ORGANIZATIONAL PROFILE OF EVEREST BANK LIMITED

Submitted in partial fulfillment of the requirement for Master of Business Administration (MBA)

By Kriti Shrestha 1011301066 Batch of 2011-2013

SONA COLLEGE OF TECHNOLOGY

[An Autonomous Institution]
Affiliated to Anna University of Technology, Coimbatore

Salem 636 005

JULY 2012

ACKNOWLEDGEMNT
I would like to express my heart full thanks to Sona College of Technology for including the Summer Internship Project in MBA. The outcome of this study would not have materialized without the help and support of my respected teachers and staffs of Everest Bank Limited, Lazimpat, Kathmandu, Nepal. I would like to thank Everest Bank Limited for accepting my internship in their esteem organization and providing helpful guidelines needed for the completion of the project. Special thanks to Mr. Ranjan Khadka, the Branch Manager, for his supervision and guidance. I would also like to thank Mr. Kumar Joshi, Human Resource Head, for his suggestions. Hereby, I would like to express my gratitude to all the staffs for their support and co-operation during the internship program. I express our hearth felt gratitude to our beloved Secretary Shri A. Dhirajlal and to our respected Principal, Dr. C.V.Koushik, Sona College of Technology , and the management for providing us an opportunity to undertake this project work. I express my sincere thanks to our respected Director, Dr. Latha Krishnan, Department of Management Studies, for her esteemed and distinguished guidance and also for giving us the opportunity to express our ideas and thoughts through this project. I acknowledge our deepest sense of gratitude to Prof. P. Praba Devi, Department of Management Studies, for her untiring efforts whose ability, efficiency and help have made the project a success. Last but not least I would like to thank my family, friends and all those who helped me during my summer internship project. Kriti Shrestha July, 2012

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DECLARATION I, Kriti Shrestha, Registration No. 1011301066 of 2011-2013 batch, a full time bonafide student of first year of Master of Business Administration (MBA) Programme to Sona College of Technology (An Autonomous Institution). I hereby certify that this project work carried out by me at Everest Bank Limited, Kathmandu. The report submitted in partial fulfillment of the requirements of the programme is an original work of mine under the guidance of the faculty Prof. P. Praba Devi, and is not based or reproduced from any existing work of any other person or on any earlier work undertaken at any other time or for any other purpose and has been submitted anywhere else at any time. Kriti Shrestha-1011301066 Date

Prof. P. Praba Devi Date

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EXECUTIVE SUMMARY The organizational profile comprises different areas that deal with the various aspects of the organization. It helps to study the organizational environment, and how the strategies and structures are formed accordingly. It helps to know about various departments and functions carried out in the different divisions. Similar study of Everest Bank Limited, Kathmandu has been conducted to know the organizational structure and its activities carried out. This report includes the details about Everest Bank Limited, its vision and mission, information about its competitors and its present position in the Nepalese Banking and Financial Sector. The report also deals with growth of the bank over the years. Various sorts of analysis have been conducted to know about the functioning of the bank, for example, Ratio Analysis, Human Resource Analysis, Analysis of the Marketing Strategies and SWOT analysis.

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CONTENTS
Contents..........................................................................................................................................v Chapter I........................................................................................................................................11 1.1Introduction..........................................................................................................................11 1.2 Introduction to the Banking Industry...................................................................................11 1.3 Development of Banking Industry in Nepal........................................................................13 1.3 Need and Scope ..................................................................................................................16 1.4 Objectives ..........................................................................................................................16 1.5 Limitations..........................................................................................................................16 CHAPTER II.................................................................................................................................17 2.1 Organizational Profile of Everest Bank Limited.................................................................17 2.2 Organizational Structure of Everest Bank...........................................................................18 2.3 Impact of Globalization.......................................................................................................19 2.4 Functions of Everest Bank Limited.....................................................................................19 2.5 Departmentalization............................................................................................................20 2.5 SWOT Analysis................................................................................................................22 2.7 Suppliers.............................................................................................................................23 2.8 Competitors ........................................................................................................................23 2.9 Business Award...................................................................................................................24 2.10 Marketing Strategies.........................................................................................................24 2.11 Computerization in Everest Bank Limited........................................................................27 2.12 Financial Structure............................................................................................................27 2.13 Deposit Mix......................................................................................................................28 2.14 Credit Distribution............................................................................................................29 2.15 Annual Turnover...............................................................................................................29 2.16 Profitability.......................................................................................................................30 2.17 Share Value of Everest Bank.............................................................................................30 v

2.18 Growth Rate of EBL.........................................................................................................31 2.19 Balance Sheet ...................................................................................................................32 2.21 Human Resource Analysis............................................................................................36 3.1 Findings..............................................................................................................................38 3.2 Recommendations...............................................................................................................39 3.3 Conclusion..........................................................................................................................39

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LIST OF TABLES

S. No. 1 2 3 4 5 6 Profitability Share Price of EBL Market Capitalization

Title

Page No. 19 19 20 20 21 22

Growth rate in terms of Annual Turnover and NPAT Balance Sheet of 3 conjugative years Summary of the Balance Sheet

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LIST OF FIGURES
S. No. 1 2 3 4 5 6 Title Financial Institutions in Nepal Organization Structure of Everest Bank Limited (EBL) Detail of Share Ownership Deposit Mix Credit Distribution Growth rate of EBL Page No. 5 9 17 17 18 20

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ABBREVIATIONS AND ACRONYMS

ABBS ADB ATM AUD BS CCTV CEO CSD e-banking EBL e.g. EPS etc. Fig. FYC ICD ICT INR IT JYP LAN LDCs Ltd. MBA NGOs NP NPAT NPR NRB NRN NTC P/E ratio PNB

Any Branch Banking System Agricultural Development Bank Automated Teller Machine Australian Dollar Bikram Sambat (as per Nepali calendar) Closed Circuit Television Chief Executive Officer Customer Service Department Electronic Banking Everest Bank Limited Exempli gratia (For example) Earnings per Share Etcetera (and others) Figure Foreign Currency Inland Container Depot Information and Communication Technology Indian Rupee Information Technology Japanese Yen Local Area Network Least Developed Countries Limited Masters of Business Administration Non-governmental Organizations Net Profit Net Profit After Tax Nepalese Rupee Nepal Rastra Bank Non Resident Nepali Nepal Telecom Price Earnings Ratio Punjab National Bank ix

POT Rs. ROA ROE SCT SMS SWOT UAE UK USB USD UTL

Point of Transaction Rupees Return on Assets Return on Equity Smart Choice Technology Short Messaging System Strength, Weakness, Opportunity and Threat United Arab Emirates United Kingdom Universal Serial Bus United States Dollar (US $) United Telecom Limited

CHAPTER I 1.1 Introduction Everest Bank Limited provided an avenue to learn the overall functioning of the bank. Commercial banks are one of the major players in the banking and financial sector in any economy. Commercial banks basically help to the collect money from the surplus group and lend the same to the deficit group in the economy. The deficit group can be an individual as well as the corporate bodies. These banks act as bridge between the depositors and the loan clients. Success of any bank depends on its ability to provide loan that do not fall overdue and ultimately convert into non-performing loans or assets. Major source of income is the interest they receive from the loan and the interest they play to the deposit; this is referred to as spread. Besides this the bank is also involved in remittance, trade finance (letter of credit), treasury, etc from which they earn income. Everest Bank Limited being one of the most prestigious banks was my first preference for the summer internship program. It was a perfect avenue to explore the knowledge and capabilities during internship period. However, selection of organization (Everest Bank Ltd) has been possible only after personal reference. The summer internship benefits to learn about the overall performance of the bank. It helps us to know about the various operations conducted by the bank being a service industry. The study of the bank allows students to learn about the practical implication the knowledge gained in their academia which helps to give us a realistic picture of the organizational work.

1.2 Introduction to the Banking Industry The term bank is said to be originated in 15 th century, directly or via French banque, from Italian banca meaning bank, bench or table. The sense bank developed in the source language from the table on which banking was transacted. With the change in time, the meaning and function of bank gradually changed. According to the shorter oxford English dictionary, "A bank is an establishment for the custody of money received from or on behalf of its customer essential duty is to pay their draft on its profit areas from its use of the money left unemployed by them". 11

A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. Banks are also called depository institutions because majority of their funds are collected from the saving of individuals. Generally banks are opened to earn income. Major source income for banks is the gap between the interest rate they provide to the deposits and the interest rates they charge on loans. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, checking accounts, and credit cards), thus banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive sectors of economy. Without this flow, savings would sit idle. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important to a free market economy. Bank is a financial institution, which provides financial services that may be in the form of accepting deposits, advancing loan, providing necessary technical advices, dealing over foreign currencies, remitting funds, etc. -Nepal Rastra Bank Act 2002 Bank is an establishment for the custody of money from or on behalf of its customers its essential duty to pay their draft on it, its profit arises from its uses of the money left unemployed by them. -The Shorter English Dictionary Banking means the accepting for the purpose of lending or investment of deposit of money from the public, repayable on demand or otherwise and withdrawal by cheque draft order or otherwise. -Indian Banking Company Act 1949 A commercial bank refers to such type of bank which operates currency exchange transactions, accepts deposits, advances loans, performs dealing relating to commerce except the banks which been specified for the cooperative, agricultural, industry of the similar other specific objective. - Commercial Bank Act 2031 B.S

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Commercial banks are the heart of every financial system in the country. Commercial banking system of the nation is important for the functioning of the economy. They facilitate lending as well as borrowing facility. The commercial banks of Nepal can be categorized into two types: Public Sector and Private Sector. Public sector banks include only two banks: Nepal Bank Limited and Rastriya Banijya Bank, whereasPrivate sector banks include other 30 banks. The importance of commercial banks are: Channelize the idle recourses towards the economic activities. Helps build the financial sectors of the country. Facilitates rapid economic growth. Provides various financial services like accepting deposits and providing loan. Exchanging foreign currency. Remitting money from one place to the other. Performing agency functions.

1.3 Development of Banking Industry in Nepal The history of development of banking system in Nepal is not been long. Nepalese banks are still in its developing stage. Banking industries started here in Nepal when the first commercial bank, the Nepal Bank Limited was established in 30 th Kartik 1994 BS (about 75 years back). Having felt the need of systematic development of banking sector and to help the government in formulating monetary policies, Nepal Rastra Bank (NRB) was established in 2013 BS (1957 AD) as the central bank as per the Nepal Rastra Bank Act, 2012 BS, and Agricultural Development Bank (ADB) was established in 2024 BS (1968 AD). The government then allowed establishing joint venture banks in 1980s, then the three joint venture banks namely Nepal Arab Bank Limited (NABIL Bank Limited), Nepal Grindlays Limited (Standard Charted Bank Nepal Limited), and Nepal Indoseuz Bank Limited (Nepal Investment Bank Limited) were established. With the opening of NABIL Bank Ltd, the door of opening commercial banks was opened to the private sector. Rural Development Banks were formed to uplift the living standard of the people by providing them the necessary training and banking services and providing loan without security collateral. Due to the enactment of Nepal Development Bank Act 2052 BS, development Banks have been established.

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The Nepalese Financial Sector is composed of Banking sector and non-banking sector. Banking sector comprises Nepal Rastra Bank (NRB) and other Commercial Banks. The non-banking sector includes Development Banks, Finance Companies, Micro-credit Development Banks, Cooperative Financial Institutions; Non-governmental Organizations (NGOs) performing limited banking activities and other financial institutions such as Insurance Companies, Employees Provident Fund, Citizen Investment Trust, Postal Saving Offices and Nepal Stock Exchange. Nepal Rastra Bank has classified the financial institutions into four categories: Class A: Commercial Banks (e.g. Everest Bank Ld.) Class B: Development Banks (e.g. International Development Bank) Class C: Finance Companies (e.g. Goodwill Finance Company) Class D: Rural Development Banks and Micro Credit Development Bank (e.g. Sana Kisan Bikas Bank Ltd.) Fig. 1: Financial Institutions in Nepal

Source: Nepal Rastra Bank Report, Mid July 2011 Currently there are 32 commercial banks, 86 development banks, 79 financial institutes, 21 Micro Credit cooperative banks, 16 saving and Credit Co-operative, 38 NGOs (Financial Intermediaries) and a central bank.

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1.3 Need and Scope

The report is submitted in partial fulfillment of the requirements for the MBA programme. The study is focused on Everest Bank Limited. The internship was conducted in
Lazimpat branch (main branch) which also has head office of EBL. The internship was conducted for one month period. The study highlights the various aspects of commercial banks in the Nepalese Banking and Financial Sector. It focuses on the Marketing, Human Resource and Financial feature of Everest Bank Limited. It also deals with the various products developed by EBL to cater the customer, meet and exceed the customer expectations.

1.4 Objectives To relate the summer internship project with the theoretical knowledge gained in academia. To gain knowledge of the operations of the commercial banks. To be familiar with the overall functioning of Everest Bank Limited. To conduct SWOT analysis of Everest Bank Limited. To analyze the performance of Everest Bank from various aspects.

1.5 Limitations The study has the following limitation: Due to time limitation it has not been possible to make a detail analysis of Everest Bank Limited. The activities in the bank are sensitive due to which all the information was not accessible. Full information could not be received due to the banks internal policy, as a result the report mainly contains information that is available in their websites, and some through our own experiences. The report is based on the annual report of the bank for the fiscal year 2010/2011 and 2011/2012 is not yet available

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CHAPTER II 2.1 Organizational Profile of Everest Bank Limited Everest Bank Limited is the 10 th commercial bank of Nepal founded in October 20, 1994. The bank has been one of the leading banks of the country and has been catering its services to various segments of the society since then. It is incorporated under companies Act 2063 as 'A' Class financial institution. Everest Bank Limited is a Limited company providing banking services. Everest Bank has a joint venture with Punjab National Bank (PNB) (holding 20% equity in the bank) is one of the largest nationalized bank in India. It has more than 5100 offices including 5 overseas branches. Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Apart from offering banking products, the bank has also entered the credit card, debit card; bullion business; life and non-life insurance; Gold coins & asset management business, etc. For its excellence in banking services, it was awarded the "Best Bank Award 2011" amongst all banks in India by the leading corporate magazine, Business India. With an aim to help Nepalese citizens working abroad, the bank has entered into arrangements with banks and finance companies in different countries, which enable quick remittance of funds by the Nepalese citizens in countries like UAE, Kuwait, Bahrain, Qatar, Saudi Arabia, Malaysia, Singapore and UK. Bank has set up its representative offices at New Delhi (India) to support Nepalese citizen remitting money and advising banking related services. EBL was one of the first banks to introduce Any Branch Banking System (ABBS) in Nepal. EBL has introduced Mobile Vehicle Banking system to serve the segment deprived of proper banking facilities through its Birtamod Branch, which is the first of its kind. EBL has introduced branchless banking system first time in Nepal to cover unbanked sector of Nepalese society. EBL is first bank that has launched e-ticketing system in Nepal. EBL customer can buy yeti airlines ticket through internet. Everest Bank has 46 Branches, 58 ATM Counters and 22 Revenue Collection Counters across the country making it a very efficient and accessible bank for its customers. Mr. P. K. Mohapatra is the Chief Executive Officer (CEO) of Everest Bank with his team the bank is developed innovative banking products to meet as well as exceed the customer 17

expectation. It has catered to more than 450,000 customers. Its operating profit as on July 2011 was Rs. 1516.69 million. The level of operating profit has increased over the year. Vision To position it as a progressive & customer friendly bank providing financial and other related services. To cater to various segments of society using advanced technology. To be committed to excellence in corporate values.

Mission To provide excellent professional services & improve its position as a leader in the field of financial related services. To build & maintain a team of motivated and committed workforce with high work ethos. To use the latest technology aimed at customer satisfaction & act as an effective catalyst for socio-economic developments.

2.2 Organizational Structure of Everest Bank Fig. 2: Organization Structure of Everest Bank Limited (EBL)

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EBL follows a line structure where top level management consist of Board of Directors, Executive Officer, Company secretary, Deputy General Manager and Assistant General Manager. The middle level consists of Managers in the different departments and the branch manager. The first line managers consist of Supervisors in each department in different branches. Each manager has his own authority and responsibility. If a decision is beyond his or her responsibility then the manager needs to consult with the higher level management. EBL follows a proper chain of command which makes the work more systematic and efficient.

2.3 Impact of Globalization The integration among the different countries across the globe is known as globalization. Through globalization communication between the people living around the world has increased to a great extent. Globalization affects virtually all the industries and sectors and the banking industry is no exception. Economists believe that the onset of the global integrations means the globalization of financial services. The elements that could contribute to the globalization of the banking industry are the emergence of new business models, the emergence of global challenges to banking, the changing attitude and perspectives of the workforce, the emergence of new competitors and the appearance of strategic off shoring. The most important, however, is the ongoing trend of removing regulatory barriers to international banking. The globalization of banks was facilitated by the advancement in information and communication technology (ICT). Since there are also risks, the government adopted appropriate regulatory, prudential and supervisory framework regarding the banking industry. Globalization are affecting on domestic banking. Due to globalization EBL has been able to create a global network by drawing arrangement with different exchange houses like Habib Exchange Company, UAE; Dalil Exchange Company, Kingdom of Bahrain; Bahrain Exchange Company, Kuwait, etc. Online remittance has also been feasible. EBL has USD Nostro Account, Euro Nostro Account, INR Account, AUD Account, JPY Account and Multiple Currency Account which are used for the purpose of remittance. These accounts are also useful in Trade Finance Department to open Letter of Credit. 2.4 Functions of Everest Bank Limited a. Accepting Deposits 19

This is the oldest function conducted by commercial banks. It accepts deposits in three forms. They are as current, saving and fixed deposit accounts. Deposited amount is repayable on demand or on short notice. Interest is provided in saving and fixed deposit accounts whereas in current account interest provision is not given. b. Providing Loans This is the second important function for EBL. It provides loans and advances from the money it receives from depositors. Different types of loan or credit facilities are provided to borrowers against tangible and intangible securities. Various types of loan such as education loan, vehicle loan or personal loan are given as per the loan need of customer. c. Agency Functions Everest Bank Ltd. acts as an agent and performs variety of services on behalf of its clients. The bank makes payment of the cheques, draft and bills of exchange presented by the customers. It can also transfer money from one place to another through use of draft, mail transfer and telegraphic transfer on customers request. It also pays utility expenses on behalf of its customers. d. General Utility Functions The bank does some services known as general utilities services. It carries out foreign currencies transactions with central banks approval. Banks provides locker facilities for safe keeping of valuable documents. It also offers investment and merchant banking services. It gives economic and professional advices to its customers. It also issues travelers cheques on behalf of customers name. e. Foreign Trade Financing The bank helps customers who deal with foreign trade. It facilitates export and import business by issuing letter of credit (L/C). It discounts the bills of exchange drawn by Nepalese exporters on the foreign importers and enabled the exporters to receive money in the home currency. On the other hand, it also accepts the bills drawn by foreign exporters.

2.5 Departmentalization Everest Bank has following departments for smooth operation of the bank. Each department has its own function and are coordinated by the department heads or supervisors. a. Trade Finance Department 20

Trade finance department is an important part of the organization. They are responsible to issue letter of credit to the customers. This department also deals with the providing bank guarantee to the clients. They generate significant amount of income for the bank in terms of commission. The department mainly serves those people who are involved in trading activities both within and outside the country. b. Operation Department Inside operation department there are three sub departments namely Customer Service Department (CSD), Cash Department and Locker. CSD is very important because it requires good public relation being a service organization with all its activities focused towards serving its customers. This department is the first place where the customers come to get the service. This department focuses on opening accounts, providing cheque books, balance statements etc. CSD is the place where people can inquire about their various problems. Cash Department accepts the deposit brought by the customer and cash the cheque provided by them. This department mainly focuses deals with the cash transaction. Operation Department also deals with lockers. Lockers are completely secured facility for safekeeping of precious items, confidential documents and other valuables. c. Credit Department Credit Department helps to disburse the fund to generate a significant income. It provides a major source of income for the bank due to which bank gives a special emphasis to this department. Success of any bank depends on its ability to provide loan that do not fall overdue and ultimately convert into non-performing loans or assets. Each credit decisions should be for a specific time period against specific terms and conditions. Through credit department the bank generates largest source of the revenue if not managed properly else can incur huge loss.

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d.

Remittance Department

There are two types of remittance services provided by EBL i.e. Inward Remittance and Outward Remittance. Through Inward Remittance people can receive money send by their families, relatives and friends from around the world. Outward remittances of foreign currency in Nepal are subject to central bank's directives. EBL provide a convenient mode of your remittance/payment via draft and Swift transfer. e. Accounts Department

Accounts department deals with all the inter bank transactions and the intra bank transaction. They help to keep record of all the debit and credit entries of the bank. The focus on developing various kinds of accounts like the cash flow statements, balance sheet, profit and loss accounts, petty cash, etc. This department helps to know whether the branch is performing various functions as per the budget set by the bank or not. f. Information Technology Department

Information Technology department is also known as System department. This department focuses on smooth operation of the information system that is made available to the bank. This department fixes any sort of problem related to the system, ATM, computers of employees, etc. System is the most important part of the bank without which none of the other operations can be carried out.

2.5 SWOT Analysis SOWT analysis helps to know about the companys internal and external environment. It helps to show the internal strength and weakness as well as the opportunity and threats posed by the external environment. Strengths One of the oldest banks operating in the country. Hence, it has a strong and reliable brand image. Large network within and outside the country. Provides customized and reliable service. Goodwill of the bank is high (Awarded as Bank of the Year 2006 by the banker). 22

Goal oriented, motivated and smart professional employees. Sound relationship with the correspondent bank and link ups in almost every part of the world. Broad customer base. Provides its customers with innovative banking and financial services. Use latest technology to provide its services. The services are prompt and convenient due to the use of the latest technology. Strong corporate culture that values customer satisfaction and quality services.

Weaknesses Low participation in corporate social responsibility. Latest technology like biometric system e.g. thumb recognition is not in practice. Credit card has not been introduced as a product of EBL. The EBL website is not updated.

Opportunities The increasing need of banking in the growth of country's economy. Increase in number of industries involved in trading of goods and services. Partnership, alliance, merger and acquisition will provide better opportunity. Development of advanced technology to increase efficiency of business.

Threats High competition from other increasing numbers of commercial banks. Political instability within the country. Innovative products and services of the competitors. Upgrading of new technology may influence the banking activities.

2.7 Suppliers Suppliers are the individual and corporate bodies that provide fund to Everest Bank. They are the depositors who deposit their money in various accounts. In other words, suppliers are the households, corporate bodies and government organization that deposit their fund in EBL. 2.8 Competitors Major competitors of Everest Bank Limited are Nabil Bank Limited, Nepal Bangladesh Bank, Nepal Investment Bank Limited and Standard Chartered Bank Nepal Limited. All these banks are providing similar banking services in the Nepalese Market. They are involved in pure banking 23

services like collecting deposits and distributing loan, remittance services, foreign currency exchange, trade credit, etc. There exist a tough competition among these organization in terms of customer service, interest rate on deposits and loan and innovation. The competitions prevailing among the different banks have benefited the customer as they are provided with improved banking services. There have been an increased number of branches opened by the banks to capture more market share, this has benefited customer as the banks have reached rural areas and there is a scope of development in such areas. 2.9 Business Award The bank has been conferred with Bank of the Year 2006, Nepal by the Banker, a publication of financial times, London. Bank of the Year Awards celebrates those banks that have risen to the challenge, displaying innovation and economic efficiency. The bank was bestowed with the NICCI Excellence award by Nepal India chamber of commerce for its spectacular performance under finance sector.

2.10 Marketing Strategies Everest Bank Ltd has adopted various strategies to retain and grow itself in the market. They have developed various innovative services to provide improved services to the customer. They have introduced Bank on wheel (a mobile services to the customers in Jhapa) and EBL Branchless Banking (uses Point of Transaction machine by using smart cards). The marketing strategies adopted by Everest Bank can be viewed as under:

Product Strategies EBL offers a wide range of products and services designed to make banking easier and to match each and every customer's requirements. EBL has developed different product in terms of Deposit, Loan, Remittance, Card Services, Locker and other services like SMS Banking, ebanking. a) Deposit Schemes: There are a number of deposit schemes provided by EBL. There are basically different types of deposit schemes provided and they are current account, saving account and fixed account. Other deposit schemes includes Recurring Deposit Account: It cater to people who have the habit to save in a regular basis and avail the bulk sum at the end with a high yielding interest rate the bank launched the recurring deposit. The deposit is targeted among the middle class families who save for specific purpose like purchase of items, marriage etc. There are two 24

recurring deposit available. They are Sunaulo Bhavishya Yojana, and Fixed Recurring Deposit Account.

FYC Deposit Account: Some individual and companies who earn or get fund in foreign currency can open this type of account. There are two FYC Deposit Account namely USD Account and EBL NRN Deposit.

b) Loan Scheme: There are mainly two types of loan schemes developed by EBL. Retail Loan are for individual where as Corporate loans are for the institutional customers. Retail Loans include Home Loan, Home Equity Loan, Vehicle Loan, Educational Loan, Share Loan, Future Lease Loan Rental, Professional Loan, Flexi Loan, Bike Loan, Loan against Life Insurance Policy and Tractor and Water Pump Finance. Likewise, Corporate Loan includes Working Capital Finance, Project Finance, Trade Finance, Consortium Finance. c) Remittance Services: Remittance is transfer of money from outside the country as well as money transfer to the citizen of the country. There are two types of remittance services provided by EBL i.e. Inward Remittance and Outward Remittance. Through Inward Remittance people can receive money send by their families, relatives and friends from around the world. Outward remittances of foreign currency in Nepal are subject to central bank's directives. EBL provide a convenient mode of your remittance/payment via draft and Swift transfer. d) Card Services: EBL debit card is a plastic card which provides an alternative payment method to cash when making purchases or cash withdrawal from ATM centers. EBL Debit Card is your key to ultimate convenience regarding day to day monetary transactions. It is associated with Smart Choice Technology (SCT). EBL debit card holder can also have the withdrawal facility from over 5600 PNB ATM in India. e) Locker: Locker services are offered in select branches. Locker facility provides completely secured facility for safekeeping of precious items, confidential documents and other valuables. f) Other Services Internet Banking SMS Banking UTL Telephone Bill Payment NTC Telephone Bill Payment

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Pricing Strategies Everest bank charges different pricing depending on the product provided by the bank. The interest rate on deposit ranges from 3.25% to 8.50% and the interest rate on loan depends on the risk and the type of loans taken by the customer.

Promotional Strategies Promotion is an important part of the marketing strategy. Everest Banks adopts a range of promotional strategies like advertising on the television, hoarding board, tool post, radio, etc. It also does personal selling by sending employees to different corporate houses. This helps the organization to negotiate with the customer and bring in deposit as well as good loan clients.

Distribution Strategies Everest Bank Limited (EBL) provides customer-friendly services through its Branch Network and all it's the branches are connected through Anywhere Branch Banking System (ABBS), which enables customers for operational transactions from any branches. The bank has 46 Branches, 17 inside Kathmandu Valley and 29 outside Kathmandu Valley. There is one representative office in New Delhi, India. There are 58 ATM Counters and 22 Revenue Collection Counters across the country. EBL has introduced Bank on wheel which is a mobile Banking operation, since 26th September 2007. This service Bank on Wheels as a banking product is the first of its kind in Nepal. EBL providing banking facilities at the customer home through mobile banking. This facility is in operation in three major cities of Jhapa District. In an endeavor to provide banking facilities to large and well spread out sections of the remote village, EBL has introduced new product as Everest Bank Ghar- Dailo Banking Sewa, on 17 th June 2009, this service is unique delivery channel in banking services to facilitate rural people in banking with the help of sophisticated technology. This service is branchless banking service through point of transaction (POT) machine by using smart cards. This is a major leap forward towards inclusion through branchless banking. The customer can avail the facility of banking at his/her own convenient time. Besides that he/she will earn interest on the savings and this fund will remain secured.

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2.11 Computerization in Everest Bank Limited The bank is fully computerized. Employees have access to computer from the assistant level onwards. They use Local Area Network (LAN) to share data over the network. They are currently using Finacle Universal Banking System. Finacle is a product developed by Infosys Partners. It enhances customer experience and achieves greater operational efficiency. It addresses the core banking, mobile banking, e-banking needs of retail, corporate and universal banks. Employees at different level have access to different part of the system. Similarly their authorities are also determined depending on the department they are working in. Eg. Employees of Customer Service Departments have access to account and account opening where as employees of credit department has access to loan account and interest status of clients, etc. Each employee has their own User Identification to enter the system and their authority to use the information system. The Information Technology Department will then set the access level for their employee as per their designation, department and as per the instruction of their supervisor. The IT department is centralized in their Head Office. If any problem occurs they send the IT staffs to the concerned branch to fix such issues. IT department maintains security over their network. They monitor employees activities in the network. Social Networking websites and personal e-mails are blocked. The USB ports are also blocked to ensure data confidentiality. Employees also have to sign contract regarding the privacy issues of the bank before joining the organization. They are using Kaspersky Anti-Virus 2012 to protect the network. Closed Circuit Television (CCTV) cameras are fitted in different location on all banks premises to monitor the activities of both staffs and customers. The top level management and the IT department have local and remote access to CCTV footage whereas the branch managers only have local access. The bank has 58 Automated Teller Machine (ATM) counters across the country which is linked to Finacle. ATM provides prompt services to the customers and also reduces the bottlenecks of the branches.

2.12 Financial Structure The share ownership of EBL is composed by different individual and institutions. It can be seen by the help of pie chart which is given below: Fig. 3: Detail of Share Ownership 27

Source: http://www.everestbankltd.com/doc/annualreport Majority of the share are owned by promoter that is 41% and 30% of the share are owned by General Public. As Everest bank is a joint venture bank; 20% of its share is owned by Punjab National Bank remaining 9% is owned by other sources.

2.13 Deposit Mix Fig. 4: Deposit Mix

Source: http://www.everestbankltd.com/doc/annualreport Major proportion of the deposit is through saving account and the least proportion is from call account which is an interest bearing account for the corporation.

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2.14 Credit Distribution Fig. 5: Credit Distribution

Source: http://www.everestbankltd.com/doc/annualreport The figure shows that majority of the loans are provided to trading sector and 31% on construction and manufacturing sector, 22.40% of loan is provided to service sector, 13.30% on other sector and 0.30% on Agriculture and Mines. 2.15 Annual Turnover As commercial banks are service industry the annual turnover would be the Interest Income. The interest income for the year 2009/2010 is NPR 3102.4 million and 2010/2011 is NPR 4331 million. The turnover has increased by 39.60%. Increase in annual turnover indicates that the business volume has increased over the year. It also shows that the profitability of the bank is rising along with the increase in turnover.

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2.16 Profitability Table 1: Profitability

Particular 2010/2011 (Rs. in millions)

Total Income 4774.5 Interest Expenses -2535.9 Staff Expenses -239.5 Operating Expenses -383.1 Operaing Profit 1616.0 Provision for losses -98.3 Provision for Staff bonus -133.1 Provision for Staff Gratituity -53.6 Profit Before Interest and Tax 1331 Provision for Income Tax -399.7 Net Profit After Tax 931.3 Source: http://www.everestbankltd.com/doc/annualreport The total income as on July 2011 is NPR 4774.5 million and the operating profit for the same fiscal year is NPR 1616million and the Net Profit After Tax (NPAT) is NPR 931.3 million. Previously the Net Profit After Tax was NPR 831.8 million. The growth rate in terms of NPAT is 11.96%.

2.17 Share Value of Everest Bank Table 2: Share Price of EBL

Last Date 05/07/12 Last Sale Rs. 952 Net Chg. Rs -2 %Change -0.21 High Rs. 952 Low Rs. 941 Close Rs. 950 Quote EBL

Source: http://www.nepalstock.com/

The share value as on 8/07/2012 is NPR 950 per share. The highest share value is NPR 952 per share and the lowest share value NPR 941 per share. Net change in the price after the last transaction was NPR -2. This indicates that the price of the share has decreased from NPR 952 to NPR 950. Table 3: Market Capitalization
Listed Shares 12316347 Paid Value Rs. 100 Up Total Value Paid Up Closing Market Market Price Capitalization Market Capitalization Date

Rs. 1,231,634,700 Rs. 950

Rs. 11,700,529,650 08/07/12

Source: http://www.nepalstock.com/ 30

The number of listed share is 12316347 and the Paid Up value of EBL is NPR 100 per share. Therefore, the total paid up value is NPR 1,231,634,700. The closing price as on 8/07/2012 is NPR 950 and the Market Capitalization is NPR 11,700,529,650.

2.18 Growth Rate of EBL The growth rate of EBL can be viewed in terms of Annual Turnover and Net Profit After Tax which is as follows: Table 4: Growth rate in terms of Annual Turnover and NPAT Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Annual Net Profit After Growth Rate of Annual Turnover tax Turnover (%) 13787 2964 18481 4512 34.05 25653 6386 38.81 35355 8318 37.82 47745 9313 35.04 Source: http://www.everestbankltd.com/doc/annualreport Fig. 6: Growth rate of EBL Growth Rate of NPAT (%) 52.23 41.53 30.25 11.96

Source: http://www.everestbankltd.com/doc/annualreport The figure shows that the growth rate of annual turnover was 34.05% in 2007-2008 and it raised in 2008-2009 and the decline in 2009-2010. The growth rate further reduced to 35.04% at the end of 2010-2011. Similarly, the growth rate of NPAT in 2007-2008 was 52.23% and it reduced to 41.53 in 20082009. The growth rate further declined to 30.25% in 2009-2010 and was 11.96% in 2010-2011.

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2.19 Balance Sheet Table 5: Balance Sheet of 3 conjugative years 2008-2009 Capital and Liabilities Share Capital Reserve and Surplus Debenture and Bonds Loans and Borrowings Deposit Liabilities Bills Payable Proposed Dividend Income Tax Liabilities Other Liabilities Total Capital Liabilities (Rs.) 1,030,467 ,300 1,173,157 ,755 300,00 0,000 312,00 0,000 33,322,946 ,246 148,65 5,592 218,08 0,345 20,52 2,280 391,01 and 9,136 36,916,8 48,654 2008-2009 (Rs.) 944,69 5,793 4,787,163 ,541 432,51 1,829 2009-2010 (Rs.) 1,279,607,49 0 1,479,530,36 5 300,000,000 404,600,000 36,932,310,0 08 145,514,679 276,252,832 (1,136,458) 566,081,795 41,382,760, 711 2009-2010 (Rs.) 1,091,500,40 7 5,625,113,84 9 1,102,200,74 7 2010-2011 (Rs.) 1,391,570,439 1,721,975,617 300,000,000 482,000,000 41,127,914,339 49,716,572 576,897,427 26,900,414 559,237,454 46,236,212,2 62 2010-2011 (Rs.) 1,048,998,72 1 4,706,320,59 0 367,543,641

Assets Cash in Hand Balance with Nepal Rastra Bank Balance with other Banks & Financial Institutions Money at Call and Short Notice

5,948,480 Investments Loan, Advances and Bills Purchased Fixed Assets 32 ,273 23,884,673 ,616 427,15 7,451

5,008,307,58 9 27,556,356,0 32 463,094,391

7,743,928,32 1 31,057,691,4 62 460,258,735

Non-Banking Assets 492,16 Other Assets Total Assets 6,151 36,916,8 536,187,696 41,382,760, 851,470,792 46,236,212, 262

48,654 711 Source: http://www.everestbankltd.com/doc/annualreport

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Table 6: Summary of the Balance Sheet Particular Capital and Reserve Long term liabilities Current Liabilites Toatl Capital and Liabilities 2008-2009 (Rs.) 2,203,625,05 5 33,934,946,2 46 778,277,353 36,916,848, 654 2009-2010 (Rs) 2,759,137,85 5 37,636,910,0 08 986,712,848 41,382,760, 711 20102011(Rs) 3,113,546,05 6 41,909,914,3 39 1,212,751,86 7 46,236,212, 262

6,164,371,16 7,818,815,00 6,122,862,95 3 3 2 30,752,477,4 33,563,945,7 40,113,349,3 Fixed Asset 91 08 10 36,916,848, 41,382,760, 46,236,212, Total Assets 654 711 262 Source: http://www.everestbankltd.com/doc/annualreport Current Asset The balance sheet shows that the total assets, total capital and liabilities have increased over the three years. Looking at the balance sheets, current assets have increased by NPR 1,654,443,840 from 20082009 to 2010-2011. Since that increase occurred on the asset side of the balance sheet, it is shown as a negative figure. If the bank extended more in credit to its customers, then it had NPR 1,654,443,840 less to use. But the current assets has decreased by NPR 1,695,952,051 from 20092010 to 2010-2011. This indicates a positive sign as bank has more money to be in use. Current liability has increased by NPR 208,435,495 from 2008-2009 to 2009-2010. Likewise, in the year 2010-2011 the current liabilities has increased by NPR 226,039,019. This shows that the source of the fund has increased over time. The fixed asset of the bank increased by NPR 2,811,468,217 from 2008-2009 to 2009-2010. Similarly, in 2010-2011 the fixed asset increased by NPR 6,549,403,602. This shows that there is a negative figure as the asset has increased. There fund has been utilized to purchase assets. Now at the liabilities section of the balance sheet, capital and reserve has increased by NPR 555,512,800 from 2008-2009 to 2009-2010. In 2010-2011 the capital rose by NPR 354,408,201. The increase in the liability side shows a positive sign and the source of fund increased. Long term liabilities has increased by NPR 3,701,963,762 in the first two years and further increased by NPR 4,273,004,331 in the next year. This shows that the source of fund has increased and it is a positive indicator. 34

2.20 Ratio Analysis From the above balance we can make ratio analysis. Following ratio are calculated i. Current Ratio= Current Assets/ Current Liabilities = 5.04 Current ratio shows the short-term financial position of the business. This ratio measures the ability of the business to pay its current liabilities. The ideal current ratio is supposed to be 2:1. The bank is using conservative working capital policy. This shows there is high liquidity but there isnt a proper utilization of fund. ii. Debt-To-Equity Ratio= Total Liabilities/ Total Shareholders Equity = 13.85 to 1 The composition of debt and equity in the capital structure is an important determinant of the cost of capital to a company. The ratio 13.85 indicated that for every Re. 1 of capital that the stockholders provided creditors provides Rs.13.85. A high debt-equity ratio indicates greater contribution by creditors than shareholders. From creditors point of view high debt-equity ratio is riskier to them. iii. Times Interest Earned Ratio= Net Income+ Interest Expenses + Income Tax Expenses/ Interest Expenses = 3.04 to 1 TIE ratio indicates that the companys ability to meet current year interest payments out of current year earning. The TIE of EBL indicates that the bank is able to satisfy interest claim even if the banks current net income falls to 1/3.04. iv. Debt-To-Assets Ratio= Total Liabilities/ Total Assets = 0.93 to 1 High Debt-assets ratio indicates that bank has low equity in comparison to debt. Debt-asset ratio of 0.93 indicates that 93% of to total asset is finance by debt. v. Net Profit Margin= (Net Income/ Turnover)*100 = 19.50% Net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue NP Margin indicates banks ability to generate net income out of per Rupee of Total Income. For every rupee of turnover contribute Rs 0.1950 to Net Income.

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vi. Operating Profit Ratio= (Operating Profit/ Turnover)*100 =33.84% Operating Profit Ratio is the ratio of operating income divided by net sales, usually presented in percent. Operating Profit Ratio implies that every rupee of banks income contributes Rs. 0.3384% to operating profit. vii. Return on Equity= (Net Income/ Total Equity)*100 =29.91% Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity ROE 29.91% indicates that banks total shareholders investment offers 29.91% return after recovering all operating expenses, interest and tax payment. viii. Return on Assets= (Net Income/ Total Assets)*100 = 2.01% The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue. ROA 2.01% indicates that banks investment in total assets offers 2% return after recovering all operating expenses, interest and tax payment. ix. Earnings Per Share= (Net Profit After Tax- Preferred Dividends)/ No. of Share Outstanding) =Rs 82.04 Earnings per share (EPS) are the amount of earnings per each outstanding share of a company's stock. EPS of Rs 82.04 indicates the earning per each outstanding share of EBL. x. Price Earnings Ratio= Current Market Price/ Earnings per Share =11.58 to 1 The P/E ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the annual Earnings per Share (EPS). Higher P/E ratio indicates that stock is overpriced by the market. The investor is willing to pay 11.58 times earnings per share. 2.21 Human Resource Analysis The staff strength of the bank is 583 in the fiscal year 2010-2011. It is the considered that the progress and success of any organization depends upon the knowledge, skills and motivation level of the workforce.

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The bank has been taking special interest in the development of its human resources by imparting employee training in various aspects of banking and relevant subjects. The bank has been conducting special program on Management Development to bring positive swing in the working attitude of senior officers. Each employee gets around 3 days of training related on various issues per year. EBL considers training as an important investment as it helps to develop competency among the employees. The number of employee differs from one branch to the other. The number of employee depends upon the business volume of the branch. In Lazimpat branch there is one branch manager, 2 supervisor and 11 subordinates. The average age of employee working is EBL is 30 years. Majority of the employee in the bank have completed post graduation and some have just completed under graduation. The employees working in the messenger level have studied till their higher secondary. The average years of experience of the employees are 5 years. Recruitment Method Recruitment refers to the process of attracting, screening, and selecting a qualified person for a job. Recruitment helps in selection which is necessary for filling up vacancies in the organization. There are two major methods of recruitment. Internal Source: An organization can recruit internally through promotion, job rotation, employee referral and job posting External Source: An organization can recruit externally through on campus interviews, advertisement in media, employee agencies, etc

Everest Bank follows both internal and external recruitment method which is through promotion, job rotation and advertisement in media to attract candidates. If candidates apply through the media then the fresh candidates will have to give various tests like written test, interview, personality test, etc. The recruitment process has to be fair and should give priority to the most competitive candidate.

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CHAPTER III 3.1 Findings After doing internship in Everest Bank Limited, following information was obtained. 1. Some of the major functions of commercial banks like Everest Bank Limited are accepting deposit, providing loans, performing agency functions. In addition to this commercial banks are also providing supplementary services like general utility services, foreign trade financing, etc. 2. Due to globalization EBL has been able to create a global network by drawing arrangement with different exchange houses. 3. Everest Bank adopts various strategies in terms of product, price, promotion and distributions. This allows the bank to gain a competitive advantage. This helps the bank to develop new strategies to meet as well as exceed their customers expectations. 4. EBL has separated different departments in their branches which facilitates the employee to perform their work in an organized method. 5. EBL follows a proper information system which allows for smooth operation of the bank. It helps the employees to perform their duties in a systematic manner. It follows a centralized IT department. 6. Most of its capital is collected through the individual promoter. Majority of the deposit collection is through Fixed Deposit and greater part of credit is provided to Trading sector of the economy. 7. The growth rate of Net Profit After Tax and annual turnover has reduced over the three years period. The NPAT and annual turnover has increased but at a decreasing rate. 8. The share price is much higher than the par value. The shareholder can benefit from selling their shares at the market rate to earn capital gain. 9. The bank has a sound financial position with high Current Ratio, Debt Equity Ratio, Net Profit Margin, Times Interest Earned Ratio, Return on Equity, EPS, etc. 10. Human resources are considered to be one of the most important assets of EBL. As employees represent the bank, it feels training the employee is an important investment. The bank tries to hire employees who are well qualified and experienced. 11. The bank has some weaknesses which it should try to reduce and there are plenty of opportunities that it should capitalize. There are some threats possessed by the external environment as well.

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12. The bank has developed various innovative products like Banks on Wheel and Branchless Banking

3.2 Recommendations Following are some points that Everest Bank Limited needs to implement for further growth of the bank. EBL may update itself with to the latest technology and implement it to provide prompt and reliable service to its customers. It may introduce credit card as a product to grab customers who are interested in it. It may be more involved in corporate social responsibility to promote public confidence. It may focus more on persuasive advertisement that not only attracts the customer but ensures confidence on the bank. It may update its website to provide needed information to the general public. It may bring in more innovative products that allow it to be a market leader in front of its competitors. The bank may provide more time for training of its employees so that the employees capabilities are enhanced to provide better service to the customers. There are a number of competitors in the market for EBL for which may to bring in different strategies to outperform its competitors.

3.3 Conclusion Commercial banks play an important role in financial sector of the economy. Everest Bank Limited has a wide network and a broad customer base serving to over 450,000 customers. EBL being a commercial bank provides various sorts of services like deposit collection, loan, debit cards, remittance, etc. It is providing all the basic banking services along with innovative banking services like Bank on wheel and EBL Branch less Banking. Everest bank has a sound marketing and human resource activities which is facilitating the bank to retain its position in the market. The financial position of the bank is sound, as it is earning profit and the return on equity is high. However, the growth rate on annual turnover and Net profit after tax is declining over the years. If the bank implements suggestions provided the bank may improve its current position. 39

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BIBLIOGRAPHY

Books Kotler, P., K.L. Keller, A. Koshy and M. Jha. 2009. Marketing Management, India: Dorling Kindersley Pvt. Ltd. Proter,G. A. and C.L. Norton. 2007. Financial Accounting for Decision Makers, China: Leap Publishing Service Inc. Ehrhardt M.C and Brigham E.F. 2008. Financial Management, India: Cengage Learning (I) Pvt. Ltd.

Websites http://bfr.nrb.org.np/List_Banks_n_Non_Banks.php http://bizfinance.about.com/od/yourfinancialposition/a/compbalsheets.htm http://en.wikipedia.org/wiki/Financial_statement http://en.wikipedia.org/wiki/List_of_banks_in_Nepal http://www.edurite.com/kbase/descriptive-analysis-definition http://www.everestbankltd.com/doc/annualreport http://www.everestbankltd.com/main/ http://www.helplinelaw.com/docs http://www.nepseguide.com/financial-statements-06667 http://www.nrb.org.np/ https://www.pnbindia.in/En/ui/Profile http://psychology.about.com/od/apastyle/p/bookref.htm

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APPENDICES
Appendix 1. Branches of Everest Bank Limited 1. Far-Western Region: Dhangadi (Kailali) 2. Mid-Western Region: Nepalgunj (Banke), Surkhet (Surkhet), Tulsipur (Dang), 3. Western Region: Baglung (Baglung), Besishahar (Lamjung), Gorkha (Gorkha), Krishnanagar (Kapilvastu), Kushma (Parbat), Pokhara (Kaski), Sandhikharka (Arghakhanchi) Syangja (Syangja), Bhairahawa, Butwal, Lumbini, (Rupandehi), Taulihawa (Kapilvastu), Lekhnath (Kaski) 4. Central Region: Bagbazar, Balaju, Baneshwar, Chabahil, Golfutar, Kalimati, Kirtipur, Lazimpat, Maitidevi, New Road, Satungal, Teku, Thamel (Kathmandu), Gwarko, Lagankhel, Pulchowk (Lalitpur), and Bhaktapur, (Bhaktapur), Chandranigahapur, ICD (Rautahat) Birjunj (Parsa), Hetauda (Makwanpur), Narayangarh (Chitwan), Simara (Bara), Tatopani (Sindhupalchok), Duhabi, Janakpur (Dhanusha) 5. Eastern Region: Biratnagar, Itahari (Sunsari), Birtamod (Jhapa),

Appendix 2. Financial Institutions in Nepal

Financial Institution Central Bank Commercial Bank Development Bank Financial Institutes Micro Credit Co-operative Bank Saving and Credit Co-operative NGOs

No. of Financial Institutions 1 32 86 79 21 16 38

273 Total (Source: Nepal Rastra Bank Report, Mid July 2011)

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Appendix 3. Deposit Mix

Deposit Mix Call

Percentage 18.40%

Fixed Deposit 36.50% Saving 31.70% Interest Fee 13.40% Total 100% (Source: http://www.everestbankltd.com/doc/annualreport)

Appendix 4. Credit Distribution Credit Distribution Service Trading Construction and Manufacturing Agriculture & Mines Others Total Percentage 22.40% 33% 31% 0.30% 13.30% 100%

(Source: http://www.everestbankltd.com/doc/annualreport)

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