Machhapuchchhre Bank limited summer internship report

CUSTOMER SERVICE DEPARTMENT
OF
MACHHAPUCHCHHRE BANK LIMITED
A PROJECT REPORT ON
CUSTOMER SERVICE DEPARTMENT AT MBL,
Birjung, parsa(Nepal)
Submitted in partial fulfillment of
BACHELOROF BUSINESS ADMINISTRATION
University School of Business
CHANDIGARH UNIVERSITY, GHARUAN
Supervised by: Submitted by:
Prof. Kapil sharma Akash swarnakar
Chandigarh University 15BBA1308
BBA-5th
sem.

ACKNOWLEDGEMENT
No task is a single man’s effort. Various factors, situations and persons integrate together to form
a background for accomplishment of a task. The valuable cooperation and guidance, directly or
indirectly of various people has contributed a lot to the successful completion of the Project
undertaken.
I am thankful to Mr. LEELA RAJ THAPA Branch Manager, Machhapuchchhre Bank Ltd,
Birgunj branch, Nepal for providing me an immense opportunity to explore myself and relate all
my knowledge into the practical field of Banking and understanding the various intricacies
coming up in the daily working of any bank.
I am also thankful to all the other members of, Machhapuchchhre Bank Ltd, Birgunj branch for
their advice, guidance and unstinted support at Machhapuchchhre Bank Ltd. Without their help
and cooperation I could not have completed this project.
I am highly indebted to Prof. Kapil Sharma for his precious guidance, kind suggestion,
encouragement, untiring help and valuable time.
Most importantly it was the blessing of my Parents and other family members and friends which
kept me encouraging throughout the Project.
Though every effort has been made to minimize the faults and errors but in case of any
discrepancies or fault, the sole responsibility is mine.
Yours Sincerely,
Akash swarnakar
15BBA1308
(BBA 5th sem)

Declaration
I Akash swarnakar, UID No.15BBA1308, student of BBA 5C(3rd year) under University School
of Business, Chandigarh University, Gharuan, Punjab, hereby declare that the project report
being submitted here with is an authentic work undertaken by me and no part of this report has
been coBard from any other material, either published or unpublished.
Akash swarnakar
BBA 5th sem

Table of contents
Chapter 1
Introduction
1.1 Introduction of banking system
1.2 Executive summary
1.3 Introduction to Machhapuchchhre bank limited
1.4 Mission and vision of MBL
1.5 Objectives of the study
1.6 Board of directors
1.7 Achievements and results
1.8 Product & services
1.19 Risk management in bank
1.10 Classification of risks
1.11 Customer service department overview
Chapter – 2
Literature Review
2.1 Introduction
2.2 SWOT analysis
Chapter-3
ResearchMethodology
3.1 Placement
3.2 Duration

3.3 Activities
3.4 Sample size and methods of selecting sample
Chapter-4
Analysis and Interpretation
4.1 Interpretation and result of questionnaire
Chapter-5
Findings & recommendations
5.1 Finding
5.2 Recommendations
5.3 Implications of the study
5.4 Limitations of the study:
5.5 Conclusion
Bibliography
Questionnaire
Abbreviation

1.1 INTRODUCTION OF BANKING SYSTEM
Banking industry is one of the most important sectors of an economy. It mobilizes the
resources of finance. Banks assist the organization from production level to the customer service
level. It also assists in developing the infrastructure as well as other financial activities of the
government owned corporations.
The history of banking in Nepal is believed to be started from the time of Prime Minister
Ranoddip Singh in 1877 A.D. He introduced many financial and economic reforms. The
Tejaratha Adda was established at that time and its basic purpose was to provide credit facilities
to the general public at a very concessional interest rate. The Tejarath Adda disbursed credit to
the people on the basis of collateral of gold and silver. All employees of government were also
eligible for this type of loan, which was settled by deducting from their salary. Tejaratha Adda
extended credit only; it did not accept deposits from the public.
But the real banking started with the establishment of Nepal bank limited in 1937 A.D which
was founded by Judda Samsher. It was the first bank of Nepal. Its main function was to provide
loans and accept deposits. Later Nepal Rastra Bank was established as a central bank in 1956
under Nepal Rastra Bank Act, 1955. The bank was completely government ownership bank. In
1966, another commercial bank fully owned by the government named “Rastriya Banijya Bank”
was established under the Commercial Bank Act. 1964. Later with the purpose of enhancing
agriculture, “Agricultural Development Bank” was established under ADB act. 1967. This bank
provides the banking service in some urban areas of Nepal as that of the commercial banks.
Financial sector of Nepal is small but growing substantially. Financial system of the nation
constitutes two broad sectors viz., Banking sector and Non Banking Sector. Banking Sector of
Nepal includes Central Bank (NRB), 31 ‘A’ class Commercial banks, 87 ‘B’ class Development
banks and more than 79 ‘C’ class finance companies, almost 2 contractual saving institutions,
postal saving offices and Nepal Stock Exchange Limited (NEPSE). Besides, some other
institutions are also providing the financial services to the people. Commercial banks in Nepal
constitute the largest share of total banking system. Commercial banks are registered under
company act 2053 B.S. and commercial bank act 2031 B.S. after obtaining permission from the
NRB for financial operations.
1.1.1 NEPALRASTRABANK
The Nepal Rastra Bank (NRB), established in 1956, is the central bank of Nepal. It has
seven offices, located at Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj,
and Dhangadhi.
It supervises the commercial banks in Nepal and guides monetary policy. Nepal Rastra Bank also
oversees foreign exchange rates and the country's foreign exchange reserves. The bank is one of
the principal owners of the Nepal Stock Exchange.
It is a member of the Asian Clearing Union. The Bank is engaged in the promotion of financial
inclusion and is also a member of the Alliance for Financial Inclusion. Nepal Rastra Bank, the
Central Bank of Nepal, was established in 1956 under the Nepal Rastra Bank Act, 1955, to

discharge the central banking responsibilities including guiding the development of the
embryonic domestic financial sector. Since inception, there has been a significant growth in both
the number and the activities of the domestic financial institutions.
To reflect this dynamic environment, the functions and objectives of the Bank have been recast
by the new NRB Act of 2002, the preamble of which lays down the primary functions of the
Bank as:
 To formulate necessary monetary and foreign exchange policies to maintain the stability
in price and consolidate the balance of payments for sustainable development of the
economy of Nepal.
 To develop a secure, healthy and efficient system of payments.
 To make appropriate supervision of the banking and financial system in order to maintain
its stability and foster its healthy development.
 To further enhance the public confidence in Nepal's entire banking and financial system.
 To promote entire banking and financial system of the kingdom of Nepal system.
The Bank is eminently aware that, for the achievement of the above objectives in the present
dynamic environment, sustained progress and continued reform of the financial sector is of
utmost importance. Continuously aware of this great responsibility, NRB is seriously pursuing
various policies, strategies and actions, all of which are conveyed in the annual report on
monetary policy.
1.1.2 ClassificationsofBanks
When a single bank performs multiple tasks, the efficiency and the effectiveness of work
becomes weak. Hence different banks are established for different purposes. Basically, the banks
have been categorized in various types in accordance with the bank’s ultimate purpose,
customer’s demands and choices, and overall economic development of nation. Broadly, the
banks can be classified into following types:
 Central Bank
 Commercial Bank
 Industrial Bank
 Agricultural Development Bank
 Rural Development Bank
 Saving Bank
 Exchange Bank
1.1.3Present Scenario of Nepalese Financial Institution
Financial institutions are the organization that channelizes the savings of government,
businesses and individual into loans and investment. Nepal’s financial system is composed of
depository and non-depository institutions. Depository institutions are the banking institution

that accepts deposits of the public and provide loan to them whereas non-depository institutions
are the financial intermediary who does not accept the deposit directly from the customers. They
are investment banks, insurance companies, pension funds, etc.
Liberalization in opening of banking and financial institution led to mushrooming of banking &
financial institutions in Nepal. Along with commercial bank, the government allowed to open
development banks, finance companies with the objective to increase people's access to financial
institution. Since then 43 financial institutions have merged so far and more are in the process of
merging.
Bank and financial institution established and licensed without long term planning has started to
fold back after the World Bank and IMF guided the Nepal Rastra Bank to reduce the numbers of
financial institution. They suggested making few but stronger institutions than many weak
institutions. Nepal Rastra Bank developed policies and guided banks and financial institutions to
strengthen their position. Nepal Rastra Bank has asked the banks and financial institutions with
the same promoters to merge.The policy adopted by the Nepal Rastra Bank has started to pay
back with the increase in the numbers of bank and financial institution for merger.
1.2 EXECUTIVE SUMMARY
Banks are among the most important financial institutions in the economy and essential
business in thousands of local towns and cities. The primary business of bank is accepting
deposits and lending money. Banks accept deposits from customers who want the safety and
convenience of deposit services and the opportunity to earn interest on their excess funds. Banks
put their depositor’s fund to other individuals or institutions that need to finance major
purchases, educational expenses or medical bills, new construction and so on.
Machhapuchchhre Bank limited registered in 1998 as the first regional commercial bank from
the western region of Nepal. The “A” class commercial bank started its banking operations from
its own head office located in the foot hills of Machhapuchchhre mountain peak in picturesque
town of Pokhara since year 2000.
The bank facilitates its customer needs by delivering the best of services in combination with the
latest state of the art technologies and prudent international practices. The Bank is the pioneer in
introducing the latest technology in the banking industry in the country. It is the first bank to
introduce centralized banking software, GLOBUS BANKING SYSTEM of Temenos NV,
Switzerland. The bank has been promoted by highly renowned Non –Residential Nepalese,
prominent businessman and industrialist with a vision and dedication to provide the best
financial products and services in the most efficient and professional manner.
This project has been conducted in Machhapuchchhre Bank Ltd., Birgunj, Nepal which deals
with various loans, remittances, letter of credit, etc. The project entitled “Customer Service
Department at MBL.” The service of MACHHAPUCHCHHRE BANK LTD has undergone
changes to cope with the environmental changes, tap the available opportunities, achieve their
commercial objective, fulfill social obligations and adhere to mandatory directed lending norms
over the years. The CRA models adopted by the bank take into account all possible factors which
go into appraising the risk associated with a loan. The vital decision to deploy the Bank’s

resources should necessarily be based upon the assessment and evaluation of the needs of the
borrower.
As we know that finding is not the end of a research, so the suggestion part is covered which are
made after a depth study. After analyzing the proposal and Customer Service Department
process, I have rationalized my observation and tried to provide practical and feasible
suggestions that may help them to improve upon their present practices.
1.3 Introduction To Machhapuchchhre Bank limited
Machhapuchchhre Bank limited registered in 1998 as the first regional commercial bank from
the western region of Nepal. The “A” class commercial bank started its banking operations from
its own head office located in the foot hills of Machhapuchchhre mountain peak in picturesque
town of Pokhara since year 2000….
The bank facilitates its customer needs by delivering the best of services in combination with the
latest state of the art technologies and prudent international practices. The Bank is the pioneer in
introducing the latest technology in the banking industry in the country. It is the first bank to
introduce centralized banking software, GLOBUS BANKING SYSTEM of Temenos
NV,Switzerland.
The bank has been promoted by highly renowned Non –Residential Nepalese, prominent
businessman and industrialist with a vision and dedication to provide the best financial products
and services in the most efficient and professional manner.
Machhapuchchhre bank ltd has 56 Branch offices 1 extension counter and 71 ATMs Spread all
across the country, it is one of the full fledged national level commercial bank operating in
Nepal. It takes pride in having its own building for its corporate office in lazimpat, head office in
Naya bazar,Pokhara,and Branch offices in Jomsom,Baglung and Damauli.
LOGO OF MACHHAPUCHCHHRE BANK LIMITED
1.4 MISSION AND VISION OF MBL

Vision
“To become one of the most respectable banks in
Nepal based on honorable conduct and long term financial
performance”
Mission
“To become a leading Bank in Nepal by providing
complete financial solution to our customers, superior value to
our shareholders and promising growth opportunities to our
employees.”
1.5 Objectives of the Study
The key elements of our overall strategic goal are to build an open and honest corporate culture
and to engage actively on mutual beneficial relationship with all our stakeholders to create value
for them. We aim to achieve our strategic goal by achieving following objectives:
 To study about customers’ evolving needs and expectations.
 To study exemplary governance and accountability.
 To study the harmony and the mutual satisfaction of business partners.
 To study about returns on the investment of our owners.
 To study the different product and services offered by Machhapuchchhre Bank Limited.
 To study the consumer’s perception towards private banking and their expectations from
private banks.
 To analyze the feedback on product and services offered by Machhapuchchhre Bank
Limited.
 To study how to explore new avenues for growth and profitability.

1.6 Boardof directors
Chairman- Mr. Roshan K.C.
CEO- Mr. Niraj kumar shrestha
Directors
Dr. Birendra Prasad Mahato
Mr. Bishwo Prakash Gautam
Mr. Omesh Lal Shrestha
Mr. Prakash K.C.
Mr. Gyan Prasad Karmacharya,
Mr. Ram Man Shrestha
Mr. Gopikrishna Neupane
Mr. Jaya Mukunda Khanal

1.7 Achievements and Results (highlights of the year 2015/16) NPR CRORE
PARTICULAR JULY 2016 JULY 2015 Change (%)
Paid Up Capital 386.45 277.62 39.20
Net Worth 534.02 381.61 39.94
Deposit 5,229.19 4,420.56 18.29
Investment 601.09 447.91 34.20
Loan and Advances 4,423.42 3,481.95 27.04
Interest Income 349.53 310.93 12.42
Interest expenses 163.80 175.33 (6.58)
Net Interest Income 185.73 135.59 36.98
other Income 43.41 35.02 23.97
Staff expenses 47.01 34.96 34.45
operating expenses 42.59 41.21 3.33
operating Income 125.86 74.76 68.35
Net Profit after Tax 89.82 61.64 45.73
Loan Loss Provision 3.99 7.00 43.00)
Non-Performing Loan(%) 0.55 0.64 14.06
Total assets 5,945.55 4,875.35 21.95
Capital adequacy (%) 12.36 12.24 0.92
Book Value per Share 138.18 137.46 0.53
Market Value Per Share (Rs) 680.00 564.00 20.57
No. of Branches 56.00 56.00 ….
No. of ATMs 72.00 70.00 2.86
No. of Employees 663.00 597.00 11.06

I. Capital and Reserves
With a total core capital at NPR 3.24 billion, which includes paid up capital of NPR. 2.77 billion,
the Bank has been able to maintain the capital adequacy ratio at 10.63% at the financial year end
against the statutory requirement of 10% set by Nepal Rastra Bank, the central bank of Nepal.
II. Liquidity Management
Liquidity management plays a vital role in the financial sector. The Bank has an effective ALCO
which constantly monitors the market, and periodically makes gap analysis, reviews the interest
rates, etc., and ensures that the Bank is in a position to face any unforeseen events that may occur in
the highly volatile environment.
III. Profit & Loss Appropriation
The net profit of the Bank amounted to NPR 454.7 million for the last Fiscal Year 2013/14, out
of which, 20%, i.e. NPR 90.90 million, has been appropriated to the Statutory General Reserve
Fund, 12% for issuing bonus shares and 0.63% for cash dividends.
IV. Remittance Services
The Bank has been putting a lot of efforts on channeling of remittance from different parts of the
world to Nepal. Accordingly, we have forged a good relationship with both domestic and foreign
counter parties. With a view to cater to the changing needs of the customers, the Bank has
launched its own remittance product and started with the domestic remittance business under the
name of MBL REMIT. MBL REMIT is an online, real-time remittance processing system that
can be accessed through the Internet and is offered as an application service.
V. Technology
Technology plays a vital role for the enhancement of the quality of service and provide value
added banking products and services. Up gradation of IT related services is a must to thrive in a
highly competitive industry such as banking. Accordingly, the Globus Banking Software, in use
in the Bank, was upgraded to R12 version last year, and further improvement has been observed
in its efficiency and reliability. With its M3 service, the Bank has been helping its customers for
different utility payments like Nepal Telecom Postpaid Mobile Bill Payment Nepal Telecom
prepaid recharge PIN purchase, CDMA re-charge PIN purchase, NTC landline bill payment, and
other Merchant Payments.
VI. Human Resources
The Bank is committed to the career growth of staffs in the days ahead as well. Various training,
both in house as well as external, were offered to a large number of staff last year. In addition,
job rotation, both in terms of functions and geography, has been practiced which will make the
staff more well rounded. Salary was revised last year as well.

1.8 Product & Services
1.8.1 DEPOSITS
I. Saving Deposits
Machhapuchchhre Bank Limited offers Normal Saving Account (NPR) that can be opened with
zero balance. Customers can benefit from MBL saving deposit account in the following
ways:
 Free Sms Banking
 Any Branch Banking System available
 Free Cheque Book
 VISA Debit Card Facility availability
II. Pewa Bachat khata
Pewa Bachat Khata, a personal saving account meant for the women who want to save their hard
earned money, has the following features.
Features:
 Only females can open this account.
 Account can be opened with NPR 100/-
 This account can be opened in the joint name of minor as well. (Minor can be son or
daughter)
 Facilities of Internet Banking, SMS Banking and Others Available.
 Account can be opened in Local currency only If the monthly average account balance is
more than NPR 15,000/-, 50% discount will be provided in Locker Charge.
III. Yuba Bachat Khata
Yuba Bachat Khata, a saving account scheme meant for the youths, has the following
features:
Features:
 Youth of age between 16 and 40 years can open the account. (Account can be opened
with NPR 100/-)
 Account can be opened in the joint names as well.
 Interest calculated on daily balance and credited to the account quarterly.
 Free ABBS (Any Branch Banking System) facility provided.
 SMS Banking is provided free of charge.
IV. Samman Bachat khata
This savings account is meant for senior citizens above 50 years of age.
Features:
 This is a Personal Saving Account.
 Account can be opened with a minimum balance of NPR 100/-

 This account may be opened in the joint names of immediate family members whose age
is more than 50 years.
 Account can be opened in Local currency only.
 Free SMS Facility
 Free Internet Banking Facility.
 50% waiver on annual charge of Locker Facility
V. Bal Balika Bachat Khata
Balbalika Bachat Khata is a deposit product meant for the children of 15 years of age and
below. The account is to be opened by their guardians. It is designed to encourage a saving habit
amongst parents so they can have significant amount of funds in due course to support their
children’s education, etc.
Features:
 This is a personal savings account opened on behalf of children of up to 15 years of age
by their parents/guardians.
 The Account may be opened with a minimum balance of NPR 100.00
 This account can be opened in local currency only.
 Free Internet banking and SMS services.
 The account to be changed into a regular account after the completion of 15 years of the
account holder.
VI. Shareholders Account
The Bank offers this account to all the MBL shareholders with the following features:
 Account can be opened with a minimum balance of 'Zero'.
 Free ATM/Debit Card facility at the time of issuance.
 Free Any Branch Banking Service (ABBS) facility.
 Free internet Banking
 Free SMS banking
 50% discount on annual charge of locker facility.
VII. Normal Saving Account
Normal saving account is meant for those individuals who have a habit of saving from their
earnings so that they can use it whenever they require. Based on the nature of this product and
features associated with it, we have been successful in collecting sizable amounts of deposits as
well as to attract a large number of depositors.
Features:
 Account may be opened with “Zero Balance”.
 Free SMS banking.
 Free internet banking.
 Any Branch Banking Services (ABBS) facility.
 Free cheque book.
 Visa Debit Card facility.

VIII. Remittance Bachat khata
The Bank has introduced this new product to meet the needs of both the reciBarnts and
remitters of funds from foreign employment.
Features:
 The account is opened in the name of beneficiary of the remittance.
 Minimum Balance: Zero
 Accidental Death Insurance: Coverage of NPR100,000.00 for accounts maintaining
minimum NPR. 1,000.00
 Free SMS Banking/ i-banking
 Free ABBS / Cheque / Statement Facility
 ATM Card facility.
IX. Current Account
Current accounts can be opened in the names of Individuals (singly or jointly),
proprietary firms, partnership firms, companies, corporations, trusts, government agencies and
other organizations.
Features:
 There is no restriction for number and amount of transactions.
 Free ABBS facility
 Withdrawal through cheques.
 Automatic funds transfer to and from call deposit account as per arrangement.
 Collection of cheques, drafts, bills, etc.
 Standing instructions of the customers are accepted.
 Facility of internet banking services.
 Can be opened both in local currency and designated foreign currencies.
 Loan and overdraft facilities are granted through current accounts.
1.8.2 LOANS AND ADVANCES
I. Corporate and business loans:
The bank offers loan to large corporate and institutional customers including public sector
entities and service them with offerings ranging from loans to meet operational funding
requirements to service related to strategic expansions, syndications, project finance etc.
II. Convenient loan:
This is tailor-made loan product devised with special focus on the needs of Small and Medium
Sized Enterprises to meet their financing need in a very convenient manner.
III. Education Loan

Reliable financial solutions for the higher studies in Nepal and aboard in purpose of Financing
education cost.
IV. Hire Purchase Loan
The Bank offers hire Purchase Loan for brand new vehicles. The financing is up to 80% of the
vehicle price at attractive interest rate repayable within 7 years in equated monthly installment.
V. MBL Easy Home Loan & Car loan
The Bank launched special offers for the purchase of residential lands and buildings and private
vehicles. With these offers, it has become Leasier for the prospective customers to own a car or a
home. The increase in home and car loan customers has become an advantage to solicit other
additional business including referrals to their friends and relatives
VI. Project Financing
All the financial resources and technical expertise required for effective project financing are
available at the Bank. Projects may be in the field of infrastructure, such as, hydropower and
other renewable energy or other sectors, such as, various industrial / hospitality projects. The
Bank acts either as a lead bank or a participating bank in the consortium of banks formed to
finance a project.
1.8.3 Bank Guarantees:
A guarantee issued by a lending institution ensuring that the liabilities of a debtor will be
met. In other words, if the debtor fails to settle a debt, the bank will cover it. A promise made by
a bank to provide payment to another bank or lender on a bond, loan, or other liability in the
event of default. Banks often make guarantees on behalf of certain clients to promise payment on
loans. Bank guarantees reduce the risk to loans and liabilities and usually improve the credit
agency ratings of bonds. The parties to the bank guarantees are:
I. Applicant: The principal debtor – person at whose request the guarantee is executed
II. Beneficiary: Person to whom the guarantee is given & who can enforce it in case of
default.
III. Guarantee: The person who undertakes to discharge the obligations of the applicant in
case of his default.
Thus, guarantee is a collateral contract, consequential to a main contract between the applicant &
the beneficiary.
1.8.4Purpose of Bank Guarantees
Bank Guarantees are used to for both preventive & remedial purposes. The guarantees executed
by banks comprise both performance guarantees & financial guarantees. The guarantees are
structured according to the terms of agreement, viz., security, maturity & purpose.

Branches may issue guarantees generally for the following purposes:
a) In lieu of security deposit/earnest money deposit for participating in tenders;
b) Mobilization advance or advance money before commencement of the project by the
contractor & for money to be received in various stages like plant layout,
design/drawings in project finance;
c) In respect of raw materials supplies or for advances by the buyers;
d) In respect of due performance of specific contracts by the borrowers & for obtaining full
payment of the bills;
e) Performance guarantee for warranty period on completion of contract which would
enable the suppliers to realize the proceeds without waiting for warranty period to be
over;
f) To allow units to draw funds from time to time from the concerned indenters against part
execution of contracts, etc.
g) Bid bonds on behalf of exporters
h) Export performance guarantees on behalf of exporters favoring the Customs Department.
1.9 Risk Management in bank
INTRODUCTION:
Risk Management is a discipline at the core of every bank and encompasses all
activities that affect its risk profile. It involves identification, measurement, monitoring and
controlling risks. The goal of credit risk management is to maximize a bank’s risk-adjusted rate
of return by maintaining credit risk exposure 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 credit risk is a critical component of a comprehensive approach to
risk management and essential to the long-term success of any banking organization.
Risk management is the strategic tool, which helps in identifying, qualifying, monitoring and
controlling risks. Risk management protects an organization from dying due to insolvency
resulting from the adverse effects of risk. Though universally relevant it is of immense
importance to a banking organization or financial institution.
The economic scenario has undergone considerable changes as compared that a few decades ago.
Some of the changes that we have been witnessed are deregulation of the banking industry,
development of financial markets, transition into floating rate of exchanges, increasing roles of
capital markets and global competition, etc. In the past the banking institution functioned in a
regulated environment thereby limiting to various types of risks. However, today that legacy no
more exists. A banking organization has to constantly strike a balance between risk and reward.
A proposal, which may seem very rewarding in the short term, may wipe out the bank
completely in the long run due to high risk embedded in it. Risk management helps the bank in
striking this balance. Thus risk management systems are not a solution, but a tool to aid decision
making.

Risk management practices considered suitable for one bank may be unsatisfactory for another.
Because of the vast diversity in risk that banks take, there is no single prescribed risk
management system that works for all. Moreover, in the context of a particular bank, the
definition of a sound or adequate risk management system is ever changing, as new technology
accommodates innovation and better information and as market efficiency grows. Each bank
should tailor its risk management program to its needs and circumstances. To remain
competitive, banks must adapt and constantly improve their process. A sound risk management
system should have the following elements:
 Active board and senior management oversight
 Adequate policies, procedures and limits
 Adequate risk measurement, monitoring and management information system; and
 Comprehensive internal controls.
It should not be understood that risk management is only limited to the individual(s), who are
responsible for overall risk management function. Business lines are equally responsible for the
risks they are taking. Because the line personnel can understand the risks of their activities and
any lack of accountability on their part may hinder the sound and effective risk management.
1.10 CLASSIFICATION OF RISKS:
Banks are always faced with different types of risks. Risk normally has two dimensions i.e. the
quality of risk and the quantity of risk. Quality of risk is essentially the probability of the risk
turning into an actual loss. Quantity of risk is the financial effect of the risk turning into loss.
Both these dimensions are extremely difficult to measure, primarily because it is an estimation of
the future, which is highly uncertain.
Bankers are concerned with six main types of risk. These are credit risk, liquidity risk, market
risk, interest rate risk, earnings risk and solvency risk that can be grouped as credit risk, market
risk and operational risk. Furthermore, currency risk, country risk and cross-border risk should
be considered when international lending is the subject matter. Among these risks credit risk
plays the major role since by far the largest asset item is loans, which generally account for half
to almost three-quarters of the total value of all bank assets. The probability that some of a
bank’s assets, especially its loans, will decline in value and perhaps become worthless is known
as credit risk
To understand Risk Management, it is extremely important to understand the various types of
risks, their characteristics and their interrelationships.
I. CREDIT RISK
A bank always faces the risk that some of its borrowers may renege on timely repayments of
loan, interest on loan or meet the other terms of contract. This risk is called credit risk, which
varies from borrower to borrower depending on their credit quality. Basel–II requires banks to
accurately measure credit risk to hold sufficient capital to cover it. Credit Risk is the most
fundamental risk faced by a banking company. Credit Risk is the risk of default by a borrower of
funds or decline in the credit standing of a borrower. It is the most difficult to quantify due to the

large amount of subjectivity involved in it. Thus credit risk management can assist in decision
making; it cannot be a substitute to the judgmental decision of a credit officer. Traditionally
credit risk has been managed by setting up limits to the global exposure, industry exposure,
country exposure and individual client/group exposure. Credit Risk
Management is extremely important as the pricing of a portfolio or a transaction is dependent on
the risk factor built in it. However, sometimes a bank may only be an adopter of the prevailing
market rate of interest.
II. MARKET RISK
Investment is risky because of the change in their prices due to market forces. This volatility in
the value of a bank's investment portfolio is known as the market risk, as it is driven by the
market forces. The change in the value of the portfolio can be due to changes in interest rate,
fluctuation in exchange rate or the changes in the values of equity or commodities.
It is a risk of loss due to adverse movements in the market rates during the compulsory holding
period having an impact on the portfolio held by the bank. Compulsorily holding period denotes
the duration during which instrument cannot be sold by an organization. This is normally the
time period, which is required in taking delivery of the instrument. Any adverse movements
beyond the compulsory holding period are due to the judgmental error and therefore should be
analyzed differently. Market risk is also important in constantly determining the true worth of a
collateral security provided by the borrower. Foreign exchange risk is often regarded as a part of
the market risk, but may be bifurcated for facilitating better analysis.
III. OPERATIONAL RISK
Several events that are neither due to default by third party nor because of the volatility of the
market mechanism are called operational risks and can be attributed to internal systems,
processes, people and external factors. It is the risk faced by an organization, arising due to
malfunctioning of internal systems, wrong entering of transaction details, wrong interpretation
and judgmental errors made by manpower. Operational risk is difficult to quantify and monitor.
However certain critical operations or systems have to be identified, the failure of which would
raise survival issues for the company. Close and constant monitoring of these systems is an
essential part of operational risk management.
IV. INTEREST RATE RISK
It is the risk of loss of revenue or increase or decrease in cost due to adverse movements in the
market interest rates. Risk due to a client exercising its option of pre-payment of a loan due to
lower interest rates is known as the optional interest rate risks. Most of the balance sheet items
generate revenue or incur costs, which are benched against one or the other interest rate. This has
become more significant with the emergence of floating interest rate instruments. The immediate
impact of change in interest rate is on bank’s earnings by changing net interest income. A long
term impact of changing interest rate is on bank’s market value of equity or net worth as the
economic value of bank’s assets, liabilities and off balance sheet items affected due to variation
in market interest rate. The interest rate risk when viewed from these two perspectives is known
as “Earning Perspective” and “Economic value Perspectives” respectively.

V. LIQUIDITY RISK
The bank always borrows short-term and lends long term. Due to this nature of banking activities
it is vulnerable to an asset-liability mismatch thereby resulting into an inability in meeting its
commitments. Liquidity risk is essentially a result of adverse movements of other risks i.e. Credit
risk, interest risk, foreign exchange risk. Small information in the market about the liquidity
problems faced by a bank may result into withdrawal of enormous deposits, thereby aggravating
the problem. Liquidity risk also includes rising of funds at an abnormal cost to meet its
commitments.
1.11 CUSTOMER SERVICE DEPARTMENT OVERVIEW
INTRODUCTION
A customer service representative interacts with a company’s customers to provide them with
information to address inquiries regarding products and services. In addition, they deal with and
help resolve any customer complaints. For instance, a customer representative may assist you in
opening an account or help you to resolve a problem if you cannot access your account or if your
order never arrived. Usually, customer service representatives gather their information via a
telephone call.
Answer participant questions, as well as question participants to obtain full understanding of
what information is being requested.
 Analyze customer needs and demand and try to fulfill those demands.
 Deliver qualitative services to customers.
 Promote bank products and services.
 Build customer relationships.
 Maintain and manage existing accounts.
 Capture new accounts.
 Respond to customer inquiries and resolve.
 Maintain customer database and update periodically.
 Assist customers in depositing and withdrawing cash.
 Refer complex issues to the management.
 Ensure best practices in rendering services to customers.
 Appraisal and assessment of credit, including selection of clients
I. “KNOW YOUR CUSTOMER” NORMS
The bank shall follow the “Know Your Customer” (KYC) norms specified by the Nepal Rastra
Bank and KYC guidelines of the Bank itself.
The following general guidelines shall be kept in mind.

 Where it is a new connection for the bank, the identification of the borrower or the
beneficial owners in case of corporate and firms shall be ascertained with the help of
citizenship certificate, names of father and grandfather and in case of foreign nationals,
passport or other photo identification documents or registration certificate from the
concerned Embassy. The latest two passport size photographs of the individuals and
directors operating the account should also be obtained.
 In case of companies /firms, certificate of registration from the office of the company
registrar / concerned department/ office as well from tax office should be obtained.
 The list of terrorist / banned organizations circulated by the regulators from time to time
should be checked and the bank shall not deal with such organizations.
 Duly filled up KYC form containing details of the applicant’s existing banks, details of
family members, etc shall be obtained.
II. CREDIT EXPOSURE LEVELS
 The present NRB Guidelines stipulate that the Single Obligor Limit (SOL) to a borrower
or group of connected borrowers shall not exceed 25% of the core capital of the bank for
aggregate exposures (fund based plus non fund –based).
 The bank’s exposure to a single product (e.g. cement, steel, etc.) shall not exceed 10% of
the bank’s total credit portfolio of the last financial year end.
 Term loan in aggregate including project term loans and retail term loans shall not exceed
40% of the total loans and advances of the bank as at the end of last financial year.
 Aggregate retail lending including revolving types as well as Term Loan types shall not
exceed 40% of the total loans and advances of the bank as at the end of the financial year.
 The aggregate fund based exposures to borrowers against personal guarantee alone as
collateral shall not normally exceed Rs. 5 crores.
 Fund based exposures exceeding 50% of the SOL and non fund based exposures
exceeding 75% of the SOL of the bank to a single unit/ group shall be considered as
substantial exposure.
 The aggregate of substantial fund based exposure shall not exceed 75% of the total fund
based commercial advances outstanding (excluding retail lending) and substantial non
funded exposures shall not exceed 75% of the total letters of credit and bank guarantees
outstanding.

2.1 INTRODUCTION
Many researchers have conducted their research in the field of commercial bank and its
impact on economic growth of Nepal. Besides this, there are some books, articles, journals and
other relevant study concerned with the aspects of financial institution which will be taken as the
literature review for the study. Some of the relevant studies, their objectives, findings and
conclusions and other literature relating to the topic will also be reviewed in this study. Financial
institution play very important and significant role in the economic growth of Nepal. There is no
suspicion that the banking sector is important for both developed and developing economies.
Developed economies already have a highly sophisticated financial market in place whereas
developing economies have no or only undeveloped institutions in place. To offer a detailed and
realistic study 9 of Nepalese banking and institutions as rural and the urban areas over the recent
decades;
 Review of a literature concerning growth theory, economic growth and commercial banks in
Nepalese economy.
 To investigate the contribution of commercial banks and to the economic growth using the
whole country is one and tries to analyze the rural and urban areas economic condition is
another.
Dhungana (2011), in his article “Impact of Bank‟s deposit in economic growth of Nepal” has
examines the bank‟s deposit and its impact on economic growth of Nepal over the period of
1990 to 2010 AD. The study was focused on the study the impact of commercial bank on
economic growth of Nepal. Trend analysis has been done to reach to the conclusion. From the
trend analysis in this article he has found that higher the deposit of the financial institutions,
higher the level of GDP and economic growth of the nation. Similarly, higher level of the deposit
of commercial banks has been contributing for the enhancement of nominal GDP and economic
growth of the nation
Bhandari (2011) conducted a survey on the topic “A study of the financial system and economic
growth: the expert‟s view”. In his study his objectives is to describe the expert‟s view regarding
the relationship between financial system and economic growth in the Nepal and tries to makes
significant contribution in area of financial sectors. The study was based on empirical analysis
using questionnaire survey collection from various experts of different fields. The survey has
identified a number of important factors that determinants of economic growth of the Nepal. The
relationship between financial structure and economic growth determinants are consistent but it
has highlights the increasing influence of political and institutional factors. Another finding 10
was that the legal environment of Nepal. Last findings was that Nepalese financial systems
efforts to promote economic growth.
Pokharel (2009) has carried a research on “A Short Review on Financial Institutions in
Economic Growth of Nepal”. Pokharel in his research his objective of the research is to

investigate the contribution of commercial banks to the economic growth of Nepal. Another
objective is to analyze the capital, GRDP (GDP ratio), Population and employer expenditure in
commercial banks. In his study he has used production function model and analysed the data
with multi – vitiate regression analysis. Major findings of the study he has found that, in the
context of Nepalese economy, there are enormous differences between the urban and the rural
sides which are seen as the regional and the rural economy. At the urban region, huge quantity of
finance is focused into the industrial sectors where the people are also of upper class grade
whose income is higher than general average income level of the country. Total capital is
doubling and the population is also increasing in which population is effected by banking and
financial institutions in affected areas. The review of the analysis indicates that the GRDP is
crucial for the enhancement of per capita income and economic development of the country.
Sapkota, Aryal, Khatri (2008), has carried a work on “Financial institution and economic
growth: The case of Nepal”. The objective of the study is to investigate the contribution of
financial institutions to the economic growth using Deposit/GDP ratio, etc., in a developing
country setting in Nepal; and to study the development of the commercial banks in Nepal in
recent decades. In this study they have done correlation 11 analysis of financial ratio of the
commercial banks. Based on the correlation analysis they have concluded that the ratio of
deposit to GDP is found to be significant at 6.5% level to the growth rate of the GDP per capita.
The correlation shows that these two variables are highly correlated with the coefficient equals to
0.49. It has conclude that the saving rate in a country is crucial to the economic development
(GDP per capita), especially for developing countries.
Shrestha (2005) had conducted a work on “Financial liberalization in Nepal”. The main
objective of this study was to evaluate the impact of the various liberalisation measures on
financial system and economic growth of Nepal. To examine the rationale of executing financial
liberalisation policy. And to prepare an account of the evolution, process and sequencing of the
financial liberalisation in Nepal. The methods used in this study to analyse the data is used of
econometric models. The models used in this study are co-integration and ARDL models to
reach to the definite conclusion. Based on the study he reached to the conclusion that the number
of per capita bank branches is significantly associated with the widening of the financial sector,
and that the financial widening affects financial development.
The policy implication of the findings is that the government should encourage the branch
extension of banks in order to speed up the financial development in the country. Another
finding of this study is that the real deposit rate is the key determinant of the time deposits
whereas income is not. Overall the result shows that the financial liberalization in Nepal has
bought some positive impact on financial development and economic growth, but some negative
impact on the redistribution and financial stability aspects.
BAFIA (2063 B.S.) "A commercial bank refers to such types of bank which deal in money
exchange, accepting deposits, advancing loan and commercial transaction except specific
banking related to cooperative, agriculture and industry and other objectives."

As per oxford dictionary, “A bank is establishment for custody of money which is pays out on
customers order."
Crowther (2058 B.S.) "A bank collects money from those who have it to spare or who are
saving it out of their income, and it lends this money those who required it."
Kenley(2050 B.S.) "A bank is an establishment which makes to individuals such advances of
money as may be required and safely made, and to which individuals entrust money when not
required for them to use."
In short, the term bank in modern time refers to an institution having following features:
 It deals with money; it accepts deposits loans.
 It also deals with credits; it has the ability to create credits i.e. the ability to expand
its liabilities as a multiple of its reserves.
 It is a commercial institute, it aims at earning profit.
 It is a unique financial institution that creates demand deposits which serves as a
medium of exchange and as a result the bank manages the payment system of the
country.
Finally, a bank is an institution that deals with money by accepting various types of deposits,
disbursement loan, and rendering other financial services. Since banks are rendering a wide
range of services to the people of different walks of life, they have become an essential part of
the modern society.
First type of banking was established at early stage (mono stage). In VEDIC ERA, deposits,
ledges, policies and interest relates were mentioned but it was a crude system of banking. After
the collapse of empire in the 15th and 16th century, revival of commerce and trade started in
Europe. Therefore, commercial banking was revival by:
 Merchant Trader
 Goldsmith
 Moneylender received commercial banking
G.Gowther (2014 B.S.): - These three have been the ancestors of bankers. Regarding the origin
of banking institution in the world, the bank of Venice (Italy). This was established in 1157 A.D
in the first banking institution in the world.
In 1964 AD the bank of England was established as a joint stuck bank. It was allowed to the
function as a central bank in 1844 AD. It was the first central bank in the world. “Bank of
Bengal", "bank of Bombay", "Bank of madras" established in the year 1809, 1840 and 1843 AD
in India was known as "presidency bank". The presidency bank was immigrated in 1921 AD to
from "The imperial Bank of India" which was converted into the "state bank of India in 1955
AD. There are several subsidiary of bank under state bank of India and there are also several
other local and foreign banks operating in different parts of the country.

2.2 SWOT ANALYSIS
An overview of MBL’s SWOT analysis
Strength Weakness
 First- class Infrastructure and advanced
technology.
 Goodwill.
 Quality Service.
 Facility of ABBS.
 Effective Inter-departmental
communication.
 Pioneer of Online banking.
 Involvement in off-balance sheet
activities.
 Proper strategic planning and
preparation.
 Strong management team.
 Lack of sufficient ATM’s in and
outside valley.
 Insufficient marketing.
 Availability of only SCT based debit
card or limited card services.
Opportunities Threats
 New Investment opportunities.
 Growing international trade.
 Introduction of innovative
products, services and programs.
 Installation of updated technology.
 Political instability.
 Changing customer preferences.
 Changing technology.
 Intense competition.
 Lack of investment opportunities
in the market.
SWOT

3.1 Placement
During the internship, I was placed in the Customer Service Department at the Birgunj
Branch. I was required to handle all the activities of the department under the guidance and
supervision of M/s.Aarti shrestha, M/s suman kushwaha & M/s Rekha yadav the junior assistant
at the branch. In addition to her, the other staffs were equally cooperative and helped me to learn
the activities of the department.
Placement Table
3.2 Duration
According to our board (Chandigarh University) we are required to do the internship for a
standard of duration of 45 days. So I also worked at Machhapuchchhre Bank for 45 days from 10
a.m. to 6 p.m. I worked four weeks in the Customer Service Department, one week in remittance
and clearing department, one week in letter of credit department and one week in loan
department. The following table illustrates the duration of my internship.
Details of internship at MBL
Address Birganj, Nepal.
Working Hour 10:00 Am To 6:00 Pm
Starting Week 04th May 2017
Ending Week 14th July 2017
Working Duration 5 Weeks
Internship Supervisors Mr. Leela Raj Thapa
Working Departments Customer Service Department (4 weeks)
Remittance and Clearing Department (1 week)
Letter Of Credit Department (1 week)
Departments/ Weeks 1 2 3 4 5
Customer Service
Remittance and Clearing

3.3 Activities
During the internship I got the opportunity to perform different activities of the
department. The first 2-3 days I spent gaining information from the staffs of Birgunj Branch, and
then after knowing that, I spent in the information counter where I had to serve the customers
with various information. I also had to help them filling up their account opening, account
closing and many other forms like demand draft, speed remit form, deposit voucher of customer
etc.
I was placed in the customer service section where following tasks are to be performed:
3.3.1 Activities performed in an organization
Name of the
department
Types of activities Performed
Customer Service
Department
 Proper counseling to the customer with politeness.
 Informing Customer about different types of account and
other queries they have about the operation of bank.
 Opening all types of accounts like saving, fixed, current, etc.
 Uploading the scanned photo and signature into the
financial system as well.
 Timely issuance of Cheque books to customers.
 Maintaining proper records of cheque register.
 Distribution of various forms such as of e-banking, SMS
banking, pay bill, etc. Checking customer’s transaction and
balance on request.
 Proper filing of account opening and closing forms.
 Informing the customers if their cheque has been returned.
 Advise customers about MBL products and services and
respond their queries.
 Collecting necessary documents and checking forms of the
customers required for account opening procedures.
 Filing application forms and writing different application on
behalf of customers on the request of customers.
 Keeping record of the account opened, account closed,
transfer of the account, customer taking additional facilities
such as Internet banking, SMS banking, etc.
 Providing ATM cards to the cardholders.
 Providing the balance statement and balance certificate to
the demanding customers after verifying the account holder
signature.
 Recording the ATM card holder information in the register
after arrival of ATM card and pin number and providing
them to the respective customer after checking the form
filled to get card and verifying the signature.

 PhotocoBars of citizenship cards, passports, license and
other documents of the customer required for recording of
customer service department.
 Handling the telephone calls.
 KYC follow up
Remittance and Clearing
Department
 Made payment to the customers receiving money from
various parts of the world through RTGS and SWIFT.
 Recording and filing of RTGS, SWIFT and DD entries.
 Helped customers to fill up various kinds of forms.
Letter of Credit
Department
 Learning about the opening procedure of Letter Of Credit
and documents which are required to open it.
 Understanding about the applicant, issuing bank,
beneficiary, beneficiary bank.
Loan Department  Learning about the types of loan and the documents required
while providing the loan.
3.4 SAMPLE SIZE AND METHODS OF SELECTING SAMPLE (DATA COLLECTION)
I choose a sample size of 37 respondents consisting of based on judgment sampling. All
respondents were the customers of Machhapuchchhre Bank Limited.
The method was simple random sampling.
Data Source
For this project both primary and secondary data were valuable sources of information which are
as follows:
I. Primary Source
Primary data means original data that has been collected specially for the purpose in mind. This
type of data are generally afresh and collected for the first time. For my project work the primary
data was collected by means of survey through questionnaires.
Contact methods
Once the client had been decided now my task was how to contact them, and for me there were
only two ways of contacting them and collecting information.
a. Personal Interview: - This method was the most appropriate way of survey, because
by personal interview I came to know about their feeling for Machhapuchchhre Bank
Limited.
b. Formal and informal communications with the official persons.

II. Secondary Source
Secondary data provides a starting point for any research and offers valuable sources of already
existing information. Secondary data are the easiest to gather and the cost of collecting this data
is also very low. For my project work it was collected through the help of various links,
documents, websites etc.
Some of them are listed below:
 Annual Reports
 Brochures of the bank.
 Internet surfing.
 Publications and journals.
 Newspapers, bulletin and booklets.
 Bank's official website Machhapuchchhrebank.com.
 Nepal Rastra Bank's official Web Site www.nrb.org.np and Periodicals

SOURCESOF
DATA
Primary Data
Informal
Interview
Secondary
Data
Websites
Databaseat
MBL
Annual report
of the bank

CHAPTER-4
ANALYSIS AND
INTERPRETATION

4.1 INTERPRETATIONAND RESULT OF QUESTIONNAIRE
Q.1 Willingness to listen and respond to customer needs by Bank.
S. NO. RESPONDS NO. OF RESPONDENTS
1 Satisfied 32
2 Neutral 5
3 Dissatisfied 0
4 Total 37
5 % Users 100%
INTERPRETATION:
The above Bar diagram shows the percentage of customers coming under the satisfaction level.
For instance, 86% of the customer say that the bank staffs have willingness in them to listen and
respond to their needs and they are satisfied with it, whereas 14% of customer say that they are
neutral with it and no any customer say that they are not dissatisfied with this services.
0
5
10
15
20
25
30
35
Satisfied Neutral Dissatisfied
Series1

Q.2 Staff members of bank are friendly and courteous.
1 Satisfied 28
2 Neutral 6
3 Dissatisfied 3
4 Total 37
5 % Users 100%
INTERPRETATION:
For instance, 48% of the customers say that they are satisfied with the friendly and courteous
behavior of bank staff members, whereas 35% of customers say that they are neutral with it and
17% customers say that they are dissatisfied with their behavior.
0
5
10
15
20
25
30
Series1

Q.3 Services of money via Machhapuchchhre Bank Ltd Remit.
1 Satisfied 15
2 Neutral 5
3 Dissatisfied 1
4 Total 21
5 % Users 57%
INTERPRETATION:
For instance, 71% of the customers say that they are satisfied with the services of money via
himal remit, whereas 24% of customers say that they are neutral with it and 5% customers say
that they are dissatisfied with this service.
0
2
4
6
8
10
12
14
16
Series1

Q.4 How much time is taken during your Telephone enquiry?
S. NO. TIME PERIOD NO. OF RESPONDENTS
1 <2 minutes 28
2 2-5 minutes 5
3 >5 minutes 4
4 Total 37
5 % Users 100%
INTERPRETATION:
The above Bar diagram shows the percentage of customers coming under the stated time period.
For instance, 75% of the customers say that their telephone enquiry is responded within 2mins,
whereas 14% of customer’s enquiry takes 2-5mins and 11% customer’s enquiry takes more than
5mins.
0
5
10
15
20
25
30
<2 minutes 2-5 minutes >5 minutes
Series1

Q.5 How much time is being taken to deposit your cash?
1 <5 minutes 14
2 5-15 minutes 13
3 >15 minutes 10
4 Total 37
5 % Users 100%
INTERPRETATION:
For instance, 38% of the customers say that time taken to deposit cash is within 5mins, whereas
35% of customer’s say it take 5-15mins and 27% customer’s say it takes more than 15mins to
deposit their money.
0
2
4
6
8
10
12
14
16
Series1

Q.6 How much time is being taken to encash your cheque?
1 <5 minutes 14
2 5-15 minutes 14
3 >15 minutes 9
4 Total 37
5 % Users 100%
INTERPRETATION:
For instance, 38% of the customers say that time taken to encash their cheque is within 5mins,
whereas 38% of customer’s say it take 5-15mins and 24% customer’s say it takes more than
15mins to encash their money.
0
2
4
6
8
10
12
14
16
Series1

Q.7 In how many days do you get your ATM card?
1 <5 days 10
2 5-15 days 9
3 >15 days 12
4 Total 31
5 % Users 84%
INTERPRETATION:
For instance, 32% of the customers say that time taken to get ATM card is on 5th day, whereas
29% of customer’s say that they get their ATM card within 5-15 days and 39% customer’s say
that they get their ATM card in more than 15 days.
0
2
4
6
8
10
12
14
<5 days 5-15 days >15 days
Series1

Q.8 In how many days do you get your cheque book?
1 Same day 27
2 2 days 5
3 >2 days 4
4 Total 36
5 % Users 97%
INTERPRETATION:
For instance, 75% of the customers say that they get their cheque book on same day, whereas
14% of customer’s say that they get their cheque book on next day and 11% customer’s say that
they get their cheque in more than two days.
0
5
10
15
20
25
30
Same day 2 days >2 days
Series1

Q.9 In how much time you demand draft is being prepared?
1 30 minutes 10
2 30-60 minutes 12
3 >60 minutes 9
4 Total 31
5 % Users 84%
INTERPRETATION:
For instance, 32% of the customers say that their demand draft if being made within 30mins,
whereas 39% of customer’s say that their demand draft is being made in 30-60mins and 29%
customer’s say that it takes more than 60mins to make their demand draft.
0
2
4
6
8
10
12
14
30 minutes 30-60 minutes >60 minutes
Series1

Q.10 On which day your cheque is being cleared?
1 Same day 27
2 Next day 8
5 Total 35
4 % Users 95%
INTERPRETATION:
For instance, 77% of the customers say that their cheque is being cleared on same day, whereas
23% of customer’s say that their cheque is being cleared on next day.
0
5
10
15
20
25
30
Same day Next day
Series1

CHAPTER-5
FINDINGS
&
RECOMMENDATIONS

5.1 FINDING
Banks are always faced with different types of risks that may have a potentially negative
effect on their business. Risk-taking is an inherent element of banking and, indeed, profits are in
part the reward for successful risk taking in business. On the other hand, excessive and poorly
managed risk can lead to losses and thus endanger the safety of a bank's depositors.
 Credit Risk Management is done to check the commercial, financial & technical viability
of the project proposed & further checks the primary or collateral security cover available
for the recovery of such funds.
 Credit risk process is a joint effort between its marketing and credit areas. Credit officers
are engaged in analyzing inherent risks in the customers, ability to repay and structure a
facility that simultaneously accommodates the financing needs.
 Bank’s main function is to lend funds/ provide finance and Credit is the core activity of
the banks and important source of their earnings which go to pay interest to depositors,
salaries to employees and dividend to shareholders.
 Till now there is no External Credit Rating Agency in Nepal which can rate the risk. It is
based on Basel II Accord and Nepal Rastra Bank Guidelines.
 Credit and risk go hand in hand; in the business world risk arises because of deficiencies
on the part of the management, uncertainties in the business and industrial environment.
 Risk reporting and measurement system is done through regular customer interactions,
site inspections and annual reviews. Further review of the bank’s performance is
conducted every quarter and findings are reported to the BOD.
 MBL loan policy contains various norms for sanction of different types of loans, these all
norms do not apply to each & every case, these norms are flexible and it may differ from
case to case.
 The CRA models adopted by the bank take into account all possible factors which go into
appraising the risk associated with a loan..
5.2 RECOMMENDATIONS
 Bank has to grant the loans for the establishment of business at a moderate rate of
interest. Because of this, the people can repay the loan amount to bank regularly and
promptly.
 The Bank should target good quality loan customers.
 Machhapuchchhre Bank should be regular In-House training to enhance work
performance.

 The inadequacy of risk management systems in bank, the lack of adequate and sufficient
data on the SMEs are factors leading to higher NPAs. This can be overcome by collection
of authentic data on the SME segment, educating the enterprises, evolving suitable risk
models and close monitoring of accounts by the bank.
 Credit Risk management is done on the basis of Nepal Rastra Bank guidelines and Basel
II Accord in Nepal; the Government should introduce a rating mechanism. This would
reduce the risks involved in providing loan.
 Ask borrower to increase holdings of capital to compensate for the additional risk.
 The Bank should keep on revising its Credit Policy as per NRB guidelines and Basel
Accord, which will help Bank’s effort to correct the course of the policies
5.3 IMPLICATIONS OF THE STUDY
I. Researcher:
This report will help researcher in improving knowledge about the Credit risk management and
credit appraisal system and to have practical exposure of the credit appraisal scenario in
Machhapuchchhre Bank Limited, Nepal.
II. Management student:
The project will help the management students to know the patterns of credit appraisal and ways
of managing credit risk in Machhapuchchhre Bank Ltd.
III. Machhapuchchhre Bank Ltd.
The project will help bank in reducing the credit risk parameters and to improve its efficiencies.
It will also help to reduce risk associated in providing any loans & advances or project finance in
future.
5.4 LIMITATIONS OF THE STUDY:
 I was unable to analyze the various facts and issues because of the organisational policies
of maintaining some material and information confidential.
 As some of the information is not revealed, whatever suggestions generated, are based on
certain assumptions.
 Credit appraisal system includes various types of detail studies for different areas of
analysis, but due to time constraint, my analysis was of limited areas only.
 Another limitation could be the lack of knowledge. Being as a student, I undertake this
project as learning experiences.
 Time constraint

5.5 CONCLUSION
Fully recognizing the risk management functions as fundamental to the business of
banking, more emphasis has been placed on risk assessment considering the turbulent economic
environment in which the Bank operates. The bank has adopted a holistic approach and has been
engaged in extensive and detailed evaluation and assessment of its risk management framework
in all areas of banking activity. Credit risk management in today’s deregulated market is a
challenge.
The ongoing development of contemporary risk management methods and the increased use of
innovative financial products such as securitization and credit derivatives have brought about
substantial changes in the business environment. The NRB Guidelines on Credit Risk
Management are intended to assist practitioners in redesigning a banks systems and processes in
the course of implementing the Basel II framework. This guideline shows the procedures and
methods relating to the credit approval process and credit risk management considered best
practice.
There are clear guidelines on how the credit analyst or lending officer has to analyze a loan
proposal. It includes different phases; like financial statement analysis (past and projected
future), Working capital and its assessment techniques, Credit risk assessment, Documentation
and Loan administration.
The preparation of this project has brought a great experience of theoretical as well as practical
knowledge in this subject. The internship at Nepal Machhapuchchhre Bank Limited gave a vast
learning experience to me and has helped to enhance my knowledge. It helped to bridge the gap
between both the experiences and gave me better understanding of various concepts involved in
financial management.
In all, the viability of the project from every aspect is analyzed, as well as type of business,
industry, promoters, past records, experience, projected data and estimates, goals, long term
plans also plays crucial role in increasing chances of getting project approved for loan.

BIBLIOGRAPHY
BOOKS
Kothari, C.R., Research Methodology, New Delhi, New Age International Pvt. Ltd
REPORT:
Annual Report of Machhapuchchhre Bank Limited
WEBSITES:
www.machbank.com
www.nrb.org.np
SEARCH ENGINE:
www.google.com
www.google.com.np

QUESTIONNAIRE
I am Akash swarnakar a BBA-student from Chandigarh University. As a part of my curriculum, as a
summer trainee I am doing a research on “CUSTOMER SERVICE DEPARTMENT AT
Machhapuchchhre Bank Ltd., Birgunj Branch.” For understanding the details your valuable inputs will be
of great help. The information provided will be analyzed for academic purpose and will be kept
confidential.⁯
Q.1 Willingness to listen and respond to customer needs by Bank.
I. Satisfied
II. Neutral
III. Dissatisfied
Q.2 Staff members of bank are friendly and courteous.
I. Satisfied
II. Neutral
III. Dissatisfied
Q.3 Services of money via Machhapuchchhre Bank Ltd Remit.
I. Satisfied
II. Neutral
III. Dissatisfied
Q.4 How much time is taken during your Telephone enquiry?
I. <2 minutes
II. 2-5 minutes
III. >5 minutes

Q.5 How much time is being taken to deposit your cash?
I. <2 minutes
II. 2-5 minutes
III. >5 minutes
Q.6 How much time is being taken to encase your cheque?
I. <2 minutes
II. 2-5 minutes
III. >5 minutes
Q.7 In how many days do you get your ATM card?
I. <5 days
II. 5-15 days
III. >15 days
Q.8 In how many days do you get your cheque book?
I. Same day
II. 2 days
III. >2 days
Q.9 In how much time you demand draft is being prepared?
I. 30 minutes
II. 30-60 minutes
III. >60 minutes

Q.10 On which day your cheque is being cleared?
I. Same day
II. Next day
11) Any suggestion you feel worth mentioning to excel the services of Machhapuchchhre bank Ltd Bank,
Birgunj branch.
……………………………………...............................................................................................
……………………………………………………………………………………………………
……………………………………………………………………………………………………
Personal Detail
 NAME : --------------------------------------------------------------------------------------------
------------
 EDUCATION : ------------------------------- ADDRESS:----------------------------- TEL:-------
-----------------
 AGE GROUP : 18-29 30-39 40-54
55+
 GENDER : Male Female
 OCCUPATION: Business Professionals Students
Housewife Employee Farmer
Thank you for your Co-operation

ABBREVIATION
MBL Machhapuchchhre Bank Ltd
ADB Agriculture Development Bank
ALCO Assets Liability Management Committee
AOA Articles of Association
ATM Automated Teller Machine
B.S Bikram Sambat
BOD Board of Director
CENMAC Central Management Committee
CPG Credit Policies Guidelines
CR Current Ratio
CRA Credit Risk Assessment
CRMC Credit Risk Management Committee
DSCR Debt Service Coverage Ratio
EAD Exposure at Default
EBITDA Earning Before Interest Tax Depreciation and Allowances
GOVT Government
ICAAP Internal Capital Adequacy Assessment Process
KYC Know Your Customer
LC Letter of credit
LGD Loss Given Default
LTD Limited
MOA Memorandum of Association
NBA Non Banking Assets
NBFC Non Banking Financial Corporation
NEPSE Nepal Stock Exchange Limited
NPA Non Performing Assets

NRB Nepal Rastra Bank Limited
PAN Permanent Account Number
PAT Profit After Tax
……..THANK YOU……….

Machhapuchchhre Bank limited summer internship report

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