A STUDY ON

DEPOSIT ANALYSIS OF MACHHAPUCHCHHRE BANK

LIMITED

A proposal of project work

Submitted By:
Ganga Nepal
TU. Reg. No.: 7-2-618-46-2019
Campus Roll No. 144
N.R.College
Nepaltar, Kathmandu

Group:- Finance

Submitted To:
The Faculty of Management
Tribhuvan University
Kathmandu, Nepal

In the partly fulfillment of the requirement for the degree of

BACHELORS OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal
April, 2024
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1.1 Background of study

The word bank has derived from Italian word "Banco" which means accumulation and
collection of money of stock. It is very hard to collect the correct information of the origin
of bank. It is origin from French word "Banque" which means "beach" for keeping and
exchanging of money or coin in the market place by money lenders or money changers.
A bank is an organization whose primary function are concentrated with accumulation of
ideal money from general public and advancing loan to individual’s traders industries and
business houses for expenditure. Generally, the bank collects money from those who
have spare of it from their income on which it pays interest regularly. The money thus
Accumulated can be invested in different sectors Such as Business, foreign trade,
agricultures industry and social works for which it charges certain percentage of interest
by the bank to accumulated fund. Such charge on advancing loan is the major revenue
sources of operating its activities. Thus the bank is good mediator between depositor and
loan taker (Lagarde, 2019).

Deposit consists money packed into a banking institution for safekeeping. This deposit is
made to deposit accounts such as saving account, checking account, and money market
account. The account holder has the right to withdraw deposited funds, as set forth in the
terms and conditions governing the account agreement. This transaction has recorded in
bank’s account book and the balance is recorded as a liability for bank and this is
deposited by customer. Some bank has charge the fee for services and may pay interest
in bank deposit amount. When someone opens the bank account and make a cash
deposit and he surrender the legal title to cash, it’s become an asset of bank and account
is liabilities for this bank. There are the general types of deposit: demand deposit and
time deposit. Demand deposit is the placement of the cash into an account that depositor
withdraw cash from account with any time and there is no any limited number of
transaction can have on these account. Time deposit is an interest bearing deposit held
by bank for fixed terms where the depositor can withdraw when bank give the notices. If
depositor withdraws before notices, bank may assess a penalty. The interest rate of time
deposit is higher than demand deposit. Deposits are a fundamental way of money moves
through the economy. Therefore, a bank is a financial institution which collects deposits
and it turn provides loans by creating credit. Today banking is such a vague term, it does
a lot more then deposits and credit remitting money issue of money guarantee letter of
credit controlling, payment, Other agency functions monetary activity of country etc. are
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also the major function of bank. This multiplicity of bank service and function has led to
a bank being labeled financial supermarket (Anthony, 2012).

Garo, (2015), examined the determinants of deposit mobilization and related costs of
commercial banks in Ethiopia using the data over the years from 2001/2 to 2012/13, and
questionnaires and interviews with senior bank officers of seven banks. The study found
that the growth per capita income is the most significant factor in affecting the bank
deposits.
In Nepalese context, now there is lots of commercial bank. Commercial bank is a financial
institution which collects saving from many person and institution and provide credit or
loan facility to different industrial and commercial business. Commercial banking consists
of changing cash into hank bank deposit and bank deposit into cash, transferring bank
deposit from one person or institution to other, giving bank deposit in exchange for
cheques, Bills of exchange etc. Nepal Bank Ltd.is first commercial bank in Nepal which
established in 1994 B.S. Now, These bank provide banking facility to the customer
through bank branches, branchless banking service, Mobile banking, internet banking,
ATMs, debit cards, credit cards etc. (Shrestha, 2018).

1.2 Profile of the Machhapurchhre Bank Limited

Machhapuchchhre Bank Limited was registered in 1998 as the first regional commercial
bank from the western region of Nepal and started its banking operations from Pokhara
since year 2000. (Source: Google )

The Bank facilitates its customer needs by delivering the best of services in combination
with the latest state of the art technologies and prudent international practices. The Bank
is the pioneer in introducing the latest technology in the banking industry in the country.
It is the first bank to introduce centralized banking software, GLOBUS BANKING
SYSTEM of Temenos NV, Switzerland. The bank provides modern banking facilities such
as Any Branch Banking, Internet Banking, Mobile Banking, Safe Deposit Locker facilities,
Utility Bill payment (Telephone & Mobile), ATM (VISA Debit Cards) to its valued
customers. Besides these, the Bank is providing 365 Days Banking and Evening Counter
services to the customers through many of its offices (https://www.machbank.com/).

The Bank has been promoted by highly renowned Non-Residential Nepalese, prominent
business man and industrialists with a vision and dedication to provide the best financial
products and services in the most efficient and professional manner.
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Now with a paid up capital of over 8.46 billion rupees, 159 Branch Offices, 148 Branchless
Banking Units, 5 Extension Counters and 192 ATMs spread all across the country, it is
one of the full-fledged national level commercial banks operating in Nepal. It takes pride
in having its own buildings for its Head and Corporate Office in Lazimpat, and Branch
offices in Naya Bazar, Pokhara, Jomsom, Baglung and Damauli.

Being an investor, we expect regular flow of return through our investment. Likewise,
public wants safeguard of their funds. For this, financial performance of the banks
needs to be analyzed to find which banks are better for investment or where the funds
are secured.

Vision
To become the bank of the first choice of the people.
Mission
To be one of the most preferred banks in Nepal, easily recognized as the bank which
satisfies and cares for its customers through quality service, innovative products,
professionalism and wide branch network, offering full array of financial services using
modern technology and with good corporate governance practices.

1.3 Statement of problem

Nepal has stepped up in developing country from the list of under developed countries.
Financial development is crucial to economic growth and banks are the most important
elements of the financial system. Development of banks is only possible from the deposit
collected from public for extending credit facility.

Commercial bank increases on their ability to generate income through their lending
activities. The lending activity is made possible only if the banks can collects, utilize and
mobilize enough funds from their customers.

i. What is the deposit positions trend of MBL?

ii. What is the difference between different types of deposit and relation them?

1.4 Objective of study

The major objectives are as follows:
a. To analyze the deposit positions trend of MBL.
b. To access the difference between different types of deposit and relation them.
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1.5 Rational of the study

However, study may have some limitations but there is some importance of the study.
Some of them are as follows:

i. This study gives us to analysis of the different deposits schemes on

Machhapuchchhre bank ltd.
ii. This study gives us to know the current conditions of Machhapuchchhre bank ltd.
iii. This project work might be useful for secondary data for those who are willing to
research analyze about commercial bank.

1.6 Literature review

Reviews of supportive text provide the fundamental theoretical framework and foundation
to the present study. For this Various Book, research paper, articles etc. dealing with
theoretical aspect of deposit analysis of Machhapuchchhre bank. Review of literature
comprises upon the existing literature and research related to the present study with a
view to find out what had already been studied. It surveys scholarly articles, books,
dissertations, conference proceedings and other resources which are relevant to a
particular issue, area of research, or theory and provides context for a dissertation by
identifying past research

1.6.1 Review of related study

Kiyotaki, & Moore, (2019) provided various liquid assets to total assets, liquid assets to
deposits and short term financing loan to total assets and loan to deposit and short term
borrowing. To sum up the stock approach employees various sheet ratios to identify
liquidity trends.
According to Commercial Bank Act, the saving account means an account of amounts
deposited in a bank for savings purposes. Saving Account are generally opened for the
savings of customers (individuals, nonprofit organization, charitable trusts, clubs,
associations and cooperative) who want to save for meeting future needs, Savings
accounts is suitable for the customers who do not want to withdraw frequently or who do
not want to keep certain amount for fixed long period. Shrestha, (2018) analyzed the
trend of deposit mobilization of Himalayan Bank and Siddhartha Bank Limited. From this
analysis he has found that in comparison to SBL, HBL seems more successful in
mobilizing total deposit on different types of government securities to maximize its
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earning capacity. Considering assets management aspect of two banks, SBL is relatively
successful to invest in productive sector and has mobilized its collected deposits to
provide loan and advance for the purpose of earning profit. HBL has weak condition in
mobilizing its collected deposits in comparison of HBL. From the Liquidity ratio, the
Liquidity position of SBL is comparatively better than HBL. SBL has highest cash and
bank balance to total deposit.

Panthi, (2019), analyzed the fund mobilizing policy and profitability analysis. From this
analysis she has found that HBL is more successful than SBL in deposit collection, since
the average deposit collection of HBL is higher than that of SBL. But, the deposit
collection trend of SBL is more uniform than that of HBL, since the Coefficient of Variation
on deposit collection of SBL is lower than that of HBL. She has also concluded that the
liquidity position of HBL is satisfactory than that of SBL. But, the liquidity policy adopted
by SBL is more stable than that of HBL. From this analysis, she has concluded that HBL
is aggressive then SBL in mobilizing the total deposit in loans and advances. On the basis
of return on total deposit HBL is more efficient than SBL in converting deposit collection
into net profit on overall view she has found that the return on assets of HBL is higher
than that of SBL which clearly indicated that HBL is more successful.

1.7 Methods of the study

This chapter describes research methodology enjoyed in the study. It includes types of
research, population sample, types of data, data collection procedure, instruments,
techniques of analysis and limitations.

1.7.1 Research design

In this study, descriptive research design is adopted. To determine the effect of earning,
book value, dividend and price earnings ratio, historical research design is adopted along
with correlation and regression analysis and the descriptive research design is adopted
to identify the qualitative. Some financial and statistical tools have been applied to
examine facts and descriptive techniques will be being used to determine the deposit
analysis based on five-year data from fiscal year 2018/19 to 2022/23.

1.7.2 Population and sampling

The total variable is simply called population. All companies listed with the Nepal Stock
Exchange were the population, but for the study only the commercial banks listed and
conducting share transactions in the NEPSE were taken as the population of the study.
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At present, there are 20 commercial banks and one commercial bank will be selected
using convenience sampling method for the purpose of analysis. Thus, the population
size was 20 and out of the total commercial bank one commercial banks (i.e.
Machhapuchchhre bank limited will is selected for study. (source:google)

1.7.3 Nature and sources of data

The research will be mainly base on secondary data which may include annual reports,
semi-annual reports, quarterly economics bulletin, economic survey report, journal of
finance, previous research studies, dissertation and articles of the subject various text
books and different related websites. Thus, the sources of the secondary data were
collected from different sources of related commercial banks as annual report of the
sample banks, information relevant to study available in various websites, SEBON,
NEPSE, financial statistics reports, bulletins publications of different authorities.

1.7.4 Data collection techniques

The research consists of secondary data. Since the nature of secondary data different,
the data collection procedure also varies. The relevant secondary data include annual
reports, semi-annual reports, quarterly economics bulletin, economic survey report,
journal of finance, previous research studies, dissertation and articles of the subject
various text books and different related websites.

1.7.5 Methods of analysis

The relevant data had been inserted in meaningful tables. Only the data that were
relevant to the study had been presented in tabular form in the understandable way and
unnecessary data excluded. It is attempted to draw out the conclusion from the available
data, with the help of various financial as well as statistical tools. For the calculation of
statistical value like mean, standard deviation, coefficient of variance, correlation etc. will
be used.

1.7.6 Techniques of analysis

The observed and collected data is tabulated. In order to accomplish the objective of the
study, various graphs, diagram including bar-diagram, pie chart, will be applied for the
purpose of analysis. The result of analysis would properly tabulate, compared, analyzed
and interpreted.
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Deposit trend
Deposit lending ratio

1.8 Limitations of the study

This is an analytical study aimed to finding out some certain clues about the theoretical
aspects and practical implication of financial performance. There are many deficiencies
found in this study due to various limitations. Some of them are as follows:
i. Through 20 commercial banks out of one bank will be choose i.e.
Machhapuchchhre bank ltd.
ii. This project report focuses only a deposit analysis but no other sectors.
iii. This study will be mostly based on secondary data annual report of
Machhapuchchhre bank ltd.
iv. This study is conducted to the constraints of time and cost.