CHAPTER ONE

INTRODUCTION

1.1. Background of the study:

Banks are the most widely known and important institution among the various
modern institution. In regarding to the origin of word “bank’’ there are two
viewpoints mainly. At first it is supposed to be derived from the Latin word
“Bancus’’or the French word “Bench” and the Italian word “Banka” which all
mean the same i.e. bench. It is so since in earlier days the banking functions were
done by sitting on the bench. The second is the origination from German word
branch, which means the joint fund. In this sense, both are similar to the fact modern
banking was started with the establishment of the bank of England. After that in
other parts of the word banks were established. There was the system of grating
loan in Nepal from ancient time. There real banking had established with the
establishment of NRB in 1994B.S.

Today the bank refers to those intuitions which are established under the law for
dealing with the monetary transaction. Nepal’s banking history starts with the
establishment of NBL in 1937A.D. (1994B.S.). It is the first bank of Nepal, which
swas established by the 51% share of government and 49% share of public. NRB
is central bank of Nepal, which was established under NRB act 2012, on 2013B.S.
Baisakh 14 Commercial Banks. The first Commercial Bank fully owned by the
Government named “Rastra Banijya Bank’’ was established under the Banijya Act,
1964 A.D. to meet the need of the diverse economic activities in the country. Then
for the purpose of enhancing agriculture “ADBL” was established under the ADBL
Act 1967 to provide services in rural areas to encourage the farmer in the agriculture
sector by providing lead in cheap rate.

After the established of these banks, the government of Nepal took liberal policy in
banking sector for the financial reforms in 1980’s which encourage for the
established of commercial and joint venture banks. After the restoration of
multiparty democracy in 1990, the government liberal policy increased the number
of commercial and joint venture banks, which adopted the modern technology in
banking sector.

1
 1.2 Background of the organization

Janata Bank Nepal Limited is the 27th commercial bank established under the Bank &
Financial Institution Act, 2063. The bank's corporate office is located at Central
Business Park, Thapathali, and Kathmandu. Currently, the bank is operating with
113 branches, 2 extension counter ,3 Limited Branch Outlet (LBO),67 ATM's and 18
Branchless Banking and will gradually expand it’s branch network to provide it’s
service all over the country.

1.3Objectives of the organization:

The main objective of the bank is to provide reliable and quality banking services to
the public through healthy competition in the banking industry, as mentioned in the
preamble of the Bank & Financial Act, 2063 and as permitted under the Act and
guidelines of Nepal Rastra Bank .Our motto is to deliver full range of quality banking
services to the doorstep of customers through various delivery channels with effective
and efficient use of human and technical resources and maintain social responsibility
and generate reasonable profit for the shareholders.

1. 4 Structure of the organization:

There are 13 members of Board of Directors manages Janata Bank Limited. For
efficient operation of the bank the Board of directors forms an Executive Committee of
19 members. Besides, a management Committee looks after the affairs of the bank. The
Bank maintains transparency in its entire works. All decisions of the management come
through discussions in appropriate forum and required follow-ups are also made to see
their effectiveness. Here are the management team given in a chart and he hierarchy of
the JBL is given below:

2
Management Committee

· Mr. Parshuram Kunwar Chhetri, Chief Executive Officer

· Mr. Prithvi Shrestha, Deputy Chief Executive Officer
· Mr. Sagar Kumar Ghimire, Deputy Chief Executive Officer
· Mr. Ajaya Mishra, Deputy Chief Executive Officer
· Mr. Pramod Bohara, Chief Operating Officer
· Mr. Kalyan Pande, Chief Of Region Kathmandu
· Mr. Binaya Neupane, Chief of Human Resources
· Mr. Paban Dhakal, Chief Country Operations
· Mr. Dhruba Kumar Paudel, Chief Of Region Nepalgunj
· Mr. Sulav Hari Joshi, Chief Risk Officer
· Mr. Kshitij Khadka, Chief Of Region Itahari
· Mr. Rajesh Bhandari, Chief of Region - Bharatpur
· Mr. Bipul Bahadur Rayamajhi, Chief of Region - Butwal
· Mr. Dhiraj Raj Subedi, Chief Finance Officer
· Mr. Mintu Jha, Chief ICT Officer
Table No: 1.1 Management commit of Janta bank limited

Organizational Chart

Teller

Service Department

Customer Service
Department
Manager

Credit Department Assistant Staff

3
1.5 Objective of the study:
General Objective: To find out the Products and Services of Janata Bank Limited
Specific Objectives:
 To know the procedure for approval of loans.
 To understand the techniques of project appraisal.
 To analyze the loan disbursement and recovery scenario.
 To provide recommendations on the basis of findings.

1.6 Limitations of the Report:

To prepare a report on the achieved practical experience in a short duration is not an
easy task. In preparing this report, some limitations have encountered, which are as
follows:
 Large scale analysis was not possible due to constraints & restrictions posted by
the banking authority.
 Since the bank personals were very busy, they could provide me very little time.
 In many cases, up to date information was not published.
 In some cases, access to relevant papers & documents were strictly prohibited.
 The time duration was not enough for a completed and fruitful study.
1.7 Review of related studies:
In loan to prepare this fieldwork report various literature sources have been consulted
the report written by the previous student of BBA 6 sem in proceeding year on the
related topic has been also consulted. Several books written by various authors have
been studied to prepare this report.
a) Annual souvenir of JBL.
b) Magazines
c) NRB act books.
d) Annual audit report.
e) Website of JBL.
1.8 Methodology of the study:
I have got all the relevant information from my working experience with Janata Bank
Limited, their Annual report, some circular, various brochures, web site of Janata Bank
Limited and such. Some information has been taken from some of my friends.

4
a) Primary data : By asking question, observation, talk with different executive of bank,
from my supervisor of the bank I got information.
b) Secondary data : Annual report of the bank, website of the bank, report ,magazine
and newspaper.

CHAPTER TWO
PRESNTION AND ANLAYSIS OF DATA

2.1 Process of loan approval

Documentation: The rules of JBL while approving loan are described below or the
document of JBL while approving loan are as follows;
a] Loan application form
b] Citizenship certificate
c] Map of land and house
d] Recently paid house and land tax receipts
e] Land owners certificate
f] Map of the land approved by municipality or V.D.C [Blue Print]
g] PAN certificate
h] Trade certificate
i] Tax and Vat registration
j] Company registration form
Table No: 2.1.Sector wise detail of loan and advance

Industry/ sector Current year Previous year

RS RS

5
Agriculture 156.87 83.60
Mining 5.44 -
Manufacturing 5858.35 4900.51
Construction 771.80 460.40
Metal products ,machinery and Electronics 144.44 91.90
Equipment and Assemblage
Production and Assemble of Transportation 11.42 23.60
Equipment 861.02 639.20
Transport, Communication and public utilities 3264.43 2528.51
Wholesaler and Retailers 961.73 738.80
Finance, insurance and Real Estate 2125.48 1638.01
Service industries 3608.12 2.7362

Sector Wise details of loan and advance

(F/Y 2067/68)
NPR in Million

1,13,
156.87
2,05.44
12, 3608.12

3, 5858.35

11, 2125.48

10, 961.73
4, 771.8
7,5,011.42
6, 144.44
8, 861.02
9, 3264.43

Figure No: 2.1. Sector wise detail of loan and advance

6
2.3 Financial indicators of the company
Important financial indicators of the company
Janta Bank Limited
Major Financial Indicators
INDICATORS OF AT LEAST PAST THREE YEARS
S/ Description Indicator F/Y F/Y F/Y
N 2065/66 2066/67 2067/68
1 Percent of net profit/gross percent 22.97 23.67 17.91
income
2 Earnings per share Rupees 37.42 52.65 48.48
3 Market value per share Rupees 1338 705 515
4 PE Ratio 37.1 13.42 10.54
5 Dividend with bonus Percent 20 25 50
6 Cash dividend Percent 20 25 25
7 Interest Income/loan Percent 7.89 10.51 13
&borrowing
8 Staffs expense Percent 38.56 39.36 41.73

7
 9 Interest on Total Percent 3.53 4.99 7.2
Deposit&borrwing
10 Exchange flution Percent 4.79 4.19 3.17
income/total Income
11 Staffs bonus/total staffs Percent 57.53 64.41 51.39
expense
12 Net profit/Loan advance Percent 2.45 3.69 2.02
13 Net profit/Total Assets Ratio 1.68 2.1 83.054

14 Total loan/deposit Percent 78.88 81.74 1.34

15 Total operating Percent 1.09 1.23 7.67
expensed/total assets
16 Liquidity Percent 10.32 7.77 5.58

2.4 Types of Loan

This organization provide different types of loan in following topics

a) Hire purchase Loan:

Under the hire purchase loan, the client acquire the possession of goods immediately
and agrees to the total hire purchase price in instalment is treated as a hire change until
the payment of the last instalment when ownership of goods passes from the JBL to
client. In case of the client make any default in the payment of any instalment the JBL
will have a right to repossess these
b) Business Loan
Business loan is provided to the business holders to improve their capability to run their
business widely and to the client to set up his/ her new business. Without sufficient fund
you can establish a new firm or run it smoothly. For business purpose, we need short
and long term funds. So, the JBL provided such loans to the business person. In this
type of loan, the JBL change as maximum 9.5% and minimum 9% interest rate.
c) Service business loan:
The JBL provided loan to different types of services business like transport, supply
service, welfare service.

8
  Transport service: Bus, truck, car, van etc.
 Supply service: Gas supply, electricity supply, water supply etc.
 Welfare service: Hospital, canteen, libraries, school, etc.
In this type of loan JBL chargers maximum 9.5%and minimum 9% of
interest.
d) Industrial Loan
The JBL also makes their rules in developing industrial sector whether it is small-scale
industry or large-scale industries by giving such industries loan to the industries, also
JBL is helping in Nepal’s industrial development where interest rate is maximum
9.5%and minimum 9%interst rate.

e) Agricultural Loan
The JBL also make aim in developing in the field of agricultural. It gives different
types of amount per remote areas farmer for their different kinds of purpose such as
farming, diary. JBL gives this small scale of loan by putting their financial document
like lalpurja. The JBL charges interest of maximum 9.5%and minimum 9% for these
types of loan
f) Miscellaneous loan
Besides above mentioned loan, JBL can provide different kinds of loan.
In these types of loan, the JBL charge interest rate of maximum 9.5%and minimum 9%.

Some of the type’s loan with their interest rate is shown below:

Types of loan Annual interest rate

Home loan 10.50%

Overdraft loan 14.75%

Vehicle loan 15%

Education loan 12.50%

9
 CHAPTER THREE

SUMMARY, CONCLUSION AND RECOMMENDATION

3.1 Summary

The Janta Bank Ltd is collect money from different source and invests the money in
different sectors. For this purpose JBL has implemented various saving plan collected
from static and unproductive sector it flows in productive and useful sector .So it has
helped the people of the community to save somewhat amount of their income as well
as it has supported the development of industry and trade in Siddharthanagar .

JBL has broadened its transactions successfully and is going towards the goal
.Although the company is in good progress .We can see the investing the industrial

10
sector is still not satisfactory .Anyhow it has served successfully the businessmen
industrialist present on siddharthanagar .Beside this JBL is also facing through
competition with other banks and financial institutions present in siddharthanagar .To
provide all the facilities of the bank ,this bank has opened 40 branches so that the people
of the urban as well as rural can obtain the facilities provided in it .This bank provide
the facilities by sending its own loan officer to the village ,so that every people who
want the facilities can get it in her own village it provide less interest for saving in the
comparison of the other bank interest .

The JBL has faced some kind of major problem yet .But that Shall be solving in the
future .This loan management can be effected by the financial need of the people .The
level of their income is rising of the other banks and financial companies.

3.2 CONCLUSION:
According to the analysis and presented to the calculated data in the table and pie chart
we can conclude that the loan procedure of JBL is categorized efficiently and
effectively so that it can understand in a systematic manner. The loan procedure is
divided in agriculture, mining, manufacture, construction, metal products, machinery
and transportation equipment, Transport, Communication and Public utilities,
wholesalers and Retailers, finance, insurance and real Estate.

Similarly, with the observation, research, presentation and analysis of the data
provided by the JBL, clears that the bank is going towards the progressive path. And if
the bank maintains its service in manner than, their may not arise any negative question
to bank from its customers so that it may obtain its objectives and goals in a coming
future.

3.3 Recommendation:

 JBL charge a uniform rate of interest on all taxes but it is Preferable to have
variable rate of interest according to the degree of risk.
 The valuing the assets, it is better to combine one of the method so that the
resulting valuation safeguards of the interest of the lender and also work out
to be borrower. A proper valuation of security requires assistance of
technical and legal experts.

11
  JBL should mention the feasibility report in their progress while approving
the loan. In this report it is important that whether the proposed planning is
technically, economically and financially feasible or not and the organization
is capable or not to run according to the proposed planning. In feasibility
report, following item have to be clearly notified.
 Technical Study
 Economical and financial analysis
 Market analysis
 Analysis of organization and its management

In loan approval process, all the power is in Board of directors. It should be better if
some liability is given to the manager to approve small scale loan.

JBL has also provided an opportunity to open a saving account with only rupee one and
the facility of ATM card with an additional charge of rupees 200.

BIBLIOGRAPHY

Annual Report 2068/69

Bhandari, Dilli Raj, “Principle and Practice of banking insurance 1st edition.2056,
(Baghbazer Asia Publication.)

Panta Prem Raj, “Field work assignment and report writing” 2nd Edition 1998,
Kathmandu, (Veena Academic Enterprised Pvt. Ltd)

Gupta, S.N, “The Banking Low in Theory and Practice” 3rd Edition, 1999,
(Universal Law Publishing Co. Pvt. Ltd)

12
Pandey, F.M, Financial Management New Delhi, (VIKASH Publishing House Pvt.ltd

13
14