A Field Visit Report on
Deposit Mix of Everest Bank Limited
Submitted By: ISHWOR LAMICHHANE
P.U Regd No: 065-2-2-01341-2007 Exam Roll No: 250345
Submitted To: KANTIPUR VALLEY COLLEGE
Faculty of Management Purbanchal University
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION (BBA)
June, 2010
Date: July, 2010
Approval Sheet This is to certify that Field Visit
Submitted by: Mr. Ishwor Lamichhane Entitled:
“Deposit Mix of Everest Bank Limited” has been prepared as approved by the college in the prescribed format of the Faculty of Management, Purbanchal University. The report is forwarded for evaluation.
……………………….. Satya Bdr. Shrestha Supervisor
……………………….. Rudra Pd. Ghimire Co-ordinator
……………………….. Jeetendra Man Amatya Vice Principle
……………………….. Pushpa Man Amatya Principal
Date: July, 2010
Approval Sheet This is to certify that Field Visit
Submitted by: Mr. Ishwor Lamichhane Entitled:
“Deposit Mix of Everest Bank Limited” has been prepared as approved by the college in the prescribed format of the Faculty of Management, Purbanchal University. The report is forwarded for evaluation.
……………………….. Satya Bdr. Shrestha Supervisor
……………………….. Rudra Pd. Ghimire Co-ordinator
……………………….. Jeetendra Man Amatya Vice Principle
……………………….. Pushpa Man Amatya Principal
COPYRIGHT
All rights reserved. No part of this report may be reproduced, stored or transmitted in any form, or by any means, without the prior permission of the authors. No patent liability is assumed with respect to the use of the information, contained herein. Although every precaution has been taken in the preparation of this report, the authors assume no responsibility for error or omission.
Date: June, 2010 Kantipur Valley College
PURBANCHAL UNIVERSITY FACULTY OF MANAGEMENT Kantipur Valley College
DECLARATION
Me, the undersigned declare that this report entitled is a result of my own study/ research carried out in the year 2010. It has not been previously submitted to any other University or any other examination(s).
………………………………
Signature Ishwor Lamichhane BBA Kantipur Valley College Redg. No.065-2-2-01341-2007
ACKNOWLEDGEMENT
My outmost gratitude goes to the Purbanchal University for including this field work report program in the syllabus of BBA V semester, which I think is very helpful in developing practical knowledge of the student. This report aims to introduce a banking institution like Everest Bank Limited contributing to enhance the commercial banking system in Nepal.
I have selected “Deposit Mix of Everest Bank” as a topic and Everest Bank Limited as the organization for the assignment.
I have tried my best to present the subject matter in a most simple and easily understandable form. The persons who remained source of inspiration and encouragement to present this report deserve to be acknowledged in the right earnest. I am very much indebted to my respectable teacher, Mr. Satya Bahadur Shrestha, who has significantly contributed to my academic career and guided to present this report.
I am also thankful to the staff of Everest Bank Limited who directly or indirectly helped me in completion of the study.
Finally, my deepest appreciation goes to my friends, family members and concerned people who supported me to accomplish this task.
Thanking You,
………….. Ishwor Lamichhane th
BBA 5 Semester Kantipur Valley College
Table of Content Title Page Recommendation from College Acknowledgement Copy Right Declaration Executive Summary Chapters
Page No:
PART 1: INTRODUCTION
1.1 Introduction to the Banking Industry 1.1.1 Background........................................................................................................................................1 1.1.2 Origin of Bank...................................................................................................................................2 1.1.3 Modern Banking in Nepal...............................................................................................................2-4 1.1.4 Types of Bank.................................................................................................................................4-5
1.2 Introduction of the Organization 1.2.1 Introduction & Historical Background...........................................................................................5-6 1.2.2 Vision, Mission & Objectives,……………………………………....................................................6 1.2.3 Corporate Social Responsibility, Values & Ethics.............................................................................7 1.2.4 Futures Plan, Awards & Achievement............................................................................................7-8 1.2.5 Capital Structure & Share Composition..........................................................................................8-9 1.2.6 Products & Services ....................................................................................................................11-12
1.3 Introduction to Deposit Mix 1.3.1 Meaning of Deposit………….........................................................................................................12
1.3.2 Types of Deposit...………….......................................................................................................12-13 1.3.3 Account Opening Procedures of Deposit………………...........................................................13-14
1.4 Statement of Problems 1.5 Objectives of the Study 1.6 Significance of the Study 1.7 Limitation of the Study 1.8 Organization of the Study
PART 2: RESEARCH METHODOLOGY
2.1 Research Design 2.2 Data collection Procedures 2.3 Data Collection Technique 2.3.1 Primary Data …………………..……………..…............................................................................19 2.3.2 Secondary Data…………………..……………….…......................................................................19
2.4 Data Processing 2.4.1 Classification & Tabulation of Data ................................................................................................19 2.4.2 Presentation of Data…….………..……………….…......................................................................19
2.5 Different Tools Used for Data Analysis
PART 3: DATA ANALYSIS & PRESENTATION
3.1 Total Deposit & It’s Trend 3.2 Deposit Composition 3.3 Comparison of saving with Fixed Deposit 3.4 Trend of Current Deposit with Total Deposit 3.5 Loan & Advance to Total Deposit
3.6 Investment to Total Deposit 3.7 Cash Balance to Total Deposit 3.8 Statistical Tools 3.8.1 Correlation Coefficient Analysis of Deposit between Total Deposit & Loan & Advance...............29 3.8.2 Total Deposit Forecasting………..……………….…......................................................................30
3.9 Major Finding PART 4: SUMMARY, CONCLUSION & RECOMMENDATION
4.1 Summary 4.2 Conclusion 4.3 Recommendation
PART 5: BIBLOGRAPHY
PART 6: ANNEXES
PART 7: QUESTIONNAIRE
List of Tables TABLE 1.1: Capital Structure of EBL ..............................................................................................................8 TABLE 1.2: Share Composition of EBL...........................................................................................................9 TABLE 1.3: Board of Director of EBL ...........................................................................................................10 TABLE 1.4: Management Team of EBL.........................................................................................................10 TABLE 1.5: Major Branches of EBL...............................................................................................................11 TABLE 1.6: Other Branches of EBL................................................................................................................11 TABLE 1.7: Rate of Interest................................................................................................................................13 TABLE 3.1: Total Deposit of EBL.………………. ....................................................................................20 TABLE 3.2: Deposit Composition of EBL ....................................................................................................21 TABLE 3.3: Comparison between Saving & Fixed Deposit....................................................................23 TABLE 3.4: Trend of Current Deposit with Total Deposit........................................................................24 TABLE 3.5: Loan & Advance to Total Deposit Ratio................................................................................25 TABLE 3.6: Investment to Total Deposit Ratio............................................................................................26 TABLE 3.7: Cash Balance to Total Deposit Ratio.......................................................................................27 TABLE 3.8.1: Calculation of Correlation Coefficient.................................................................................29 TABLE 3.8.2: Total Deposit Forecasting........................................................................................................30
List of Figures
FIGURE 1.1: Capital Structure of EBL..............................................................................................................8 FIGURE 1.2: Share Composition of EBL.......................................................................................................10 FIGURE 3.1: Trend line of Total Deposit.......................................................................................................21 FIGURE 3.2(a): Deposit Composition ............................................................................................................22 FIGURE 3.2(b): Position of different Deposit ..............................................................................................22 FIGURE 3.3: Comparison between Saving & Fixed Deposit...................................................................23 FIGURE 3.4: Relation between Current Deposits with Total Deposit...................................................24 FIGURE 3.5: Loan & Advance to Total Deposit Ratio.............................................................................25 FIGURE 3.6: Trend Line of Investment to Total Deposit Ratio.............................................................26 FIGURE 3.7(a): Trend Line of Cash Balance to Total Deposit Ratio...................................................28 FIGURE 3.7(b): Trend Line of Loan & Advance, Cash Balance to Total Deposit Ratio...............28 FIGURE 3.8: Trend Line of Total Deposit Forecasting.......…………………………....................28
Abbreviation:
A.D.
Anno Domini
HMG
Her (or His) Majesty’s Government
ATM
Automated Teller Machine
B.S.
Bikram Sambat
BBA
Bachelors in Business Administration
NABIL
Nepal Arab Bank Limited
NRB
Nepal Rastriya Bank
PNB
Punjab National Bank
FY
Fiscal Year
UAE
United Arab Emirates
UK
United Kingdom
HIV
Human Immunodeficiency Virus
IT
Information Technology
NICCI
Nepal Indian Chamber of Commerce
LC
Letter of Credit
ABBS
Anywhere Branch Banking System
Psh.
Public Shareholders
FCA
Finance Chartered Accountant
Dy.
Deputy
Asst.
Assistant
A/C
Account
N/A
Not Attained
Rs.
Rupees
%
Percentage
No.
Number
EBL
Everest Bank Limited
SWIFT
Society for Worldwide Inter-bank Financial Telecommunication
P.U.
Purbanchal University
EXECUTIVE SUMMARY This fieldwork report on ”Deposit Mix” of the Everest Bank Limited, Pulchok is submitted to
Kantipur Valley College for the fulfillment of the requirement of
Bachelor in Business Administration. This report is mainly divided into three sections: General description of the industry, general description of the organization and specific study of function (Job done and lesson learned). The first section as name suggests, i.e. General Description of the industry mainly describes about origin of the bank and history of the bank, how banking system enter in Nepal. The second section describes about the introduction and history of EBL, its mission and objectives, social norms & ethics, achievement & awards, about branches of EBL. The third section describes about what I have learned from EBL and the position of different Deposit Mix along with cash balance, loan & advance, investment & its thorough effects on financial position of EBL
The last section of the report describes about my recommendation and my personal feedback towards EBL.
1
Chapter – 1
INTRODUCTION 1.1
Introduction to Banking Industry 1.1.1 Background
The term bank derives from the Latin Bancus, which refers to the bench on which the banker would keep its money and his records. Banks are among the most important financial industries in the economy and essential business in thousands of local towns and cities. In the local context, there is much confusion about exactly what a bank is. Bank can be defined as the financial intermediately between depositor and entrepreneurs. The intermediation takes place when banks accept deposits from general public co-operate bodies and private organization and deploys that deposit for profitable purposes in the form of loans and advance. Thus, banks must identify by the function (service and rules) they perform in the economy. To know the precise meaning of bank, some definitions are given below.
"A banker or a bank is a person or company having a place of business where credits are opened by deposits or collections or money or currency or where money is advance or loaned"(Oxford Dictionary).
“A bank is a dealer in debt his own and other people’s. the banker’s business is, then to take the depts. Of other people, to offer his own in exchange and there by to ‘Create’ money.”(Crowther-……)
By these definitions bank can easily be defined as the custodian of deposits. The transaction in the financial market heavily depends upon the banking system of the country. Without bank it would be quite impossible for the industrialist and entrepreneurs to go directly to the general public for getting their savings for investments. So, the simplest definition is that, bank takes the saving of the public by providing them certain rate of interest and earns some profit by providing these saving to the industrialist and entrepreneurs who need it by changing some interest. This is the broadest form of banking but in 2
this cut throats age banking is such a vague terms it does a lot more than the deposit and credits. Remitting of money, letter of the credit, guarantee, draft, TC, Telex transfer etc. The bank of Venice established in 1157 A.D. was the first bank in the world. The second bank was bank of Barcelona of Spain establish in 1401 A.D. And the first Central Bank was the bank of England established in 1844 A.D. 1.1.2 Origin of bank in Nepal
In context of Nepal, our history of banking sector is rather more slow evolution. Even now, the banking system is still in the evolutionary phase. So far as banking is concerned with debt, we may go back in the Nepalese history, where a merchant namely “Sankhdhar” is recorded. He was the person who alone paid all debts of the existing in the country at that time. Since then he introduced a new era called “Nepal Sambat”. This is recorded proves the existence of money lending function at that time. During the course of development of borrowing, we further come across the term “Tanka Dhari” at the end of the 14th century meaning moneylenders. They are one of the 64 castes classified on the basis of occupation. In 1877 AD ‘Tejarath Adda’ was established by the government. The main purpose of this institution was to provide credit facilities to general public at minimum interest rate of 5%. The establishment of this institution marked the beginning of organized financial institution in Nepal. 1.1.3 Modern Banking in Nepal
Nepal Bank Ltd. is the first modern bank of Nepal. It is taken as the milestone of modern bank of the country. This was established on 30
th
kartik, 1994 BS
(1937AD) until mid 1940s, only metallic coins were used as medium of exchange. So the HMG felt need of separate institution or body to issue national currencies and promote financial organization in the country. Hence the Nepal Rastra bank act 2012 was formulated, which was approved by 3
HMG. Accordingly, the Nepal Rastra bank was established in 2013 B.S. as the central bank of Nepal. Similarly Nepal Industrial development Bank was established to accelerate industrial development in 1
st
Magh, 2024 BS, which
eventually turned into agricultural Development bank in 7th Magh, 2024 B.S. th
In 10
Magh, 2022 B.S. a fully government owned 2
nd
commercial bank
Rastria Banijya bank was established. Two decades, after the establishment of 2
nd
bank government declares free
economy and privatization policy to encourage the foreign bank for join venture in Nepal. As a result, Nepal Arab Bank Ltd. (NABIL) was established in 2041 B.S. This is the modern bank with latest technology. Then 29 commercial banks have been opened in the country. There are various no. of commercial banks operating in Nepal. -
Nepal Bank Ltd. (1994B.S.)
-
Rastriya Banijya Bank (2022 B.S.)
-
Nepal Arab Bank Ltd.(2041 B.S.
-
Nepal Indsuez Bank (2042 B.S.)
-
Nepal Grindlays Bank Ltd. (2043 B.S.)
-
Himalayan bank Ltd.(2049 B.S.)
-
Nepal SBI bank Ltd. (2050 B.S.)
-
Nepal Bangladesh Bank Ltd. (2051 B.S.)
-
Everest Bank Ltd. (2051 B.S.)
-
Bank of Kathmandu (2051 B.S.)
These entire banks have their head office in Kathmandu with branches spreading over various regions and areas. But after 2052 B.S. Nepal Rastra Bank (NRB) allowed commercial banks to operate their main activities outside the valley. Due to decentralization policy, NRB induced policy that for new commercial bank, the head office must be outside of capital. Nagar)
Nepal Bank of Ceylon (2053 B.S. with Head Office in Siddhartha
-
Nepal Industrial & Commercial Bank (Head Office in Biratnagar)
-
Lumbini Bank Ltd. (Head Office in Bharatpur) 4
-
Laxmi Bank Ltd. (Head Office in Narayangarh)
Bank can be categorized into different types on the basis of their functions, objectives etc. The word "BANK" will always be synonymous with the commercial
banks
and
its
functions.
Basically,
the
functions
of
the
commercial bank all over the world are same and basic functions are collecting various types of deposit facilities, namely; current, fixed and savings, exchange of money, lending of money , remittance of money, letter of credit, guarantee, loans, locker facility, foreign exchange, serving as an agent of client, e-banking, mobile banking etc. The commercial Banks of Nepal also do all these functions. Commercial Bank is a profit oriented financial service institution having certain rate of interest given to the depositors and also charged certain interest rate to the loan borrower. The basic sources of fund for commercial banks are capital (Funds from shareholders), reserve (Retained Earnings) and various types of deposits. Basic uses of fund are loans, advances and investments. 1.1.4 Types of bank
a. Central Bank: A central bank is the banker of government and banker's bank. It is an institution which entrusted with the duty of issuing and circulating currency notes, controlling and supervising of commercial bank in the country. Maintain stability of currency and formulating the government's monetary policy,
b. Commercial Bank: Commercial banks are organized on joint stock company system which exchanges money, accept deposits and grant loans. Commercial banks preliminary function is to earn profits,
5
c. Co-operative Bank: Co-operative bank is another component of banking organization. It collects small deposits; mobilize small saving and provides short term and medium term loan to their member.
d. Merchant Bank: Merchant bank can be defined as a personal institution which engaged in business of making arrangement for selling, buying or subscribing securities and manage it on behalf of its customers. It also plays a vital role as a consultant advisor or rendering cooperative advisory services in relation to such services.
e. Development Bank: Development bank is concerned with the economic development of a country with adequate long term capital investment and technology for development of
infrastructures
like
agriculture,
industry,
electricity,
transportation,
communication etc. 1.2
Introduction of the Organization 1.2.1 Introduction & Historical background of Everest’s bank
Massive changes and development have taken place during the past two decades in the financial sector. Amidst all these changes, for economic growth and
development
of
new
Nepal,
Liberalization,
Privatization
and
Globalization in this sector has given birth to the largest commercial bank, “Everest Bank Ltd.”. Everest Bank Limited (EBL) was established in 1994 and
started
its
operations
with
a
view
and
objective
of
extending
professionalized and efficient banking services to various segments of the society. EBL joined hands with Punjab National Bank (PNB), India as its joint venture partner in 1997. PNB is the largest Public Sector Bank of India having 112 years of banking history with more than 4400 offices allover India and is known for its strong systems and procedures and a distinct work culture. 6
Drawing its strength from its joint venture partner, EBL has been steadily growing in its size and operations ever since its inception and today it has established itself as a leading Private Sector Bank of the Nation, reckoned as one of the fastest growing Commercial Bank of the Country. With an aim to help Nepalese citizens working abroad, the bank has entered into arrangements with banks and finance companies in different countries, which enable quick remittance of funds by the Nepalese citizens in countries like UAE, Kuwait, Bahrain, Qatar, Saudi Arabia, Malaysia, Singapore and U K. 1.2.2 Vision, Mission & Objectives
Vision Evolve & position the bank as a progressive, cost effective & customer friendly institution providing comprehensive financial and related services; Integrating frontiers of technology & servicing various segments of society; Committed to excellence in serving the public & also excelling in corporate values.
Mission Provide excellent professional services & improve its position as a leader in the field of financial related services; Build & maintain a team motivated & committed workforce with high work ethos; Use latest technology aided at customer satisfaction & act as an effective catalyst for socio-economic developments.
Objectives Extending professionalized and efficient Banking services to various segment of the society. The bank has following objectives: To become the bank of First Choice. To become a leading bank by providing quality product and services. To ensure and provide attractive return to the shareholders. To provide higher expected returns on their investments. To provide loans with very competitive rate of interest. To bridge the gap between savers and users of the fund effectively and
efficiently.
7
1.2.3 Corporate Social Responsibility, Value & Ethics
Corporate Social Responsibility EBL is a socially responsibly corporate and recognizes its responsibilities to its staff and to the communities in which it operates. The bank concentrates on projects that assist children, particularly in the areas of health and education and it has taken up various initiates to benefit the community. Two major initiatives in the area of health ‘Living with HIV’ and ‘Seeing is Believing’ have been undertaken by the bank.
Values and Ethics We at EBL believe that the long term development of an organization depends on how we build trust among our stakeholders. Our values are focused on the ethics at work place and outside. Thus we need to be as transparent as possible through proper corporate governance. We have built a code of conduct where by all employees working, needs to follow it stringently.
1.2.4 Future Plans, Awards & Achievement
Future Plans of EBL According to the annual report of EBL 2008/2009, the bank has been growing on an average at per annum against of overall banking industry. And the bank is focusing on different strategic plans to sustain this growth. The focus of the bank is focusing on different strategic plans to sustain this growth. The focus of the bank is in: Increase in Branch network. Increase in customer base by upgrading IT initiatives to reduce transaction time and
cost of transaction and providing alternatives delivery channels. Increase customer base in low cost deposits with a view to reduce average cost of
deposits. Increase average yield on advances by aggressive marketing of retail lending schemes. Recruit ideally suitable man power and train them for movements of fast track to man
the position of responsibilities at branches and Head Office Further improve internal control system.
8
Awards and Achievements Despite the harsh economic and political scenario, the bank was able to grow on an average at 30% per annum in the year 2006/2007. This is the greatest achievements than any company could achieve. For the effective services provided to the customer in the competitive market it has been awarded “BANK OF THE YEAR 2006.” “NICCI EXCELLENCE AWARD” Besides it, the bank has opened its representative office in New Delhi, India and successfully achieved the goals of facilitating the opening of account of Nepali residing and working in India and remitting their funds to any EBL branch of Nepal. All the branches of the bank are connected through Anywhere Branch Banking System (ABBS), which enables customers for operational transactions from any branches. It was also successful to liaise with and attract the business relating to trade and finance emanating to and from India. Drawing its strengths from its joint venture partner, EBL has been steadily growing in its size and operations and established itself as a leading Private Sector Bank
1.2.5 Capital Structure & Share Composition
Capital Structure The Bank’s Paid-Up Capital has increased to 455 million against the Authorized Capital of 750 million whereas the Core Capital of the Bank is around 700 million.
Table 1.1
Capital Structure of EBL PARTICULARS
AMOUNT
Authorized Capital
1,000,000,000
Issued Capital
840,620,000
Paid Up Capital
838,821,000
Source: EBL’s Brochure
9
Fig 1.1
Capital Structure of EBL 1.05E+09 1E+09 95000000 90000000 85000000
Amount
80000000 75000000 Authorized Capital
Issued Capital
Paid Up Capital
Share Composition The local Nepalese promoters hold 50% stake in the Bank’s equity, while 20% of equity is contributed by joint venture partner PNB whereas remaining 30% is held by the public. Table 1.2
Share Composition of EBL PARTICULARS
AMOUNT
Local Promoters Holds
50%
Panjab National Bank, India Holds
20%
Public Shareholders Holds Remaining
30%
Source: EBL’s Brochure
10
Fig 1.2 Share Compositions of EBL
Table 1.3
Board of Directors of EBL NAME
DESIGNATION
Mr. B.K. Shrestha
Chairman
Dr. Bal Gopal Baidhya
Director
Mr. Ved K Shrestha
Director
Mr. Arun Man Sherchan
Director
Mr. Jagat Ram
Director(PNB)
Mr. R.K Ummat
Director(PNB)
Mr. Shivasharana K.C
Director(PSh.)
Mr. Muskan Shrestha
Director(PSh.)
Mr. Ratna Sansar Shrestha
Director (FCA) Table 1.4
Management team of EBL
NAME
DESIGNATION DEPARTMENT
Mr. R.K Ummat Mr. P.K Pradhan Mr. Jagdish Kumar Arora Mr. Hum Nath Gurung Mr. Pramod Raj Sharma Advocate Shambhu Thapa
Chairman Dy. General Manager Dy. General Manager Asst. General Manager Company Secretary
Legal Advisor
11
Branches of EBL The bank has 12 branches within the Kathmandu valley. They are as follows: Table 1.5
Major Branches of EBL S.NO BRANCH
S.NO BRANCH
1
Lazimpat
7
Chabahil
2
Baneshwor
8
Balaju
3
New Road
9
Galfutar
4
Teku
10
Gwarko
5
Pulchok
11
Suryavinayak
6
Satungal
12
Lagankhel
Source: EBL’s Brochure Besides these 12 Branches the EBL have other 18 Branches, they are as follows:
Table 1.6
Other Branches of EBL S.NO
BRANCH
S.NO
BRANCH
S.NO
BRANCH
13
Biratnagar
19
Pokhara
26
Baglunj
14
Birtamod
20
Butwal
27
Simara
15
Janakpur
21
Bhairahawa
28
Lagankhel
16
Duhabi
22
Dhangadi
29
Besi Sahar
17
Birgunj
23
Itahari
30
Lekhnath
18
ICD Dry Port 24
Nepalgunj
31
Narayangadh
(Birgunj) Source: EBL’s Brochure
1.2.6 Everest Bank Has Offered the Following Products and Services
Deposits: Current deposit, Saving deposit, Fixed deposit Remittances: Draft, SWIFT and Telegraphic Transfer, Mail Major Lending Products: Fixed/Working Capital, Hire Purchase, Overdraft, Construction, Consumer Loan, 12
1.3
Securities, Consortium, Trade Finance, Trust Receipt, Inter bank lending, Merchant Banking Issue Management Underwriting Security dealers (Primary Market) Refund Management Bank Guarantee Foreign Exchange Dealing
Introduction to Deposit Mix 1.3.1
Meaning of Deposits
Deposit is that amount which is deposits by savers in commercial banks or others financial institution for keeping as well as for earning interest from it. The existence of commercial banks basically depends upon the mobilization at deposit. Higher the volume of deposit higher will be their volume at profit so a commercial bank first of all tries to mobilize as much deposits as possible. 1.3.2
Types of Deposit
There are 3 major deposits: A bank Current Deposit a/c can be defined as running account between bankers and customers with the amount being deposited and withdrawn continuously. It is also known as demand deposit with amount draw able on demand. The main purpose of opening current accounts is for safety purpose only and is normally opened by the business people business institutions that have high transaction in bank cause. There is no restriction on withdraw of amount deposited. Since the bank has to maintain high liquidity to customers demand, no interest is paid on such deposit. So this is non interest bearing deposit. The Saving deposit a/c are usually opened and operated by lower and middle class people so as to meet their feature contingencies. It can open by any body on his behalf or on behalf of any other of whom s\he is a guardian. The main aim of opening saving deposits accounts is to promote thrift among the lower income class people. Saving deposit indicates the habit of Nepalese people to deposit money in the Bank and help to accumulate the scattered resources and invest them in needy & productive sector. In this deposit account, Bank give 13
lower rate of interest as money can be withdrawn with minimum limit given by the concerned Bank. Per-notice is needed when sums over of fixed amounts are required to be withdrawn. The Fixed Deposit a/c is also one of the types of a/c available in the bank. When people want to deposit their money for certain period then they open fixed a/c. In this a/c, money is deposited for certain time period such as one month, three month, six month, and one year & even for several years. The money cannot be withdrawn before the expiry time. Both banks & depositors agree the terms & condition & follow it. The interest amt. is higher in this account than in other accounts. Fixed deposit makes the funds available for investment for longer period of time. People deposit their money in fixed a/c for protection of their money & also earn more money in interest. Table no. 1.7 Rate of Interest Deposits
%
Saving
3/Daily Balance
Fixed up to 6 months
8.25
Fixed above 6 months
10
Fixed 12 months or above
10.5
Current
N\A
Source: Statistical Bulletin of Everest Bank 2067
1.3.3
Account Opening Procedure of Deposits (General Rules)
Everest bank has facilitated its customer three types of deposit accounts, i.e. current deposit, saving and fixed deposit. Different deposit a\c has its own characteristics from the banker’s point of view. In case of account opening procedure they have
own particular rules as well as rules in general. In this chapter we are going to discuss about account opening procedure in Everest bank. As we have discussed in former chapter s that the current a/c is non-interest benefit account which is suitable for business firms, corporations, social organizations schools etc. So, opening the current a/c first of all customer 14
should fill up the account opening firm, signature specimen card & should be recommended by the current a/c holder of the bank or other persons, organization with whom the bank satisfy. Including the account opening firm the above mentioned party should submit the photocopies of firm registration certificate, tax certificate, citizenship certificate, partnership deeds (in case of partnership firm), board resolution, articles & memorandum (in case of limited company). After submitting those documents the bank opens an account and made available a cheque book & a/c opening advice to its concerned. The a/c holder must deposit certain amount as minimum balance at the particular a/c. In case of saving deposit first of all applicant should fill up the application firm, signature specimen card & should recommend by the person who have account with the bank. The applicant must submit the photocopy of his/her citizenship certificate. The bank may open saving a/c on the basis of citizenship certificate only. He/she should glue a photo on the application firms as well as on the specimen card. While a/c is opened the a/c holder must deposit the certain Amt. as minimum balance. The bank issues a cheque book and ATM card for that a/c & handover to the a/c holder. In case of fixed deposit, fixed deposit a/c opening procedure is simple. The applicant should fill up the firm, signature specimen card & a deposit voucher for the said amount. The bank issues a fixed deposit receipt where the customers name & address, the time period & the interest rate are mentioned. After the maturity date the depositor should present the receipt at the bank for the payment of the deposited amt
1.4
Statement of the problem Among external & internal problem, external problem effects badly because internal problem can be solved by bank where as external problem may be beyond the bank’s control, they are as follows. •
As the market size is small there is a right competition in between commercial banks & financial companies. As financial companies also perform banking activities it creates right competition in various 15
banking activities such as collection of deposit. It mainly blocks depositors. •
Sluggish economic growth is also a problem because it affects business activities.
•
Political instability is also another problem because government rule changes as government change and it directly effects economic liberalization that cause difficulty on performance of must business mainly financial sector.
•
Customer changing behavior can also be pointed out as a problem they always look for better services.
1.5 Objective of the study The main objective of this study is: •
To find out the trend & position of current, saving, fixed & other deposits.
•
To find out the deposit mobilization in loan & advance, investments sector.
•
To find out the procedures of collecting money through various deposits.
•
To see the development of Everest bank Ltd. in this historical and in general respective.
•
To find out the effectiveness of Everest Bank in Banking Sector.
•
To provide suggestion and possible guideline to improve the bank’s problem regarding to the deposits.
1.6
Significance of the study Everest bank is one of the fabulous banks of Nepal, it is public controlled bank. This study mainly focuses the various deposits of Everest bank, which is one of the main sources of liquidity. As well as this report will help the student, to evaluate the various deposits of Everest bank & its utilization. •
Teachers and students also may obtain a lot of information regarding the various deposits account for proper study about it.
16
•
In the context of modern economy of Nepal, various deposits can play a vital role to improve the living condition, sense of security investment and modern out look of the people.
•
Government can obtain the required information through it in order to amend and improve the rules and regulation of deposit account to meet the requirement of the country.
•
1.7
And also to HMG for making plan and policies of the country.
Limitation of the study Every study has its limitations, some limiting factors are unfavorable condition; situation and other may be the objectives of study. If objectives of study are limited, fixed and specific, the study cannot go beyond that. In general studies, such type of limitation used to being common. These studies have its certain limitation. •
This study has covered only the three financial years from 2064 to 2066 (Due to the published latest Everest bank Statistical Bulletin July 2066)
•
This report is to be submitted within the time limitation.
•
Among the various joint venture banks, the study focused only on Everest bank.
•
It focuses only on deposit schemes, therefore, overall position of Everest bank cannot be judged by this report.
•
Most of the data used are of secondary type, which is available from bank and other sources of books.
1.8
Organization of the study / Scheme of the study This study is organized into following schedule or part 1.
-
Introduction
2.
-
Research Methodology
3.
-
Data Analysis & presentation
4.
-
Summary Conclusion & Recommendation
17
The first chapter deals with various aspects of the present study, like background of the study, which includes brief introduction of banks & Everest Bank Pvt. ltd. It also includes current deposit, saving deposit, fixed deposit & other deposits account. It also deals with the account opening procedure in general rules, statement of the problems, objectives of the study, significance of the study, limitations of the study and scheme of the study. The second chapter deals with research methodology, which includes introduction, research design, nature and sources of data, data processing procedures and tools used for analysis. The third chapter, which is the main aspect of the study deals with the data presentation and analysis on the basis of the document received from the related organization. This study used the statistical as well as financial tools in order to fulfill the objectives and problems of the study. The last or the fourth chapter presents the major summary on the findings, issues and conclusions followed by the recommendations.
18
Chapter - 2
RESEARCH METHODOLOGY 2.1
Research Design Research Design is the first step of the present case study. The Research Design of the present case study is analytical, comparative & graphic study approach. This design is less descriptive but more prescriptive because the historical secondary data have been mainly employed for analysis. For the analytical purpose some question have been asked to the concerned personnel, which is considered as primary data and the secondary data includes the annual report published by Everest Bank etc. Such data and information have been
processed
through
various
processes
like
editors,
tabulations,
calculations & results have been interpreted in the form of ratio and percentage for clear vision.
2.2
Data collection procedure As the study will also be based on primary data, information will be collected through developing a scheduled questionnaires and distributing these to employees of the banks. Question of open-end (i.e. Yes or No) will be included in questionnaires. Besides this, junior employees and clients are also being observed and responses have been drawn from them about relevant questionnaires.
2.3
Data collection technique There are two types of data collection procedure, which are: 2.3.1
Primary Data:
The primary data are those which are collected a fresh and for the first time and thus happen to be original in character. During the survey period we use questionnaire method for collection of primary data but it could not make a strong result because of topics & time limitation.
19
2.3.2
Secondary Data:
During our study period, secondary data becomes a supportive source to conduct the result and analyze them. Thus, in the process of report writing, the annual balance sheet and profit/loss a/c was provided by banks. Thorough magazine, bulletins and the annual reports, the required data were collected. After sorting these data, various ratios have been used to analyze and interpret the financial aspect of the bank. Therefore, on overall context secondary data has been used in maximum number.
2.4
Data Processing 2.4.1
Classification and tabulation of data:
After collecting the data, they are classified and arranged in tables with columns and rows.
2.4.2
Presentation of Data:
In order to present the data clearly various diagrams such as bar diagram, pie chart and trend line have been used. 2.5
Different tools used for analyzing data. Financial Analysis Trend Analysis Statistical Analysis
20
Chapter - 3
DATA ANALYSIS & PRESENTATION The purpose of this chapter is to analyze study and evaluate the major liquidity position, which are mainly related to the strategy of liquidity position or management of Everest bank. It is notable that all types of financial ratios are not studied under this chapter. Only those ratios are calculated and analyzed which are very important to evaluate current deposit of the Everest bank.
3.1
Total Deposit of Everest bank and its Trends The first and foremost important thing to know is the total deposit trend of Everest bank. Total deposit trend refers to the total deposits of the public in various accounts of Everest bank during certain period. Table 3.1 Total Deposit (Rs. in Million)
Fiscal Year
2064
Total deposit of Everest Bank 18185
Change in %
-
2065
23978
31.86
2066
33322
38.97
Source: Statistical Bulletin of Everest Bank,2066
21
Fig no. 3.1
Total deposit of everest bank 35000 30000 n o 25000 i l l i 20000 m n 15000 i s 10000 R 5000 0 2064
2065
2066
Fiscal year
Deposit is the main source of funds for a commercial bank. It collects funds from different sources for various investment functions. From the above table, we can see that the total deposit of the bank in increasing order. In the mid of 2064 there was only Rs.18185 million. In 2065 the amount of total deposit is increased by 31.86%, which is Rs.23978 million. Similarly, the deposit in F/Y 2066 becomes Rs.33322 million which means an increase by 38.97%. This shows that though the total deposits are increasing, it is increasing at a comparatively increasing rate. 3.2
Deposit composition of Everest bank:
After knowing the total deposits, it is necessary to know the composition of that deposit of Everest bank. The total deposit of Everest bank consists of fixed deposit, saving deposit, current deposit and others. Here others refer to collect from other sources. The total deposits comprises of all these kinds of deposits. Table no.3.2 Deposit composition of Everest bank (Rs in million)
S oFiscal uyear r 2064 c e2065 : 2066 S t Total a t Source:
Current Deposit 613.74375
Saving Deposit 5523.69375
Fixed Deposit 10001.75
Others
2045.8125
Total Deposits 18185
629.4225
5664.8025
15585.70
2098.075
23978
2424.48
8998.47
15400.75
6498.30
33322
3667.64625
20186.96625
40988.20
10642.1875 75485
Statistical bulletin of Everest bank 2066
22
The above table reveals that the amount of deposit position of Everest bank was increasing in current deposit, saving deposit, and others deposits but in fixed deposit it was increase in F\Y(2065) and then decrease in F\Y (2066). Figure no: 3.2(a) Deposit composition of Everest bank
16000 ) 14000 n o 12000 i l l i m 10000 n i 8000 ( t i s 6000 o p 4000 e D 2000 0 2064
2065
2066
Fiscal Year
current deposit
Saving deposit
fixed deposit
Others
Figure no: 3.2(b) Position of different deposits of Everest bank 18000 ) 16000 n o 14000 i l l i 12000 m n 10000 i ( s 8000 t i s 6000 o p e 4000 D 2000 0 2064
2065
2066
Fiscal Year Current deposit
Saving deposit
Fixed deposit
Others
From the above figures, we can clearly see that the current deposit, saving deposit and other deposit are in increasing form. But in the case of fixed deposit it is increasing in fiscal year 2065 and then decrease in fiscal year 2066. It is because people are more interested to invest their amount in highly 23
profitable sectors. They do not want to lock out their amount in fixed deposit for certain amount of interest rate. Now a day people are more interested to open saving deposits than fixed deposit. In saving deposit people can withdraw and deposit their money in any time but in fixed deposit they do not able to take the advantage of withdraw and deposit their amount before the maturity time is completed. 3.3
Comparison of Saving Deposit with fixed Deposit
The fixed and saving deposits are in good position. We can clear it with the following table, where the comparison between saving deposits with fixed deposit. Table no: 3.3 Comparison between saving deposit with Fixed Deposit (Rs. in million)
Year
Saving Deposit
2064
5523.69375
2065 2066
%change
Fixed Deposit
%change
-
10001.75
-
5664.8025
2.56
15585.70
55.83
8998.47
5885
15400.75
(1.19)
Source: Statistical bulletin of Everest bank 2066
Figure no: 3.3 Comaprison of Fixed Deposit With Saving Deposit
20000
) n o i l 15000 l i m n i ( 10000 t n u o 5000 m A
0 2064
2065
2066
Fiscal Year Saving Deposit
Fixed deposit
the above table and diagram shows the clear composition between saving deposit with fixed deposit. The saving deposits are in increasing trend from 2064 to till 2066
24
and change in percentages in this deposit is in increasing trend. The fixed deposits are in also increasing trend from 2064 to 2065 but in fiscal year 2066 it is in decreasing trend. The change in percentage in 2066 is negative that is 1.19%. This shows that conditions of saving deposits are far better than fixed deposits.
3.4
Trend of Current Deposit with Total Deposit
Current Deposit to total deposit ratio is calculated to find out the proportion of current deposits with respect to total deposits. The ratio is calculated by using the following formulas, Formula used =
Current Deposit x 100 Total Deposit Table no: 3.4
Trend of Current deposit with Total d eposit (Rs. in million)
Year
Current Deposit
Total deposit
Percentage (%)
2064
613.74375
18185
3.375
2065
629.4225
23978
2.625
2066
2424.48
33322
7.28
Source: Statistical bulletin of Everest bank 2066
Figure no: 3.4 Relation between Current deposit & Total deposit 35000
) n 30000 o i l l i 25000 m n 20000 i ( t 15000 n u 10000 o m A 5000
0 2064
2065
2066
Fiscal year Current Deposit
Total Deposit
25
The above table shows that percentage change in current deposit amount in respect to total deposit. According to table, in 2064, the percentage of current deposit to total deposit of Everest bank was 3.375%. In 2065, the percentage was decrease to 2.625%. In 2066, the percentage of current deposit to total deposit of Everest bank is increased, that is 7.28%.
3.5
Loan & Advance to Total Deposit Ratio
This ratio measures the earning capacity of a commercial bank on its mobilized fund based loan and advance. A high ratio indicates a high success to as loan and advance and vice-versa. This ratio of loans & advance to deposits is calculated in order to find out how many times the loans and advance are as compared to the deposit. This ratio is calculated by using the following formula. Loan & adv. Formula used = x 100. Total Deposit Table no: 3.5 Loan & Advance to Total Deposit Ratio
(Rs in million)
Year
Loan & Advance
Total Deposit
Percentage
2064
14083
18185
77.44
2065
18340
23978
76.49
2066
24470
33322
73.43
Average
75.79
Source: Statistical bulletin of Everest bank 2066
Figure no: 3.5 Loan & Advance to Total deposit 35000 30000
) n o 25000 i l l i m 20000 n i ( t 15000 n u o m 10000 A
5000 0
2064
2065
2066
Fiscal year
Loan & Advance
Total deposit
26
3.6
Investment to Total deposit Ratio This ratio measures the total amount invested on the various sector on the basis of deposits. The ratio of investment to total deposit is calculated in order to find out how many times the investment is as compared to total deposit. This ratio is calculated by using the following formula. Formula used =
Investment Total Deposit
×
100
Table no: 3.6 Investment to Total Deposit Ratio
(Rs in million)
Year
Investment
Total Deposit
Percentage
2064
4985
18185
27.41
2065
5060
23978
21.10
2066
5949
33322
17.85
Average
22.12
Source: Statistical bulletin of Everest bank 2066
Figure no: 3.6
Trend line of Investment with Total Deposit 45000 ) 40000 n o 35000 i l l i 30000 m n 25000 i ( t 20000 n u 15000 o m10000 A 5000 0 2064
2065
2066
Fiscal year Investment
Total Deposit
The above table and diagram shows the percentage of total deposit mobilized in investment. F\Y 2064, investment of Everest Bank in respect of total deposit is
27
27.41% and it decrease to 21.10% and 17.85% in 2065 and 2066. From this we can conclude that the bank invested about 22.12% of total deposit on investment.
3.7
Cash Balance to Total Deposit Ratio Cash and Bank Balance are assets that consists the bank’s line of and cash on hand, foreign cash on hand, cheques and other cash item, balance with domestic bank and balance held abroad. It represents the greater ability to meet their deposits where as lower ratio represents the lower ability to meet its current obligation on their deposit. Measurement of the banks ability to meet its immediate deposit higher rate moreover, too high ratio is unfit as capital will be tied up and opportunity cost will be higher. This ratio is calculated by using the following formula.
Formula used =
Cash Balance x 100. Total Deposit Table no: 3.7
Cash Balance to Total Deposit Ratio
(Rs. in million)
Year
Cash Balance
Total Deposit
Percentage
2064
535
18185
2.94
2065
823
23978
3.43
2066
945
33322
2.84
Average
3.07
Source: Statistical Bulletin of Everest bank 2066
28
Figure no. 3.7(a) Cash Balance to Total Deposit 35000 30000 n o25000 i l l i 20000 m n i . 15000 s R
10000 5000 0 2064
2065
2066
Fiscal year
Cash Balance
Total Deposit
The above table and figure shows the capacity of bank to meet unanticipated calls on deposits. In F\Y 2064 cash and balance is 2.94%, as on 2065 it reaches to 3.43%. Similarly in F\Y 2066 it reaches to 2.84% of the total deposits. From the above analysis, it is concluded that the cash and balance position of the Everest bank with respect to deposits is not better against the readiness to serve its customer’s deposit. In contrast, a high ratio of cash and bank balance may be unfit which indicates the banks inability. Thus Everest bank may invest in more productive sectors like short term marketable security, treasury bills etc. to improve its profitability.
Figure no: 3.7(b)
Trend line of investment, loan & Advance and Cash Balance with Total Deposit 35000 30000 25000 20000 15000 10000 5000 0
) n o i l l i m n i . s R ( t n u o m A
2064
2065
2066
Fiscal Year
Total deposit
Investment
Loan and Advance
Cash balance
29
Source: table no: 3.1, 3.5, 3.6, 3.7
3.8 Statistical Tools Some important statistical tools are used to achieve the objective of this study. In this study statistical tools such as coefficient of correlation analysis and least square lines trend have been used. The basic analysis is written in points below.
3.8.1 Correlation coefficient analysis of deposit between total deposit and loan and Advance. The statistical tool, coefficient of correlation has been studied to find out whether the two available variables are inter-correlated or not. If the results falls with in the correlated point, the two variables are inter-correlated, otherwise not, now to find out the correlation coefficient of correlation has been adapted.
Correlation coefficient =
Here,
NΣUV-(ΣU)(ΣV) 2
2
NΣU -(ΣU)
2
2
NΣV -(ΣV)
N = Number of pairs of x and y observed. x = Total Deposit y = Loan & Advance r = Karl Pearson's Coefficient of Correlation. Table no. 3.8.1
Calculation of correlation coefficient between total deposit and Loan and Advance (Rs. In million)
F\Y
Total deposit (X)
Loan and Advance (Y)
2064
18185
14083
2065
23978
18340
2066
33322
24470
Correlation coefficient (rx,y)
0.9995
Source: Appendix no.1 Here ‘r’ represents the correlation coefficient between total deposit and total loan and advance which is positive (0.9995) which is nearer to 1.
30
3.8.2 Total Deposit Forecasting
On the basis of 3 years data (2064-2066) Table no.3.8.2 Deposit forecasting (Rs. in million) Fiscal year Total deposit of Everest bank 2067 40298.67
2068
47867.17
2069
55435.67
2070
63004.17
2071
70572.67
Source: Appendix no.2
Figure no: 3.8 Trend of Total deposit Forecasting of Everest bank 80000
n i . 70000 s R ( 60000 t i s o ) 50000 p n o e i 40000 d l l i d m 30000 e t s a 20000 c e r 10000 o F
0
2067
2068
2069
2070
2071
Fiscal Year Forcasted Deposit
31
3.9
Major findings The major finding of the study, which covers a period of three years (2064-2066), Everest bank has much efficient in collection from people. Deposit plays a vital role in the mobilization of the amount to earn. Total Deposit is increasing over 3 years which is increase gradually. •
• •
•
•
Depositors more trusted the Everest bank with their strategy of service strategy, quick services & easiness to access to the services. The main attraction point is drawing limitation, which is comparatively higher than other financial institutions. Everest Bank increases its investment under different purposes over the year. The trends of general public to open saving deposit account with Everest Bank have been increasing every year. The current deposit account also in increasing trend in every year. But in the case of fixed deposit account it is increasing in first two years and then in decreasing order. From this we can conclude that the bank invested about 75.79% of total deposit on loan and advance which is quick remarkable and satisfactory on average calculation. The correlation coefficient between total deposit and advance is positive (0.9995) which is nearer to 1.
32
Chapter - IV
SUMMARY CONCLUSION & RECOMMENDATION 4.1
Summary The report has been prepared in partial fulfillment of the requirement for the degree of bachelor of business administration from Purbanchal University. I have chosen Everest Bank branch office of Kumaripati to study deposits as a subject matter. Banks are the most important institution for acceleration of economic growth in the country. They accept deposits from public & in return advance loans by creating credit. Everest Bank Limited (EBL) was established in 1994 and started its operations with a view and objective of extending professionalized and efficient banking services to various segments of the society. EBL joined hands with Punjab National Bank (PNB), India as its joint venture partner in 1997. PNB is the largest Public Sector Bank of India having 112 years of banking history with more than 4400 offices allover India and is known for its strong systems and procedures and a distinct work culture. The financial position regarding the deposit of Everest bank shows a gradual increment in each year. The deposit collection trends of each separate amount namely fixed, saving, and current and other deposit ac count of Everest bank. The fixed deposit is increasing in first two years and then in decreasing way. The saving deposit is in increasing trend in every year. The bank invested about 22.11% (table no.) of total deposit on investment which is in satisfactory on average calculation. The bank invested about 75.79% (table no.) of total deposit on loan & advance which is quick remarkable and satisfactory on average collection.
4.2
Conclusions •
•
•
In average 26.74% of total deposits are contributed by saving deposit. So it clearly shows that saving deposits are one of the major sources of funds for Everest bank which helps Everest bank to earn more profits. The trends of general public to open saving deposit account with Everest bank have been increasing every year. It shows that Everest bank had a good and sound representation among its customers towards saving deposits. They have collected deposits in sufficient amount and invested in priority sector more. The trend of deposit collection is increasing in every year. The large amount of deposits is in fixed a/c. Similarly, amount deposits in current a/c are in increasing basis. 33
4.3
Recommendations After studying & analyzing the deposits a/c and the procedure of opening saving deposit a/c in Everest bank, the following recommendations are made: •
The number of branches of the Everest bank has been increasing in each year but the performance of such branches has not been evaluated. Prior to establishing new branches, a proper study is needed and these branches having their performance below the satisfaction have to be closed down of need or requirement.
•
The bank may increase its deposits (despite reducing the interest rates on the deposit) to a substantial level by introducing a number of attractive deposit mobilization schemes.
•
The bank may generate profit only if the minimum ratio of the deposit is invested in good parties. So while investing it should bear in mind that at least 80% of the total deposit is to be utilized in proper way with minimizing bad debts.
•
Bank should invest deposits in various sectors and provide loan and advances to its customers so as to increase deposits, as it is the major sources of funds.
•
It should provide more facilities like ‘Credit Card’, ‘24 hour banking’ etc.
Thus, bank should make positive attitude towards public of every society and treat them well as it is said that “customers are god”. If bank succeed to make positive attitude from public, even in the situation of providing less interest rate also, deposits from clients will not decrease
34
BIBLIOGRAPHY Book Source
Bajracharya B.C (2005), “Business Statistics & Mathematics”: Kathmandu, M.K. Publisher & Distribution
Bhandri Dilli Raj (2056), “Principles and Practice of Banking and Insurance” st
1 Edition, Kathmandu, Asia Publication.
Dr. Joshi Shyam, Dr.Shrestha Hari Prasad (2058), “Principles of Banking and st
Insurance” 1 Edition, Taleju Publication, Bhotahiti, Kathmandu.
Upadhya G.B and Tiwari N.R (1982), “Principal of Money and Banking in Nepal” Ratna Pustak Bhandar.
Pant,
Prem
Raj
(1998),
“Fieldwork
Assignment
Kathmandu: Veena Academic
Statistical Bulletin of Everest’s Bank 2066
Internet Source th
Available from www.everestbankltd.com [Accessed 29 June, 2010] th
Available from www.nrb.org.np [Accessed 29 June, 2010] th
Available from www.wikipedia.com [Accessed 29 June, 2010]
Other Source Brochures of the Bank
35
and
Report
Writing”,
Annexes Appendix no. 1 Calculation of Correlation coefficient between Total deposit & Loan & Advance (Rs. in Million) u=x23978
u2
Total deposit (x)
Loan & Advance (y)
2064 2065
18185 23978
14083 18340
(5793)
(4257)
33558849
18122049
24660801
0
0
0
0
0
2066
33322
24470
9344
6130
87310336
37576900
57278720
3551
1873
120869185
55698949
81939521
Total
v=y– 18340
v2
Fiscal Year (X)
Now, n = 3, Σu = 3551, Σv = 1873, r=? Σuv = 81939521 Correlation coefficient =
=
2
Σu
= 120869185,
2
Σv
uv
= 55698949,
NΣUV-(ΣU)(ΣV) NΣU2-(ΣU)2
NΣV2-(ΣV)2
3x81939521 - (3551) x (1873) 3 x 120869185 - (3551)2 3 x55698949 - (1873)2
=
245818563 - 6651023 349997954 163588718
=
239167540 18708.23 x 12790.19
=
239167540 239281816.26
= 0.9995
36
Appendix no. 2 Calculation of Total Deposit Forecasting (Rs. in Million)
Fiscal Year (X) 2064
Total deposit (Y)
x=X-2065
x2
xy
18185
-1
1
-18185
2065
23978
0
0
0
2066
33322
1
1
33322
Total
75485
=0
=2
= 15137
Where, X = Fiscal year Y = Total deposit
Let the assumed mean be (A) = 2065 Let the regression equation of y on x be: Y = a + bx ………………(i)
The parameters a & b of equation (i) can be obtained by solving the following two equation: Σy Σxy
= na + b Σx
………….(ii) 2
= aΣx + bΣx …………(iii)
Let, Σx
= 0,
Σy
= na
Σxy
2
Σx
= 2,
Σxy
=15137,
a = 2
= bΣx
b =
Σy
n Σxy Σx2
= =
Σy=75485,
75485 3 15137 2
Now, Ŷ = a + bx Ŷ = 25161.67+7568.5x
For 2067, X=2067, x=2067-2065 = 2
37
n= 3
= 25161.67 = 7568.5
