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Chapter One


1.1 Study Background

Todays world is more challenging and dynamic. This is due to the advancement of
innovative or new technology. In this competitive age, to be a successful personality
one has to be competent in that field and it is possible only through hard work,
dedication and commitment. For that, internship program provides a platform to the
students for gaining greater practical knowledge to perform effectively in dynamic
corporate environment with working experience. It is designed in such a way that it
aims at developing business and management skills necessary to become effective
human resources in managerial field as well as business leader and entrepreneur. It
teaches about the style to deal with customer, to put data given by the customer,
develops public relationship skills, and makes competent to work in a dynamic
environment. The internship program under the BBA is mainly focused at providing
the practical exposure to the students who have acquired the plenty of theoretical
knowledge in the related field of the study. Here the students are provide an
opportunity to work within organizational boundary so as to learn and solve the real
life problems and develop the knowledge and skills that was initially limited within
the theoretical territory. The study is a partial fulfillment of BBA course affiliated
with TU but is of high advantage in enlightening the students who are really
interested in different modes of payment and settlement system commonly used by
various financial and banking organizations (esp. commercial bank) in our country.
Hence, the focus of the study is to analyze the student ability to cope with the real
work scenario. The internship report is submitted in order to fulfill the qualifications
to attain the degree of Bachelors in Business Administration (BBA) under Faculty of
Management, Tribhuvan University. The internship period was for eight weeks and
started from June 15, 2016 to August 15, 2016.. The 4-year course of BBA is divided
into eight semesters, a total of 120 credits hour and students need to compulsorily
perform internship and prepare the report for the fulfillment of degree.

1.2 Objectives of the Study
With the internship program, students have benefits of work experience. It is a taste of
how its like to be an employee. The aim of internship is directed towards creating an
actual work environment that will be challenging as well as interesting to the students.
It plays a crucial role in clarifying aim, vision, skills and career of the students. This is
a practical learning curve that provides opportunity to work in future. The specific
objectives are as follows:

To improve communication and information as well as interpersonal skills

for remittance purpose.
To understand the working mechanism of remittance.
To improve public relations and create contacts for future works.
To analyze the practical implication of the theoretical aspects learnt during
BBA program.
To understand the cost of remittance and related field.
To learn how the remittance process is executed.

1.3 Methodology

1.3.1 Sources of information

Research Methodology is a way to solve the research problem in a systematic

Manner. Methodology refers to the various sequential steps adopted in the study. The
Research Methodology describes about the methods to be used and the reasons why
they are being used. The primary objective of this study is to analyze the Customer
Service Department of NICA. The research is divided into three major chapters. They
are Introduction, Presentation and Analysis of Data, and Summary and Conclusion.
Primary sources Secondary sources

External Interview with the staff at Broachers

NICA Policy manuals
Interview with the customers Websites of commercial banks
of NICA Internal search
Journals and magazines related to

Internal Interview with the personnel Literatures, lectures, articles
of different banks under Financial statement of commercial
consideration banks taken for the study
Questionnaire survey Statistical publication by NRB on
Opinion of different people commercial banks
Table No 1.1: Sources of data collection

1.3.2 Selection of the Organization

Banking being a service sector, I choose and decided to do my internship in a bank.

NIC Asia Bank Ltd was selected as an organization for pursuing the internship
program. It was an appropriate place for intern to learn the banking process since
there was the provisions of placement in different departments and it is one of top
most busy bank in Biratnagar as well as it also highly appreciated by customer for its
banking operation. All the members are keen and kind to help whatever the problem
comes. Therefore Im thankful towards the NIC Asia Bank Family.

1.3.3 Placement

In the course of internship, the intern was placed in the business Customer Service
Department (CSD), Remittance and DMAT Department under the supervision of
Supervisor, Ms. Rupa Shrestha. As per the major, intern choose to carry on internship
in the CSD, Remittance & DMAT to deal with customer and to dematerialization the
physical shares . Every staffs at Business Advantage was supportive and friendly who
helped the intern to complete the internship period with proper guidance. Gradually,
the understanding of the work and working environment got better and the intern
could do the tasks with more efficiency.

1.3.4 Duration of Internship

The standard duration of internship is six credit hours i.e. eight weeks as prescribed
by T.U. Two months internship was attended at NIC Asia starting from June 15, 2016
to August 15, 2016.

1.3.5 Activities performed in NIC Asia Bank Ltd

During the two months of internship period, the works were done in customer service
department, demat and remittance department. The details of the activities carried out
during the period on internship are presented in the next chapter.

1.3.6 Limitations
The limitations of the internship program are as follows:

For security reasons, intern is not provided access to much information

The study report has covered only a limited aspect of the total system
The interpretation and conclusion were drawn being based on the
information collected from primary and secondary sources and the
personal observation of the intern; hence it may be short of a professional
The organization did not rotate the intern in all department

Chapter Two


2.1 Background of the study

2.1.1 General Background

Finance is the life blood of trade, commerce and industry. Now a-days, banking sector acts
as the backbone of modern business. Development of any country mainly depends upon the
banking system. In fact it can be considered as the backbone of economic development of the
nation. Hence, in order to enter in this sector one must have sufficient knowledge, skills and
ability related to this sector to tackle different situations.

The role of bank prominent for the all round development of the country because its facilitates
or adds social, economical and industrial sector. Banks helps directly or indirectly to invest
and mobilize saving of the people in systematic way. Hence, in the present context it is
essential for each and every individual to have sound knowledge of banking and services
provided by it for public and social welfare.

2.1.2 Bank: An Overview

Banks are depository institutions that deal with the financial or monetary
transactions. The main and basic function of the bank is to accept the deposit from
consumer and advancing loan to the consumer. Banks serves as the bridge between
the savers and users of fund. Banks collects funds from general public by providing
certain interest and provide loan to the public at higher interest rate. The difference
between the costs of fund gained and paid, which is known as the interest spreads is
major source of income for banks. Besides that non-interest income is also other
source of income for banks. Banks have been serving the public from long period of
time. Along with the flow of time banks function and services has been improving
gradually. Banks facilitate and assist in growth of trade, industry, agriculture,
commerce and also contribute to national economy.

In a comprehensive way, bank can be defined as any financial institution that

receives, collects, transfers, pays, exchanges, lends, invest, or safeguards money for
its customer.

Since bank itself operates in dynamic environment, the concept of banking has been
modifying. Some of the significant definitions of bank are stated below:

"The Bankers business is to take debts of other people to offer his own in
exchange and there by creates money." - Crowther
"Bank is a financial institution which provides financial services that may be in
the form of accepting deposits, advancing loan, providing necessary technical
advice, dealing over foreign currencies, remitting funds etc." - Nepal Rastriya
Bank Act 2002
A bank is an organization whose principle operation is concerned with the
accumulation of the temporarily idle money of the general public for the
purpose of advancing to other for expenditure"- Kent

"A bank is an established for custody of money received from or on behalf of

its customers, its profit arise from its use of the money left unemployed by
them"- Oxford Dictionary

2.1.3 Origin of the word Bank

We can tell from historical records, banking is the oldest of all financial service
professions. linguistic (the science of language) and etymology (the study of word
origin) tell us that the French word banque and the Italian word banca were used
centuries ago to refer to a "bench or "money changer's table" during the Renaissance
by Florentines bankers who used to make their transactions above a desk covered by
a green table cloth. This describes what historians have observed about the first
bankers offering their services more than 2,000 years ago. There were money
changers situated usually at a table in the commercial districts, aiding travelers by
exchanging foreign coins for local money or discounting commercial notes for a

2.1.4 History of Bank in Nepal

Evolution of modern banking system of our country has not been more than three
decades. As in other countries, Goldsmiths, landlords and Merchants were also the
ancient's bankers of Nepal. This becomes explicit when one compares Nepalese
banking system with the banking system of other countries across the globe. But this

does not prove that there was complete absence of banking activities in Nepal. It is
very difficult to trace the correct chronological history of the traditional banking
system of Nepal due to lack of historical records of banking. The banking in the form
of money lending can be the form of money lending can be traced bank during "The
Lichchawi Period" in the regime of King GunaKamdev at the end of eighth century.
As historical evidence shows that GunaKamdev, the king of Kathmandu has
borrowed money to republic and to rule in 780 BS. Then, in 11th century King
Jayasthiti Malla divided the people in 64 castes on the basis of their professions one
of them named "Tenkadhari", who used to perform simple lending and borrowing

Another historical example as of the pre-modern banking system is found during the
reign of Rana Prime Minister, Ranodip Singh, an institution called "Tejarath Adda"
was established in Kathmandu in 1933 BS. It is considered to be the first step
towards institutional development banking of Nepal. Tejarath Adda did not collect
deposits from public but used to provide loans to the government officials and the
people against mortgage of gold and silver in the term of 5% interest (1933 BS -
1942 BS). There were money lenders known as Marwaari Merchant, Jamindaar,
Goldsmith, Brokers and Sahukars. They still exist in some remotest part of the
country. Indian Currency was accustomed in Terai area. Hindi function had been
done through merchants. "Sainik Dravya Kosh" was established in 1933 BS for the
purpose of future welfare of the government staffs and sainik only. Now-a-days
"Karmachari Shanchaya Kosh" has been performing more functions than Sainik
Dravya Kosh, which gives facilities not only to the staffs of the government but also
to the corporation's staffs. Later on in 1993 the draft of company Act and Banking
Act were prepared by forming "Udhyog Parishad (Industrial Council)". "A Jute Mill"
was established in Biratnagar under this Act and both Commercial and Industrial
Development as well as Institution Banking System had started together at a time in

With the view to provide required financial services and to enhance the economic
development on 30th of Kartik, 1994 BS Nepal Bank Limited was established which
is the first commercial bank of Nepal. Its functions were to meet the need for
development of banking sector and also to formulate monetary policies. Then to

regulate the financial service and activities, on 14th Baishak, 2013 BS, Nepal Rastriya
Bank was established under NRB ACT 2012. Since then, it has been functioning as
government's bank. Being a Central Bank NRB had its own limitation and NBL was
reluctant to go to unprofitable sector. In other words, with the economic growth,
NBL solely could not manage the required demand of financial service. So, Industrial
Development Bank was established in 2015 BS for the promotion of Industrialization
in Nepal which was later on converted into NIDC (Nepal Industrial Development
Corporation) in 2017 BS. Also, the Government established RBB (Rastriya Banijaya
Bank) in 2022 BS under RBB ACT 2021 BS. These banks carried out the functions
of commercial bank and functions of development bank as well. Similarly to provide
the required financial services to the people involved in Agriculture Sector,
government established Agriculture Development Bank in 2024 BS. Until the year
2040 BS, financial Market was totally dominated by government owned

Insurance market was under the control of National Insurance Corporation. None of
the financial service was provided by private sector. Financial sector was sluggish.
Banking service to the satisfaction of customer was a far cry. Having observed the
success of this bank, many other commercial banks, financial institutions, co-
operatives and development banks have been established to provide services to
different sectors. After the political revolution in 2046 BS, Nepal adopted the open
economic policy which enhanced the entry of many commercial private and joint
venture banks. Government adopted free and liberal policies through Foreign direct
Investment Act 2047 BS and Foreign Investment and Technology Transfer Act. There
has been shift in demographical pattern which has directly affected the financial
sectors and the transfer from physical saving to financial saving. People are attracted
towards investing on share, doing insurance and consumption habit of people has also
changed. Society has become more advanced. different and new types of financial
services are emerging. E.g., home loan, auto loan, education loan, card services,
mobile banking, E-banking, telebanking, banking @door, and so on. There are many
finance companies which are similar to commercial banks, many social co-operation
run at local level and also managed by INGO's and NGO's are in operation.

2.1.5 Types of Banks:

Banks can broadly be categorized under two heading Central Bank & Commercial
Bank. They both are briefly described below.

Central bank:

Central banks are the main bank or the bank of the government of any country.
Central bank acts as guardian for all other financial and non-financial banks and
regulated them in correct way. It prepares the monetary policy which must be
followed by other banks. Some of the major activities performed by Central Bank are
as below:

1. Preparation of Monetary Policy

2. Issue of Currency
3. Lender of the last resort
4. Clearing house function
5. Custodian of cash reserves of commercial banks
6. Regulation, control and supervision of banking sector
7. Developmental function

Commercial bank:

In general banks refer to Commercial bank. Commercial banks are the heart of the
financial system. They hold deposits of many persons, government establishment &
business unit. They make fund available through lending & investing activities to
borrowers, individual business firm, and government unit. In doing so, they assist
both the flow of goods & services from the producers to consumer & the financial
activities of the government.

According to the America Institute of Banking Definition, "Commercial Bank is a

corporation which accepts demand deposit subject to check and makes short-
term loan to business enterprise regarding of the scope of its other services".

In the Nepalese Contest, The Nepal Commercial Bank Act 1974 AD defines, "A
commercial bank is one which exchange money & deposit money; accepts
deposits; grant loan & perform commercial banking function".

2.1.6 List of some licensed Bank & Micro Finance in Nepal

Commercial Banks (Class A)

1. Nepal Bank Limited

2. Rastriya Banijya Bank Limited
3. Agriculture Development Bank Limited
4. Nabil Bank Limited
5. Nepal Investment Bank Limited
6. Standard Chartered Bank Nepal Limited
7. Himalayan Bank Limited
8. Nepal SBI Bank Limited
9. Nepal Bangladesh Bank Limited
10. Everest Bank Limited
11. Bank of Kathmandu Lumbini Limited
12. Nepal Credit and Commerce Bank Limited
13. Kumari Bank Limited
14. Laxmi Bank Limited
15. Siddhartha Bank Limited
16. Global IME Bank Limited
17. Citizens Bank International Limited
18. Prime Commercial Bank Limited
19. Sunrise Bank Limited
20. NMB Bank Nepal Limited
21. NIC Asia Bank Limited
22. Machhapuchchhre Bank Limited
23. Mega Bank Nepal Limited
24. Civil Bank Limited (in merger process with Int'l Leasing & Fin, Co. Ltd.)
25. Century Bank Limited
26. Sanima Bank Limited
27. Janata Bank Nepal Limited
28. Prabhu Bank Limited

Development Banks (Class B)

1. Nepal Industrial Development Corporation

2. Malika Bikash Bank Limited
3. Siddhartha Development Bank Limited
4. Yeti Development Bank Limited
5. United Bikash Bank Limited
6. Narayani Development Bank Limited
7. Sahayogi Bikas Bank Limited
8. Karnali Bikash Bank Limited
9. Tribeni Development Bank Limited
10. Supreme Development Bank Limited (in merger process with NCC Bank)
11. Shubhechchha Bikas Bank Limited
12. Sangrila Development Bank Limited
13. Gandaki Bikas Bank Limited
14. Infrastructure Development Bank Limited (in merger process with NCC Bank)
15. Business Development Bank Limited (In merger process with Siddhartha
16. Biratlaxmi Bikas Bank Limited (In merger process with Prime Commercial
17. Excel Development Bank Limited
18. Western Development Bank Limited
19. Society Development Bank Limited (in merger process with Vibor Bikash
Bank Limited)
20. Arniko Development Bank Limited
21. Deva Development Bank Limited
22. Miteri Development Bank Limited
23. Tinau Bikas Bank Limited
24. Muktinath Bikas Bank Limited
25. Sewa Bikas Bank Limited
26. Kankai Bikas Bank Limited
27. Ace Development Bank Limited
28. Mahakali Bikas Bank Limited (in merger process with Kasthamandap
Development Bank Limited)

Finance Companies (Class C)

1. Nepal Finance Limited

2. NIDC Capital Markets Limited
3. Nepal Share Markets and Finance Limited
4. Gurkhas Finance Limited
5. Himalaya Finance Limited
6. Union Finance Limited
7. Paschhimanchal Finance Co. Limited
8. Samjhana Finance Co. Limited
9. Goodwill Finance Limited
10. Siddhartha Finance Limited
11. Shree Investment & Finance Co. Ltd.
12. Mahalaxmi Finance Limited
13. Lalitpur Finance Co. Limited
14. United Finance Co. Limited

Micro Credit Development Banks (Class D)

1. Nepal Grameen Bikas Bank Limited

2. Nirdhan Utthan Bank Limited
3. Rural Microfinance Development Centre Limited
4. Deprosc Microfinance Development Bank Limited
5. Chhimeki Microfinance Development Bank Limited
6. Shawalamban Laghu Bitta Bikas Bank Limited
7. Sana Kisan Vikas Bank Limited
8. Nerude Laghu Bitta Bikas Bank Limited
9. Summit Microfinance Development Bank Ltd
10. Sworojagar Laghu Bitta Bikas Bank Ltd
11. First Microfinance Development Bank Ltd
12. Nagbeli Microfinance Development Bank Ltd

13. Kalika Microcredit Development Bank Limited
14. Mirmire Microfinance Development Bank Limited
15. Janautthan Samudayik Microfinance Dev. Bank Limited

2.1.7 Challenges and Opportunities of Banking Sectors:

The banking sector of Nepal is facing its ultimate test amidst political instability,
liquidity crisis, and unfavorable policies of the regulatory body, sluggish economy
and various other macro and micro economic factors. The ripple effect of global
financial crisis of 2007-2008 has hit the Nepali Banking Sector as well. Improving
the worsening liquidity crisis that is directly affecting the operation of banks is the
major challenge for the banking sector in the current scenario. Higher loan
investment made by banks compared to the deposit they have mobilized and the
regulatory provision that requires declaration of the source of the fluid for a deposits
exceeding Rs. 1 million, contributed to the liquidity crisis. Due to the liquidity
crunch, inter-bank short term interest rate has crossed 12%. The continuous injection
of liquidity by NRB through repo sale over the last two months suggests a
continuing liquidity crunch. Fresh funds have not been generated hence retaining
depositors money remains a challenge. Despite a large number of BFIs (Bank and
Financial Institutions), banking facilities has not reached 70% of the population.

Nepalese banking sector flourished over the years despite numerous challenges and is
trying to be at par with international standards. By becoming the member of the
WTO, Nepal has opened its market for foreign banks to set up their branch here
beginning 2010 AD. There are ample opportunities for the banking sectors to explore
the rural markets in Nepal via innovative products such as microfinance, mobile
banking, etc. Nepal is an agro-based economy with nearly 84% of the population in
the rural areas. The BFIs need to develop ingenious products and adopt new
technologies to cater to the rural sectors. By reaching remote locations, BFIs could
contribute towards poverty alleviation as well. If the banking sector could expand its
services there, more jobs would be created which will result in further prosperity of
the overall economy. The banking sector can bring about tremendous improvement in
the coming days by giving special preference to the rural along with the urban sector.

Chapter Three


3.1 Overview of the NIC Asia Bank Limited

NIC ASIA Bank has its antecedents in NIC Bank which was established on 21 st July
1998. The Bank was rechristened as NIC ASIA Bank after the merger of NIC Bank
with Bank of Asia Nepal on 30th June 2013. This was a historic merger in the annals
of Nepalese financial landscape as the first of its kind merger between two successful
commercial banks in the country. Today, NIC ASIA has established itself as one of
the most successful commercial bank in Nepal.

During the post-merger integration phase, NIC ASIA managed the transition very
smoothly receiving accolades from the regulators as well as the stakeholders, paving
the way for other mergers and consolidation in the Nepalese financial sector. After the
merger, NIC ASIA was recognized as Bank of the Year 2013-Nepal by The
Banker, Financial Times, UK. This is the second time that the Bank was recognized
with this prestigious award, the previous occasion being in 2007.

NIC ASIA Bank is now, one of the largest private sector commercial banks in the
country in terms of capital base, balance-sheet size, number of branches, ATM
network and customer base. The Bank has 67 branches across Nepal with a network
covering all major financial centers of the country. The Bank strongly believes
in meritocracy, transparency, professionalism, team spirit and service excellence.
These core values are internalized by all functions within the Bank and are reflected
in all actions the Bank takes during the course of its business.

3.2 History of NIC Asia Bank Limited

NIC ASIA Bank is the first commercial bank which has created history in the
Nepalese banking sector as the first merger of two A class commercial banks
namely NIC Bank and Bank of Asia. The bank will start its operation as NIC ASIA
Bank from Sunday, 30th June, 2013, at a function to be inaugurated by Dr. Yuba Raj

Khatiwada, Governor, Nepal Rastra Bank (NRB) at the Bank's new Corporate office
at Trade Tower,Thapathali, Kathmandu. With this merger, NIC ASIA Bank is now
amongst the largest private sector commercial banks in the country in terms of capital
base, balance-sheet size, branch/ATM network, customer base and employees. With
the consolidation, NIC Asia Bank will now have 53 branches and 57 ATMs which
will be expanded to a total of 66 branches within 1 year with the re-location of its 13
branches. The Bank has a customer base of 270,000 and a strong capital base of close
to NPR 5 billion including retained earnings for the current year. The Bank's
consolidated Operating Profit for the first 11 months of the current year to mid-June
2013 is NPR 1.43 billion. On a consolidated basis, the Bank's deposit base now is
NPR 38 billion with loans & advances of Rs 33 billion.

The Board of Directors of the Bank is supported by a management team, which

comprises of young, enthusiastic professionals. The Bank has successfully embarked
on a multi-pronged strategy of consolidation, administrative streamlining, human
resource up-skilling, strategic cost management, focused non-performing assets
management, balance sheet and treasury management and controlled asset growth, in
tandem with strengthening the credit culture as well as strategic marketing and sales.

NIC Bank's organizational structure is designed to support its business goals.

However, it is flexible enough in seeking to ensure effective control and supervision
and consistency in standards across all businesses at the same time. The organization
structure is divided into five major areas via Retail Banking, Business Banking,
Special Assets Management, Audit & Compliance and Treasury Marketing all of
which are supported by the corporate center.

The Bank believes in continuously offering new and value added services to its
customers, with commitment to quality and value to its clients at the same time.
Accordingly, the Bank shall continue to be in the forefront in launching innovative
and superior products having unique customer friendly features with immense

Mission & Vision


To become one of the most respectable banks in Nepal based on honorable conduct
and long-term financial performance.

To become a leading bank in Nepal by providing complete financial solutions to our

customers, superior value to our shareholders and promising growth opportunities to
our employees.
District Branch Location Contact No. More Details

Argakhanchi Branch
Arghakhanchi Arghakhanchi 977 077 - 420803/420804
Hall Line, Newroad Tole, VDC - 06

977 - 081 - Kohalpur - 3, Banke

Banke Kohalpur
540858/540869/9858028918 Nepal

Hajari Market Kalaiya - 7, Bara

Bara Kalaiya 977- 053 - 551937/551938/9745031113

Bhaktapur Branch
Bhaktapur Suryabinayak 977 1 6619182/ 6619183/ 6619184
Suryabinayak Chowk, Bhaktapur, Nepal

Narayangarh Branch
Chitawan Narayangarh 056-570034,570035
Bharatpur Na. Pa. 4, Lions Chowk

Lamahi Branch
Dang Lamahi 977 082 - 540681/540682
Chailahi VDC - 2, Lamahi Bazar, Dang

977 - 082 - Bahini Chowk, Duruwa - 4 Tulsipur, Dang

Dang Tulsipur
523086/523087/9857061400 Nepal

Janakpur Branch
Dhanusa Janakpur 977 041 - 525856
Ram Mandir Chowk, Janakpur

Ilam Branch Ilam 1, Ilam

Ilam Ilam 977 - 27 - 521702

Mahendranagar Branch
Kanchanpur Mahendranagar 977 099 - 520384/520385
Bhimdatta Municipality - 04, Campus Road

Pokhara Branch
Kaski Pokhara 061-539645
Mahendra Pool, Pokhara

Head Office
Kathmandu Thapathali 977 1 5111177/5111178/5111179
Thapathali Trade Tower (TTN)

977-1- New Road Branch

Kathmandu New Road
4223269/4223169/4231343/4222411 Meera Home, Khichapokhari

Kalanki Branch
Kathmandu Kalanki 977-1-4281561/4281562/4281564
Kalanki, Kathmandu, Nepal

Chhetrapati Branch
Kathmandu Chhetrapati 977-1-4268876/4257441
Chhetrapati, Kathmandu, Nepal

Maharajgunj Branch
Kathmandu Maharajgunj 977 1 4379396/ 97 /98
Narayangopal Chowk, Maharajgunj

Samakhushi Branch
Kathmandu Samakhushi 977 1 - 4387055/4387056
Kathmandu Metropolitan - 29

Boudha Branch
Kathmandu Bouddha 977 1 - 4493192/4493193
Kathmandu 6, Tusal Chowk , Boudha

Bagbazar Branch
Kathmandu Bagbazar 977 1 4212548/4212120
Bagbazar 31, Bagbazar

Table 3.1: NIC Asia's offices & Branches

Capital Plan of NIC Asia Bank Ltd.

Rs. in Million

Particulars FY 2071/72 FY 2072/73 FY 2073/74

Paid Up Capital

1. Opening Paid Up capital of 2,658 3,695 5,470

previous year

2. New Share Issuance - - -

3. Right Share Issuance - 924 1,368

- Right Share Ratio 4:1 4:1

4. Bonus Share* 1,037 851 1,179

- From profit & retained earnings 585 592 940

- From Capital Reserve 452 259 239

Total Paid Up Capital 3,695 5,470 8,017

Table 3.2: Capital plan of NIC Asia Bank Ltd.

* Bonus share for FY 2072/73 and FY 2073/74 has been calculated based on the
projected profit of these fiscal years.

Management Committee

The Bank is run by professionals having sound experience and exposure in

commercial banking in Nepal as well as in international markets. The Management
Committee of the Bank comprises of the following senior staff members:

Mr. Laxman Risal Chief Executive Officer

Mr. Bimal Daga Deputy General Manager

Mr. Sujit Shakya Chief Credit Officer

Mr. Prabin Basnet Head Retail Banking

Mr. Roshan Neupane Chief Risk Officer

Mr. Sudhir Pandey Chief Operation Officer and Head Human Resource

Mr. Bhanu Dabadi Head Corporate Communication and Branding

Mr. Binay Dahal Head SME

Mr. Dinesh Bhari Head Legal & Corporate Affairs

Mr. Dipak Dhakal Manager Internal Audit

Mr. Bishal Sigdel Manager Finance

Table 3.3: Management Commitee

3.3 Nature of the organization

A successful business requires three things - patience, vision and dedication. Resting
on these three pillars, NICA was set up a vision To become one of the most
respectable banks in Nepal. It is combinations of NIC Bank and Bank of Asia. NIC
Asia Bank is established with a view of providing the various services to the people.
It also aims achieving better response from their customer.- Since every bank want to
survive in the highly aggressive banking society, Hence, NICA is working hard to be
better day by day in upcoming days. NIC have different nature from others. They are
as follows.

1. Savings and current accounts

Banks offer savings accounts for investing small amounts with easy- accessibility,
time deposits, and certificates of deposits.

Happy Savings Account

It is an exclusive savings deposit product specially designed to provide good financial

return to customers with various other facilities. We at NIC Asia Bank believe in
giving more happiness for our customers by different and customized products and

Super Special Savings Account

Super Special Savings Account is a special account designed to cater individuals who
wish to get good returns on their savings.

Youth Savings Account

It is a saving account designed for youth/college students of new generation who want
value for their money.

Karmashil Bachat Khata

It is a special account designed to cater the staff payroll account of various

organizations. As a value-added service to you, we are also pleased to offer you free
of cost salary management service wherein we will manage the monthly disbursement
of salary to your staff maintaining accounts with us.

Nari Shakti Bachat Khata

It is a special savings account designed for women of new generation who wants
value for their money.

Share Suvidha Bachat Khata

This is a unique and innovative deposit product in the banking industry in terms of its
features and benefits.

Super Deposit Account

It is a term deposit with an interest rate of up to 5.5% p.a. bundled with flexibility of a
savings account.

Special Savings Account

It is a special savings account designed to cater customers who are looking for good
return in their savings as well as some facilities and discounts.

Corporate Super Account- BFIs

Corporate Super Account, specially designed for Financial Institutions offers interest
rate of flat 1.5% p.a.

Corporate Super Account- Others

Corporate Super Account, highly beneficial for institutions and organizations of

profit-making nature offers interest rate of up to 2.50% p.a. on daily balance, payable
half yearly with Minimum Balance NPR 100,000.

Social Account

Social Account is a complete banking to the non-profit making organizations. It is an

interest bearing current account specially designed to avail banking opportunity to
NGOs/INGOs, trusts, government and local government offices, hospitals,
educational institutes, diplomatic missions, embassies, club/societies/community
organizations, etc.

Business Account

Business Account (BA) is an interest bearing account aimed at businesses. It is being

targeted to Proprietorship firms, Enterprises, Partnership Firms, Private / Public
Limited Companies, etc. who maintain/have a need for opening the accounts with
bank. Still many firms and companies are out of reach of the banking.

Little Star Savings Account

NIC Asias Little Star Savings Account can be opened in the name of children below
the age of 16 years for their future savings.

Life Savings Account

A premium savings account with added facilities of free Life Insurance cover of
Rs.100,000/- with Accidental Insurance cover of Rs.200,000/- .

Interest % p.a. [/up Minimum Deposit

Scheme Name to] (NPR)

Karmashil Bachat Khata 1.5% 100

Nari Shakti Bachat Khata 2% 1,000

Youth Savings Account 1.5% 100

Happy Savings 2% 1,000

Sulav Bachat 1.5% 500

Table 3.4: Interest Rate of Different Saving

2. Mortgages and other loan

Gold Loan

NIC ASIA Bank introduces NIC ASIA Gold Loan, one of the easiest and fastest loan
schemes of the banking industry

Sajilo Subidha

An innovative collateral based loan which is a combination of term loan and

overdraft. This product bundles fixed term repayment and full flexibility of overdraft
serving interest on monthly basis.

Home Loan

NICASIA Home loan, an attractive financing scheme bundled with special features to
purchase/construct your dream home and live with family happily ever after.

Auto Loan
NICASIA Auto loan is an exclusive financing option to move in style by owing a
vehicle of your own choice.

Loan Against Assets

With the aim to have easy and quick access to your financial requirement we have
designed this product. If you own any land and building or private vehicle, you can
easily convert it into cash.

Share Dhito Karza

With NIC ASIA Banks Loan against Shares, you can get an overdraft facility against
the securities of shares. This is an instant solution if required cash within a short
period of time with simple documentation and processing.

NIC ASIA Personal Loans (NAPL)

NIC ASIA Personal Loans (NAPL) is a non-collateral based loan scheme especially
designed to facilitate Salaried Individuals and Professionals; offers lower monthly
obligation and hassle-free services along with fastest service delivery to our valued

3. ATM Card/ Visa Card

NIC ASIA International Visa Card

NIC ASIA International Visa Card is a pre-funded card issued in collaboration with
principal member of Visa International bearing Visa brand mark which can be used at
a merchant location to purchase goods and services through POS (Point of Sales)
terminals and/or ATM terminals bearing Visa logo to withdraw cash.

NIC ASIA Visa Debit Card

The NIC ASIA Visa Debit Card is a Debit card issued in collaboration with a
principal member of Visa International bearing Visa brand mark which can be used at
a merchant location to purchase goods and services through POS (Point of Sales)
terminals and/or ATM terminals bearing Visa logo to withdraw cash.

Visa Credit Card

Pre-approved credit which can be used for the purchase of items now and make
payment later.

4. Insurance


Before, insurance were meant to be only for the limited person but now we are being
able to be in touch with unlimited people and Bancassurance has helped out to reach
these people. Bancassurance is the relationship between a bank and various insurance
companies. Bancassurance has become a key distribution channel in many insurance
markets, where NIC Asia is also one of the Banks who provides insurance facilities to
our Customers.

Products Associated with Life Insurance

We are associated with two life Insurance Companies:

2. NLIC ( Nepal Life Insurance Company)

Join up with NIC ASIA Bank Bancassurance and give us an opportunity to serve you
to take care of uncertainties risk associated and also financial needs, which is the most
important in life. Be insured and be secure.

Products Associated with Non-Life Insurance

1. Nepal Insurance Company Ltd.

2. Shikhar Insurance Company Ltd
3. United Insurance Company (Nepal) Ltd
4. Prudential Insurance Company Ltd.
5. Premier Insurance Company Ltd
6. Sagarmatha Insurance Company Ltd.
7. Siddhartha Insurance Company Ltd.
8. NLG Insurance Company Ltd
9. Everest Insurance Company Ltd.
10. Lumbini General Insurance Company Ltd.
11. Himalayan General Insurance Company Ltd.
12. NB Insurance Company Ltd
13. Prabhu Insurance Company
14. Neco Insurance Company

Non-Life Insurance covers

House: household, rental, commercial and under construction, earthquake, fire, flood,
landslide, explosion, riot strike damage/malicious damage, terrorism activities.

Vehicle: accidental, loss, theft, third party liability, driver passenger helper ( in case
of Commercial Vehicle), riot strike damage/malicious damage, terrorism activities.

5. Internet Banking

Internet banking enables a customer to do banking transactions through the banks

website in the internet. This is also known as virtual banking or net banking or
anywhere banking. The internet has dramatically changed the cost and capabilities of
the marketing and distribution of new type of products and services. This is
especially true for retail financial services where the widespread adoption of
electronic interface, primarily the internet, and the standardization of World Wide
Web, have made it possible to reach customers in a new way.

NIC ASIAs customers shall be able to conduct various informational and financial
transactions through the banks website. This service currently includes the following

Non-Financial Transactions:

Account Information

Account statement

History of financial transaction

Log in and transaction password change

Web transactional alerts

Financial Transactions:

Funds transfer between registered accounts of the customers

Funds transfer to any customers account within the bank

Merchant payments

Utility Bill payments

E-Sewa facilities

The scope of internet banking services shall not only be limited to the features
mentioned above and is subject to review according to market trends and customer

6. Mobile Banking

Mobile banking is a platform provided to the customers enabling them to access their
accounts through mobile phones in a secured manner. The mobile banking service
gives customer account information and real time transaction capabilities from mobile
phones at a true anywhere, anytime, anyhow convenience. It also allows sending
informational messages about the Banks products and services to customers. Mobile
Banking service of NIC ASIA shall allow customers to carry out various
informational and financial transactions through their mobile phones as follows:

Enquire account information

Mini statement view

Funds transfer between registered accounts of the customers

Funds transfer to any customers account within the bank

Foreign Exchange Rate inquiry

Billy Payment of NTC Land Line / NTC GSM Post-Paid

NTC GSM/CDMA Pre-Paid recharge PIN purchase

Merchant Payments

The scope of Mobile Banking services shall not only be limited to the features
mentioned above and is subject to review according to market trends and customer

3.4 Organizational Structure

Figure 3.1: Organization Structure

3.5 Introduction of NIC Asia Bank Ltd. in Biratnagar

NIC Asia Bank Ltd is presently located at Opposite D.S.P Office.

Staff of NIC Asia in biratnagar branch

SN Staff Name Current Designation Department

1 Santosh Kumar Rathi Branch Mannager Branch Manager-BRT

2 Sunny Maharjan RM Corporate Banking Corporate Banking

3 Rupa Shrestha Operation Manager Operations

4 Prashant Sharma ARM Corporate Corporate Banking

5 Jinusha Palikhey ARM Corporate Corporate Banking
6 Hira Prasad Poudyal Supervisor CAD CAD

7 Ashim Regmi ARM SME SME Business

8 Neeti Pant ARM SME SME Business

9 Sandesh Bhandari ARM SME SME Business

10 Madhu Basnet RSO RSO

11 Bhola Sankhar Shah RSE Retail Banking

12 Bhisma Raj Karki RSE Retail Banking

13 Sujan Pokhrel Head Teller Operations

14 Kaushila Ghimire In charge CSD Operations

15 Karishma Agrawal Ass. Trade Finance Trade Finance

16 Sheetal Shrestha Ass. CAD CAD

17 Ashok Rijal TA-CAD CAD

18 Manisha Sultaniya Asst. Remittance Operations

19 Dimple Basnet Asst. CSD Operations

20 Anjila Nepal TA-CSD Operations

21 Bhisma Gartaula Asst. BO Operations

22 Sunny Hamal TA-Teller Operations

23 Romina Shrestha TA-Teller Operations

24 Shishir Thapa TA-Teller Operations

25 Anu Koirala TA-Teller Operations

26 Aishwarya Shrestha TA-Teller/Clearing Operations

Table 3.5: Staff working in NICA Bank of Biratnagar Branch

3.5.1 Overall and Concerned department

There are various departments in a commercial bank which are tend to form so as to
carry out the work, operation of the organization in a smooth manner leading towards
better performance. Different departments running under the roof of NIC Asia Bank
Ltd. are as follows:

3.5.2 Cash Department:

In cash department transaction of withdrawal or payment and depositing of money is

done and as well as payment of remittance. Therefore, they are departed and kept in a
locker. The cash transactions are only carried out in this department approves the
cash account to be deposit in fixed, current and saving or the amount to be withdrawn
from these accounts. This section is also responsible for maintaining of the daily
record of transaction within its periphery.

Task duties and accountability towards the Cash section are:

Receive the cash from the depositors and deposit it to the respective account.
Deposit money only after it matches as tally with the deposit voucher.
Receives the cheque, verify and examine the signature of the respective account
Make the payment of cash on the basis of cheque, drafts, bills payable and other
payment vouchers and secure them in well- managed ways.
Maintain the amount of liquidity after the daily transactions ends.
Assist in the opening and closing of different deposit accounts.
Beneficiary's branch name or address the functions conducted in this department
are: draft, telegraphic transfer, mail transfer, bills payable, fund transfers, and

3.5.3 Customer services department

It is the most important department of NIC Asia Bank Ltd.. It is the enquiry sector
and is established for customer's convenience. The customer can take any type of
information from this section. So, the employees of this department most are ready to
handle every type of customers. This department is responsible for dealing with
different customers receiving the call, opening the different accounts and soon.

Task, duties and accountability towards CSD are:

Receive the telephone call and response the caller efficiently and effectively

Response to the customers' enquiry as of their necessity

Assist the customer in opening and closing different accounts

Issue new cheque book, summary or the statement of account

According to Turban et al. (2002), "Customer service is a series of activities

designed to enhance the level of customer satisfaction- that is, the feeling that a
product or service has met the customer expectation." Good customer service is the
lifeblood of any business. You can offer promotions and slash prices to bring in as
many new customers as you want, but unless you can get some customers to come
ban, your business wont be profitable for long. One of the major departments of the
bank is Customer Service Department. Good customer service is all about bringing
customers back. And about sending them away happy- happy enough to pass
positive feedback about your business along to others, who may then try the product
or service you offer for themselves and in their turn 1 become repeat customers. The
Customer Service Department is responsible for handling, order processing, product
and service questions, pricing information, system transfers, and other customer
enquiries. The department is solely responsible to provide the retail banking services
like opening and closing account. Like other organization, NICA is also highly
concerned regarding customer satisfaction, where increase customer satisfaction
relates to increase in the productivity of the NICA. In order to increase its customer
service, the bank has applied the concept of Total Quality Management.
The activities done in Customer Service Department are summarized below:
Account Opening

This is the first process of establishing relation with the bank. To open a new
account in the bank, the customer should fill up the form along with their two
passport size photos for identification and security purposed. The principle of know
your customers should be meet with all detail address and occupation. If any special
instruction is there from customer, put all this in the system.

The brief procedures and documents require are mention below to understand this
process thoroughly:

For all Customers

A properly filled application form, determining their identity, type of account.
Identification documents (Citizenship or passport or driving license)
Two photographs
Specimen of signature

Location of customer's home customer

For a firm
firm registration certificates
Income tax registration certificate
Memorandum and Article of the association
Board minute for account opening and signature authority Company common seal
Identification documents of account holders
If any special instruction

Account Closing

For closing the account, the customer should fill up a separate form and return all the
cheque and the ATM cards to the organization which was issued to them. They have
to give their reason for account closing. The procedures of closing account mentioned

1.Fill up the closing form

2.Know the reason for closing the account

3.Ensure unused cheques leaves and ATM card
4.Ensure the closing charge deduction

ATM or Debit Card Issuing and Verifications

It is most important responsibility of CSD department. ATM or Debit card is an

electronic cards use in alternative of cheques and cash. It can be used to purchase
various goods and services. NICA used VISA Card and credit cards. The ATM card
distribution procedure includes:

1. Customer fills the ATM card form.

2. The filled form is sent to head office
3. Then card centre then issues the ATM cards
4. It reaches around one weeks.
5. ATM card and pin numbers are matched and kept in sealed envelops.
6. The customers are informed to collect their cards via telephone.
7. The customers need to sign and it is verify

8. The card is activated after one days of received.

Filling and documentation

Information keeping is very necessary for the bank and this is filling and
documentation helps bank to maintain its record for long period of time. Here, all the
entire paper work has to be done simultaneously to the computer work. There are
different files for filing different documents. The account holders forms, their
signature card, void cheques are also filed. The request for debit card issuances is
mailed to the card centre at cooperate office daily. Such requested slips given by
customers are also in separate files. Similarly the account statement issued and cheque
issued are printed and filed. Various types of authorized letter are also filed in CSD.
Different complains regarding ATM and others are also kept safely by filling them

Making and Issuing the Cheque Book

After opening a new account and as per the customer requests the CSD has to prepare
the cheque for them. Cheque is like the paper of cash. Printing account holder name,
account number, taking their signature, including slip inside cheque books, etc are
responsibility of CSD. In case of existing account, the customer present the check
demand slips to develop the cheques. If customer has lost demand slip then they have
to pay NPR 500 for new cheques

Attending Telephone Calls

CSD is one of the busiest departments of Bank, because all the phone incoming has to
be received from this department. CSD is responsible to handle the phone
systematically in a good manner and deals with the client as its necessity. First greet
the client with smile, give introduction, talk with them showing empathy, and try to
solve their problem, wish them to thankful for calling at the end. The important calls
should be passed o the other related departments. CSD is responsible to make phone
calls and inform the clients of the bank about services and charges.

Balance Inquiry

For balance inquiry purpose, the account holder must be present himself or herself in
the bank. The staff of bank will provide the information regarding his or her account
balance the account holder.

Providing Account Statement

The first activity done is receiving the statement request from which comprises of
name and account number of customer, signature, and the date from where the
statement is needed. After that the signature of the account holder is verified,
statement is printed starting the date mentioned by the customer in the statement
request form

The above mentioned activities are the major and important that was done. Besides
these activities, the other activities performed were providing the customer with the
relevant information, helping customers in writing applications e.g. can be mobile
number changing application, making account opening forms, maintenance and
searching files etc.

3.5.4 Loan department

This department performs the entire loan management functions. From the loan
application to the entire loan approval with credit analysis. Loans are giving to the
business customers to their working capital and long term requirements. Personal
customers take loans against their fixed deposits and for their customers' credit.
Following are the types of loan:

Hypothecation: It is the creation of creditors on goods where possession remains

with the borrower and lies with the bank. However, the borrower undertakes to
convert hypothecation into pledge as and when asked by the bank.

Overdraft: Borrower can draw the cheques in current account up to the approved
limit at any time as per the need. Certain % of interest is charged to the overdraft
amount to the customer by the bank.

Project loan: The loan department of NIC Asia Bank Ltd provides project loan to
the needy party depending upon their project nature.

Personal Loan: Under this loan, loan is provided to an individual person against
the security. Only two loans are provided by the bank.

Government privacy sector: Under this, loans are provided to those sectors
which are laid more emphasis by the government. They are further divide into two
categories: priority sector and deprived sector.

Educational Loan: Under this loan is provided to a student's going abroad for
their further education. There is only one educational loan provided by the bank.

Home Loan: This loan is provided for building a house. There is only one house
loan provided by the bank.

Fixed Deposit Loan: Under this Customers can withdraw certain % amount from
their fixed deposit account.

Miscellaneous/Pledge Loan: Miscellaneous loan are provided under different


3.5.5 Administration Department

This department looks upon overall activities of the bank..It does the purchasing work
of the bank. The stationaries are purchased and are distributed from the administration
department. The letters and documentation of the bankds are sent from their
department and they are recceived too. It prepares profit and loss account.It looks
after the salary, bonus, pension, etc. of the employees working in this bank.

3.5.6 Remittance Department

Remittance is one of the functions of the commercial bank. Remitters from any part
of the world can send money from any bank to an account at NIC Asia Bank Ltd.
The originating bank will send the money through one of NIC's Correspondent

3.6 SWOT Analysis

SWOT analysis is one of the major tools for analyzing organizational internal as well
as external environment. The internal environment provides strength and weaknesses
whereas the external environment posses opportunities and threats to the organization.
Thus, the organization uses its strength to grab opportunities and minimize threats.

Most of the organization uses this tool to formulate plan, policies, and strategies for
achieving goals.The SWOT analysis of Business Advantage can be done as follows:

3.6.1 Strengths
Organization's mission and vision
Raised Customer trust
Highly experienced, efficient, hardworking, professional and friendly staffs.
Diversified product and service offered
Better image and established brand name in the market.
Quality work culture leading to superior and prompt service.

3.6.2 Weaknesses
Non-performing assets and loans
Gaps in coordination
Lack of systematic operation
Lack of efficient performance appraisal system
Inertia in Client Expansion
Work place Disorders

3.6.3 Opportunities
Political will and encouragement
Increase Remittance service through
Increase in the mediums and options of communication ( Mobile phones,
internet, etc)
Opportunity to attract large clients by promoting its name by providing many
other facilities in the market.

3.6.4 Threats
Government restriction and unstable policies
Excessive liquidity in currency banking environment
The creative employees cannot imply their creative ideas, they have to work
under the supervisor.
Tough and unfair competition
Lack of interest and attitudinal problems at the community level

Chapter Four


4.1 Introduction to Remittance

Literally, the word remittance denotes the sum of money or volume of goods sent by
the migrants or workers to their homes who have their earnings outside their home
country. The history of remittance perhaps dates back to the period when trade came
into existence. Various mythological stories about the travelers who sailed throughout
the world for trading purpose, verify the remitting activity centuries ago. Later when
Columbus discovered America, the British migrated there. Hence, the Englishmen
used to send their earnings to their relatives at Britain. In Nepal, the Gurkhalis are
believed to be the pioneers of remitting activities. After the end of Second World
War, the demand of the Gurkhali soldiers was at peak as a result of which Brunei
government entered into an agreement to deploy the Gurkhalis there. Thus, the
Gurkhalis reached there. Since, then yearly thousands of Nepalese are recruited in
these countries and hence they send the money to the family members at home.

Remittance transfer refers to the transfer of money or financial assets from an

individual, most often a person who has emigrated to the person or relatives who
remains at home. Remittance often referred to as migrants private transfer are
typically person-to-person payments and of low monetary value especially for the
third world countries.

The International Monetary Fund(IMF) considers a wider definition and incorporates

three categories, that is, a) workers remittances or transfers in cash or in kind from
migrants to resident households in the country of origin, b) compensation to
employees or the wages, salaries and other remuneration, in cash or in kind, paid to
individuals who work in a country other than where they legally reside and c) migrant
transfers which denote capital transfers of financial assets made by migrants as they
move from one country to another and stay for more than one year.

There are two basic categories of remittance transfers: domestic and

international. Domestic remittance transfers occur when an individual transfers funds
from one location to another within the same country. The predominant pattern within

this category is that the individual sending the funds, i.e., the remitter, hails from a
rural area and has relocated to an urban center. In contrast, an international remittance
transfer involves an immigrant in a new country sending funds to his country of
origin, or to individuals (usually family) in a third country. Frequently, the remitter
has moved, for the purpose of employment, from a developing country to an
industrialized one. Remittance transfers include neither the international sale and
transfer of goods nor the cross-border transfer of funds between businesses. The
remittance for the purpose of this report comprises of international transfers.

In the international arena, the remittance phenomena had been overlooked,

not to say neglected for a longer period of time. This led the emigrants to send the
money back home through the informal and private channels. In the mean time, the
commercial institutions or the private banking institutions were reluctant to cater
these services. But the scenario now has been reversed. The tacit acceptance of the
developed countries about the importance of remittance has often brought them
together to talk something about it. Take an example, remittance are usually of
smaller amount, if people send couple of hundred bucks to their relatives at their
home, millions of people who work abroad and send the money can turn around to
millions of bucks. The challenge however for both the developed and the developing
countries is unanimous i.e. the challenge of channeling the remittance through one
window. This leads to the tabulation and calculation of the actual remittance received
as the informal channel and illegal flow of the money also consist a major share in the
world economy. Having much of said about the role of remittance, in the age of
globalization, none can underestimate the outflow or inflow of remittance as it has
becomes common phenomenon.

4.1.2 Remittance in Nepal: The Economic Lifeline

Remittance income in developing countries has become a lifeline for economic

development. By remittance we mean sending income in terms of money or goods in
home by the migrants or workers who have their earnings outside their home country.
Now-a-days, this source of foreign income has been growing rapidly in each year in
developing countries. Initially, remittance in Nepal was introduced with Gurkha
remittances. 'The Gurkhas' were renowned for good qualities of soldiers. That is why

British India formally recruited Nepalese youth as a regular army, which later divided
into British and Indian army. Now-a-days, Nepalese going abroad are not only for
armies but also spread all over the world for work and mostly they are concentrated in
Gulf areas in civilian front. Any Nepali to go for work legally, he/she needs to get
permission from the Department of Labor under the Ministry of Labor and Transport
of the Government of Nepal. From the official report of the Labor Department it is
known that 107 countries are at the government list where Nepalese are allowed to go
for work. But still some people are found going abroad without permission and
working in the government restricted areas too. Because of this trend, data on foreign
employed workers are not available in exact form. Majority of those who have left
home for overseas job are eager to earn foreign currency by hard working to support
their families.

Since long time in Nepal, many migrants have been transferring their income through
the unofficial channels. Today due to the establishment of different agencies like
Western Union, International Money Express (IME) etc. in several district
headquarters of the country, the remittance flows has become popular for transferring
cash or money in time to the recipients. However, it is difficult to calculate the exact
size of remittance flows in Nepal due to the emergence of unofficial channels even
though it has recorded in balance of payments account. In this regard, it is estimated
that unrecorded flows through informal channels are believed to be more than 50
percent of the recorded flows in developing countries.
According to the Department of Foreign Employment (2010), some 1.2 million
Nepali migrants workers left for overseas for foreign employment in the last five
years since Nepal was transformed from a Hindu monarchy to the world's youngest
federal democratic republic. This steady growth is mainly because the 3.5 percent
economic growth rate has been able to absorb some 400,000 new entrants in the labor
market annually. Many youths do not see any future for them in the country despite
the tall promises the politicians has made during JanaAndoLan II (People's movement
led by major political parties and civil society against auto cratic king's rule to
established Nepal as a federal democratic republic state) in April 2006. As the table
below illustrates, the number of Nepali men and women migrating overseas for
foreign employment had decline in fiscal, year 2008-09 because of the global
economic meltdown but has picked up again in the subsequent months. Elusive
political stability, frequent closure and strikes and reluctance of businessmen to invest
in Nepal and closure and strikes and reluctance of the businessmen to invest in Nepal
and closure of many industries that provided jobs and income opportunities were
blamed for such a situation.

The following table shows the position of foreign employment of Nepal and
the total number of workers at foreign countries.

Table 4.1: Labor Migration by year

FY Number of Nepali Labor Migrants

2006-07 204,433
2007-08 249,051
2008-09 219,965
2009-10 294,094
2010-11 354,716

Source: Department of Foreign Employment, 2010

During the period between 2006 and 2010/11, the largest number of Nepalese
(361,464) had gone to Malaysia followed by Qatar (351,544), Saudi Arabia (246,448),
United Arab Emirates (178,535) and Bahrain (20,303). If in the beginning those
migrating overseas were unskilled manual labors, technically qualified personnel such
as medical doctors and engineers are also leaving the country because the income they
make in Nepal is far below the money they have invested in getting medical and
engineering degrees. Even Nepalese who had migrated overseas for jobs but have
since then returned back to the country are now regretting due to unemployment and
disappointing political and socio-economic condition of the country. Many of them
are planning to return back to the countries they had migrated in the past.

4.1.3 Trend of Use of Remittance and Impacts in Nepal

There are some long-term opportunities brought from the foreign employment.
Children of the foreign employment workers are getting quality education from the
remittances paid from their parents. The nation can benefit in the long term out of this
trend as skilled and educated manpower is produced for the economy

The remittance sent by the migrant workers can be used to further generate wealth in
the country. Besides spending on consumption, it can be invested in productive
sectors, which would bring about some positive change on the major macroeconomic
variables of the country. Remittances can produce long term impact only if it is
channeled into productive investment. Going by the current trends of consumption in
Nepal, if the remittances are soaked up by consumption only and are not turned into
investments, the short term boost provided by it in the economy will not be
sustainable. Productivity will decline and the economic choices get tougher if the
situation is not addressed in time and is stalled being shortly content with the
remittance-based income. More remittance money is spent on consumption than in
any other aspects. Only 2.4 per cent of remittance money is spent for capital
formation in our country.

Due to increase in revenues from remittances, the currency of a country becomes

stronger compared to that of other nations resulting in exports becoming more
expensive for other countries to buy. This can make the manufacturing sector less
competitive. Thus, with the increase in the purchasing capacity of households
receiving remittance, there is high demand of consumption and imported goods. There
has been an appreciation of real exchange rate due to rise in the price of non-tradable
with respect to tradable. Furthermore, there has been an erosion of manufacturing
sector entailing to their reduced competitiveness.

Remittance has played a vital role in poverty reduction. Various reports and planning
documents published in recent times have attributed the dramatic fall in absolute
poverty to the inflow of remittances in Nepal. The percentage of all households
receiving remittances in Nepal during the year 2010/11 was 55.8 percent. This is a
sharp rise from the year 2003/04 when it stood at 31.9 percent. There has been an 18
percent decline in absolute poverty in the six years between 2003/04 and 2009/10.
Therefore, according to me, foreign employment is a major economic phenomenon in
Nepal and its relation to the economic growth of the country is integral.

4.1.4 Remittance in Relation to NICA

NICA, with the inception of carrying out remittance activities, joined hands with
various Exchange Companies, especially in the Middle East due to higher
concentration of Nepalese in these areas. Identifying the ever increasing volume of
remitting funds known as Hundi, NICA developed the remittance product known as
NIC Remit. NIC Remit is a secured web based user friendly remittance service
introduced by NICA since its inception. Under this service, both domestic remittance
and foreign inward remittance facility is served with a purpose to provide complete
remittance solution to the valued customers of the Bank.

Well equipped with the State of the Art Technology, NIC remit service is available at
all the branches and remittance agent locations of the bank throughout the country.

Currently, NICA receives remittance payments from many exchange houses including
international MTCs (Money Transfer Companies) like IME, City Express Money
Transfer, SDBL Trust Remit, Reliable Remit, Al Ansari Exchange, UAE, EzRemit,
Bahrain, Western Union Money Transfer, Money Gram covering gulf countries such
as Qatar, Bahrain etc. with a plan envisaged for expansion into other countries as

With the increasing public insecurity even today, there is no sign of decline in the
outgoing Nepalese youth force in search of foreign employment. With an average of
400 individuals leaving the country each day for foreign employment, the remittance
business still has a greater scope in the days to come. To reap the benefits of this,
NICA targets to widen its network of remittance in near future.

Remittance in NICA involves performing the following functions:

a) Issuance of Demand Draft

b) Issuance of Banker's Cheque

c) Sale and Encashment of Travelers Cheque (TC)

d) Intra bank and inter branch fund transfers

e) Fund Transfer for Payments against Identification Documents using
Remittance Awaiting Disposal (RAD) Account between Branches of NIC
Asia Bank

f) Balancing Cash

a) Issuance of Demand Draft

A Demand Draft is issued by the bank payable outside Nepal. Drafts are issued upon
formal requests made by the customers by giving cash, cheques or debit Authority.
Validity of bank draft is 6 months from the date of issuance. The following details
should be considered while issuing DD:
Applicant name




Valid documents

After issuing DD the respective Nostro a/c have to be credited at the end of every day.
When DD transaction remains outstanding in the Nostro account for more than 6
months of the issue date, reconciliation department should check the transaction and
correspond with the branch and the Nostro bank for confirming and expediting
payment of DD for settlement.

b) Issuance of Banker's Cheque

Bankers Cheques are issued primarily on request of Bank to discharge the liabilities
of the issuing bank. In addition, Bankers Cheque is also issued on behalf of
customers to meet their fund transfer requirements. If BC are issued to make
payments to the vendor then it can be made bearer up to the limit of NPR 10,000.00
(Say Nepalese Rupees Ten Thousand Only), above that it has to be either A/C Payee
or and Co. If BC are issued on request of customer then it has to be A/C Payee or and
Co. But on exceptional cases on request of customer and on approval of Branch
Manager it can be made bearer.
BC is paid over the counter or through clearing. When BC is presented at the counter
or deposited in the account, the remittance department must verify signature in the
BC. Furthermore, the identity of the presenter must be obtained and verified for
ensuring the beneficiary of the BC if payment is to be made over the counter. While
issuing BC Payable a/c is credited, if any amount remains outstanding for more than 6
months from the issue date, reconciliation department should check the transaction
and correspond with the branch for confirming and expediting payment of BC for

c) Sale and Encashment of Travelers Cheque (TC)

NICA issue foreign currency TC to Nepalese citizen for traveling against passport
facility and to foreigners against the available fund in their FCY accounts as per NRB
permit where applicable.

NICA also allow to encash travelers cheque. While TC is presented for encashment
first of all it must be checked with lost and stolen TCs list to ensure that the TC is
valid. For this purpose a database of lost and stolen TCs should be created.

d) Intra bank and inter branch fund transfers

NICA facilitates intra bank and inter branch fund transfer to its valued customers
through Vostro/Nostro accounts. In general term Vostro refers to that account
maintained on NICA by banks in relation with it. On the other hand, Nostro refers to
that account maintained by NICA in relation to other foreign.

e) Fund Transfer for Payments against Identification Documents using

Remittance Awaiting Disposal (RAD) Account between Branches of NIC Asia

Under this system, NIC Asia Bank provides inter-branch fund transfer service to its

f) Balancing cash

Cash received by the Remittance Teller in course of transaction are balanced on daily
basis. Remittance Teller after transaction hours ensures that all tickets are posted in
the system. The Teller rechecks vouchers with the transaction list.

4.1.5 Parties involved in Remittance Process

Different parties are involved in remittance process. Generally there are four parties in
all types of remittance and also have their own process. They are:

(i) Remitter

The person upon whose request or on whose behalf the bank remits/sends the amount
of cash is known as remitter. Remitter should pay service charge to the bank along
with remittance money. The service charge depends upon the modes and amount of
the remittance.

(ii) Beneficiary

The person on whose benefit remittance is made is referred as beneficiary.

Beneficiary is the person whom the Remitter intends to send money to or who is the
final recipient of the money sent. Beneficiary may either be an individual or a firm or
an institution. If the beneficiary is an account holder of respective bank/branch, the
remitted amount will be credited into his account and if beneficiary do not have an
account with respective branch, the amount will be paid to him on his demand upon
proper identification such as citizenship, passport, license etc.

(iii) Remitting Bank/Branch

The bank/branch who acts on the behalf of remitter to remit the amount is called
remitters bank/branch or remitting bank/branch. Remitting Bank sends payment
instruction to the beneficiary bank directly or via intermediary bank that consists of
the detail information of the final recipient.

(iv) Receiving Bank/Branch

The bank that makes the payment to the final recipient or beneficiary is known as
receiving bank/branch. Upon receipt of the payment instruction from the remitting
bank, the beneficiary bank dispose of the amount stipulated in the payment order to
the person mentioned thereon.

4.2 Types of Remittance

4.2.1 Outward Remittance

Outward Remittance is the process of transferring or remitting fund to some other

bank or branch.

4.2.2 Inward Remittance

Inward remittance is the remittance which is coming into the NIC Asia Bank. The
general categories of inward remittance are as follows:

Inward Remittance

ID Payment Account Credit

Through Through NICA's NICA A/C Other Bank

NICA Counter Authorized Agents Credit A/C Credit

Figure 4.1: Inward Remittance Process

ID Payment

Payment to the beneficiary is made across the payment counter upon presentation of
correct Control Number and approved Identity Card i.e. citizenship certificate,
passport, driving license or any other ID card issued by any Government Agency or
any commercial bank of Nepal as approved ID of the beneficiary. Depending upon the
pre-arranged payment location at the time of remitting the amount, the payment is
either made by NICA branch or Authorized Agent.

Account Credit

Payment to the beneficiary is by way of crediting the designated account of the

beneficiary with the amount remitted. The account intended to be credited may be an
account maintained by the beneficiary in any bank and need not necessarily be an
account maintained in NICA.

4.3 Focus of the Study

Learning the overall aspects of remittance, especially the Nepalese context has been
the focus of the study. The effort to be acquainted with the scenario has been
attempted through a small window of remittance operations department at NICA,
Biratnagar Branch. The remittance operations department is a place where customers
constantly interact with staff members of the bank. Here the effort is made to know
and make the readers appreciable about the subject matter. Similarly, on the other
part, this report is focused on to make the readers understand about how remittance
operation department can be run efficient and effectively.

Here, the study has been focused on the REMITTANCE IN RELATION TO NIC
ASIA BANK LIMITED. So based on the topic, the entire research report is conducted.
Here the researcher want to convey readers the message about that the entire report is
conducted over the remittance operation department, and with the objectives,
methodology and tools, assumptions and limitation mentioned, the attempt is made to
present and analyze the report which further make this research report more clear and

4.4 Assumptions and Limitation of the Study

It is obvious that every work has some or the other kind of limitations. This study has
also some limitations of its own which are presented as under.
The study is limited to the NICA, Biratnagar branch.
The research report is undertaken for the partial requirement of BBA 8th
semester. Therefore, is limited to the academic knowledge of researcher.
Time and resource constraints are another limitation of the study.
It was quite difficult for me to convince the respondents to fill up the
The study is fully based upon the answers received from the respondents.
The accuracy and authenticity of the answers given by the respondents can
also be subjects of limitations.
Reluctance of some respondents towards some of the questions led to depends
upon informal queries.
Remittance received in form of cash was only taken into consideration i.e.
remittance directly transferred into account holders account was not

The study was limited by the availability of annual reports, office records, and
other published and unpublished source.
Branch office of NIC Asia Bank at Biratnagar is recently established, due to
which the data and information was not enough for comparison.

Despite of the above limitations, NICA was very cooperative with liberal environment
of working for both staffs and interns. All the employees were very helpful and their
coordinating behavior helped the researcher to ease the preparation of this report.

4.5 Tariff of Charges in Remittances of NIC Asia Bank Ltd.

1.1 NPR Draft 0.05%-0.10% or min NPR 100/-/0.10% or min
issuance(Customer/Non 150/-
1.2 Stop payment of Demand Draft NPR 500/- (Plus communication charges as per
section 6 COMMUNCATION where applicable)
1.3 MC/NRB Cheque issuance NPR 250/- flat
1.4 Draft FCY
1.4.1 Draft FCY (Incl. INR) Customer 0.10% or minimum NPR 150/- for each
draft/telex. RMs/ staff at sales point (AM and
above ) and BMs are authorized to offer discount
with proper record and justification to maximize
sales and increase customer satisfaction as under.
0.05% or minimum NPR 100/- (Plus
communication charge as per STC section 6).
1.4.2 Draft FCY (Incl. INR) Non 0.15% or minimum NPR 250/- for each
Customer draft/telex. (Plus communication charge as per
Section 6. COMMUNICATION). RMs/staff at
sales at sales point (AM and above) and BMs are
authorized to offer discount with proper record
and justification to maximize sales and increase
customer satisfaction as under 0.10% or min NPR

1.5 SWIFT Transfer FCY
1.5.1 SWIFT Transfer FCY (Incl. INR) 0.10% or minimum NPR 150/- for each
Customer draft/telex. RMs/staff at sales point (AM and
above) and BMs are authorized to offer discount
with proper record and justification to maximize
sales and increase customer satisfaction as under:
0.05% or min NPR 100/-
1.5.2 SWIFT Transfer FCY (Incl. INR) 0.15% or minimum NPR 250/- for each
Non Customer draft/telex. (Plus communication charge as per
section 6 communication, postage and test key
handling charges . RMs/ staff at the sales point
(AM and above) and BMs are authorized to offer
discount with proper record and justification to
maximize sales and increase customer satisfaction
as under: 0.10% or min NPR 150/-.
1.6 Cancellation of Remittance a) Up to six month from draft issuance date: NPR
DD/MC/etc 250/- flat per draft plus communication and other
bank and charges.
b) > 6 months to one year draft issuance date:
NPR 500/- flat per draft plus communication and
other bank charges.
c) > 1 year draft issuance date: NPR 1000/- flat
per draft plus communication and other bank
1.7 SWIFT LCY 0.05% or minimum NPR 250/- plus SWIFT
charges as applicable. (Waiver for corporate
clients can be done by AGMCB)
1.8 Cancellation of SWIFT payment NPR 500.00 plus SWIFT charge as applicable
1.9 LCY Inward Remittance No Charge
1.10 FCY inward Remittance
1.10.1 For credit to customer's LCY NPR 250/- flat per credit

1.10.2 For credit to customer's FCY No charge
1.10.3 Non-customer/ Tourist 0.1% or minimum NPR 250/- if paid in LCY at
our counter.
1.10.4 Transfer to another bank 0.125% or minimum NPR 500/-
1.11 Follow up telex/SWIFT on NPR 750/- per message plus other bank charges if
remittances/ funds through Nostro any.
1.12 Return of FCY inward USD 20.00 or equivalent (Plus other bank charges
remittances/ funds through Nostro if any and SWIFT charges as applicable (to be
accounts. deducted from funds being returned)

1.13 Local Inter Bank Transfer (At the a) If the beneficiary is a Bank: free
request of one bank to another) b) For third party beneficiary:
Up to NPR 1.5 M- NPR 500 Flat
Above NPR 1.5 M- NPR 1,000 Flat

Table 4.2: Charges in Remittances

4.6 Findings

4.6.1 International Remittance at a Glance

The World Banks new report Migration and Remittance Fact book, 2011 says
Nepal is among the top five countries with remittance amounting to 23 percent of the
GDP. Tajikistan, Tonga, Lesotho and Moldova are ranked ahead of Nepal. Among the
least developed countries, Nepal is placed second behind Bangladesh. The total
amount of formal (officially recorded) received remittances is estimated at 3.5 billion
USD for 2010. The other interesting facts that attracted the stakeholders at the G8
Outreach Meeting on Remittance in Berlin was that the total remittance flow was 3
times higher than that of the Official Development Assistance (ODA) which was 100
million in 2007. The total amount of formal remittances compared to Official
Development Assistance is growing dramatically. The point is that 100$ of ODA

might have a larger impact than 1000$ remittance, because Nepal population is only
using 2.4% of the remittance for capital development.

Remittance and migration are used together. So, it is important to know the
countries where people migrate more in search of employment.

Table 4.3: 5 Top Ten Migrant Receivers

Top Ten Migrant Receivers

1 United States 6 United Kingdom

2 Russia 7 Spain

3 Germany 8 France

4 Saudi Arabia 9 Australia

5 Canada 10 India

Source: Migration and Remittance Fact book, 2011

The table above shows the top ten migrant receivers countries where more people go
in search of employment. The most targeted country for the employment is the United

Top remittance-recipient countries

51 India
60 China
(US $ Billion, 2010e)

40 22.6
21.3 Germany
30 15.9
11.6 11.1 10.4 Belgium
10.2 9.2
20 Spain


Figure 4.2: Top Remittance-recipient Countries in 2010

Source: Migration and Remittance Fact book, 2011

Above figure shows the top ten remittance receiving countries. From the above table
we can know that India is the number one country with highest remittance receipt i.e.
US$ 55 billion in 2010 and India is followed by China, Mexico, Philippines, France,
Germany, Bangladesh, Belgium, Spain, and Nigeria.

Contribution to GDP
40 35
(% of GDP, 2009)

30 23
25 23 22 22
19 17 16
an ga ho va al on oa as na or
t n ot ldo Nep an am dur uya vad
ji To s b G Sal
Ta Le Mo Le S

Figure 4.3: Countries with highest GDP contribution

Source: Migration and Remittance Fact book, 2011

From the figure above, Nepal contributed 23% of GDP from the remittance in 2010.
Other countries have the contribution as Tajikistan- 35%, Tonga- 28%, Lesotho- 25%,
Moldova- 23%, Lebanon- 22% and so on.

4.6.2 Importance of remittance to bank


While issuing any instrument of remittance, bank charges certain amount as

commission. Normally banks charges certain minimum amount or certain percentage
of draft amount as it's commission. In case of SWIFT additional communication fees
is also taken from customers.


Bank enjoys float by issuing instrument of remittance. Bank instantly debits
customers account or collects equivalent cash from customer while issuing draft and
place such fund as draft payable on its book of account. Banks nostro account at
paying bank is debited only after few days (after draft is presented for payment at the
paying bank). Therefore bank is able to gain float i.e. free cost fund from the date of
issuance of draft to the date on which banks nostro account at paying bank is debited.

Forex gain

Bank normally makes Forex gain both in inward and outward remittance. Normally
banks values it's FCY assets and liabilities in terms of mid rate (simple average of
Non cash buying and selling rate) i.e. such assets and liabilities are valued by the rate
which is higher than banks buying rate and lower then banks selling rate, which
enables bank to make Forex gain both on inward and outward remittance.

Deposit Mobilization

Inward remittance helps individual banks increase their deposit base. Remittance who
receive the remittance amount normally will find it easier and safer to deposit the
money in the same bank.

FX Reserve

In the last few years, with the number of migrant worker increasing tremendously, the
country's FX reserve have been helped by inward Remittances.

Chapter Five


5.1 Conclusion

The bank today can not only be described as an institution for accepting and lending
money for making profit. But can be described as a major regulator of the economy of
a country. They had become a major aspect like in context of Nepal which is always
helping people in upgrading their economic condition and finally the economic
condition of the country as a whole. It provides the opportunities for the people as
well as the government to utilize the available funds that remain idle on them.

The Nepalese economy is filled with much of uncertainty and insecurity as due to
political instability of any business and banking organization. However in such
situation NICA can be said to be playing a biggest role for the development of
economic sector through its services. NICA is a new and a growing commercial bank
in Nepal providing various services and facilities to the general public. With the
establishment of just few years, NICA has become a leading bank of the country
preferably by providing quality financial services in the country. NICA has always
been promoting social activities as well, thus this proves an organization devoted
towards the welfare of the Nepalese citizens in a whole.

The managers and the management techniques are impressive and the activities of
entire staffs are devoted towards the success and development of the institution at its
optimum level adapting the modern technologies and innovative banking
services/products has proved to be an additional beneficial factor required for the
standardization in work performance. Hence, an employee in NICA not only gets a
job for living but also goes on developing its skills, carrier and personality as he/she
keeps on working. The whole internship period in NICA was a great experience
where time was Spent serving in CSD, DMAT and Remittance where intern came up
with new ideas, and developed with skills to deal with customers, so far to cope with
the real banking world situation. I Working at NICA as an intern was a great
opportunity to develop conceptual and analytical knowledge about banking sector in

The internship period of four weeks taught the lesson and importance of self-
confident, time management, effective communication, interpersonal relationship,
public relationship and managerial skills which are essential for building up the
career. This is a great opportunity to enhance internee practical knowledge and the
real working environment of the banking sector.

5.2 Recommendation

From the overall study and observation, NICA is an excellent in terms of its products
and services. NICA has opportunity to increase their market share as it is expanding
its branches in various parts of the country. This is established with the promise to
provide excellent services to their customer and improve customer satisfaction by
specializing on the strength, overcoming its weakness and performing their best to
retain valued customers through its quality services. Some recommendation are as

The only visible thing that can boost up the profit level and attract the customers
of competing banks towards it is the change in the advertisement strategy.

Many people who visited or rendered the services of the Nabil Bank and the
Everest Bank were unaware of similar services being provided by the NICA.
Thus it seemed that potential customers are needed to be made aware.

The other thing we would like to suggest is that, unlike the remittance transfer,
the in house service to the customer is little slow. This might be because of the
rush all day long.

'The most significant problem that has been so far is the timely distribution of the
ATM cards. As the card request is not done on time as when customer request for

Similarly, the competing banks open the bank account and give out account
number the same day whereas it takes a day time to open an account at the NICA
the bank should try to cut down the time duration as lengthy procedure might
compel the customers to rethink whether to take service or not to take the service.

5.3 Contribution of internship in knowledge gain

Working in the real environment is the very hard to engage oneself in general banking
transaction taught various aspects of the banking procedures and activities during the
internship period. Being engaged in providing various banking services helped to
broaden the theoretical knowledge as well as practical knowledge as well. It helped to
comprehend the value of time, discipline and communication skill too. customers are
the main drivers of any financial institutions. Therefore the various ways to learnt are:

To please the customers by offering quality products and services with minimum

It helps to understand the practical implication of general banking procedures

basically in customer service department

Helped intern to know the importance of time management in an organization

The internee learnt importance of the social interactions, mutual understanding,

cooperation among employees at work place.

5.4 General comments and suggestion for the company

From the study it was found that the employees of NICA are quite satisfied with the
compensation and reward management of the organization. So the researcher is trying
to provide some useful suggestion which will be proven beneficial to the

In order to know the views of each customers views NICA should conduct survey
about their attitudes

NICA should focus on their HR policies to make the organization as number one
among all.

NICA should enhance the monetary and non monetary rewards practically.

Provision for the benefits and services should be made.

The job should be assigned meeting the experience, qualification and interest of