. Party's account

CR. Commission (as per Bank's rule)

CR. NCC Gen. A/C (Bills and Remittance)

Fax transfer letter to respective branch.

Inward: Once inward fax transfer is received

Verify test and verify signature(s).

Enter detail into Inward Fax Transfer Register (specimen # )

Enter following entries:

DR. NBB Gen. A/C (Bills and Remittance account)
CR. Party's account.
Description: FT No.
IBC No. Name of branch.

4.2.12

Money Transfer in Foreign Currency

Transferring money in foreign currency in any medium, procedure is as same as demand

draft. This transfer process are directed by foreign exchange regulations act rules and
regulations and directives issued by Nepal Rastra Bank.

4.3 Letter of Credit (L/C)

4.3.1 Backgroud of L/C
Letter of Credit is a written instrument issued by the bank on behalf of the buyer in favor of
the seller expressing its definite undertaking to effect payment for the specific amount
provided the seller complies with the terms and conditions stipulated in the letter. Here, the
buyer is the Applicant and seller is Beneficiary. The bank that issues the L/C is referred to as
the Issuing Bank, which is generally in the country of the buyer. The bank that advices the
L/C to the seller is known as the Advising Bank that is generally in the country of the seller.
L/C is a payment term generally used for international sales transactions. It is widely used
instrument in the field of international trade. The need of L/C generally arises whenever any
two parties (i.e. exporter and importer) get into contract to buy and sell something, as the
buyer and seller are far away from each other and may not know each other. Therefore, the
issue of confidence or credit worthiness arises. A party always think from a negative view i.e.
the other party might default. Thus, such kinds of problems between parties have been
resolved after introduction of Letter of Credit in the trade.

44

L/C often called Documentary Credit. It is a mechanism that provides security to both the
buyer anf seller. The seller can demand payment from the issuing bank after presenting the
required documents. Seller also have option to avoid shipment of goods, when it feels that
any terms and conditions are not met. Onthe other hand, buyer also have the right to put any
terms and conditions in the L/C. If the document does not fulfill his terms and conditions, he
has the option to reject the document.
Thus, L/C is a payment undertaking given by bank to the beneficiary and is issued on behalf
of the applicant. It deals in documents, not goods. The operation of L/C is governed by
UCPDC (Universal Custom and Practice in Documentary Credit) on force published by ICC
(International Chamber of Commerce).

4.3.2 Parties Involved in Letter of Credit

Parties involved in L/C are as follows:

4.3.2.1 Applicant
An applicant is a buyer who requests his bank to issue a letter of credit in favor of an
exporter to cover the purchase of goods and agrees to pay as per the terms of the
contract. The Applicant should be aware of the status of the beneficiary and
understand the terms and conditions mentioned in the underlying contract.

4.3.2.2 Beneficiary
The beneficiary is the seller, exporter of the goods or merchandise. It is the
beneficiary of the L/C. The seller ships the goods before the credit expires and sends
the shipping documents to the agent/issuing bank, which checks the documents
against the terms and conditons of L/C and pays him.

4.3.2.3 Issuing Bank

The Issuing Bank issues L/C on behalf of the applicant. the buyer mentions the terms
and conditons of the credit to issuing bank for the imort of goods. The bank must
ensure that the regulatory conditions are fulfilled and the instructions are precise and
specific. The bank will select a bank in the exporters country to act as its agent, and
will notify that the L/C has been opened.

45

4.3.2.4 Advising Bank

The Advising Bank is the correspondent situated in the place where the seller is
situated. It is the bank where credit has been sent. The bank gives message to the
seller about the opening of L/C in his favor through a cable message.

4.3.2.5 Settlement Bank

The Settlement Bank negotiates the bills of exchange or drafts under the L/C. It is the
bank where seller present document for settlement. Generally, the same bank acts as
the notifying bank/negotiating bank. This bank must see carefully that the documents
are strictly according to the terms and conditions of the credit.

4.3.2.6 Confirming Bank

Sometimes the beneficiary insists that a bank in his own contry must confirm credit.
Bank giving confirmation is known as confirming bank. Here, one of the merits from
seller point of view is that he can receive the payment as soon as documents are
presented at his own center.

4.3.3 Types of Letter of Credit

4.3.3.1 Revocable and Irrevocable L/C
In a Revocable L/C, any changes to the L/C can be made without the consenty of the
beneficiary. That is , cancellation or withdrawn by buyer or issuing bank without giving
prior notice to beneficiary. Thus, this type of L/C provides less security of payment to
beneficiary.
In a Irrevocable L/C, changes cannot be made unless both the buyer and seller agree.
this type of L/Cs cancellation is not posible without the concent of Beneficiary. Thus, it
provides additional security.

Confirmed L/C: In a confirmed credit, the advising bank adds its guarantee to
pay the seller to that of the buyers issuing bank. Once the advising bank reviews
and confirms that all the documentary requirements are met, it will pay the seller.
Confirmed irrevocable L/C is used when trading in a high-risk area where war or
social, political or financial instability is real threats. It is also common when the
seller is unfamiliar with the bank issuing the letter of credit or seller needs to use
the confirmed L/C to obtain financing its bank to fill the order.

46

Unconfirmed L/C: In an unconfirmed credit, the buyers bank issuing the credit
is the only party responsible for payment to the seller. The sellers advising bank
pays only after receiving payment from the issuing bank.

4.3.3.2 Standby L/C

This credit is often called non-performing letters of credit because they are only used as a
back-up if the buyer fail to pay as agreed. Thus, a stand-by letter of credit allows the
customer to establish a rapport with the seller by showing that it can fulfill its payment
commitments. Stand-by letter of credit is generally less complicated and involves less
documenatation than irrevocable latter of credit.

4.3.3.3 Sight L/C

In sight L/C, payment is made immediately to the beneficiary upon presentation of the
correct documents in the required time frame. Usually payment is done within seven
working days.

4.3.3.4 Deferred Payment (Usance) L/C

In deferred payment L/C. the applicant accepts the documents related to the L/C and
agrees to pay the issuing bank after a fixed period. This credit gives the applicant a grace
period for payment.

4.3.3.5 Back-to-Back L/C

It is a new L/C opened based on an already existing, non-transferable credit used as
collateral. Traders often use back-to-back arrangements to pay the ultimate supplier. A
supplier receives a letter of credit from the buyer and then opens another L/C in favor of
the supplier. The first L/C serves as collateral for the second credit.

4.3.3.6 Red Clause L/C

It provides the seller with cash prior to shipment to finance production of the goods. The
buyers issuing bank may advance some or all of the funds. It gives authority to advising
bank to make cash advance to beneficiary before he presents document, to enable him to
purchase raw-materials needed to produce finished goods required for shipment under
terms of credit.

4.3.3.7 Revolving L/C

In revolving L/C, the original value or part of the original value or any other value as per
the term is reinstated after certain occurance i.e. upon completion of first shipment or
47

upon completion of certain period or upon notification is made by the issuing bank or
applicant.

4.3.3.8 Transferable L/C

This type of L/C allows the seller to transfer all or part of the proceeds of the original L/C
to a second beneficiary, usually the ultimate supplier of the goods. The L/C must clearly
state that it is transferable for it to be considered as such. This is a common financing
tactic for intermediaries and is common in East Asia.
4.3.4

Documents Used in Letter of Credit

Documentation constitutes a very important element in smooth execution of export order. It is

therefore essential that the exporter clearly prepares and assembles the document needed for
the contract of L/C.
The documents required are as follows:
a. Proforma Invoice
b. Transport Document
c. Commerical Invoice
d. Packing List
e. Certificate of Origin
f. Insurance Document
g. Other Documents

4.3.5 Informations Required by the Letter of Credit

L/C must contain the informations which are as follows:
Name and address of the issuing bank
A statement regarding application of UCPDC
L/C number and L/C open date
Name and address of applicant
Name and address of beneficiary
L/C value (Currency and amount)
Terms of delivery
Tenor of bills of exchange
Description of Goods (brand name, quantity, amount, etc)
Mode of shipment
48

 Document required
Date and place of expiry
If any further instruction

4.3.6 Discrepant Document

After receiving the documents, it needs to be throughly checked with terms and condition of
L/C. If any documents contain any discrepancies, which are not accepted by the issuing bank,
then it immediately informs the settlemt bank and client within seven working days as per
UCP Act. If the issuing bank fails to inform the settlement bank then the bank is bound to
remit the payment even though the documents contain any discrepancies. If the client accepts
the discrepancies then he immediately has to submit an acceptance letter to the bank before
retring the documents and remitting the payment.

4.3.7 Ammendments in the Documentary Credit

The issuing bank, the beneficiary and advising/confirming bank are entitled to reject any
amendment under an irrevocable credit that may rither create embarrassment or additional
involvement to violate the beneficiary contract. Any issuing bank as a rule, acts in accordance
with buyers wishes, if the documentary credit is still feasible, and for itself further unwanted
liability.

4.3.8 Pre-requistes for opening Letter of Credit

Before opeming L/C, following pre-requistes are to be fulfilled by the opener i.e. issuing
bank:
a. The

company

or

firm

should

be

registered

in

concerned

Ministry/Department/Authority (to obtain operational permission from concerning

authority or submitted yearly renewal certificate, if required).
b. Any one of the following must be presented; Income Tax Certificate, PAN Certificate,
VAT Certificate.
c. The customer should be current account holder of the bank.
d. The photocopy of citizenship of the proprietor/partners/directors required.
e. The customer should have high credit worthiness in the market
f. The proprietor/partners/directors name should not be in a black-list or defaulter list by
NRB.
g. Limit approval or review period bank should collect the copy of customers or firms
financial document, CIB report or Board Minute (if Company is Pvt. Ltd.).
49

h. Either approved limit or cash margin (cash or equivalent canh) is required before
opening L/C.
i. Approval or recommendation letter is required from concerned authority for import
like wool, cotton, and medicine.
j. Import restricted items by NRB

Arms and explosive products

Radio frequency transmission products

Naracotic products; cigarette, tobacco, heroin

Gold, Silver and precious metals

Liquors, Wines Inland Revenue Departments approval is required

Products made of recycled plastics granules

Ozone deflecting products must be CFC free

Beef

4.3.9 Procedure of Letter of Credit

Following is an example of how an Export Letter of Credit works and in case of Import
Letter of Credit the situation is just reverse.
The Flow of Goods and Documents
Understanding the flow of goods and documents is essential for the exporter to properly plan
and schedule shipments. It is important to remember that banks deal only in documents. The
merchandise flows directly from the exporter to the buyer. The following steps outline the
process:
1. The applicant completes an application for a commerical letter and submits it to his
bank(issuing bank).
2. The bank issues a letter of credit in accordance with the buyers application and
transmits it to a confirming bank, usually to a correspondent domiciled in the city or
state of the beneficiary, or any other bank unless the applicant names an advising
bank. This can be an important consideration because most exporters prefer to work
with a bank they know. In that case, the exporter should specifically request that all
letters of credit be advised through a named bank.
3. The advising bank, INTRUST for example, receives the letter of credit, authenticates
it and sends it to the exporter, along with a transmittal letter which usually contains
additional information, such as whether or not the credit has been confirmed. If the
50

letter of credit were restricted to the counters of another bank for negotiation, this
would be noted so that delays in presentation can be avoided.
4. The exporter examines the letter of credit to determine if he can comply with its
terms. If he cannot, he should contact the applicant immediately to arrange for an
amendment. But if the letter of credit os found to be acceptable, a copy of it should be
sent to the freight forwarder.
5. After the merchandise is shipped or trucked, the exporter prepare and assemble all
required documentation for presentation. INTRUST, as the advising bank, examines
the documents and if found to be in order, forwards them on to the issuing bank and
simultaneously initiates the payment process.
After the set of documents has been received by the issuing bank, if the documents
contained any discrepancies ot some L/C terms and condition has not been met, they
will be notified and the beneficiary will be notified within five working days after
receiving the set of documents and cretain amount of charge has to beared by the
beneficiary.. If the defect can be cured, the exporter can submit replacement
documents. If not, then the confirming bank will request approval to pay and to
forward the documents to the issuing bank.
4.3.10

Prohibition Regarding the Opening of Letter of Credit

Opening of L/C for cretain things are prohibitted by NRB, NG and Head Office of related
bank. Opening of L/C for things like Tetracycline, Rice, Boron, Poppy Seeds, Readymade
Garments, Clove, Video Cassette, Plastic Scraps, Titanium Dioxide, Shoes, raw materials for
medicine, Flasks and Lunch Box. Apart from these if the applicant requests the bank to open
the L/C for other things that do not have harmonic code, bank should open only after taking
the permission of the Loan Administrative Department. L/C cannot be opened for illegal
products.
Besides these, SrBL has prohibited regarding the following items:

51

Aims and Ammunitions

Jewelleries or Precious Stones

Naracotics

Wild Life Products like Elephant Tusk, Beef, Skin.

Walkie Talkie

4.4. Credit Department:

This is the department which the customers approach when they are in need of loans. The department is
responsible to analyze the customers who apply for the loans. They evaluate the income flows of the client and
also their collateral. This is one of the main departments in any bank.
The credit department of Sunrise Bank deals with various lending scheme concerning the
loan and credit facilities. Some of the credit facilities provided are as follows:

Bridge Gap loan

Loan provided to the project during its initial stage
before the actual transaction starts.
Consortium financing or loan
Loan provided by two or more than two banks to
the amount is generally huge which is divided according to
the proportion.

Overdraft
Business loan for financing their working capital
Mortgage home loan/ vehicle loan
Others

Credit department includes three sections:

4.4.1

Credit Marketing Department (CMD)

4.4.2

Credit Administration Department (CAD)

52

4.4.3

Credit Recovery Department (CRD)

4.4.1 Credit Marketing Department (CMD)

This department is in charge of the initial stage in credit process. Its performs activities such
as

Credit appraisal process which include

Background of the applicants
Reference check
Earning source/ validation of the source
Previous experience
Memo/ analysis
Recommendation submission
Approval limit
Terms and condition

4.4.2 Credit Administration Department (CAD)

The Credit Administration function is critical in ensuring that proper documentation and
approvals are in place prior to the disbursement of financial facilities. After the credit
appraisal process and proposal is made by CMD and is approved by manager, CAD is in
charge of legal documentation. It is the responsibility of credit administration to ensure
completeness of documentation in accordance with approved terms and conditions. It
prepares the offer letter and checklist of the required documents. It also consults with the
legal department or legal consultant. This department works between the time period post
approvals to pre disbursement of loan amount. The process of working in this department are
documents collected from government as well as internal organization, charges for the
disbursement, required documents from insurance (if required), account opening etc.
The legal documents required are as follows:
Copy of firm/ Company Registration Certificate
Copy of PAN/ VAT Registration Certificate
53

Partnership deed
Copy of Citizenship or Passport of Guarantors/ Directors
Memorandum and Articles of Association
Boards Resolution
Latest Shareholding Pattern certified by companys
Credit Facility Offer Letter duly signed
CICL Report
Valuation Report
No Objection Letter from legal heirs
Net Worth Statement of Guarantors
Copy of Lalpurja
Copy of Char Killa Certificate of Land
Copy of Approved Drawing of Building
Original of catastrophic map (Blue Print) of land
Income Certificate/ financial
Tax Clearance Certificate
Family details

Registrar

The offer letter includes the following components:

Approved credit types (Facility OD, Cash Credit, Term loan, Home loan, Short

term loan, Hire purchase etc.)

Credit amount (limit)
Margin if required (D/E ratio)
Interest rate (floating/fixed)
FEES (LPF, Mgmt. Fee, Legal Charges, Pre-payment charges, Commitment charges,

Fore-closure charges, Other Charges)

Penalty/ other charges
Duration (Tenure of the loan)
Asset details (PROJECT)
Collateral Details
Security Valuation
Pro-Rata Conditions

Disbursement is the final stage of implementation & starting stage of Credit Monitoring &
Supervision. Disbursement is made after compliance of pre-disbursement terms, conditions &
legal formalities.

4.4.3 Credit Recovery Department (CRD)

54

Monitoring/supervision starts with checking completeness of proper execution of security

documents and collateral. In the case of Term Loan/ Project Loan / Home Loan, the
followings are the activities to be performed by CRD:

Obtain financial plan

Check work process
Ensure promoters investment (If required)
Prepare checklist and disbursement advice

The credit monitoring process includes the following activities:

Prepare fact sheet

Obtain report and access
Activities
Financial
Stock Report (monthly/ quarterly yearly)
Site visit ( company/ industry/ project site)

This section of credit department is also responsible for collection of interest or principle
recovery as well as blacklisting the customer for not paying the loan amount at its due date.

Chapter 5

SUMMARY, LESSON LEARNT, CONCLUSIONS, AND

RECOMMENDATION
4.4 Summary
This study aims to get better understanding of the operations of banking industry. The report
specifically presents the operation of SrBL representing the banking environment in Nepal. In
addition it tries to assess in detail of banking mechanism and particularly SrBLs contribution
to the banking in Nepal.
In order to attain the above objectives, the internee selected SrBL as an organization. The
main reason for selecting SrBL is its policy to provide opportunities for the internees to learn.
The internee spent ten weeks (10 weeks) in internship. The internee was placed in different
departments so that the internee can get insight knowledge in overall banking procedures and
55

system. During internship, the internee carried out activities relating to letter of credit and
acquired knowledge of how L/C is opened and the process involved and problems faced by
banks as well as the customers. Similarly, the internee worked day to day activities as per the
instruction and supervision. Moreover, I was responsible for all the ECC (Electronic Cheque
Clearing) in the bank. Although this is a short span of time to learn about the L/C business of
such huge organization with its huge transaction but it was possible to know about the basic
things about the L/C business at SrBL. Similarly, the internee was also placed in other
departments like CSD, remittance, clearing etc. to provide the knowledge and make familiar
of the overall banking procedures, systems and services.
In this study, the internee used both primary and secondary data that have been collected from
the various sources. The main sources of primary data are the daily observations, problems
and instructions of the supervisors, queries and discussions while the secondary sources were
newsletter, annual report, magazines, and internet.

4.5 Conclusion
The purpose of the internship is to provide the student an opportunity to practice various
management principles in the real world. In addition it provides students with an
understanding of how organization operates in real world.
During the internship, the internee was involved in various departments like CSD, clearing
department, remittance, and L/C. The internee got real life experience and exposure of
working in an organization by performing day to day activities, dealing with customers and
providing information regarding making operation and services. The internee believes this
experience will support while working for an organization.
The report basically deals with the activities performed as an intern in the Sunrise Bank Ltd
during ten weeks internship period under different departments. It mainly focuses on the
activities performed in different departments.
The internee had various experiences under different departments. Business Desk also known
as customers service department deals with the customer and is importantly linked to the
organizations different part. Besides Remittance department working as clearing hose and
transfer of money gives insight of operation of a different banking mechanism. The L/C
department enriched the understanding of international trade to the internee. The bank has
been providing various facilities like ABBS; pay bill, E-banking, branchless banking, banking
on wheels, ATM and debit cards. Through an extensive global network that facilitates
domestic and international transaction SrBL are able to meet customers need of import,
export, payments through offering facilities like L/C, SWIFT transfers, guarantees etc. Trust
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Receipt loans are offered to retire import bills. The bank also offers pre-shipment and post
shipment loans as part of export finance.
Hence the internship has proved to be a fruitful experience providing a chance to actually
work in the real settings which helped enhance the knowledge and qualities. Moreover SrBL
offered a rotation internship program whereby the interns are rotated to different departments
as per their requests. This helped to have an overall picture of the working of the bank. The
internship program was extensively useful in understanding the working mechanism, human
relations, work ethics and personal relationship.

4.6 Lesson Learnt

The internship tenure of ten weeks has been an experience full of learning and new
understandings. It was indeed a meaningful period as it helped acquire knowledge on
different aspects of the banking industry.
The lesson learnt as an intern in the SrBL specifically during the internship period in the
department can be listed as mentioned below:
Acquired a first hand knowledge on the working of CSD, Remittance department and L/C
department.
Understood the concept of right share and bonus share as well as dividend.
Learnt to deal with the customers.
Acquired knowledge about different types of services provided by the Banks particularly
SrBL.
Learnt how to respond to a customers query.
A country where foreign exchange is limited may use the letter of credit system to allocate hard
currency to trading companies

The bank charge fees for making and advising amendment

Got acquainted with the working of locker department and its functions.
Understood the working environment of SrBL.

4.7 Recommendation
At the end of the study following measures can be recommended for improving performance
of the bank.

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Bank can try more on satisfying customers through varied products.

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Proper training and development programs can be entertained to the needy staffs for
developing their skills and abilities.

Certain interaction program can be conducted to establish better coordination among

staffs and their work

Increase the no of staffs at clearing department due to pressure on a two staff only.

There should be motivational and recreational programs for the staffs.

Bibliography
Websites

www.sunrisebank.com.np

www.nrb.org.np

www.encyclopedia.com

Annual Report

Annual Report (2068/69) of Sunrise Bank Limited

Books

Bhandari, Dilli Raj, (2006), Principle and Practice of Banking and Insurance,
Kathmandu: Aush Publication

Rose, Peter S. (2002), commerical Bank Management, USA: Mcgraw Hill

Shrestha, M.K and Bhandari, D.B. (2007), Financial Market and Institutions

Kolb, Robert w. and Rodriguez Ricardo J. Financial Institutions and Markets

Cambridge, Massachusetts; Blackwell Publishers Inc., USA

Manuals

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Business Desk Manual

Job Description of Business Desk

Manual of Remittance Department

Job Description of Remittance Department

Manual of L/C Department

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Job Description of L/C department.