Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Submitted by
Shiva Raj Khanal
Shanker Dev Campus
Campus Roll No.: 502/064
T.U. Regd. No.: 7-2-39-4-2002
Symbol No.: 390809/066
Submitted to
Office of the Dean
Faculty of Management
Tribhuvan University
Kathmandu, Nepal
February, 2014
RECOMMENDATION
Submitted by:
Shiva Raj Khanal
Entitled
CREDIT MANAGEMENT OF SIDDHARTHA DEVELOPMENT BANK
LIMITED
has been prepared as approved by this Department in the prescribed format of
the Faculty of Management. This thesis work is forwarded for examination.
...
Mr. Kapil Khanal
(Thesis Supervisor)
....
...
Date: .
(Campus Chief)
VIVA-VOCE SHEET
Viva-Voce Committee
..
..
..
Date: ..
DECLARATION
I hereby declare that the work reported in this thesis entitled Credit
Management of Siddhartha Development Bank Limited submitted to
Office of the Dean, Faculty of Management, Tribhuvan University, is my
original work done in the form of partial fulfillment of the requirement for the
degree of Master of Business Studies (MBS) under the supervision of Mr.
Kapil Khanal, Lecturer of Shanker Dev Campus.
.
Shiva Raj Khanal
Campus Roll No.: 502/064
Shanker Dev Campus
ACKNOWLEDGEMENTS
TABLE OF CONTENTS
Page No.
Recommendation
Viva-Voce Sheet
ii
Declaration
iii
Acknowledgements
iv
Table of Contents
List of Tables
viii
List of Figures
ix
Abbreviations
CHAPTER-I: INTRODUCTION
12
15
17
17
18
18
9
20
21
21
24
28
28
31
32
33
39
29
40
40
41
41
42
44
37
48
48
50
52
53
54
55
57
58
61
65
66
67
68
69
70
70
71
72
73
74
74
75
75
76
77
77
78
70
5.1 Summary
81
5.2 Conclusion
83
5.3 Recommendations
84
BIBLIOGRAPHY
86
APPENDICES
vii
LIST OF TABLES
Table No. 4.1: Deposits Collection by SDBL
Page No.
49
50
53
55
58
59
59
60
61
62
63
64
65
66
67
Table No. 4.18: Total Amount of Net Profit, Deposit and Lending
Table No. 4.18: Relationship between Lending and Deposit to profitability
68
68
71
72
73
74
Table No. 4.26: Reviewing the Loans and Advances on Periodic Basis
Table No. 4.27: Period of Reviewing Loans and Advances
75
75
76
77
LIST OF FIGURES
Page No.
Figure No.4.1: Deposit Collection of SDBL
49
52
52
54
54
56
69
Figure No. 4.9: Using Credit Analysis before Approval of Any Loan Proposal
71
Figure No. 4.10: Visiting the Project Site at the Time of Granting Loan
72
73
74
76
77
ABBREVIATIONS
A.D.
Anno Domini
A.M.
Arithmetic Mean
B.S.
Bikram Sambat
BOK
Bank of Kathmandu
C.V.
Coefficient of Variation
EPS
F/Y
Fiscal Year
G.M
General Manager
Ktm.
Kathmandu
Ltd.
Limited
M.
Million
MBS
NBL
NIBL
No.
Number
NPA
Non-Performing Assets
NPL
Non-Performing Loan
NRB
P.E
Probable Error
Pvt.
Private
Coefficient of Correlation
ROE
Return on Equity
Rs.
Rupees
S.E
Standard Error
T. U.
Tribhuvan University
CHAPTER-I
INTRODUCTION
1.1 Background of the Study
The prosperity of every developing country can be insured by its economic
growth. Different profit and non-profit institutions are to be established for
economic growth, for which the source of finance is very essential. Profit
oriented institutions usually obtain these sources through ownership capital,
public capital through the issues of shares and through financial institutions
such as banks, in the form of credits, overdrafts etc.
Financial institutions are the backbone of the economic development of any
country. A small financial institution is a vital contributor to the financial
health of the national economy. The financial institutions are often fragile and
susceptible to failure because of poor management, particularly in financial
management. National development of any country depends upon the economic
development of that country and economic development is supported by
financial in institution of that country. Financial infrastructure indicates the
financial strength, position and environment of the institutions. The various
branches of bank in towns and villages are offering various types of services. In
past, they just used to accept deposits from the savers of money (surplus units
of the society) and give loan to the users of money (deficit units of the society).
Savers of the money are those units whose earning exceeds expenditure on real
assets and user of money is those units whose expenditure on real assets
exceeds their earnings.
Any institution offering deposits subjects to withdrawal on demand and making
loans of a commercial or business nature is a bank. Banks constitute an
important segment of financial infrastructure of any country. Bank came into
existence mainly with the objective of collecting the idle fund, and mobilizing
them to productive sector causing overall economic development. A bank is the
financial departmental store, which render various financial services besides
taking deposits and lending loans. Bank is the financial institution, which deals
Today no banker can survive for long run without proper standing of economy
and no place ahead without proper banking system. Moreover, the ability of
banks is to gather and analyze financial information that has given rise to
another view of why banks exist in modern society. Most borrowers and
depositors prefer to keep their financial records confidentially, especially, from
competitors. Banks are able to fulfill this need by offering high liquidity in the
deposits they sell. More people believe that banks play only narrow role in the
country, taking deposits and making loans. The modern bank has to adopt new
roles in order to remain competitive and responsive to public needs (NRB,
Smarika, 2010/11/11: 41).
Banks are expected to support their local communities with an adequate supply
of credit for all legitimate business and customer needs to price that credit
reasonably in line with competitively determined interest rates. Bank loan
support the growth of new business and jobs within the banks trade territory
and promote economic vitality. Banks make a wide variety of loans to a wide
variety of customers for many different purposes from purchasing automobiles,
and buying new furniture, taking dream vacation or purchasing college
education, to constructing home and office buildings.
Going through loan granting provision, bank will through safety of funds,
purpose of loans, security for loans, profitability spread of loan portfolio etc.
besides this, the character of person receiving credit, the capacity of borrower
to utilize the fund, the percentage of borrower stake in the business are the
basic elements which measures the quality of borrower and ultimately the
quantity of the loan.
In this way bank plays an important part in the development of trade,
commerce and industry. Today no bankers can survive for long run without
proper standing of economy and economy cannot pace ahead without proper
banking system built.
In this way, Nepalese banking has stepped a great stride in its development.
However, Nepalese banking has not been succeeded in bringing change in the
economy in society and with people. The large portion of national economy is
still behind the touch of present banking system. The unorganized moneylender
has been playing a monopoly role in granting the loan to public of remote
economy and this monopoly results in excessively higher interest rate than that
of institutional banker. Thus, the moneylenders are still exploiting the public of
rural sector in the absence of easy access to banking activities. Increasing the
number of financial institutions has not proportionately increased the total
banking behavior of people. This is because most of the financial institutions
are situated in the urban area and rural economy has not been touched by this
change in financial sector. Hence, in conclusion it can be summarized that the
technical and quantitative development of the financial sector is found
satisfactory but its qualitative impact on overall economy cannot be considered
utmost.
For most banks, loans are the largest and most obvious source of credit risk,
however other sources of credit risk exist throughout the activities of a bank,
including in the banking book and in the trading book, and both on and off the
balance sheet. Banks are increasingly facing credit risk in various financial
instruments other than loans, including acceptances, inter bank transactions,
trade financing, foreign exchange transactions, financial futures, swaps, bonds,
equities, options, and in the extension of commitments and guarantees and the
settlement of transactions.
1.2 Statement of the Problem
Banks in Nepal have been facing various challenges and problems. Some of
them arising due to the economic condition of the country, some of them
arising due to confused policy of government and many of them arising due to
default borrowers. After liberalization of economy, banking sector has various
opportunities.
CHAPTER-II
REVIEW OF LITERATURE
Review of literature is a crucial part of all dissertations. In other words its just
like fact are finding based on sound theoretical framework oriented towards
discovery of relationship guided by experience, resonating and empirical
investigation. It helps to find out already discovered things. Review of relevant
literature implies putting new spectacle in old eyes to think in new way by
posting the problem with new data and information to see that what results are
derived. The primary purpose of literature is to learn and it helps researcher to
find out what research studies have been conducted in ones chosen field of
study, and what remains to be done. For review study, the researcher uses
different books and journal, reviews and abstracts, indexes, reports, and
dissertation or research studies published by various institutions, encyclopedia
etc.
Theoretical/Conceptual Framework
Review of Related Studies
2.1 Theoretical Review
The review of textbook and other reference materials such as: newspaper,
magazines, research articles, journals and past thesis have been included in this
topic. Credit administration involves the creation and management of risk
assets. The process of lending takes in to consideration about the people and
system required for the evaluation and approval of loan requests, negotiation of
terms, documentation, disbursement, administration of outstanding loans and
workouts, knowledge of the process and awareness of its strength and
weakness are important in setting objectives and goals for lending activities
and for allocating available funds to various lending functions such as
commercial, installment and mortgage portfolios
amount is taken as margin from the customer and the customers margin
account is credited.
Letter of Credit (L/C): It is issued on behalf of the customer (buyer/importer)
in favor of the exporter (seller) for the import of goods and services stating to
pay certain sum of money on the submission of certain documents complying
the stipulated terms and conditions as per the agreement of L/C. It is also
known as importers letter of credit since the bank of importer do not open
separate L/C for the trade of same commodities (Johnson, 1940:85).
2.1.2 Credit Management
Credit management is a term used to identify accounting functions usually
conducted under the umbrella of accounting receivables. Essentially, this
collection of processes involves qualifying to extension of credit to a customer,
monitors the reception and logging of payments on outstanding invoices, the
initiation of collection procedures, and the resolution of disputes or queries
regarding charges on a customer invoice. When functioning efficiently, credit
management serves as an excellent way for the business to remain financially
stable.
The process of credit management begins with accurately assessing the creditworthiness of the customer base. This is particularly important if the company
chooses to extend some type of credit line or revolving credit to certain
customers. Proper credit management calls for setting specific criteria that a
customer must meet before receiving this type of credit arrangement. As part of
the evaluation process, credit management also calls for determining the total
credit line that will be extended to a given customer.
Several factors are used as part of the credit management process to evaluate
and qualify a customer for the receipt of some form of commercial credit. This
includes gathering data on the potential customers current financial condition,
including to current credit score. The current ratio between income and
within acceptable parameters. For most banks, loan are the largest and most
obvious sources of credit risk, however, other sources of credit risk exist
throughout the activities of a bank, including in the banking book, and in the
trading book, and both increasingly facing credit risk in various financial
instruments other than land, including acceptances, inter bank transactions and
guarantees and the settlement of transactions.
The credit policy of a firm provides the framework to determine whether or not
to extend credit and how much credit to extend. The credit policy decision of a
bank has two broad dimensions; credit standards and credit analysis. A firm has
to establish and use standards in making credit decision, develop appropriate
sources of credit and methods of credit analysis.
Credit promotes economies growth and contributes the nations wealth. People
deposit their surplus money in the bank and may lend those collected funds to
the various business and companies. These firms in return may invest in new
factories and equipment to increase their productivity. As a result investment
raises the nation's living standard. Now days, most companies issue stocks and
bonds to raise the capital needed for business expansion instead of borrowing
from the banks. Similarly government also issue bonds to obtain fund to invest
in the projects like construction of damps, roads, Bridges and schools etc. All
such investment by individual business as well as government involves a
sacrifice of present value to get expected future benefits and income which is
probably uncertain.
Credit risk is most simply defined as the potential that a bank borrower or
counterparty will fail to meet its obligations in accordance with agreed terms.
The goal of credit risk management is to maximize a banks risk adjusted rate
of return by maintaining credit risk exposures within acceptable parameters.
Banks need to manage the credit risk inherent in the entire portfolio as well as
the risk in individual credits or transactions. Banks should also consider the
relationships between credit risk and other risks. The effective management of
are inspired with the object of earning profit and helping the economic
development and finally to take the social responsibility. They should have the
ability to use the policy of banking investment and to implement it much more
carefully otherwise a bank may be unsuccessful in its goal. It is essential to
carryout the business of lending consistency. For effective credit management,
following credit policy are very essential for every bank.
1. Principle of Liquidity
Liquidity means the whole money stock in the economy. The liquid property
means cash stock of the banks the amount of short term, current account and
short term government and business security and the Treasury bill. A bank
should not forget the principle of liquidity while it is following its investment
policy. A bank should able to return the deposit when demanded by the
depositors. A banker has to ensure that money will come as in demand or as per
agreed terms of repayment. For this purpose bank need liquid cash.
2. Principle of Profitability
The objective of bank is to earn profit. The bank should focus from which
sectors it can earn much profit. The bank can earn more profit from safe and
long term investment. If bank pays its attention only on profit, liquidity will be
less and if it pays attention on the liquidity, it can't be a long-term investment
and the bank doesn't earn profit. So it should maintain equality in it.
3. Principle of Safety
A bank should pay special emphasis on safety. If the investment area is unsafe
it is not a good for the bank. There will be no doubt of loss whether it is greater
or little, if the bank has not invested in a safe sector. Before making any
investment, the bank should seriously study whether it is safe to invest or not.
4. Principle of Diversification
The principle of diversification means, to invest the money in the various
sectors. The bank by studying and analyzing the different sectors where it is
possible to earn more from little investment should extend its environment. If
bank invest in various sectors, it become successful to keep it in balance. As
the statement, the bank should not keep all its eggs in the same basket and
should invest in various sectors.
5. Principle of Marketability
A bank should adopt the principle of marketability. The bank should invest by
taking the security of high quality as far as possible. Bank should study the
market value of the goods, which are taken as a security. There should not be
investment by taking the securities of such goods which are not saleable in the
market.
6. Principle of National Interest
The objective of bank should not go against the national interest. The banks
should follow the rules and regulations as well as policy and directions given
time to time by the Nepal Rastra Bank. The bank should make its investment,
which is suitable to the national interest and provides benefit to the society.
7. Principle of Tangibility
Though it may be considered that tangible property does not yield on income
apart from direct satisfaction of possession of property, many intangible
securities may lost their value due to price level inflation. A bank should prefer
tangible security rather than intangible one.
8. Principle of Legality
Illegal securities will bring out many problems for the investor. A bank must
follow the rules and regulations as well as different directions issued by Nepal
Property of Shanker Dev Campus Library 30
5. Security Realization
It determines the control over various securities obtained by bank to secure the
loan provided extractability of the security documents and present value of the
properties mortgaged with the bank weaknesses in security threatens the bank's
second way out (Khadka and Singh, 2069: 139).
2.1.6 Review of Nepal Rastra Bank Directives
Central Bank NRB has established a legal framework by formulating various
rules and regulations to mobilize or invest the deposit of the bank in different
sectors of the different parts of the nation, to prevent them from the financial
problems. Those rules and regulations are discuss which are formulated by
NRB in terms of investment and credit to priority sector, deprived sector, other
institution, single borrower limit, CCR, loan loss provision, capital adequacy
ratio, interest spread, productive sector investment etc. Bank is directly related
to the fact that how much fund must be collected as paid up capital while
establishing the bank at certain place of the nation, how much fund is needed to
expand the branch and counters. But we discuss only those which are related to
credit management of the development bank. The directives given by NRB for
effective credit management are as follows:
1) Directives on Loan Classification and Loss Provision
With a view to improve the quality of assets of bank, NRB has directed
development bank to classify their outstanding loan and advances, investment
and other assets into four categories. The classification is done in two ways.
The loans of more than one hundred thousands are to be classified as per debt
services ratio, repayment situation and financial condition of borrower,
management efficiency and quality of collateral. The loans of less than one
hundred thousands have to be classified as per maturity period.
According to the circulars, the loans are classified based on weakness and
dependence on collateral securities into four categories and prescribed the
provisioning rate as follows:
Loan
Classification
Pass
Provision
Rate
1%
months.
Substandard
25%
months.
Doubtful
50%
Loss
100%
Fund based credit and advances can be issued up to 25% (upper limit)
of core capital to a single customer, firm, company and a group of
related customers.
II.
she has considered GDP as the dependent variable and various sectors of
lending viz. agriculture, industrial, commercial, service, general and social
sectors as independent variables. A multiple regression technique has been
applied to analyze the contribution.
The multiple analyses have shown that all the variables except service sector
lending have positive impact on GDP. Thus in conclusion, she has accepted the
hypothesis, i.e. there has been positive impact on GDP by the lending of
commercial banks in various sectors of economy, except service sector
investment."
Chhetri D.B. (2005) , in an article titled "Non Performing Assets: A need for
Rationalization" the writer has attempted to provide connection of the term
NPA and its potential sources , implication of NPA in financial sector in the
South East Asian region .He had also given possible measures to contain NPA.
"Loans and advances of financial institutions are meant to be serviced either
part of principal of the interest of the amount borrowed in stipulated time as
agreed by the parties at the time of Loan settlement. Since the date becomes
past dues, the loan becomes non-performing assets. The book of the account
with lending institution should be effectively operative by means of real
transaction effected on the part of debtor in order to remain loan performing.
As stated by the writer, the definition of NPA differs from country to country.
In some of the developing countries of Asia Pacific Economic cooperation
(APEC) forum, a loan is classified as non-performing only after it has been
arrear for at least 6 months. Similarly, it is after 3 months, in India. Loans thus
defaulted are classified into different categories having their differing
implication on the assets management of financial institution. He also stated
that NPAs are classified into practices into 3 categories namely substandard,
Doubtful and loss depending upon the temporal position of loan default. Thus
the degree of NPA assets depends solely on the length of time the assets has
been in form of none obliged by the loanee. The more time it has elapsed the
accordingly. As per Mr. Chhetrie's view, failure of business for which loan is
used, defective and below standard credit appraisal system credit program
sponsored by government, slowdown in economy/recession, diversion of fund
is some of the factors leading to accumulation of NPAs.
institution like waving interest, rescheduling the loan, writing off the loan,
appointing private recovery agent, taking help of land etc NPAs can be
reduced.
For this reason BLV is conceptually and practically redundant in real estate
markets. It appears on the surface to be a solution to the banks requirement for
the reduced risk property lending. In reality, it may indeed transfer that risk by
demanding a level of protection to the bank that the valuation cannot give. But
if values agree to it, it could open the way to successful negligence claims in
the aftermath of poor lending decisions. This is because the concepts appears
the determinants of the virtually certain level of value below which the value
will not fall for an indeterminate time into the future. Values are vulnerable to
claims that their valuation was too high, should values fall below that level at
any time during the loan. Sustainable value is predicated on having a shelf life
but the application believes this fundamental requirement. Values must have a
time point. The concept is redundant, the target unidentifiable and the
definition ambiguous. It is little wonder that the application appears
mechanistic. Market value is an obtainable and useful piece of information to
the lender. Worth in the market sets this in context and gives the lender a view
of whether market prices are at current sustainable levels. In obtaining worth,
the value is obliged to carry out both quantitative and qualitative investigation
into the future and this generates other analyses at different time points during
the course of the loan.
Mundul (2010), in his article on "Understanding of credit derivative Business
Age September emphases Credit derivative enable financial institution and
companies to transfer credit risk to a third parity and thymus reduce their
exposure to the risk of an obligors default. Credit enhancement technique,
which helps reduce the credit risk of an obligation, play a key role in
encouraging loans and investment in debts.
In legal term credit derivative are privately negotiated bilateral contract to
transfer credit risk from one party to another.
credit
derivatives,
practitioners
typically
highlight
two
characteristics that differentiate them from other secondary loan markets. First,
bankers stress that the ease with which credit derivatives may be traded allows
them to manage concentration risk in their portfolios.
The papers arguments are developed as follows. First, I build a model for
corporate financing that rests on the value insider bank-held debt creates for the
dispersed holders of publicly quoted securities. This approach was first
CHAPTER -III
RESEARCH METHODOLOGY
Research methodology helps to find out accuracy, validity and suitability. The
justification on the present study cannot be obtained without help of proper
research methodology. For the purpose of achieving the objectives of the study,
the applied methodology will be used.
This topic presents the short outline of the methods applied in the process of
analyzing the credit management of SDBL. Research is a systematic method of
finding out the solution to a problem whereas research methodology refers to
the various sequential steps to adopt by a researcher in studying a problem with
certain objective in view.
3.1 Research Design
Research design is a plan of structure and strategy of investigation conceived
so as to obtain answer to research questions and to control variances'
(Kerlinger, 1986: 275). Research design is that outline which configures the
collection and of this research concerns with descriptive and analytical type of
research design.
Descriptive research design is the process of accumulating facts. It does not
necessarily seek to explain relationship and test hypotheses make predictions or
get at analysis style of the data and information. Whereas analytical type of
research design is used to clear the situations by the help of various tools.
According to the subject matter this research also clarified by using various
tools.
3.2 Population and Sampling
A population is a complete enumeration of each and every unit of the universe
as a whole. It is related to the total study of the material in detail. There are 88
B class licensed banks in Nepal but this study considers only Siddhartha
Development Bank Limited.
3.3 Nature and Sources of Data
Both primary and secondary sources of data have been collected in order to
achieve the real and actual results:
Primary Sources of Data
Primary data relevant to right study have been gathered through questionnaire
and observation of institution itself. Fifteen personnel of SDBL head office and
branch had selected for the sources of primary data. 13 questionnaires are
distributed to the staffs of concerned bank and their responses have been
collected for study.
Secondary Sources of Data
The major sources of secondary data for this study are as follows:
Annual reports of the bank.
Previous studies and reports.
Reports of Nepal Rastra Bank Samachar and Banking and Financial
Institutions Statistics published by Nepal Rastra Bank.
Journal and other publish and unpublished related document and reports
for Central Library of T.U., Library of Shanker Dev Campus, Library of
Nepal Rastra Bank.
Various Internet Websites related to banking and finance.
3.5 Data Analysis Tools
Presentation and Analysis of the collection data is the core part of the research
work. The collected raw data are first presented in systematic manner in tabular
form and are then analyzed by applying different financial and statistical tools
to achieve the research objectives.
Current ratio =
Current assets
Current liabilitie s
B. Profitability Ratios
Some of the important profitability ratios are used here as follows:
Net Interest to total assets ratio
Net interest means receive interest minus interest paid. It is also known as
interest spread. The high ratio indicates that profitability of the bank. Similarly,
the low ratio indicates that low profitability of the bank. It can be expressed as:
Net profit
Total assets
X
N
b. Standard Deviation
Standard deviation (S.D.) is the most popular and the most useful measure of
dispersion. It indicates the ranges and size of deviance from the middle or
mean. It measures the absolute dispersion. Higher the value of standard
deviation higher is the variability and vice versa. It is the positive square root
of average sum of squares of deviations of observations from the arithmetic
mean of the distribution.
It can be calculated as follows:
Standard Deviation ( ) =
( X X ) 2
N
c. Coefficient of Variation
The percentage measure of coefficient of standard deviation is called
coefficient of variation. The less is the C.V the more is the uniformity and
consistency and vice versa. Standard deviation gives an absolute measure of
dispersion. Hence where the mean value of the variable is not equal it is not
appropriate to compare two pairs of variables based in S.D. only. The
coefficient of variation measures the relative measures of dispersion, hence
capable to compare two variables independently in terms of their variability.
Coefficient of Variation (C.V) =
100
X
xy
N x y
Where,
x =X X
y= YY
xy
x . y
2
The Karl Pearson Coefficient of correlation always falls between 1 to +1. The
value of correlation in minus signifies, the negative correlation and in plus
signifies the positive correlation. If,
r = 0, There is no relationship between the variables
r < 0, There is negative relationship between the variables
r > 0, There is positive relationship between the variables
r = +1, the relationship is perfectly positive.
r = -1, the relationship is perfectly negative.
The reliability of the correlation coefficient is judged with the help of probable
error (P.E). It is calculated as follows:
Probable Error (P.E.) =
0.6745(1 r 2 )
N
Y = Na + b X ... (i)
XY = a X + b X (ii)
CHAPTER FOUR
DATA PRESENTATION AND ANAYLSIS
In this chapter the relevant information available has been used by analyzing
the loan management of SDBL for the fulfillment of the research objectives.
The data of fives year (2008/09-2012/13) has been presented for the purpose of
study. This study is based on both primary and secondary data. Sources of
secondary data are the annual reports of the bank, books, journals, published or
unpublished reports etc. Primary data has been collected through direct
interview with the staffs of the bank. For the purpose of analysis, data has been
presented in the form of tables and charts. Data presentation and analysis is
done to fulfill the objective of the study. The objectives of the study are to
analyze the trend of every years deposit collection and loan investment, to
measure total amount disbursed, out of total deposit collected two measure
performance of bank in terms of profitability, liquidity, NPL, to study the
attitudes of employees of SDBL in regard to the performance of the bank.
4.1 Analysis of Secondary Data
4.1.1 Deposits of SDBL
Bank collects the scattered funds form the public in the form of deposits and
mobilization in the productive sector. The volume of credit extension depends
upon the deposit base of a bank besides other factors. The deposits collected by
SDBL can be divided as current, saving, fixed, call and other deposits. The
deposits collection by the bank in 5 years (2008/09-2012/13) is presented in the
table below:
Deposit collection
Inc/Dec. in deposit
collection
2008/09
1602.22
2009/10
1719.28
117.06
2010/11
3479.94
1760.66
2011/12
4001.52
521.58
2012/13
4954.22
952.70
Source: Annual reports of respective years.
Rs. in million
% inc./decrease
7.31
102.41
14.99
23.81
The above table shows the deposit collected by SDBL from the year 2008/092012/13. There is increasing trend in deposit collection from 2008/09-2012/13.
In 2008/09 the deposits collected amount is Rs. 1602.22 million. Similarly, in
2009/10 collected deposit amount is Rs. 1719.28 million which is 117.06
million greater than previous year and in percent it has increased by 7.31
percentages. Total deposit collection in 2010/11 is 3479.94 million. In 2011/12
the collected deposit amount is 4001.52 million which 521.58 million greater
than the year 2010/11 and in percent it has increased by 102.41. Similarly,
deposits collection by SDBL has increased by 14.99 and 23.81 percent than
previous year respectively. The deposits collected by SDBL annually for 5
years (2008/09-2012/13) can be presented in following graph.
Figure No.4.1
Deposit Collection of SDBL
Deposit
Saving
Fixed
Current
Total
%
Call
Other
deposit
2008/09
2.10 92.82
5.79
1602.22
2009/10
1719.21
2010/11 1745.49 50.19 1004.23 28.87 302.44 8.69 102.44 2.94 323.34 9.30
3477.94
2011/12 1761.33 44.02 1436.43 35.89 121.98 3.05 674.34 16.85 7.43
0.18 4001.51
2012/13 2353.54 47.51 1451.19 29.29 897.40 18.11 105.63 2.13 146.46 2.96
4954.22
In the year 2008/09, the amount of fixed deposits seems 309.44 million. After
this year this deposit shows high degree of increasing trend. It indicates that to
cost of source of fund is increasing trend. It virtually affects in profitability. It
can be said that there is negative relation between profitability and cost of
source of fund.
In the research period current, call and other deposits of SDBL were
fluctuating. Current deposit is maximum in the year 2011/12 i.e. 674.34 million
and maximum amount of other deposits collected in the year 2012/13 i.e.
146.46 million. The bank heavily depends on saving deposits in the total
composition because to saving deposit has greater contribution in total deposit
collection. Similarly, the fixed deposit is in second rank for the contribution in
total deposit collection. Then current deposit is in third and call deposit is in
fourth rank. In the research period other deposits is in fifth rank because this
deposit has less contribution in the total deposit collection.
The amount collected in fixed deposit is more appropriate to lend because of its
fixed nature but its cost of fund is high. Similarly, the saving deposits are also
useful because of low cost of saving deposit in comparison to fixed deposits.
How deposit is optimum in saving, fixed, current, call and other deposit, it
depends on the nature of loan. If there is high demand of long term loan, the
bank should increase fixed deposit. Otherwise, the bank should increase
different deposits such as saving, current, call and other short- term deposits.
The following chart shows the above information.
The above figure shows that the deposit collection by this bank is in increasing
trend if other things remaining constant. According to the trend forecast the
deposit collection in the year 2008/09 will be 1353.76, in 2009/10 it will be Rs.
2252.39 million and in the year 2017/18 it will be Rs. 9441.43 million
respectively. It is increased by 898.624 million every year.
4.1.4 Loans and Advances of SDBL
A bank takes deposit and lends loan and advances. Giving loans and advances
are the major task of any bank. Loan and advances is a major chunk of assets in
assets side. Because of cut throat competition in banking sector and limited
area of investment giving loan and advances is difficult and critical job.
Table No. 4.3: Loans and Advances of SDBL
Rs. in million
Year
% inc./decrease
2008/09
798.82
2009/10
1494.02
695.20
87.03
2010/11
2883.28
1389.26
92.99
2011/12
3697.66
814.38
28.24
2012/13
3564.64
-133.02
-3.59
The above table shows loan and advances. The table shows that loan and
advances are more fluctuating in the year 2009/10 and 2010/11. In 2008/09
loan and advances amounted to 798.82 million. It is increased by 87.03 percent
and reached to 1494.02 million in the year 2009/10. Similarly, loan and
advances in 2010/11 amounted to Rs. 2883.28 million. It is 92.99 percent
greater than former year. This percentage is the highest percentage increase in
study period. In 2011/12 loan and advances reached up to Rs. 3697.66 million
but there is an increasing trend but the rate of growth is decreasing. Loan and
advances in 2012/13 is Rs. 3564.64 million, which is -3.59 percent less than
previous year. The loan and advances of SDBL can be presented in a form of
bar chart.
The above figure shows that the loan and advances by this bank is in increasing
trend if other things remain constant. According to the trend forecast the loan
and advances in the 2012/13 will be Rs. 4034.734 million, in 2013/14 it will be
Rs. 4808.26 million and in year 2017/18 it will be Rs. 7902.36 million
respectively. It is increased every year by Rs. 773.528 million.
4.1.6 Loan and Advances to the Deposit Collection
To evaluate the lending performance of banks, it is important to know, how
much the amount is disburse out of total deposit collection. Loan and advances
to deposit collection of SDBL has been presented in the table below:
Table No. 4.4: Loan Disbursed to the Deposit Collection
Rs. in million
2008/09
798.82
1602.22
2009/10
1494.02
1719.21
86.90
2010/11
2883.28
3477.94
82.90
2011/12
3697.66
4001.51
92.41
2012/13
3564.64
4954.22
71.95
Year
Total Deposit
comes 71.95 percent of total deposit. The highest percentage of loan and
advances to total deposit was in the fiscal year 2011/12 which is 92.41. In
every year loan and advances is lower than total deposit but it is utilized more
than 70% in every fiscal year except than FY 2008/09. This shows the fund is
utilizing properly. Loans and disbursed to deposits can be presented in the
following chart:
Figure No. 4.6: Loan Disbursement to Deposit Collection
2008/09
2009/10
2010/11
2011/12
2012/13
2008/09
2009/10
7.31
87.03
2010/11
102.41
92.99
2011/12
14.99
28.24
2012/13
23.81
-3.59
r2
Probable error
6 PE
0.9499
0.9023
0.044
0.2629
Total assets
566.03
2449.79
4241.56
4948.30
5652.49
3571.634
Ratio (%)
9.17
3.25
3.32
3.84
2.99
4.51
The above table shows net interest and total assets from FY 2008/09 to FY
2012/13. There is both are increasing trend. In 2008/09, the net interest is Rs.
51.93 million which is 9.17 percent of total assets. In the year 2009/10, net
interest is Rs. 79.66 million which comes to 3.25 percent of total assets. The
trend of Net interest income ratio to the total assets. In 2010/11, net interest is
Rs. 140.89 million which is 3.32 percent of total assets. In 2011/12, net interest
is Rs. 189.95 million which 3.84 percent of total assets. This is significantly
greater than previous year. Net interest of Rs. 168.73 million is collected in
2012/13 which is 2.99 percent of total assets with Rs. 5652.49 million. Net
interest is increasing trend from 2008/09 to 2011/12 but it decreases in FY
2012/13. It indicates that interest earn is greater than interest paid. In other
word, we can say that there is moderate utilization of collected fund.
ii. Analysis of Net Profit to Total Assets
Table No. 4.9: Net Profit to Total Assets Ratio
Rs. in million
Year
2008/09
2009/10
2010/11
2011/12
2012/13
Source: Annual reports.
NPAT
16.99
35.19
48.66
65.53
(72.90)
Total assets
566.03
2449.79
4241.56
4948.30
5652.49
Ratio (%)
3.00
1.44
1.15
1.32
-1.29
The above table shows the relation between net profit and total assets. In the
study period, net profit is increasing trend except year 2012/13. In 2008/09, net
profit is Rs. 16.99 million which is 3.00 percent of the total assets which has
highest ratio of profit to the total assets shown in the study period. Similarly, in
2009/10, net profit of the bank is 35.19 million, which is 1.44 percent of total
assets. In 2010/11, the bank has earned profit of Rs. 48.66 million and 1.15
percent of the total assets. The bank earned 1.32 percent of profit of the total
assets in 2011/12, which is Rs. 65.53 million. In FY 2012/13, the bank is in
loss by Rs. 70.90 million which is -1.29 percent of the total assets.
So, we can say that the bank can be able proper utilize of the assets because the
profit of bank is increasing every year except in year 2012/13.
iii. Analysis of Return on Equity Capital
Table No. 4.10: Return on Equity Capital
Rs. In million
Year
NPAT
Equity Capital
Ratio (%)
2008/09
16.99
645.00
2.63
2009/10
35.19
645.00
5.46
2010/11
48.66
645.00
7.54
2011/12
65.53
693.35
9.45
2012/13
(72.90)
645.00
-11.30
capital is -11.30 percent. Here, the ratio of NPAT to the Equity capital is
increasing trend except year 2012/13.
performance of bank is good. In coming year the bank can earn more profit.
4.1.10 Analysis of Liquidity Ratio:
Short-term lenders such as suppliers and creditors use liquidity analysis to
assets the risk level and ability of a firm to meet its current obligations.
Satisfying these obligations requires the use of the cash resources available as
of the balance sheet date and the cash to be generated through the operating
cycle of the firm. (Bajracharya, Ojha, Goet, Sharma, 2008/09: 1018)
i. Analysis of Current Ratio
Table No. 4.11: Analysis of Current Ratio
Rs. in million
Year
2008/09
2009/10
2010/11
2011/12
2012/13
Source: Annual reports.
CA
1305.54
1767.35
2425.33
2798.54
3054.18
CL
615.24
933.23
1127.12
1325.23
2287.17
Ratio
2.12
1.89
2.15
2.11
1.34
From the above table, in 2008/09 the SDBL has 2.12 times current ratio
between current assets and current liabilities. But in 2009/10, the current ratio
declined to 1.89 times. In every year, current assets are greater than current
liabilities. Similarly, in 2010/11, the current ratio is 2.15, which is slightly
greater than in the former year. IN the fiscal year 2011/12 the ratio between
current assets and current liabilities are 2.11 times. In 2012/13, this ratio is
decreased to 1.34 times. This ratio shows that the current assets are not
sufficient to pay current liabilities in comparison to the former year.
The standard ratio current assets and current liabilities are 2:1. There is
standard ratio between current assets and current liabilities except year 2009/10
and 2012/13. It indicates that the bank able to pay current liabilities on time.
Property of Shanker Dev Campus Library 61
Total deposit
1602.22
1719.21
3477.94
4001.51
4954.22
Ratio (%)
8.64
8.17
5.21
8.45
4.32
Cash and bank balance and total deposits in 2008/09 are Rs. 138.50 million and
Rs. 1602.22 million respectively. Cash and bank balances come 8.64 percent of
the total deposit. In 2009/10, a cash and bank balance seems 140.43 million and
1719.21 million respectively. The ratio of cash and bank balance to the total
deposit is 8.17 percent. Similarly, in 2010/11, the cash and bank balance is Rs.
181.24 million which is 5.21 percent of the total deposit. We can see that in
2010/11, the percent of cash and bank balance is decreasing rate. In 2011/12,
cash and bank balance is Rs. 338.22 million which is 8.45 percent of the total
deposit. But in 2012/13 year, the lowest percent of the cash and balance to the
total deposit is 4.32 percent.
In above table, it is found that every year's cash and bank balance ratio lies
between 4 to 9 percent. The highest percentage of the cash and bank balance of
the study period is in 2008/09. It indicates that the bank is able to pay cash to
deposit holders. In other words, it can be said that the large amount is in idle
with cash and bank balance indicates lack of proper utilization of assets.
Similarly, the lowest percent of the cash and bank balance is 4.32 percent
which indicates that more fund utilized in loan and advances.
Current assets
Ratio (%)
2008/09
138.50
1305.54
10.61
2009/10
140.43
1767.35
7.95
2010/11
181.24
2425.33
7.47
2011/12
338.22
2798.54
12.09
2012/13
214.097
3054.18
7.01
Current assets
Ratio (%)
2008/09
798.82
1305.54
61.19
2009/10
1494.02
1767.35
84.53
2010/11
2883.28
2425.33
118.88
2011/12
3697.66
2798.54
132.13
2012/13
3564.64
3054.18
116.71
Non-performing loan
Ratio (%)
2008/09
8.25
798.82
1.03
2009/10
10.22
1494.02
0.68
2010/11
14.13
2883.28
0.49
2011/12
17.32
3697.66
0.47
2012/13
19.18
3564.64
0.54
Agriculture
390.23
522.23
Industry
15.22
116.22
228.46
513.21
717.15
1590.26
Service
4.11
144.53
244.26
428.35
298.33
1119.58
215.77
436.44
612.13
611.22
1875.56
388.36
485.14
757.96
774.31
500.31
2906.08
10.13
14.50
46.15
17.81
88.59
Real Estate
Business
Other loan and
Total
advances
Total
798.82
Capital adequacy of
according to NRB
SDBL
2008/09
47.00
2009/10
10
32.56
2010/11
11
12.92
2011/12
11
12.24
2012/13
11
17.99
Total deposit
1602.22
1719.21
3477.94
4001.51
4954.22
Total lending
79.88
14.94
28.83
36.98
35.65
Correlation(r)
Coefficient of
determination (r2)
Source: Calculation through SPSS software.
From table No. 4.18, the net profit seems in increasing trend in every fiscal
year except FY 2012/13 and total deposit amount is also in increasing trend in
every fiscal year. But total lending amount is Rs. 79.88 million in FY 2008/09
but it is highly fluctuating during the study period. The table reveals that the
negative relationship of net profit and lending i.e. -0.1059. Similarly, the
relationship between net profit and borrowing is also negative i.e. 0.4311.
Coefficient of determination of lending and net profit shows the effect of
lending on net profit is 1.1% whereas 98.9% caused of other factors to net
profit. Similarly net profit is caused of deposit by 18.58% whereas other factors
caused on net profit is 81.82%.
Respondents
25
2
5
32
Percentage (%)
78
6
16
100
The figure shows that 78 percent of the respondents response Yes, 6 percent
respondents response No and remaining 16 percent says dont know about this
query. It shows that maximum respondents are known about directives related
to credit policy issued by NRB.
4.2.2 Implementation of NRB Directives Related to Credit Policy
The question wants to clear that SDBL implementing to directives issued by
NRB related to credit policy. To responses are as follows:
Table No. 4.20: Implementation of NRB Directives Related to Credit
Policy
Variables
a) Yes
b) No
c) Dont know
Total
Source: opinion survey, 2013
Respondents
32
32
Percentage (%)
100
100
The table shows that 100 percent respondents response Yes about this query.
It shows that SDBL is implementing cent percent directives issued by NRB
related to credit policy.
4.2.3 Using Credit Analysis before Approval of Any Loan Proposal
The question wants to clear that SDBL used credit analysis before approval any
loan proposal. The responses are as follows:
Table No. 4.21: Using Credit Analysis before Approval of Any Loan
Proposal
Variables
Respondents
Percentage (%)
a) Yes
32
94
b) No
c) Dont know
Total
32
100
Figure No. 4.9: Using Credit Analysis before Approval of Any Loan
Proposal
The figure shows that 94 percent respondents are convinced that SDBL used
credit analysis before approving any loan proposal but 6 percent respondents
says dont know about it.
4.2.4 Visiting the Project Site at the Time of Granting Loan
Respondents were asked to SDBL officers to visit to project site at the time of
granting loan. The responses are as follows:
Table No. 4.22: Visiting the Project Site at the Time of Granting Loan
Variables
Respondents
Percentage (%)
a) Yes
26
81
b) No
c) Dont know
13
Total
32
100
Figure No. 4.10: Visiting the Project Site at the Time of Granting Loan
The figure shows that 81 percent respondents agrees that SDBL officers visit
the project site at the time of granting loan, 6 percent respondent opinions that
No and remaining 13 percent respondents opinion that they Dont know. Most
of the respondent agrees that bank officers visit the project site at the time of
granting loan.
4.2.5 Maintaining Right Level of Liquidity
The responses regarding maintaining right level of liquidity are as follows:
Table No. 4.23: Maintaining Right Level of Liquidity
Variables
Respondents
Percentage (%)
a) Yes
32
100
b) No
c) Dont know
32
100
Total
Source: Opinion survey, 2013
The table shows that 100 percent respondent opinions that Yes. So, it reflects
that SDBL have right level of liquidity.
Respondents
Percentage (%)
a) Yes
24
75
b) No
c) Dont know
19
Total
32
100
The figure shows that 75 percent respondents opinions that Yes, 6 percent
respondents opinions that No and remaining 19 percent respondents opinions
that dont know about this query. Most of the respondents agree that the credit
practices adopted by SDBL in good position and minority respondents dont
know about it.
Respondents
Percentage (%)
a) Yes
17
53
b) No
10
31
c) Dont know
16
Total
32
100
The figure shows that 53 percentage respondents response Yes about it, 31
percentage response No and remaining 16 percentage response dont know
about it. So, SDBL are facing credit related problems.
4.2.8 Types of Credit Related Problems Faced
The responses are as follows:
Respondents
Percentage (%)
a) Yes
32
100
b) No
c) Dont know
32
100
Total
Source: Opinion survey, 2013
The table shows that 100 percentage respondents are in favour of loans and
advances which indicate that loans and advances are reviewed on a periodic
basis in the bank.
4.2.10 Period of Reviewing Loans and Advances
The responses are shown in the below table:
Table No. 4.27: Period of Reviewing Loans and Advances
Variables
Respondents
Percentage (%)
a) Monthly
b) Quarterly
28
88
c) Semi-annually
d) Annually
e) If any
32
100
Total
Source: opinion survey, 2013
The figure shows that 88 percentage respondent opinions that SDBL should be
reviewed loans and advances in quarterly basis whereas 6 percent respondents
are in favour of monthly basis and another 6 percent respondent agrees that
loans and advances are reviewed on semi-annually basis. It shows that
generally loans and advances are reviewed in quarterly basis.
4.2.11 Maintaining Sufficient Provision for Loan Losses
For this query of maintaining sufficient provision for loan losses, the responses
are as follows:
Table No. 4.28: Maintaining Sufficient Provision for Loan Loses
Variables
Respondents
Percentage (%)
a) Yes
32
100
b) No
c) Dont know
32
100
Total
Source: opinion survey, 2013
The table shows that 100 percent respondents are in favour of option Yes. So,
we can say that SDBL is maintaining sufficient provision for loans losses.
Good Debt
1%
Sub-standard Debt
25%
Doubtful Debt
50%
Bad Debt
100%
Respondents
Percentage (%)
a) Yes
28
87
b) No
c) Dont know
13
Total
32
100
The figure shows that 87 percent respondents are in favour of Yes but 13
percent respondent opinions that dont know about it. We can assume that there
is relationship between credit position and profitability in SDBL.
4.3 Major Findings of the Study
From the analysis of secondary and primary data following major findings have
been drawn:
Findings from secondary data:
Deposit collection of SDBL is in increasing trend. We find that there is
continuous increasing trend from 117.06 million to 952.70 million.
In all the year total saving deposit has more contribution than other
deposit except year 2008/09 and 2009/10. In year 2008/09, current
deposit has highest contribution to the total deposit and in year 2009/10
fixed deposit has highest contribution to the total deposit.
Loan and advances have continuous increasing trend except year
2012/13 although the banking sector have cut throat competition.
Higher deposited amount is utilized in loan and advances. The lowest
percent of deposits to loan and advances are 49.86 percent in year
2008/09 and highest is 92.41 percent in year 2011/12.
Correlation between deposit collection and loan disbursement is 0.9499.
This indicates that these two variables relation is highly positive. Hence
the analysis found r is also greater than 6PE; it reveals that the relation is
significant.
Net interest to total assets ratio is fluctuating trend during the year. It is
ranged from 2.99 to 9.17 percent.
Net profit to total assets ratio is also in decreasing trend. It is 3 percent
in FY 2008/09 and -1.29 percent in FY 2012/13.
Return on equity capital is satisfactory. It is increasing trend during the
year except year 2012/13.
About 81 percent respondents agrees that SDBL officers visit the project
site at the time of granting loan, 6 percent respondent opinions that No
and remaining 13 percent respondents opinion that they Dont know.
CHAPTER V
SUMMARY, CONCLUSION AND RECOMMENDATIONS
This is the concluding chapter which provides summary of the study,
conclusion, and recommendations for further improvement based on the
analysis and interpretation of data.
5.1 Summary
Analysis of credit management with to Siddhartha Development Bank Limited
has been prepared to fulfill the requirement of Masters of Business Studies
(MBS) program. This study is mainly based on the annual report provided by
the concerned bank. While sampling the bank for study, only one development
bank has been taken as sample.
For this work various tools are used to study and this study is primarily based
on secondary data. However the analysis is done on the basis of primary data
also. For the secondary data, the most important financial tools are used for the
findings of different types of ratios. Similarly statistical method is used to find
out mean, trend analysis. The secondary data is abstracted from the annual
report of concerned bank. The study covers the periods of five year from
2008/09 to 2012/13. For collection of the primary data, the schedules of
questionnaires were developed and asked to the employees of the bank. The
personal interview was also conducted to know their opinion.
To conclude this study, the whole study has been divided into five chapters of
the different aspects. The summary of each chapter can be presented in each
paragraph.
However, the financial institutions are increasing regularly. Liquidity is
maximum with the financial institutions. Hence, the banks and financial
institutions are competing among themselves to advance credit to limited
opportunity sectors. Banks and financial institutions are investing in housing
loan, hire purchase loan for safety purpose. Now days, banks have increasing
number of deposits in fixed and saving accounts but have decreasing trend in
lending behaviors. So, this has caused major problems in development banks.
Now days, due to competition among banks, the interest rate charge for loan is
in decreasing trend. Due to unhealthy competition among banks, the recovery
of the banks credit is going towards negative trends. Non-performing credits
of the banks are increasing year by year. To control such type of state, the
regulatory body of the banks and financial institutions, NRB has renewed its
directives of the credit loss provision. Therefore, it is necessary to analyze the
credit management or credit disbursement recovery provision for loss and
write off of credit.
The objective of the study is to analyze the credit management of Siddhartha
Development Bank. The specific objectives are to analyze the trends of deposit
collection and credit lending i.e. loan and advances, to assess total amount of
loan, to evaluate the performance of SDBL in terms of liquidity, profitability,
sector-wise loan, non-performing loan, to analyze capital adequacy of SDBL
and to know the view of employees in regarding to credit management.
Literature review is done in second chapter relating to the financial
performance has been reviewed. By reviewing some previous studies, many
inputs can be taken for the study and other researcher can also take advantages
from this section. However, various researchers have been conducted on
lending practice, credit policy, financial performance and credit management of
various commercial banks. Past researchers have not properly analyzed about
lending and its impact on the profitability. The ratios have not categorized
according to nature.
In third chapter explains about the methodology of the study. Generally, a
common research design possesses the five basic elements viz. (i) selection of
problem (ii) methodology (iii) data gathering (iv) data analysis and (v) report
writing. The Present study follows the descriptive as well as exploratory design
to meet the stated objectives of the study. The research is based on primary as
well as secondary source of data, even though adequate data are collected from
secondary sources. Here, the total 86 development banks constitute the
population of the data and Siddhartha Development Bank Limited under the
study constitutes the sample under the study. Mainly financial methods are
applied for the purpose of this study. Appropriate statistical tools are also used.
Fourth chapter is data presentation and analysis. Data analysis tools mentioned
in the third chapter is used to analyze the data in this chapter. Various ratios
that are related to financial performance of the bank have been used to analyze
the financial performance of the SDBL.
5.2 Conclusion
In total deposit composition, the portion of the saving deposit has in first rank,
fixed deposits is in second rank and current deposit in the third rank, other
deposit in the fourth and call deposit in the last rank. Although the narrow area
of investment, and cut throat competition in banking sector, loans and advances
of the SDBL shows continuous increasing trend. Loans and advances are lower
than total deposit i.e. all deposits are somehow utilized in loan and advances.
Correlation between deposit collection and loan disbursement is 0.9499. It
indicates that the relations of two variables are highly positive. The relation is
significant because r is greater than 6PE.
Net interest to total assets ratio shows increasing trend but the rate is very low
in previous year. Because of low net interest to total assets ratio, the
profitability of the bank shows also low. Net profit to total assets ratio of SDBL
is fluctuated i.e. increase in former year and decrease in later years. It proves
net assets of the bank is not fixed. Return on equity capital is shown in
increasing trend in first four year, and then it has been decreased in fifth year.
That is why, increment in capital is higher than the increment in return on
equity respecting in fifth year.
The current ratio 2:1 of the SDBL is equal closely related to 2:1. It indicates
that the liquidity position of the SDBL can be supposed as satisfactory. Cash
and bank balance to current assets can be seen in satisfactory level. It has
maintained NRB directives. There is 7.01 percent to 12.09 percent of the cash
and bank in total current assets. The first, second and third greatest amount of
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Property of Shanker Dev Campus Library 86
APPENDIX-I
QUESTIONNAIRE
Sir,
First of all, I want to introduce myself as a student of Shanker Dev Campus. I
would like to request you to fill up the following questionnaires prepared for
collection of your views as valuable resources for my research work. This
research is conducted for the partial fulfillment of the requirements for the
degree of MBS. It would be of great value should you help in this project work
by filling the following questionnaire:
Shiva Raj Khanal
Please tick () an option which you favor most.
1. Do you know the directives issued by NRB related to credit policy?
(a) Yes
(b) No
2. If yes, are the SDBL implementing the directives issued by NRB related
to credit policy?
(a) Yes
(b) No
3. Do the SDBL use credit analysis before approval any loan proposal?
(a) Yes
(b) No
4. Does any bank officer visit the project site at the time of granting loan?
(a) Yes
(b) No
(b) No
(b) Quarterly
(d) annually
(e) If any..
(b) No
12. If yes, then what is the % of loan losses provision maintaining by your
bank?
(a) Good debts
..
(c) Doubtful debts ..
(b) No
APPENDIX-II
A Profile of Siddhartha Development Bank Limited
Siddhartha Development Bank Limited (SDBL), established in 2002 and
promoted by prominent personalities of Nepal, today stands as one of the
consistently growing banks in Nepal. While, the promoters come from a wide
range of sectors, they possess immense business acumen and share their
valuable experiences towards the betterment of the Bank.
Within a short span of time, Siddhartha Bank has been able come up with a
wide range of products and services that best suits its clientele Siddhartha Bank
has been posting growth in its portfolio size and management of the bank has
been thoroughly professional.
SDBL has been able to gain significant trust of the customers and all other
stakeholders to become one of to most promising commercial banks in the
country in less than 10 years of its operation. The bank is fully committed
towards customer satisfaction. The range and scope of modern banking
products and services the bank has been providing is an example to its
commitment towards customer satisfaction. It is this commitment that has
helped the bank register quantum growth every year. And the bank is confident
and hopeful that it will be able to retain this trust and move even further
towards its mission of becoming one of the leading banks of the industry.
VISION
Siddhartha bank runs with a vision to be financially sound, operationally
efficient and keep abreast with technological developments.
MISSION
The bank desires to be one of to leading banks of the industry by fulfilling the
interest of the stakeholders and also aims to provide total customer satisfaction
by way of offering innovative products and by developing and satisfaction bay
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