(old thesis report, uploaded for reference, hope it may helpful for concerned students)
Introduction
Meaning of Bank
The origin of bank is linked to either
Latin word ‘Bancess’, Italian word “Banco”,French word “Banke” ,German word
“back” and bank in England were used .it may be more correct to say that at
period the German’s were Master’s of a great part of Italy and the word bank is
derived from the German word “Bank” came to be used as it’s Italian equivalent
“Monte” and was Italianized into “Banco”and the loans were called in
differently “Monti”or “Banchi”.
Bank is a financial institution which
deals with money by accepting various type of deposits disbursing loans and
rendering other financial services. In other words we can define bank as the
place where the transaction of money as well as securities takes place in different
financial needs.
There are so many experts who have
defined the meaning of a bank in several ways, which are as follows;
According
to Kent, “A bank is an
organization whose principal operations are concerned with the accumulation of
the temporarily idle money of the general public for the purpose of advancing
to others for expenditure.”
According
to G. Crowther ,“ A bank
is an institution which collects money from those who have it spare or who are
saving it out of their income and lends this out to those who required to.”
Bank being an integral part of modern
society are rendering a wide range of services to different walks of everyone’s
life. Agriculture Development Bank is a type of development bank whose aim is
to earn profit by providing loans to the farmer’s and other agriculture sector.
It accepts money in current account, saving account, fixed account, and
provides loan it also provides interest on the deposit accepted and collects
interest on the loan provided. The rates of interest on loan are higher than
those paid for deposit.
Ricardo
has said “A man becomes
banker only when he begins to lend other people’s money.”
ADB provides various different types of
loans. Loan may be short term or long term loan.
Nepal being an agro- based country, 80%
of its total population survive upon agriculture and of its total population
live in village areas. In this way, most of their lives are dependent on agriculture.
The beginning phase of development in agriculture took place during the Rana
Regime.
Establishment of the organization “Krishi
Adda” in 1918 B.S gave the light on priority of agriculture .In 1994 B.S
“Krishi parishad” and Veterinary Hospital” was established formally. Same year
establishment of agriculture investigation office in “Parbantpur” and “Kakani”
took place. Though different range of developments in agriculture sector was achieved
during Rana Regime, there remained the lack of Research and development,
required fertilizer’s and equipments, irrigation facility, technical skill and
facility of long, short and medium type of loans. There seemed to be the
necessity for the organization that can provide the full support for the
development of agriculture sector. As a result in 2020 B.S cooperative bank was
established according to cooperative bank act 2019, which was made after the
existence of 5year plan in 2013 B.S .Under the permission of Nepal Rastra Bank
.Being t5he result unsatisfactory on 7th Magh 2024 B.S., ADB was
established with the object of providing loan to general farmers in suitable
interest rates. In same year these was establishment of “Bhumi Sudhar” and
“Bachhat Sanstha” for the productive utilization of loan collected. In 2030 it
merged into ADB. In this way the establishment of ADB has been proved a boon
for the development of agriculture sector of Nepal.
Agriculture development bank has
authorized capital Rs. 5 crores in the very beginning. But a capital has
crossed about 1 arab in the economic fiscal year 2055/52. 75% of total capital
is invested in general public and rest 25% is owned by government. For the
smooth operation of ADB a committee of seven member’s organized inclusive of 1
representative of NRB, one from finance Ministry ,one from Krishi Mantralaya,
one of cooperative organization and one representative from shareholders and a
chairman .In general manager of ADB appointed by HMG.
Since the establishment of ADB has
contributed a lot in the Development Of Agriculture sector. It has mainly
invested its fund in cash crops, agriculture tools, irrigation facility,
cottage industry etc. ADB banking office, Biratnagar-14, was established in
2042 B.S. under the ADB act 2024 B.S. it is located at Mahendra Chowk.
Agriculture Development Bank Branch
office, BRT was established on 2044 under the permission of NRB. The bank is
situated in the heart of city just opposite to Himalayan Hall i.e. in Himalayan
Road. The number of staffs, contributing their best for the effective working
of the bank is altogether 39 but it is in fluctuating pattern.
This bank provides loan for agriculture
product, fringing cottage Industry, industry producing the equipment needed for
agriculture development and establishing and running cottage industry .it also
makes necessary arrangement to provide loan to the customers as well as
provides banking facilities to the local people in rural areas and motivate
them to involve themselves in banking transactions. The bank also grant loan or
invest its capital on hire purchase, hotel & services, contract loan,
housing demand and many more. Besides this bank is also providing it’s customer
with commercial loan (Trade). All the loans are granted on the basis of
goodwill of the customers.ADB is gives on deposits. The commercial banks accept
deposits from the public & lend loans.ADB is also one of the commercial bank
of Nepal. ADB is providing the full commercial banking services to the clients.
ADB accept deposit from the public and provide loans that really are in need of
it acceptance of deposits and money lending are the major function of
commercial bank .following are the function by which banks provides by deposit
and lending loan. Accepting deposits from the public & granting loan.
Deposits represent the liability of the
Bank. The acceptance of deposits, from the public and provision of credit,
forms the mainstay of the banking business. So receiving deposit is one of the
primary functions of agriculture bank also. The bulk of the resources of a bank
are mobilized by accepting deposits from the public.
Deposits are received under different
heads of account for which they pay interest which depends on the type of
account and periods of deposits.
The most common types of deposits
accepted by the bank are:
1) Current deposit
2) Saving deposit
3) Fixed deposit.
Current
deposit:
Current deposits are also known as demand
deposit, as the deposit is withdrawn at demand. A current deposit account is
running and active account which may be operated upon any number of times
during a working day. There is no restriction on the number and the amount of
withdraws from a current account. Though the bank can’t gain profit by investing
it in new sector after taking from the customer, this facility is given to the customers.
Therefore, the bank does not give interest on this account and bank charges are
also nil for their services on this account. Minimum balance required in this
account is Rs. 7000. A bank should keep enough balance because the bank should
pay the large amount at the time of account holder’s demand.
Saving deposits:
Receipts and deposit in saving bank a/c
has become the feature of ADB.A saving bank a/c is meant for the people of the
lower and middle classes who wish to save a part of their current income to
meet their future needs and also intent to earn an income from their saving.
Generally, the bank provides 5 to 12%
interest in this deposit but this percent may change according to ADB. Usually,
the interest is given every six month in this deposit. The minimum balance
required in this account is Rs, 100/- payment of interest is done semi-annually
3.75% anyone on his own behalf or on behalf of any minor relative. Generally,
he can submit only one cheque in a day or two or three in a week.
Fixed deposits:
Under the commercial bank act 2031
(1974), fixed account means an account of amounts deposited in a bank for
certain period of time.
Deposits made under fixed deposits
account cannot be withdrawn before the expiry of the deposit period of without
giving a due notice of withdraw. The period of time can be 3 month, 6th
month, 9th month, 1 year, 2 year, 3 year, 4 year, 5 year etc. the
amount cannot be withdraw by check in this deposit like in other current and
saving deposits. The interest on these deposits depends on the period of
deposit. The interest is provided minimum 3.5% to maximum 13.5%, according to
the duration of time. The minimum period of deposit is usually 45 days maximum
period is 5 year.
Lending pattern
Another function of ADB is to lend loan
to agriculture sector. The rate of interest on loans at higher than these paid
for deposit. The banker does not lend his own money.
While lending funds, a banker, therefore
follows a very cautions policy and conducts his business on the basis of the
well known principle of sound lending in order to minimize the risk.
Ricardo
has said “A man becomes
banker only when he begins to lend other peoples money.”
Loan disbursement system refers to the
procedure followed by ADB in providing loan. The procedure may differ with
respect to the terms of loan & sector to loan.
If a borrower wants to borrow from the
bank be must offer a current a/c .So as to be a member of the bank .the very
initial step in lending loan is to fill the proposal from for demanding loan.
In this form name of the person or firm, amt. of loan, repayment procedures
i.e. time to repay etc are filled. The bank checks out the proposal from and
uses the 5 tools that are character, credit worthiness, capacity, capital and
collateral for granting loan. Bank makes itself sure about all the things
before moving forward.
The next step is to check security, which
might either be primary security or collateral security. if the market value of
the security is enough for granting the loan the next is preparation of
“TAMUSKH” (legal consideration) is done it includes loan deed where terms and
conditions are mentioned, promissory note where the borrower promises to pay
back the principal amount and interest timely and the clause is also mention for
where the borrower is unable is unable to pay the amount or cheats or dose any
fraud will be punished. He/she should not violate any terms and conditions
regarding contract. Borrower does signature on each and every paper. Now the
bank open an a/c and loan amount is granted. The borrower can pay the amount
either an installment basis or whole amount at a time.
Objective of the study
The objective of study is to identify the performance on deposits & money lending of ADB.The significant objective is to study the strength & pinpoint the weakness under deposit and money lending of ADB. The specific objectives are listed below:
- To
compare the deposit structure.
- To
compare profitability.
- To
identify the collection of deposits in different account and the loan
disbursement.
- To
specify how the banks collects its funds through the savings of the
public.
- To know
the operation of the banking system.
- To
analyze the sure of saving deposit out of total deposit of ADB.
- To draw out problem, suggest and recommend to ADB regarding saving deposit management.
ADB accept the compulsory deposit by HMG.
It mobilizes such amount in its different transaction and with the permission
of HMG.ADB issue shares to the general public and guarantees the loan to the
public.
Bank also provides the technical
knowledge and facilities to the people of rural with small development program
conducted by specific managing committee. it helps in the development of lower
level farmers by providing them different kind of facilities and
infrastructure.
Area of study
Nepal is a landlocked country with
population above then 23 million. The basic survival ground for Nepalese people
is agriculture i.e. more than 80% of people in Nepal survive in agriculture.
This agriculture is the dominant sector of Nepalese economy. It is therefore, agriculture
is regarded as backbone and as well as apse of economic development of the
country.
Nepal is still in its infant stage i.e.
it is not fully developed country. More precisely we can say that, Nepal is an
underdeveloped country, which is characterized by mass poverty, which is
chronic, and not the result of some temporary misfortune and absolute methods
of production and social organization. Some general characteristics of an
underdeveloped economy in our country prevails are low level of technology and
skills, unsystematized political infra structure, unsuitable social structure
and illiteracy. Thus bank has vital role to play in the development of economy.
Agriculture being the basic part of generating income for our country should be sincerely undertaken for the economic development of our country. Thus Agriculture Development Bank has been established to support the economic of the country. Existence of this bank has helped a lot in progressing the agriculture sector of the country.41% of the nation’s income from agriculture sector, which also includes agricultural, industries and business. The bank is also providing facilities to the general public and farmers as other commercial bank are doing. Thus the bank has performed an indispensable role in the development of the country through channel of Agriculture. Commercial bank Act 2031 (1974) has define that commercial bank means a bank operates currency exchange transactions, deposits, provide loan ,performs dealing relating to commercial except the banks which have been specified for the co-operative, agricultural, Industry of similar other specify objective.
In this way a commercial bank is
different from a central bank and the distinction between the two terms is
essentially based on their objects. While the primary of a commercial bank is
the maximization of profit, the central bank is primarily concerned with the
effects of its operations on the functioning of the economy. Moreover while
there may certainly be many competing commercial banks, there exits only one
central bank in a country. While the commercial banks compete against each other,
the central bank comes out if any ordinary banking business for the general public;
incomplete it confines itself mainly to controlling the operations of the
banking system in a country.
Issues to be addressed/ questions to be answered
As we know that the main objectives of any business organization e.g. bank, profit maximization. Deposit, mobilization is the key factor to attain this objective therefore if the bank fails to employ its funds suitably it is not possible to maximize the profit. A bank has to make decisions within a framework of statutory requirements of credit regulation by central bank as well as the national objectives that arte determined in the matter of the provision of credit from time to time. The commercial bank should maintain adequate cash deposit ratio but sometimes bank credit may expand out of proportion to the requirement. In this situation, bank has to collect sufficient fund from deposits and most make changes in its banking policies. A number of problems have been faced while preparing this report. Some are listed below:
- The
sufficient information about the history of ADB is not available.
- The findings
are based on observation and some fact and figure.
- It was
very difficult to collect sufficient data and information within a
specified period of time.
- Cost
factor also constrained the study.
National occupation of our country is
agriculture. But our country import food grain or agriculture product in bulk
quantity from foreign countries only 18% of the total land in our country is cultivable,
which is a pity situation for the country like Nepal known as agricultural
country. The problem in agriculture can be divided into two part i.e. plan wise
problem and quality wise problem.
Limitation of the study:
Following are the limitation in the
preparation of this field work report:
a) This study does not cover overall
performance of the bank. It is concerned with only a single aspect of the bank
i.e. acceptance of deposits and money lending.
b) Due to insufficient data this study
covers the time span of six years from the fiscal year 2054/ 2055-2062/63.
c) The change government and direction of
NRB has been ignored.
d) Findings are based on observation and
some facts and figure.
e) In the study only a selected book &
techniques has been used.
f) Study is done on the basis of primary and
secondary data. Which are not free from limitations, itself?
g) The study is limited in its scope, since
only a little knowledge is acquired through a limited number of staff and
personnel.
h) The way of dealing seems to differ from
other banks in different accounts.
i) This study highlights only on financial
performance.
Research methodology
The main theme for this fieldwork report
is to allocate the collection of deposit in different account and the loan
disbursement .Moreover to specify how efficiently and effectively has the ADB
been performing its activities. So, research design, population and sampling
will help in fulfilling the major purpose of the study.
Research Design
The research design includes the
graphical presentation and increase and decrease trend aswell as growth rate of
fixed deposit, current deposit, saving deposit and loan provided to
agricultureal sectors of fiscal year are
2054/55-2062/63.
Populations and sampling
The population and sampling of the study
covers the ADB of biratnagar-14 of 6 fiscal years i.e.2054/55-2062/63.since it
is very difficult to analyse all the published financial data.
Method
of data collection
Primary data which are originally
collected by an investigator or an agent for the first time for the purpose of
statistical enquiry are known as primary data. The data is thus original in character.
These types of data are obtained in the survey and enquiries conducted government,
some individuals, institutions and search bodies. For example an investigator
wants to study the salaries of teachers working in the campuses. Then the data
collected for this purpose by the investigator himself or with the help of his
representative, are primary data. The method of collecting primary data is
direct personal interview indirect oral interview, information’s through
correspondents, mailed questionnaire method & schedules sent through
enumerators.
Secondary data which are originally collected
but obtained from some published or unpublished sources. This type of data is
not original in character. For examples: the reports and publications made by
central bureau of statistics are primary for that organization but secondary
for those who use it. Published sources of secondary data are the (a) reports
and official publications (b) semi official publications (c) private
publications. Unpublished sources of secondary data are the records maintained
by private form, business enterprises, various departments and offices of
government, hospital records, and research carried out by the individual
research scholar’s in the university or research institutes.
Part II
Presentation and Analysis of Data
Presentation of data.
No doubt, it is really a crucial task of
the bank or any organization to mobilize its financial resources. Accepting
deposits is one of the main stages of banking business. So, to use the
financial resources effectively & efficiently the available date is
analyzed & interpreted. As mentioned earlier ADB accepts three types of
deposits namely current, fixed and saving. The analysis & presentation of
each deposits, loan and net income of ADB are given below separately.
Analysis of Data
Source: final reports of bank and investigation
While analyzing the table, the result
shows that current deposit has been increased the year 2055/56 by growth rate
of 28.23% and the year 056/57 has been also increase by growth rate of 72.87%
but unfavorably it has been decreased by 3.75% in 057/58 year again in year
058/ 59 it has been decreased by 1.47%. 059/60 it has been increased by 1.47%.
The table shows that all growth rates have
been increasing pattern. Saving deposits has been increased in the year 2055/56 by growth rate 29.02%. In the year
2056/57 growth rate rises by 37.92%. But again next year fall’s by 30.30%. Similarly,
in year 2058/59 & 2059/ 60 growth rate is 7.32% & 8.01%.in 2060/61,
2061/62 & 2062/63 is falling by 9.2%, 0.31% & 5.61% respectively.
Comparing with all other year growth rate increased much more in the year
2056/57.
Figure No. 3
Showing the increase/ decrease & growth rate Of fixed deposits.
The above table shows that each year
loans are falling rapidly. Loans have been increased more in the year 2055/56
by growth rate 152.40. But unfavorable in the year 2062/63 the loan has been
decreased by the growth rate 3.93%.
According to the table, the net interest
income growth rate is 2.18% in the year 2055/56. In the year 2056/57 net
interest income was quite satisfactory, its growth rate increased by 43.67%.but
there is huge fall of income in the year 2057/58 by growth rate 7.15 it was
turned to negative income. Again in the year 2058/59 growth rate has been
increased by 29.66%. But in 2059/60 growth rate again decreased by 41.79%.
The above table reveals that total
deposit in year the 2055/56 big 27.43% growth rate in increasing pattern. In
the year 2056/57 it increases much more compare to other year, its growth rate
is 31.86%. Again in the year 2057/58 its growth rate has been 22.57%. Similarly
in the year 2058/59 its growth rate fall’s by 8.04%. in 2059/60 it growth rate
is 10.09%.similarly in the year 2060/61, 2061/62& 2062/63 it has been decreased by 6.94%,2.23%
&6.55% respectively.
Major finding
Agriculture development bank is a
developmental bank. This bank is established with an objective of developing
the country uplifting the life standard of the people living rural as well as
urban areas of our country. This bank provides short term, medium & ling
term loan to any person, & government organization village development
committee for agriculture development. This bank also provides loan for farmers
having mohiyani right to purchase the same land as per the ruled. Similarly,
this bank also makes necessary arrangement for providing fertilizers, tools
& equipment's, machine pumps insect ides &pesticides etc. to the farmers
needed for agriculture development. The bank also grant loan or invests capital
on agriculture product fringing cottage industry, industry producing the
equipment needed for agriculture development & establishing &running
cottage industry. Moreover it provides loan to the customers as well as provides
banking faculties to the local people in rural areas & motivates them to indulge in banking transactions.
To make the loan system effective
agriculture development bank has to expand small farmer project &to organize
small farmer in union so that their over all duty can be provided in village. To
provide loan & technical help in constructing small canals to irrigated
filed region by committee effect. To provide loan for cattle raring &for
fish farming in the districts where fish development project is implemented. Thus,
help in raising economic standard of farmers. And to collect more &more
saving of the people & deposits them & profit suitable rate of
interest. This encourages them to save more & more.
Summary, Conclusion
& recommendation
Summary
Nepal is an agriculture country, so more than 80% of the people of the country are engaged in the agricultural field. Most of the product of Nepal is obtained for the agriculture, so we say that Nepal has an agricultural based economy. In such way that the importance of ADB is most essential in the country, so, ADB is more or less contributing to the farmer’s by accepting deposit & granting loan to the required sectors in their needs. It accepts deposits in the three ways they are current, saving &fixed deposits. The collected deposits are utilizes in the form of loan to the farmers as well as the businessman .bank usually adopts different policy on the withdrawals of money to the depositors. Similarly different interest rates are entitled for different types of deposits. Here I have taken the data of the fiscal year i.e. 2054/55 to 2062/63. & shown the different deposits pattern in the charts & the graphs.
It has divided into three parts, introduction, presentation & analysis of data. Summary & Conclusion.
In
the first part it includes meaning of bank, history and it’s evolution of
banking sectors introduction of ADB, branch Biratnagar, deposits pattern &
lending pattern & area of study,
issues to be addressed/ questions to be answered, objective of study &
organization of study.
In the second part it includes
presentation of data, analysis of data & graphical presentation & major
finding of ADB.
In the third part it includes a brief
summary of the report major conclusion &advices or suggestions are made
accordingly.
Conclusions
The acceptance of deposit, money lending & the interest income of ADB Biratnagar is more or less satisfactory. current deposits shows the increase trend in year 2055/56 by 28.23%, 2056/57 by 72.87% ,2059/60 by 26.95% & 2060/61 by 2.70%,but it has been decreasing trend in year 2057/58, 2058/ 59, 2061/62 & 2062/63by 3.75%,1.47% 5.18% & 57.34% respectively.
Saving
deposit has been increased by 29.07% in the year 2055/56, in the year 2056/ 57
which is the highest collection. Whereas in the year 2062/63 the growth rate
has been decreased by 5.61%.
The fixed deposit in the year 2055/56 was
increased by 23.28%. In next year 2056/57 growth rate increased by 5.03%, &
in the year 2061/62 & 2062/62 it has been increased by 14.6%& 13.07%
respectively.
The loan was decreased from year to year.
In year 2055/56 it was increased by 152.40%, which is the highest collection. The
data of the report shows that the ADB is in profit more or less in all the
fiscal year.
Suggestions & Recommendation
Agriculture development bank has to take some positive and improve mental steps to correct the weaknesses present in it. Some suggestions are listed below in the above given regard which is as follows:
This bank takes minimum of 7-30 days in loan providing process and for farmer it would be very difficult to adjust the time in this long period. Moreover, many farmer are in the immediate need of loan, therefore, agriculture development bank has to take some steps for providing loan in simple and short way.
Interest rate should be less especially for the people living in rular areas.
This bank doesn’t provide loan to the farmer without any mortgage. This policy is not suitable for the poor farmers who have nothings for mortgaging .therefore; bank should adopt the policy of providing loan to the farmer without any mortgage.
Bank should provide training for developing particular skill for which it has provided loan.
An analysis of acceptance of deposit & money lending is done on its basis following recommendation can be made to tackle the problems.
a)
Modern
technology & requirement should be brought for results.
b)
Separate
departments should be there for efficient job.
c)
Bank
should give training & skills to its employees for better performances.
d) The
co-ordination between the staffs is not satisfactory & should be good
relation among the workers & banker’s people.
e) The
methods & technical equipment is also of old fashion & should utilize
the new technology such as computer & other technical devices for the
prompt services of the customers.
f) Bank
should encourage the people to deposit their money in various accounts by
introducing different schemes as of providing higher interest rate & other
banking services.
g) In order to compute in the market ADB branch should utilize their fund in the productive sectors.
