A STUDY ON CREDIT MANAGEMENT OF SAHAYOGI

VIKASBANK LTD

A Project Work Report

Submitted by:-

Mamta Kumari Mahato

T.U. Regd. No.7-2-589- -2016

 Campus Roll No.:16/073

 Rajarshi Janak Campus, Janakpur

Submitted to:

The faculty of Management

Tribhuvan University

Kathmandu

In partial fulfillment of the requirement for the Degree of 4 – Year BACHELOR OF BUSINESS
STUDIES (BBS)

Janakpur Dham, Nepal

May, 2020
 DECLARATION

I hereby declare that the Project work entitled “A STUDY ON CREDIT MANAGEMENT
OF SAHAYOGI VIKASBANK LTD” Submitted to the Faculty of Management, Tribhuvan
University, Kathmandu is an original piece of work under the supervision of Mr.
Linkan Karn, Lecturer, Management department, RAJARSHI JANAK CAMPUS,
JANAKPUR and is submitted in partial fulfillment of the requirements for the degree of
Bachelor of Business Studies (BBS). This project report has not been submitted to any
other university or institution for the award of any degree or diploma.

...............

Signature

Mamta Kumari Mahato

Date:
 Supervisor’s Recommendation

The project work report entitled “A STUDY ON CREDIT MANAGEMENT OF SAHAYOGI

VIKASBANK LTD” submitted by of RAJARSHI JANAK CAMPUS; JANAKPUR is prepared under
my supervision as per the procedure and format requirements laid by the Faculty of
Management, Tribhuvan University, as partial fulfillment of the requirements for the
degree of Bachelor of Business Studies (BBS). I, therefore, recommend the project work
report for evaluation.

………………………….

Mr. Linkan Karn

(Project Work Report Supervision)

Rajarshi Janak Campus, Janakpur

Date: ……………………….
 Endorsement

We hereby endorse that the project work report entitled “A STUDY ON CREDIT MANAGEMENT OF
SAHAYOGI VIKASBANK LTD” submitted by Mamta Kumari Mahato of Rajarshi Janak Campus,
Janakpur in partial fulfillment of Rajarshi Janak Campus, Janakpur in Partial fulfillment of the requirements
of the degree of Bachelor of Business Studies (BBS) for external evaluation.

---------------------- -------------------

Dr. Binod Lal Karn Mr. Neeraj Kumar Jha

Chairperson Assistant Campus Chief

 ACKNOWLEDGEMENTS

This project work report entitled, " A STUDY ON CREDIT MANAGEMENT OF

SAHAYOGI VIKASBANK LTD” has been prepared in partial fulfillment for the degree of
Bachelor of Business Studies (B.B.S) under the supervision of Mr. Linkan Kumar Karn,
Lecturer, Rajarshi Janak Campus, Janakpur. It is my privilege of getting helps and co-
operation from different persons. It is not possible to enumerate the names of all of
them. However, it will be matter of injustice if I forget the names of those personalities
whose valuable suggestions and co-operation escorted this project work report.

First and foremost, I would like to offer special thanks to, Dr. Binod Lal Karn
Chairman, Management Research Committee, Rajarshi Janak Campus, Janakpur, and
Mr. Neeraj Kumar Jha, Assistant Campus Chief of Rajarshi Janak Campus, Janakpur,
Tribhuvan University and all the professors, Lecturers as well as staffs of Rajarshi Janak
Campus whose suggestions made me able to finalize the study. I especially appreciate
my parents and all my family members who always gave their continuous inspiration,
support and help.

I am very thankful to the librarian of Rajarshi J anal Campus and Central Library, TU
Kirtipur for their kind co-operation. I am alone responsible for whatever weakness it
may still contain.

Rajarshi Janak Campus, Janakpur

––-----
 Lists of Tables

Table page no
2.1 Loan Advance to Total Assets Ratio of SBBLJ 15

2.2 Loan and Advance and Investment to total Deposit Ratio of SBBLJ 17

2.3 Investment to Loan and Advances and Investment Ratio of SBBLJ 18

2.4 Loans and Advance to Shareholder’s Equity Ratio of SBBLJ 19

2.5 Loan Loss Provision to Total Loans and Advance of SBBLJ 20

2.6 Non- Performing Loans to Total Loans and Advance Ratio of SBBLJ 21

2.7 Loan and Advance to Total Deposit Ratio of SBBLJ 22

2.8 Interest Income to Interest Expenses Ratio of SBBLJ 24

 LIST OF FIGURES

Figures page No
2.1 Loan Advance to Total Assets Ratio of SBBLJ 15

2.2 Loan and Advance and Investment to total Deposit Ratio of SBBLJ 17

2.3 Investment to Loan and Advances and Investment Ratio of SBBLJ 18

2.4 Loans and Advance to Shareholder’s Equity Ratio of SBBLJ 19

2.5 Loan Loss Provision to Total Loans and Advance of SBBLJ 20

2.6 Non- Performing Loans to Total Loans and Advance Ratio of SBBLJ 21

2.7 Loan and Advance to Total Deposit Ratio of SBBLJ 22

2.8 Interest Income to Interest Expenses Ratio of SBBLJ 24

 ABBREVIATIONS

AAAN : Advertising Agency Association of Nepal

DG : Director General

FM : Frequency Modulation

i.e : That is

Mgmt. : Management

MIS : Management Information System

SBBLJ : SAHAYOGI VikasBank Ltd

NAP : Nepal Advertising policy

NG : Nepal Government

NIDC : Nepal Tea Development Corporation

NLL : Nepal Lever Limited

NLO : Nepal Lube Oil

NRs : Nepalese Rupees

NT : Nepal Telecom

NTC : Nepal Telecommunication Corporation

NTL : National Trading Limited

NTV : Nepal Television

NWC : Net Working Capital

TU : Tribhuvan University

TMSA : Technical and Management Service Agreement

TV : Television '

US : United State

UK : United Kingdom

WTO : World Trade Organization

 CHAPTER: ONE

INTRODUCTION
1.1 Background of the Study

Development banks are those financial institutions engaged in the promotion and development of industry,
agriculture and other key sectors.

“A development bank is like a living organism that reacts to the social-economic environment and its
success depends on reacting most aptly to that environment”. They should satisfy the developmental needs
of the economy and their success is linked to the satisfactory growth of the economy.

“A development bank has the opportunity to promote enterprises i.e. to conceive investment proposals and
to stimulate others to pursue them or it to carry them through, from ‘conception’ to ‘realization’. In
principle, a development bank is well suited to assume this kind of role. Yet, enterprise creation is fraught
with costs and risks which development bank cannot neglect. Development banks can prudently undertake
them only when they have the requisite financial strength, technical expertise and the managerial skill to
bank”. In his views, a development bank is an institution which takes up the job of developing industrial
enterprises from its inception to completion. This process involves costs as well as risks. The bank should
have sufficient financial sources and expertise to promote a unit.

A development bank may be defined as a financial institution concerned with providing all types of financial
assistance (medium as well as long-term) to business units in the form of loans, underwriting, investment
and guarantee operations and development in general and industrial. The role of a development bank has
been emphasized in this definition. In this view a development bank aims to provide financial and
promotional facilities for the overall development of a country. The role of a development bank is of gap
filler. When assistance from other sources is not sufficient then this channel helps. It does not compete with
normal channels of finance. Development banks primarily aim to accelerate the rate of growth. It helps
industrialization specific and economic development in general Development banks react to the socio-
economic needs of development.

Credit is the amount of money lent by the creditor (bank) to the borrower (customers) either on the basis of
security or without security. Sum of the money lent by a bank, is known as credit. Credit and advances is an
important item on the asset side of the Balance sheet of a commercial bank. Bank earns interest on credits
and advances, which is one of the major sources of income for banks. Bank prepares credit portfolio,
otherwise it will not only add bad debts but also affect profitability adversely.

Credit is financial assets resulting from the delivery of cash or other assets by a lender to a borrower in
return for an obligation of repay on specified on demand. Loan is lent for some fixed period and for
temporary use. It is not lent for unlimited time period and free of cost. Loan is provided against some fixed
monetary charges called “Interest”. Loan is a type of debt. Like all debt instruments, a loan entails the
redistribution of financial assets over time, between the lender and the borrower.

Loan disbursement means the amount of the credit or loan outflow by a bank or any other financial
intermediary in a certain timeline. One of the major sources of income of any financial institution is the
amount of interest earned through their disbursed loan. Hence all financial institution tries to disburse their
loan in a secure sector as much as they can.

All banks and financial institution provides loan for different Objective and different time period. The
distribution of loan amount under different heading and sector is known as loan disbursement. Loan
realization is the amount of money or credit or loan recovered out of the disbursed loan during a certain
period of time. If the loan realization process is not running smoothly as planned during the time of Loan
disbursement the loan it will hamper all the Loan disbursement process of the bank. Non-realization of loan
is one of the main causes which deteriorate the financial strength of any financial institution.

Credit means to collection of the principle amount of loan. Every loan taken must be paid back on specific
time period. The repayment the loan is according to the terms and condition in the contract.

The Credit is one of the important functions of the banks. The success of the banks does not depend only on
the extension of more amount of credit. The recovery of extent is equally important. In fact, the timely
recovery is crucial thing of the Loan disbursement activities of the banks.

There is lots of research work on the other performance of development banks but this specific function does
not seem given importance before. Therefore, the this Study has an effort to bring the facts related to credit
Management of SBBLJ in the expectation that it adds to the management literature the idea and findings
related to the banks is an effort to bring the facts related to disbursement and collection of SBBLJ in the
expectation that it adds to the management literature the idea and findings related to the banks. It is an
attempt to help the bank to improve its performance and able to face competition.

1.2 Profile of SAHAYOGI Vikas Bank LTD.

Sahayogi Vikas Bank Limited started its full fledged commercial operations from 23rd
October 2003 with the vision to become a significant contributor to the economic
development of Nepal by distinguishing ourselves as an efficient, competitive and top
quality financial institution. Sahayogi Vikas Bank is the 10th Development Bank of
Nepal with its Head Office at Vidhyapati Chowk -4, Janakpurdham, Dhanusha, Nepal.
Mission of this Bank is to become the “Bank of Choice” by dedicating ourselves to the
progress and growth of our institution for our community, customers, employees and
stockholders by promoting economic growth and becoming a caring corporate citizen,
Providing excellent customer services by offering personalized quality, enhancing
shareholder value and providing challenging career and learning opportunities for
employees.

1.3 Objectives of the Study

Development banks are in growth stage and expanding their operation but development
banks of Nepal do not have successful results and operations. Due to tough and Unhealthy competition and
lack of peace and political instability, SBBLJ are facing problem on loan disbursement and Credit Collection
patterns due to lack of supervision. The loan granted by SBBLJ for one Objective is used. For another.
Similarly, the loan disbursement procedures are cumbersome and lengthy. The terms, conditions and
languages are unfamiliar to the general people. The problem of the Study has directed to find the solution of
following questions:

 What does there exist a relationship on loan disbursement and Credit Collection of SBBLJ?

 In which sector the loan of SBBLJ are distributed and what loan products are provided by this bank?

 What is the procedure of SBBLJ for granting loan?

 What is the Credit Collection rate of SBBLJ?

 How SBBLJ is analyzing the loan loss provisions, Non-performing loan, total
deposits?
The general Objective of the proposed research has to’ analyze, examine and interpret
the loan disbursement and Credit Collection of SAHAYOGI Vikas Bank Ltd. The specific objectives of this
Study have as follows:

 To examine the different types of loan disbursed by the sample bank.

 To know about the procedure of SBBLJ for granting loan.
 To examine the Credit Collection rate of SBBLJ.
 To analyze the LLP, Non-performing loan, total deposits of SBBLJ.

1.4 Rationale of the Study

This study is mainly focused on one of the important functions of disbursement of loan and it’s Credit
Collection from the borrowers. It analyzes the loan disbursement criteria and procedure of SBBLJ, the
position of the bank with respect to the efficiency in providing loan, the Credit Collection procedure and the
problems of the Credit Collection faced by the bank. It has been attempted to study the facts related to the
“loan” be it disbursement or collection

1. This study provides information to those who has planned to invest in SBBLJ.
2. With the help of the report of this study, the management applies corrective measures for the
improvement of the bank’s performance.
3. The policy formulates of the bank gains something with the help of the result of
this study.
4. The study helps general public to know about the overall credit position of the
SAHAYOGIVikas Bank Limited.
5. After the completion, this report can help to other students who want to write
thesis and research report as reference.

1.5 Review of Literature

Review of literature means reviewing research studies or other relevant proposition in the related area of
the study so that all the past and previous studies, their conclusion and perspective of deficiency may be
known and further researcher can be conducted or done. It is an integral mandatory process in research
works. It is a crucial part of all dissertations. In other words, it’s 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 review of literature in dividing two headings

> Conceptual Review

> Review of Related Studies

1.5.1 Conceptual Framework

Underlying principles and international practices are found in different books. Entire
book is the collection of principles and practices in different circumstances and contexts. For better
understanding, these principles and practices are dealt under different headings.

1.5.1.1 Concept of Credit Management "Credit Management is composed of two words capital and
structure. Capital is defined as the produced wealth used productivity for gain. It is thus distinguished from
land and other natural resources, which are not, produced from consumer's goods, which are not used
productivity for gain. The economists’ conception of capital is unlike the conceptions which governs the
practice of the accounts" (Hampton, 19742:42). There is different way to see the Credit Management, some
financial synonyms of financial structure and capitalization and some presents in a different way from
financial structure and capitalization. In Credit Management, common share capital, preference share
capital, debenture, and long-term debt and also short-term debt included. Thus financial structure is board in
looking as compared to Credit Management. Similarly, there are some differences between Credit
Management and capitalization denotes to total value of long-term capital and capitalization.

1.5.1.2 Credit Management Components

The components of Credit Management of any firm can be broadly categorized into two types of funds: debt
and equity. Numerous types of equity, ranging from straight common equity to convertible shares and
preferred, stocks, can be used for new ownership funding while, conversely, existing ownership funds can
also be returned through repurchase of the company's shares in the open market. The later has become an
important aspect of Credit Management, for repurchasing stock with corporate cash flow reduces the
number of shares outstanding, making each remaining share proportionately more valuable. At the same
time, no dividends need to be paid on the purchased shares. The trade-off is between adding value through
new investment and adding value through reduced ownership claims. The choice of debt instruments is also
varied. These also include leases and similar long-term obligations, which are called off-balance sheet debt
because they are not, listed on the balance sheet and only impact the operation statement as annual expenses.
Proper Credit Management decision needs close insight of each of its components. The following figure
serves for better understanding of the components and their effect in any business system (Helfert, 1997 :13)

1.5.2 Review of Previous Works

The literature of review of BBS 4th years are as follows:

1.5.2.1 Review of Related Thesis

Sharma, R. P. (2015) has submitted a thesis named “Credit Management of NBBL”

to Central Department of TU. The main objective of this study is to evaluate loan Disbursement and loan
collection condition of SBBLJ. The general objectives of this study are as follow.

 To analyze the trend of very year’s deposit collection.

 To measure total amount of Credit lending out of total deposit.
 To analyze the status of Credit lending.
 To measure the status of loan recovery out of total Credit lending.

By taking these objectives, the researcher finds following in her thesis,

 The deposit collected by the bank during the six-year period is in increasing trend. The highest
percentage increase in increasing in deposit collection in the years 2009 i.e. by 75.56%. Similarly,
the amount of Credit lending has increase every year except in 2013.
 The loan disburse by NBBL is also affected by factors other than the amount the of deposit collected
like the poor economic state with less investment of opportunities. HMG regulation provision.
 NBBL disburses highest amount of overdraft loan then other types of the nonspecific nature of
overdraft loan.
 The amount of loan recovered every year has increased with each subsequent year but the percentage
increase does not follow the same increasing trend.
  The loan which are easier to recover include specific loan like hire purchase, housing, education loan
etc. because of the selected group of customers. NBBL has followed NRB directives and lent almost
12% each year in priority and deprived sector.
 The deposit collected and the Credit lending increase or decrease irrespective of the increase or
interest rate as it has been analyzed by comparative study of the rate of interest and the amount of
deposit collected and Credit lending.

Khannal, P. P. (2016) has submitted a thesis named “A study of Credit Management of Agricultural
Development Bank Nepal” to Central department of TU. The main objectives of the study are below:

 To examine the achievement of Objective wise, term and development region wise loan
investment, collection and outstanding.
 To analysis the relationship between targeted and achievement of loan investment and collection.
 To study lending policy, loan recovery procedure interest rebel and discount, interest rate
charged by ADBN.
 To analysis the relationship between the loan outstanding and collection

Major finding about the Credit Management of the study are below

 Targeted loan investment and collection is increase every year and weight age growth rate in
fluctuating percent of collection to investment is in fluctuating trend.
 The highest investment has been in agriculture input marketing and lowest investment in
horticulture. Investment growth rate was increasing or decreasing. Trend. The investment table
emphasizes incremental trend of investment except in the total portfolio like irrigation, biogas,
housing and land development.
 The total loan collection of the development financing increased by 12.73%. The highest collection
has been in agriculture input marketing in amount and lowest collection in amount tea and coffee
Objective, however, collection growth rate was highest in tea and coffee followed by marketing and
lowest in irrigation.
 Generally, ADBN’s loan is not impress good behavior in the borrower. Most of the borrowers are
not know about the interest rate, repayment period, type of loan, calculating the transaction, penalty
of late paying amount etc.

Shreshtha, R. (2016), made research entitled “A Study on Financial Performance Analysis of NABIL
Bank Limited” and her research objectives were as follows:

 To analyze the liquidity, profitability, Credit Management and ownership ratios of NABIL bank.
 To provide information and major points that has help management to improve performance of the
bank. 0 To measure the ability of bank to meet its short term obligation and draw the problem of
financial management.
 To evaluate the soundness of profitability and operating efficiency of NABIL bank limited.

In her research work, she has made ratio analysis, return to investors analysis and simple statistical
analysis. His important research findings were as follows:

 The liquidity position of NABIL bank is strong and the basic earning power of bank is also good. It
had utilized its deposit properly with increment in net income every year and on the basis of EPS
also profit is increasing in every year.
  It is able to meet short term obligation and maintain the cash reserve ratio. The bank has high debt
ratio indicating more investment of the creditors and the role of creditors is higher than investors.
 DPS of the bank is lower and dividend payout ratio is irregular also. Shareholders are being
compensated slowly.

1.5.3 Research Gap

From the review of the above theses on Credit Management and leverage position, it is clear that
different persons have presented different views about Credit Management and its impact on
profitability. All above research title “Credit Management” are mainly based on manufacturing and
banking sector as service sector hotels are neglected. One study has been done on hotels business.
Possibly this study may be the first of its kind in the area as the study is concentrated in three hotels
companies which are listed in NEPSE. The study is done to find out composition of debt and equity
maintain by hotel sector and its relationship with profitability. This study covers the data of 5 years’
period based on the secondary data only.

1.6 Method of the Study

Methodology is the research method used to conduct the research work. In designing methodology for a
thesis the following element should be taken into account. They are research design, population and sample,
types and sources of data, procedure and data analysis tools. Research Methodology is the way to solve the
research problem systematically.

1.6.1 Research design

Research design is the main part of thesis or any Research works. By Research design mean overall frame
work or plan for the collection and analysis of data (Wolfe H. K, & Pant RR. (2005). Research design
presents a series of guide posts to enable the researcher to progress in right direction in order to achieve the
goals. This study tries to evaluate the credit management of SAHAYOGI Vikas Bank Ltd.

1.6.2 Population and Sample

The population refers to the organization of the same nature on its services and product on general.
Currently there are 33 licensed Development banks in Nepal according to Wikipedia Report 7th
October 2018 has the population. But, in this Study, the whole development banks could not be analyzed.
So, the Whole population has constrained by the taking sample. Out of total 33 development banks
established in Nepal, only one bank has taken as sample on the basis of bank operation since 5 years
(SBBLJ). The study has based on five years’ financial data of SBBLJ starting from 2070/71 to 2075/76 B.S.

1.6.3 Nature and Types of Data

The information and Data required for the study has collected from secondary sources. So, the Study is
based mainly on secondary data. Secondary data has gathered from both internal and external sources. The
internal secondary Data include data available in financial statements i.e. Income statements, Balance sheet,
Annual reports and other unpublished official records of SBBLJ. The external secondary data include the
data available in books, periodicals, and other published/unpublished reports.

1.6.4 Data Collection Procedure

Data collection procedure is the method, technique and process of gathering the necessary information for
the study. The necessary information may already be recorded or to be collected or both. The study mostly
based on the secondary data and it has collected from websites, books, published articles etc. the data has
five years old i.e. from fiscal year 2070/71 to 2075/76 . And mostly has in from websites and annual reports.
1.6.5 Data Analysis Tools

Financial and statistical tools are used for data analysis according to the requirement.

1.6.5.1 Financial Tools

Ratio analysis has used as Financial Tools for this Study. These are as follows:

1. Credit Management Ratio

It measures the proportion of various assets and liabilities in balance sheet. The proper management of
assets and liability ensure its effective utilization. The banking business converts the liability into assets by
way of is lending and investment function. Assets and liability management ratio measures its efficiency in
multiplying various liabilities in performing assets. The following are the various ratios relating to assets
liability management used to determine the lending policy of the development banks.

i. Loans and Advance to Total Assets Ratio:

Loan and advance to total assets ratio reflects the extent to the bank is successful in mobilizing its total
assets on loan and advance for the Objective of income generating. Loan and advance includes total loan and
advance and total assets includes current assets and fixed assets, investment on shares, miscellaneous assets,
loan and advances etc.

Loan and Advance to Total Assets Ratio = (Loan and advance /100) × Total Assets

ii. Loans and advances and Investment to Total Deposit Ratio:

Loans and advances and investments are the major area of fund mobilization. This is the major area where
the funds collected as deposits are collected. The first part loans and advances is more crucial and also bears
more risk than investments but also gives the higher return whereas the second half investment has lesser
risk and gives the lower return in compared to loans and advances. Loans and advances and investments to
total deposits ratio indicates the firm’s funds mobilizing power in gross. Any idle deposit ‘means loss to the
company. Thus, this ratio measures how well the deposits have been mobilized. In other words, we can say
that this ratio measures what part of deposits are generating income for the company to give out interest to
the deposits and also make profit

oan and Advance and Investment to Total Deposit Ratio = (Loan and Advance and investment /100) ×Total
Deposit

iii. Investment to loan and Advances and Investment Ratio:

This ratio measure the contribution made by investment in total amount of loans and advances and
investments. The proportion between investment and loans and advances depicts the management attitude
towards risk assets and safety assets. This also measures the risk to the certain banks. The high ratio
indicates the mobilization of funds in safe area and vice versa. However, safety does not provide with
satisfactory return, or we can say that “no risk no gain” Thus, a compromising ratio between risk and profit
should be maintained.

Investment to Loan and Advance and Investment ratio= (Investment / Loan and Advance and Investment)
×100

iv. Loans and Advances to Shareholder’s Equity Ratio:

Shareholder’s equity consists of paid up capital, undistributed profits, reserves and retained earnings. The
ratio between loans and advances to shareholder’s equity shows how far the shareholder’s equity has been
able to generate assets to multiple its wealth. This also measures the success of converting liability into
assets and measures size of the business.

Loan and Advance to Shareholders Equity Ratio = (Loan and Advance/ Shareholders’ Equity)

2. Activity Ratio:

Activity ratio measures the performance efficiency of an organization from various angles of its operation.
Activity ratio indicates the efficiency of activity of an enterprise to utilize available funds, particularly short-
term funds. The following ratios are used in this study to determine the efficiency, quality and contribution
of loans and advances in the total profitability.

I. Loan Loss Provision to Total loans and advance:

The ratio of loan loss provision to total loans and advances describes the quality of asset in form of loan is
bank holding. Loan loss provision, in fact is the cushion against future contingency created by the default of
the borrowers. Loan loss provision indicates the figure that is the summation of provision made against all
types of loans as per the NRB directives. According to the NRB directives, it directs to make the provision
of 1Percent, 25Percent, 50Percent and 100Percent for good loans, sub-loans, doubtful loans and bad loans
respectively. Loan loss provision occupies the large share in the total provision. Presented in the profit and
loss account and definitely decrease the profit of the company. Since according to the NRB directives
percent provision to be provided for all good loans.

Loan Loss Provision to Loan and Advance Ratio= (Loan Loss Provision/Loan and Advance) × 100

ii. Non -performing Loans to Total Loans and Advances Ratio:

As the NRB directives given to the banks, sub-standard, doubtful and bad loans are categorized under non-
performing loans. Increase in non-performing loans increase loan loss provision and interest suspense too,
which ultimately results in profit deduction. “The banking sector is severely affected by the non-performing
loans problems It is estimated that the non-performing loans of the Nepalese banking system is around 16
Percent, Therefore, there is no doubt that it has a serious implication on economic performance of the
country.”
Non performing Loan

Non-Performing Loan to Loan and Advance Ratio= (Non-performing Loan/ Loan and Advance × 100

iii. Loan and Advance to Total Deposit Ratio:

This ratio measures the bank's ability to mobilize the depositor’s fund to earn profit by providing loan and
advances. It also measures the extent to which the banks are successful in mobilizing deposits for the
Objective of profit generating. Loan and advances refer to total sum of loan, advances, credit, overdraft local
and foreign bills purchased and discounted. Total deposit includes total outsides’ fund or all kind of
deposits. A high ratio indicates higher efficiency to utilize depositors fund and low ratio indicates bank’s
liability to efficiency to utilize the depositor’s fund.

Loan and Advance to Total Deposit Ratio= (Loan and advance/ total deposit) ×100

iv. Interest Income to Interest Expenses Ratio:

 The ratio of interest income to interest expenses ratio measures the difference between interest rates offered
and interest rate changed. The spread between the interest income and interest expenses is the main
foundation for the profit of the bank. NRB had restrictions on the interest rate spread of the banks. The
interest offered and the interest charged should not be more than 5 percent. The banks are free to fix interest
rate on deposits and loans. Interest rates on all types of deposit and loans should be published in the local
newspapers and communicated to Nepal Rastra Bank on quarterly basis and immediately when revised.
Deviation of 0.5 percent from the published rate is allowed on all types of loans and deposit. However, in
rate fixation but it does not specify the conditions that would oblige NRB to do so.

Interest Income to Interest Expenses Ratio = (Interest Income / Interest Expenses)

1.6.5.2 Statistical Tools
i. Average: A simple arithmetic average has used to summarize the data as a representation of
mass data. During the analysis of data, mean has calculated by using the statistical formula
average on excel data sheet in computer. 

1.7 Limitations of the Study

This study has made only for the partial fulfillment of the Bachelor of Business Studies. This study has
based on well-known or already estimated analytical methods. So, this conclusion oriented. The study has
various limitations. It has not concern much with fundamental basis decision oriented research. The other
limitations of the study are as follow.

The study has based on secondary data collected from the sample bank.

 The study has been carried out based on the ‘published financial statement.
 Out of numerous factors, only operating fund Analysis has considered.
 The study has focusing an investment aspect of banking performance only.
 The study has carried out in only one bank.

CHAPTER- TWO

RESULTS AND ANALYSIS

This chapter deals with the presentation and analysis of data collected from various sources. The main
objective of this chapter is to evaluates and analyze the main financial performance, which are mainly
related to lending performance of the related banks. To obtain best result, the data have been analyzed
according to the research methodology as mentioned in the third chapter.

2.1 Credit Management Analysis

It measures the proportion of various assets and liabilities in balance sheet. The proper management of
assets and liability ensure its effective utilization. The banking business converts the liability into assets by
way of is lending and investment function. Assets and liability management ratio measures its efficiency in
multiplying various liabilities in performing assets. The following are the various ratios relating to assets
liability management used to determine the lending policy of the development banks.
2.1.1 Loans and Advance to Total Assets Ratio:
Loan and advance to total assets ratio reflects the extent to the bank is successful in mobilizing its total
assets on loan and advance for objective of income generating. Loan and advance includes total loan and
advance and total assets includes current assets and fixed assets, investment on shares, miscellaneous assets,
loan and advances etc.
Table 2.1 Loan and Advance to Total Assets Ratio of SBBLJ (In Millions)

Fiscal Year Loan and Total Assets Ratio in Percent

Advance
2071/72 4377.60 6029.44 72.60
2072/73 6625.26 9000.47 73.61
2073/74 9798.61 12936.75 75.74
2074/75 15159.39 19592.34 77.37
2075/76 25003.03 34649.26 72.16
Source: Annual Report of SBBLJ

From the table No. 2.1,The loan and advance to total assets ratio is showing, it is clear that the height
contribution to loan and advance in total assets is 77.37 percentage in FY 2074/75 and the lowest ratio is
72.16 percent is in FY 2075/76. It can be present in the given figure

Loan and Advance to Total Assets Ratio of

SBBLJ
40000
35000
30000
25000
20000
15000
10000
5000
0
2071/72 2072/73 2073/74 2074/75 2075/76

Loan and Advance Total Assets Ratio in Percent

2.1.2 Loans and Advances and Investment to Total Deposit Ratio:

Loans and advances and investments are the major area of fund mobilization. This is the major area where
the funds collected as deposits are collected. The first part loans and advances is more crucial and also bears
more risk than investments but also gives the higher return whereas the second half investment has lesser
risk and gives the lower return in compared to loans and advances. Loans and advances and investments to
total deposits ratio indicates the firm’s funds mobilizing power in gross. Any idle deposit means loss to the
company. Thus, this ratio measures how well the deposit has been mobilized. In other words, we can say
that this ratio measures what part of deposits are generating income for the company to give out interest to
the deposits and also make profit.

Table 2.2 Loan and Advance and Investment to Deposit Ratio of SBBLJ (In Million)

Loan and advance and Total Ratio in

From the table Fiscal Investment Deposit Percent no. 2.2, Loan and
Advance and Year Investment to
Deposit Ratio of 2071/72 4463.37 5197.89 85.87 SBBLJ is
2072/73 6728.73 7781.56 86.47
showing It is clear that the
2073/74 9919.57 11276.65 87.91
highest contribution to
2074/75 15316.28 16775.22 91.30
Loan and 2075/76 25664.00 30354.84 84.55 Advance and
Investment to Deposit Ratio is
91.30 percent in FY 2074/75 and
the lowest ratio is 84.55 percent is in FY 2075/76.. It can be presented in the given figure:

Fig No. 2.2: Loan and Advance and Investment to Deposit Ratio of SBBLJ

Loan and Advance and Investment to

Deposit Ratio of SBBLJ
Loan and advance and
30000 Investment
Amounts in million)

20000
Total Deposit
10000 Ratio in Percent
0
r 2 3 4 5 6
ea /7 /7 /7 /7 /7
la Y 71 72 73 74 75
c 20 20 20 20 20
Fis

2.1.1.3 Investment to Loan and Advances and Investment Ratio

This ratio measures the contribution made by investment in total amount of loans and advances and
investments. The proportion between investment and loans and advances depicts the management attitude
towards risk and safety assets. This also measures the risk to the certain banks. The high ratio indicates the
mobilization of funds in safe area and vice versa. However, safety does not provide with satisfactory return
or we can say that “no risk no gain”. Thus, a comprising ratio between risk and profit should be maintained.

Table 2.3 Investment to Loan and Advances and Investment Ratio of SBBLJ(In Million)

Fiscal Year Investment Loan and Ratio in

Advance and Percent
Investment
2071/72 85.77 4463.37 1.92
2072/73 103.47 6728.73 1.54
2073/74 114.96 9913.57 1.16
 2074/75 156.89 15316.28 1.02
2075/76 660.97 25664.00 2.58
Source: Annual Report of SBBLJ

From the Table No. 2.3, The Investment to Loan and Advances and Investment Ratio of SBBLJ is showing.
It is clear that the highest contribution to Investment to Loan and Advances and Investment Ratio is 2.58
percent in FY 2075/76 and the lowest ratio is 1.02 percent is in FY 2074/75.. It can be presented in the given
figure:
30000
25000
20000
15000 Ratio in Percent
10000 Loan and Advance
and Investment
5000 Investment
0

2.1.1.4 Loans and Advances to shareholder’s equity ratio:

Shareholder’s equity consists of paid up capital, undistributed profits, reserves and retained earnings. The
ratio between loans and advances to shareholder’s equity shows how far the shareholder’s equity has been
able to generate assets to multiple its wealth. This also measures the success of converting liability into
assets and measure size of the business.

Table 2.4 Loans and advances to shareholder’s Equity of SBBLJ (in Million)

Fiscal Year Loan and Advance Shareholder’s Ratio(Times)

Equity
2072/73 4377.60 595.79 7.35
2072/73 6625.26 972.05 6.82
2073/74 9798.61 1344.31 7.29
2074/75 15159.39 2289.81 6.62
2075/76 25003.03 3514.83 7.11
Source: Annual Report of SBBLJ

From the table No. 2.4, The Loan and advances to shareholder’s Equity Ratio of SBBLJ is showing. It is
clear that the highest contribution to Loans and Advances to Shareholder’s Equity Ratio of SBBLJ is 7.35
percent in FY 2072/73 and the Lowest ratio is 6.62 percent is in FY 2074/75. And 7.11 in the FY 2075/76
and average ratio is 7.04percent. It can be presented in the given figure:
 30000

25000

20000

15000
Loan and Advance
10000 Shareholder’s Equity
Ratio(Times)
5000

2.1.2 Activity Analysis

Activity ratio measures the performance efficiency of an organization from various angels of its operation.
Activity ratio indicates the efficiency of activity of an enterprise to utilize available funds, particularly short-
term funds. The following ratios are used in this study to determine the efficiency, quality and contribution
of loan and advances in total profitability.

2.1.2.1 Loan Loss Provision to Total Loans and Advances:

The ratio of loan loss provision to total loans and advances describes the quality of assets in form of loan is
banking holding. Loan Loss provision, in fact is the cushion against future contingency created by the
default of the borrowers. Loan loss provision indicates the figure that is summation of provision of made
against all type of loans as per the NRB directives. According to the NRB directives, it directs to make the
provision of 1perscent, 25 percent, 50 percent and 100 percent for good loans, sub-loans, doubtful loans and
bad loans respectively. Loan loss provision occupies the large share in the total provision. Presented in the
profit and loss account and definitely decreases the profit of the company. Since according to the NRB
directives 1percent provision to be provided for all good loans.

Table 2.5 Loan Provision to total loans and advances of SBBLJ (In million)

Fiscal Year Loan Loss Provision Loan and advance Ratio in Percent
2071/72 63.29 4377.60 1.45
2072/73 78.39 6625.26 1.18
2073/74 106.16 9798.61 1.08
2074/75 156.99 15159.39 1.04
2075/76 256.98 25003.03 1.03
Source: Annul Report of SBBLJ

From the Table No 2.5, The loan Loss Provision to total loans and advances of SBBLJ is showing. It is clear
that the highest contribution to loan Loss Provision to total loans and advances of SBBLJ is 1.45 percent in
FY 2071/72 and the lowest ratio is 1.03 percent is in FY 2075/76. Percent. It can be presented in the given
figure.
 30000

25000

20000

15000
Ratio in Percent
10000 Loan and advance
Loan Loss Provision
5000

2.1.2.1 Non-Performing Loans to Total Loans and advances Ratio:

As the NRB directive4s given to the banks, sub-standard, doubtful and bad loans are categorized under
non0performing loans. Increase in non-performing loans increase loan loss provision and interest suspense
too, which intimately results in profit deduction. “The banking sector is severely affected by the no-
performing loans of the Nepalese Banking system is around 16 percent, Therefore, there is no doubt that it
has a serious implication on economic performance of the country.” (Dhungana, 2058,P13)

Table 2.6 Non-Performing Loans to total loans and advances Ratio of SBBLJ(In million)

Fiscal Year Non-performing Loans and advances Ratio in Percent

2071/72 19.91 4377.60 0.455
2072/73 12.45 6625.26 0.188
2073/74 9.11 9798.61 0.093
2074/75 2.89 15159.39 0.019
2075/76 1.11 25003.03 0.004
Source: Annual Report of SBBLJ

From the Table No 2.6, The Non-Performing loans to total Loans and advances Ratio of SBBLJ is Showing.
It is clear that the highest contribution to Non-Performing Loans to total Loans and Advances Ratio of
SBBLJ is 0.455 percent in FY 2071/72 and the lowest ratio is 0.004 percent is in FY 2075/76.
30000
25000
20000
15000
Non-performing
10000 Loans and advances
5000 Ratio in Percent

2.1.2.2 Loan and advance to Total Deposit Ratio

This ratio measures the bank’s ability to mobilize the depositor’s fund to earn profit by providing loan and
advances. It also measures the extent to which the banks are successful in mobilizing deposits for the
Objective of profit generating. Loan and advances refer to total sum of loan, advances, credit, overdraft local
and foreign bills purchased and discounted. Total deposit includes total outsides’ fund or all kind of
deposits. A high ratio indicates higher efficiency to utilize depositors fund and low ratio indicates bank’s
liability to efficiency to utilize the depositor’s fund.

Table2.7 Loan and advances to total deposit Ratio of SBBLJ

Fiscal Year Loan and advance Total Deposit Ratio in Percent

2071/72 4377.60 5197.89 84.22
2072/73 6625.25 7781.56 85.14
2073/74 9728.61 11276.65 86.89
2074/75 15159.39 16775.22 90.37
2075/76 25003.39 30354.84 82.37
Source: Annual Report of SBBLJ

From the table No 2.7, The loan and advances to Total Deposit Ratio of SBBLJ is showing. It is clear that
the highest contribution to loan and advances to total Deposit Ratio of SBBLJ is 90.37 percent in FY
2074/75 and the Lowest Ratio is 82.37 percent is in FY 2075/76. It can be presented in the given figure.
35000
30000
25000
20000
15000
10000 Loan and advance
5000 Total Deposit
0 Ratio in Percent
2071/72 2072/73 2073/74 2074/75 2075/76

2.1.2.3 Interest income to Interest Expenses Ratio:

The ratio of interest income expenses ratio measures the difference between interest rates offered and
interest rate changed. The spread between the interest income and interest expenses is the main foundation
for the profit of the bank. NRB had restrictions on the interest rate spread of the banks. The interest offered
and the interest charged should not be more than 5 percent. The banks are free to fix interest rate on deposits
and loan newspapers and communicated to Nepal Rastra Bank on quarterly basis and immediately when
revised. Deviation of 0.5 percent from the published rate is allowed on all types of loans and deposits.
However, in rate fixation bit it does not specify the condition that would oblige NRB to do so.

Table 2.8 Income to Interest Expenses Ratio of SBBLJ (In Million)

Fiscal Year Interest Income Interest Expenses Ratio

2071/72 613.76 286.96 2.14
2072/73 836.24 350.80 2.38
2073/74 1174.80 483.91 2.43
2074/75 1881.95 850.14 2.21
2075/76 3100.55 1842.41 1.68
Source: Annual Report of SBBLJ

From the table No. 2.8, the interest to Expenses Ratio of SBBLJ is showing. It is clear that the highest
contribution to interest Expenses. Ratio of SBBLJ 2.43 in FY 2073/74 and the lowest ratio is 1.68 is in FY
2075/76. It can be presented in the given figure.
 3500

3000

2500

2000 Interest Income

Interest Expenses
1500 Ratio

1000

500

0
2071/72 2072/73 2073/74 2074/75 2075/76

2.2 Major Findings

The major findings of the study are summarized below:-

 The loan and advance to total assets ratio is showing, it is clear that the height contribution to loan
and advance in total assets is 77.37 percentages in FY 2074/75 and the lowest ratio is 72.16 percent
is in FY 2075/76. And average ratio is 74.30 percent.

 Loan and Advance and Investment to Deposit Ratio of SBBLJ is showing It is clear that the highest
contribution to Loan and Advance and Investment to Deposit Ratio is 91.30 percent in FY 2074/75
and the lowest ratio is 84.55 percent is in FY 2075/76.
 The Investment to Loan and Advances and Investment Ratio of SBBLJ is showing. It is clear that the
highest contribution to Investment to Loan and Advances and Investment Ratio is 2.58 percent in FY
2075/76 and the lowest ratio is 1.02 percent is in FY 2074/75.

 The Loan and advances to shareholder’s Equity Ratio of SBBLJ is showing. It is clear that the
highest contribution to Loans and Advances to Shareholder’s Equity Ratio of SBBLJ is 7.35 percent
in FY 2072/73 and the lowest ratio is 6.62 percent is in FY 2074/75. And 7.11 in the FY 2075/76

 The loan Loss Provision to total loans and advances of SBBLJ is showing. It is clear that the highest
contribution to loan Loss Provision to total loans and advances of SBBLJ is 1.45 percent in FY
2071/72 and the lowest ratio is 1.03 percent is in FY 2075/76.

 The Non-Performing loans to total Loans and advances Ratio of SBBLJ is showing. It is clear that
the highest contribution to Non-Performing Loans to total Loans and Advances Ratio of SBBLJ is
0.455 percent in FY 2071/72 and the lowest ratio is 0.004 percent is in FY 2075/76.

 The loan and advances to Total Deposit Ratio of SBBLJ is showing. It is clear that the highest
contribution to loan and advances to total Deposit Ratio of SBBLJ is 90.37 percent in FY 2074/75
and the Lowest Ratio is 82.37 percent is in FY 2075/76.

 The interest to Expenses Ratio of SBBLJ is showing. It is clear that the highest contribution to
interest Expenses. Ratio of SBBLJ 2.43 in FY 2073/74 and the lowest ratio is 1.68 is in FY 2075/76.
 CHAPTER- THREE

SUMMARY AND CONCLUSIONS

This chapter highlights the results of the study derived from the analysis of concerned banks. The
analysis of the data is carried out with the help of various financial and statistical tools. It is divided
into summary, conclusion and recommendations.

Summary
Loan is the core area of the bank. It plays the significant impact on the bank’s liquidity and
profitability. But the most worry factors in banking industry are the total management of loan. Due to
the excessive amount of non-performing assets in the banks, there is the wide sprees suspicion on the
performance on the banks.

Lending is one of the most important functions of overall bank and the composition of loan and
advances directly affect the performance and profitability of the bank. There is more competition in
banking business with limited market and less investment opportunities available. Every bank is
facing the problem of default loan and there is always possibility of a certain portion of the loan and
advances turning in nonperforming loan. A study of loan and advances, profitability, deposits
position of the banks are analyzed and the banks’ lending strength, lending efficiency and its
contribution in total profitability has been measured.
 Development banks collect scattered saving from the peoples and provide resources as loan and
advances to the people who need them. This activity builds industrial environment in the country,
create employment and investment opportunity for the people and consequently economy of the
country secures people growth. Banking institutions are inevitable for the resources mobilization and
the all-round development of the county. They have resources for economic development and they
maintain economic confidence of various and extend credit to people.

In this study, the financial tools, ratio analysis and profitability ratios are calculated to find out the
lending strength of the development banks. Also statistical tools like, co-efficient of correlation, and
regression analysis is calculated. The data used in this research is primary as well as secondary
nature and extracted from the annual reports of the concerned banks and website of Nepal Stock
Exchange. The financial statements of five years were selected for the study Objective.

 Conclusion
After analyzing the Credit Management of SAHAYOGI VikasBank Ltd. of Nepal from both
financial and statistical aspects, based on the main finding, following conclusion have been drawn:
The loan and advance to total assets ratio is showing, it is clear that the height contribution to loan
and advance in total assets is 77.37 percentages in FY 2074/75 and the lowest ratio is 72.16 percent
is in FY 2075/76. And average ratio is 74.30 percent.

 The Investment to Loan and Advances and Investment Ratio of SBBLJ is showing. It is clear that the
highest contribution to Investment to Loan and Advances and Investment Ratio is 2.58 percent in FY
2075/76 and the lowest ratio is 1.02 percent is in FY 2074/75.
 Loan and Advance and Investment to Deposit Ratio of SBBLJ is showing It is clear that the highest
contribution to Loan and Advance and Investment to Deposit Ratio is 91.30 percent in FY 2074/75
and the lowest ratio is 84.55 percent is in FY 2075/76.

 The Loan and advances to shareholder’s Equity Ratio of SBBLJ is showing. It is clear that the
highest contribution to Loans and Advances to Shareholder’s Equity Ratio of SBBLJ is 7.35 percent
in FY 2072/73 and the lowest ratio is 6.62 percent is in FY 2074/75. And 7.11 in the FY 2075/76 .

 The loan Loss Provision to total loans and advances of SBBLJ is showing. It is clear that the highest
contribution to loan Loss Provision to total loans and advances of SBBLJ is 1.45 percent in FY
2071/72 and the lowest ratio is 1.03 percent is in FY 2075/76.

 The Non-Performing loans to total Loans and advances Ratio of SBBLJ is showing. It is clear that
the highest contribution to Non-Performing Loans to total Loans and Advances Ratio of SBBLJ is
0.455 percent in FY 2071/72 and the lowest ratio is 0.004 percent is in FY 2075/76.

 The loan and advances to Total Deposit Ratio of SBBLJ is showing. It is clear that the highest
contribution to loan and advances to total Deposit Ratio of SBBLJ is 90.37 percent in FY 2074/75
and the Lowest Ratio is 82.37 percent is in FY 2075/76.

 The interest to Expenses Ratio of SBBLJ is showing. It is clear that the highest contribution to
interest Expenses. Ratio of SBBLJ 2.43 in FY 2073/74 and the lowest ratio is 1.68 is in FY 2075/76.
Therefore, the effort has been made to analyze the Credit lending and collection of SBBLJ for the stated
period. Similarly, despite continues effort data wise loan disbursement and type wise loan recovery amount
was not made available by the banks. So, primary source of data was relied upon. On asking the loan
officials and the staffs of the credit department, it was extracted that among different types of loan that are
easy to recover are specialized loans. In their opinion, it is so because the loan type has been planned to be
given away for a particular group of people and as per the scheme, the participating in the borrowing under
such schemes are automatically selected by the criteria for providing loan for such particular Objectives. So,
these people are aware of the consequences of default in repayment and deliberate defaulters are almost
negligent in number. On the of borrowers of varying needs, backgrounds and attitudes. Because of this
diversify in the Objective and attitude of borrowers, there is a high chance of default but SBBLJ has
disbursed overdraft loan in higher percentage than other type of loans in spite of the fact that high default is
observed in this type of loan as compared to other loans other hand, the different type of loan to be
recovered is overdraft loan and in overdraft loan also, Person are found to be defaulting more in comparison
to companies and business firms, there are default in this loan because it is a loan wide coverage and it is not
meant for a particular Objective only. This includes a wide range.

The following recommendation and suggestion have been made to improve the related banks on the basis of
present situation. Dancing thereby diversifying its lending by identifying new avenues rather than focusing
nearly in

 Need to diversify its loan: Banks should take the steps to diversify its loan so that risk can be
minimized and small borrowers are promoted. Also bank should develop the concept of micro
financing. In addition, bank is recommended to the group if one sector.
 Need to Expand Branches: All the banks are concentrated in the urban area. Not concentrating only
in big cities and large groups, banks should expand new branches in rural areas so that people of all
sectors and area could be benefited with banking services and for the development of all country and
milfoil the government’s objectives of people in the economic development.
 Proper Guidelines to loan officers: In interaction with top management, Credit Quality Control
(CQC) department should design a work guideline for the loan officers. These guidelines would
contain tips on how to perform their duties with utmost efficiency and credibility. For example, a
guideline could be prepared mentioned tips, tips on how to tactfully handle problematic situations
etc. These guidelines should be provided to the loan officers, right from their entry in the
organization and also whenever required. These guidelines should be timely reviewed and modified
as per situation.
 Arrange Weekly Corporate Meeting: Weekly corporate meeting should be conducted among the
corporate officers and top management whereby proposals could be discussed and approvals could
be done faster. This would add to the efficiency of the lending process.
 Prepare a watch list for clients under examination: Before granting a loan to a new client, the
bank should first place him/her in probation. During this period, the client should be strictly and
closely examined.
 Need to Reduce the Interest Rate on loan: The interest rate can be minimized with appropriate
management of the operating expenses and thereby spread rate (Le. difference between rate of
deposit and lending). It does mean that the bank should make the interest rate by bearing loss. The
rate should be minimized with the scientific management of the fund and operating expenses.
 Need to Invest the Small Entrepreneur Development Program: Loan should provide to those
who are economically backward and uplifting the condition of those people so bank should come to
 forward to increase the number of clients, develop entrepreneurs, diversify its business with large
number of small investors according with investing to small entrepreneur development programmed.
 Need to Invest to Productive Area that Utilize the Natural Resources: Nepal is full of natural
resources but these are not used properly due to lack of financial support as well as technical
assistant. So, bank should grant the loan to this area for fruitful development of the country. Mainly,
Nepalese Economy bases on agriculture and major proportion of population dependents upon this
sector. Therefore, bank should promote these areas focusing its lending.
 Need to Adopt the Conserving Lending Policies: Banks should adopt the conservation lending
policies to minimize the risk hereby ensuring its term suitability. On the other hand, bank should
modernize itself by providing the quality of service and satisfying the consumers. So, the bank
should maintain the balance in its loan.
 Preference to the Short Lending: It is justified that the risk can be minimized through short term
lending than long term. Therefore, preference should be given for short term trade financing and
discoursing long-term and also focusing multiple returnable loan.
 Pricing of loan: It should be based on risk based pricing where the rate should be compensating the
risk of the loan. It means loan pricing should be prime rate convention in which borrowers are priced
on a prime rate or minus basis. However, it should be bear in mind that high pricing not always
compensates the risk associated with it.
  Bibliography

 Dangol, RM, (1995) Theory and Practice of Financial Management, Kathmandu, Taleju
Prakashan.
 Garg, K. N (1997) Money, Banking, Trade & Finance, Allahabad: Kitab Mahal.
 Guideline for the thesis writing, published from TU, 2015
 Gupta, S.C (2000) Fundamental of Statistics, Bombay, Himalayan Publishing House.
 Khan, M.Y. and Jain PK (1981) Financial Management, New Delhi, Tata McGraw Hill
Publishing Ltd.
 Munankarmi, SP (2003) Management Accounting, Kathmandu Buddha Academic Publishers
and Distributors Pvt. Ltd.
 Pandey, I.M. (1993) Financial Management, New Delhi, Vikash Publishing House Pvt. Ltd.
 Pant, P. R. (2015). Social Science Research and Thesis Writing. Kathmandu: Buddha
Academic Enterprises.
 Weston, j. Fred and Brigham, Eugene F. Managerial Finance (11'h Edition) New Delhi, The
Dryden Press.

Unpublished Thesis

 Khanal, P. P. (2016) “A study of Credit Management of Agricultural Development Bank Nepal”

an Unpublished Project Work Report, Rajarshi Janak Campus, Janakpur, TU.
 Shanna, R. P. (2015) “Credit Management of NBBL” an Unpublished Project Work Report,
Rajarshi Janak Campus, Janakpur, TU.
 Shreshtha, R. (2016), “A Study on Financial Performance Analysis of NABIL Bank Limited”,
an Unpublished Project Work Report, Rajarshi Janak Campus, Janakpur, TU.

Website

 www. google.com.np 
  www.muktinathbikasbank.com
 Appendix

APPENDIX I:

AGGEREGATE BALANCE SHEET OF SAHAYOGI VIKASBANK LTD FOR 5 YEARS (IN

MILLION)

Capital Liabilities 2071/72 2072/73 2073/74 2074/75 2075/76

Share Capital 507.15 838.43 1123.50 1977.80 3064.76
Reserve and Surplus 88.64 133.61 220.81 312.01 450.07
Debentures & Bonds 0.00 0.00 0.00 0.00 0.00
Borrowing 98.15 27.47 0.00 0.00 0.00
Deposits 5197.89 7781.56 11276.65 16775.22 30354.84
Bills Payable 0.00 0.00 0.00 0.00 5.51
Proposed & Undistributed 7.35 10.44 0.00 22.73 24.86
Dividends
Income Tax Liabilities 4.38 0.00 0.00 0.00 0.00
Other Liabilities 125.88 208.96 315.79 504.57 949.17
Total 6029.44 9000.47 12.936.75 19.592.34 34649.26
Assets 2071/72 2072/73 2073/74 2074/75 2075/76
Cash Balance 139.46 226.59 356.91 468.03 693.21
Balance with Nepal Rastra 249.90 475.27 693.15 1348.07 1439.80
Bank
Balance with 12.76 13.05 48.31 93.15 108.33
Banks/Financial Institutions
Money at Call and Short 1062.65 1410.41 1571.37 1894.81 6084.23
Notice
Investment 85.77 103.47 114.96 156.89 660.97
Loans Advances and Bills 4377.60 6625.26 9798.61 15159.39 25003.03
Purchased
Fixed Assets 66.82 96.47 299.64 393.25 473.55
Non Banking Assets 0.00 0.00 0.00 0.00 0.00
Other Assets 36.49 49.51 53.81 78.75 186.13
Total 6029.44 9000.47 12936.75 19592.34 34649.26
Appendix II:

Different Items Taken from Annual Reports of SAHAYOGI VikasBank Ltd (In Millions)

Particulars 2071/72 2072/73 2073/74 2074/75 2075/76

Loan and Advance 4377.60 6625.26 9798.61 15159.3 25003.03
9
Total Assets 6029.44 9000.47 12936.75 19592.3 34649.26
4
Loan and Advance and 4463.37 6728.73 9913.57 15316.2 25664.00
Investment 8
Total deposit 5197.89 7781.56 11276.65 16775.2 30354.84
2
Investment 85.77 103.47 114.96 156.89 660.97
Shareholder’s Equity 595.79 972.05 1344.31 2289.81 3514.83
Loan loss provision 63.29 75.39 106.16 156.89 256.98
Non-Performing Loan 19.91 12.45 9.11 2.89 1.11
Interest Income 613.76 836.24 1174.80 1881.95 3100.55
Interest Expenses 286.96 350.80 483.91 850.14 1842.41
Net Profit 151.85 217.64 361.37 486.93 57.53
Total no. of Share 10.0 10.00 25.00 25.00 30.00