CHAPTER – I

INTRODUCTION
1.1 Background of the study
Loan is the amount of money that is given to person for a fixed time to
earn some return. Loan is given by lender to borrower keeping some security of
greater value for a certain period changing fixed on it. A loan obtains from a bank
or other financial institution for which the borrower agree to make a success of
payments consisting of interest and principal on specific dates.
Loan is one of the major sources of income and earning profit for financial
institution. F.I invest by lending loan in different sector for different purpose.
Loan may be risky so it lends money only after investigation and keeping some
security of grates value. If loan is not distributed properly and consciously, then it
may be the main causes of failure of the company investigation.
It plays a great role in economic development opportunities, capital
condition, loan to farmers, trade loan to traders and industrial loan to enterprises
and providing loan in cheaper interest rate, releasing the Nepalese people from the
economical problems. Regarding these services, BOK provides other services
such as banking transaction, draft, handiest etc. to trader’s loans to different
parties. Besides this, it has been providing financial helps to several kinds of
social programs. The bank is not only helping to social improvement of the
country. It has been providing its services and operating its transaction in the back
ward districts and remote places. It is impossible to start business organization
without banking transaction among the country Nepal and Nepalese people. The
bank has already done great job to Nepal and Nepali and also it will play an
important role to the economic development of the country forever.

1.2 Significance of the Study

By the study of this topic, we came to know the level of loan that the bank
could serve how much of interest to the customer. It provides general information
regarding lending procedure of BOK to the general community. It shows the way
to other researcher who will engage in preparation of such report in this aspect. It
will help the mgmt. of the bank to know about the effective implementation and

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formulate those. It also gives some recommendation to the executive of this
organization to take correlative action of any.

1.3 Purpose of the study

The main purposes of this study are as follows:
 To identify the profitability from investment.
 To know the rate of interest on different types of loan.
 To know the position of loan recovery in different years.

1.4 Field work procedures

There are some certain steps while studying and researching the filed work
procedures, while are as follows:
A) Method of data collection

1. Primary data
Primary data are original in character because they are collected from the
related organization of department, middle men competitive and customer etc. It is
more popular and widely used. The primary data can be classified into various
methods.
i. Questionnaire methods
Before visiting the bank, related questions about the deposit was made and
visited the bank and asked the questions and got valuable data.

ii. Direct personal interview

Under this method, various interview were taken to the staff of the BOK

iii. Direct observation

Under this method, observation process was taken in order to get the
additional information of the bank.

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iv. Personal meeting
This is also other method used for the collection of data. By personal
meeting with manager and staff of the bank, information and data were gathered.

2. Secondary data
Data which are not originally collected but rather obtained from publisher
or unpublished sources is known as secondary data. The information and data are
gathered by other like from magazine, newspaper, T.V advertisement etc. It is
mostly available and easy to get. So most of the report is based on secondary data.

B) Methods of data presentation and analysis

The following facts are used for data presentation
 Table
 Pie chart
 Percentage
 Trend line

1.5 Limitation of the study

The limitations under this study are given below.
 It should be limited only under the transaction by this branch of BOK,
Butwal.
 Among the several activities and transaction the study is limited only
under the tending procedure of the bank.
 There are several tools that can be used for analysis but only limited tools
will be adopted for the analysis.
 The study covers the data for five fiscal year only. If we take more fiscal
year, it becomes more lengthy and difficult to calculate.
 Due to time and cost the study is limited in lending procedure only.

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 CHAPTER – II
DATA PRESENTATION AND ANALYSIS

2.1 Data Presentation and Analysis

Data are most valuable tools to show the true position of any organization.
By analyzing the data, various problems and limitations of the organization were
found. Therefore, this chapter focuses on presenting the data relating lending
procedure of BOK.

2.1.1 Analysis of Sartorial Investment

Bank deposit is one of the main sources for loan. To invest the amount in
different sector is the main task of the bank. In the same way, BOK also invested
loan in different sector which are as follows.
 Business loan
 Hire purchase loan
 Housing loan
 Education Loan
 Miscellaneous Loan

Table no. 2.1

Table of data of last five years

Fiscal Business Housing Hire Education Miscellaneous

year purchase
2062/063 35.42 7.5 12.00 140.10 50.33
2063/064 40.75 10.5 15.20 150.50 65.62
2064/065 50.29 15.0 25.92 195.92 95.40
2065/066 56.35 20.5 30.50 225.00 100.00
2066/067 60.00 22.5 35.62 250.72 105.20
Total 242.81 76 119.24 962.24 416.55

The data shows in the table no 2.1 can show by the figure

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. No. 2.1

In the above figure 2.1 i.e. bar diagram of five fiscal year, on x – axis
shows loan in million 2062/063 bank has invested highest amount of social loan
i.e. 140.10 million then miscellaneous loan i.e. amount 50.33 million, Business
loan i.e. 35.42 Hire purchase loan i.e. 12.00 and the lowest investment is seem at
the agriculture loan i.e. 7.5 million. In the fiscal year 2063/064 bank has invested
highest amount of social loan i.e. 150.50 million then miscellaneous loan i.e.
65.62. Business loan i.e. 40.75. Hire purchase loan i.e. 15.20 and the lowest
investment are seen at the housing loan i.e. 10.5 million. In the same way, the
fiscal year 2065/066 to 2066/067 bank has invested highest amount of social loan
and lowest investment seems in housing loan.

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. No. 2.2

In the above figure, Business loan seems to be in increasing order, during

fiscal year 2062/063 to 2066/067 it seems increasing order and during 2062/063 it
increasing rapidly in comparison with other year and 2062/063 to 2066/067
though it is increase order but its increasing ratio is less than other fiscal year.

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. no. 2.3

In the above figure housing loan seems to be in increasing order. During
fiscal year 2062/063 to 2066/067 it is slightly increasing order then of the
2062/063 to 2066/067 it increases rapidly than 2065/066 its increasing ratio is
slightly decreases.

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. no. 2.4

Fig 2.4 shows that Hire Purchase Loan is seem to be effective area of
investment because it increases slowly and slowly during the five fiscal areas then
other loan.

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. no. 2.5

Trend line of social loan seems to be increasing order but its increasing
ratio is very low during 2062/063 to 2066/067. It increasing order is very low
during 2065/066 to 2066/067. It is slightly seems to be increasing.

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 2062/063 2063/064 2064/065 2065/066 2066/067

Fig. No. 2.6

In the above figure, the loan investment in miscellaneous loan is in
increasing order during 2062/063 to 2066/067.

2.1.2 Analysis of Invest ratio

BOK collects the scattered small amount of saving from the public and
uses up to the productive area that is loan flow. The several kinds of the loan and
interest rates changes on them to the public are given below.

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 Types of loan and investment ratios

Types of loan Interest ratio

Business loan 10%
Housing loan 8%
Hire purchase loan 10%
Education loan 8.5%
Priority loan 10%
Low class area loan 8.5%
Govt. security bills 7%
Jollies (gold, silver) 10%

2.1.3 Analysis on recovery of loan on different types of loan indifferent fiscal

year (RS in million)

Table no. 2.2

Recovery table of business loan indifferent fiscal year (Rs. in million)
million

Year Amount of loan Recovery of loan % of recovery

2062/063 35.42 26.30 74.25%
2063/064 40.75 36.23 88.91%
2064/065 50.29 39.32 78.19%
2065/066 56.35 45.32 80.43%
2066/067 60.00 52.132 86.87%
Average 48562 39.86 81.73

The recovery of business loan seems to be very good because its recovery
percentage (%) is about 80 throughout the fiscal year. The lowest recovery % is in
2062/063 i.e. 74.25% and the most favorable recovery period is 2063/064 i.e.
88.91% than 2066/067 i.e. 86.7% and 2065/066 i.e. 80.43% and then 2064/065 i.e.
78.19%.

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 Table 2.3
Recovery of Housing Loan (Rs. in million)
million

Year Amount of loan Recovery of loan % of recovery

2062/063 7.5 3.75 50%
2063/064 10.5 5.73 54.57%
2064/065 15.0 8.95 59.67%
2065/066 22.5 18.26 65.46%
2066/067 22.5 18.26 81.16%
Average 15.2 10.02 62.17%

The recovery housing loan seems to be in increasing order. The highest

recovery seem at fiscal year 2066/067 i.e. 81.16% and the lowest recovery period
seems to be fiscal year 2062/063 i.e. 50%. During 2065/066 recovery seems
65.46% during fiscal year 2064/065 it seems 59.67 and in 2063/064 it seems
54.57%.

Table no. 2.4

Recovery table of Hire Purchase Loan
L (Rs. in million)
Year Amount of loan Recovery of loan % of recovery
2062/063 12.00 5.72 47.67%
2063/064 15.20 11.02 72.5%
2064/065 25.92 17.64 68%
2065/066 30.50 26.36 86.43%
2066/067 35.62 31.98 89.78%
Average 23.85 18.54 72.88%

Recovery of Hire purchase loan is very good. During fiscal year 2062/063
its recovery percentage is very low i.e. 47.67%. There recovery percentage was
increase up to 89.78% during the fiscal year 2066/067.

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 Table no. 2.5
Recovery table of Education Loan

Year Amount of loan Recovery of loan % of recovery

2062/063 140.10 84.29 60.16%
2063/064 150.50 109.62 72.84%
2064/065 195.92 158.35 80.82%
2065/066 225.00 196.65 87.4%
2066/067 250.72 225.72 90%
Average 182.45 154.93 78.28%

Recovery percentage of education loan is in increase order. The most

favorable recovery is in 2066/067 i.e. 90% and the lowest recovery seems at
2062/063 i.e. 60.16% and other in average.

Table No. 2.6

Recovery table of miscellaneous loan

Year Amount of loan Recovery of loan % of recovery

2062/063 50.33 33.54 66.64%
2063/064 65.62 46.82 71.35%
2064/065 95.40 56.43 59.15%
2065/066 100.00 82.46 82.46%
2066/067 105.20 96.09 91.34%
Average 83.31 63.07 74.19%

Recovery percentage of miscellaneous loan is in increasing and decreasing

order. In the fiscal year 2062/063 % of recovery seems 66.64% and increase up to
71.35 in 2063/064 and the decrease in the fiscal year 2064/065 i.e. 59.15% and
they again increasing up to 91.34% during the fiscal year 2066/067.

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2.2 Major findings
By the study of this topic, BOK has been making its great effort for the
economic development of Nepalese people as well as the country by providing
different types of loan in different sectors such as business loan, housing loan, hire
purchase loan, social loan and miscellaneous loan.
 During the 5 fiscal year recovery of business loan in average is 48.562 and
the percentage of recovery was 81.73%.
 Likewise during the 5 fiscal year the recovery of housing loan, average
amount of loan is 15.2 and the percentage of recovery was 62.17%.
 During the 5 fiscal year the recovery of hire purchase loan, average
amount of loan is 23.85 and the percentage of recovery was 72.88%.
 During the 5 fiscal year the recovery of education loan, average amount of
loan is 192.95 and the percentage of recovery was 78.34%.
 In the same way during the 5 fiscal year the recovery of miscellaneous
loan, average amount of loan is 83.31 and the percentage of recovery was
74.19%.

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 CHAPTER – III
SUMMARY, CONCLUSION & RECOMMENDATION

3.1 Summary
The study of lending behavior is the process of identifying firm's lending
in different sectors. To prepare this fieldwork report, various methods are used to
collect the data from BOK. It has shown different types of interest rate, which is
given to the public or in different sectors by BOK.
In this fieldwork report, secondary data are used frequently. Various tools
are used to analyze the data such as the data are personal in bar diagram and trend
line basis. It presents the different types of loan in different fiscal year which
presents on the basis of average percentage and shows the recovery of loan. BOK
is very good because its recovery percentage is more than 60% in every fiscal
year.

3.2 Conclusion
With the help of the study on Butwal Branch office of BOK, I have
mentioned briefly the services provided by bank to the poverty and unemployment
of the country for a long time. The major objective of the establishment of the
bank is to avoid poverty and to economic development of the country. Thus, to
fulfill bank’s own objectives, the bank is providing different kinds of loans and
facilities to the area. Such as Nepal is agriculture dependent and poor country. The
government has selected agriculture and deprived class area as the priority area of
improvement and increase of employment in this area. Therefore, the bank has
economic development of the country and for provided class people. Hence, the
bank is helping to increase income for the formers.
Industrialists produce several kinds of products using the raw materials
purchased from the farmer. The bank also provides commercial loans for the
industrialists for the production of industrial products in cheaper interest rate,
which has helped in employment of rules and small industries. Like wise the bank
is also conducting social works such as to conduct adult education, to help the
campaigns like tree planning, awareness program for family planning, to train the

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farmer for the production of agricultural products using modern equipments and
technology, organize the game programs, and it is helping in other many more
social programs. The bank is providing many kinds of services to the public such
as it provide interest in certain time the saving by the public and provide loan to
the customer-taking mortgage. Only after the establishment of the bank loans for
consumable project, opportunity and employment condition of capital,
development of competitive capacity, increase in government as revenue,
development of entrepreneurship market etc. have development. All credits of
starting comprehension of all those services go to this bank.

3.3 Recommendation
 According to the study, the bank has more staffs than the necessary which
is only increasing the labor cost and making laziness to the employees, so
the bank must reduce the number of employees, announcing self
retirement offer.
 To get achievement, the bank should improve the arrangement system
well.
 Loan investment seems loan in agriculture so bank should give more
emphasis to agriculture sector while providing loan.

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 BIBLIOGRAQPHY

Brigham, E.F. (2006). Financial Management Theory & Practice. The orient press
Illinois.
Dongol, R.M. and Prajapati, K. (2007). Accounting for analysis and Planning.
Sewa Printing Press, Teku, Kathmandu.
Joshi P.R. 2005, (Sept.). Fundamentals of financial Management. Asmita Books
Publishers & Distributor, Kathmandu, Nepal.
Rana S. (2061). Financial Management. Kathmandu, Ratna Pustak Bhandar.
Pant, G.D. and chaudhary, A.K. (2055). Business Statistics and Mathematics.
Kathmandu, Bhundi Puran Prakashan.
Shrestha, M.K. Bhandari, D.B (2062). Financial Market and institutions. Asmita
books publisher and distributors, Pustalisadak, Kathmandu.
Prospects of BOK, www.bok.com.

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