DEPOSIT MOBILIZATION OF SIDDHARTHA BANK LIMITED

A Project Work Report

By

Sanjana Chaudhary

Exam Roll No: 709270504

T.U Registration No: 7-2-927-542-2020

Swoyambhu International College

Group: Finance

Submitted to

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

Bachelors of Business Studies (BBS)

Lalitpur, Nepal

February 2025
DECLARATION

I hereby declare that the project work entitled DEPOSIT MOBILIZATION OF

SIDDHARTHA BANK LIMITED submitted to the Faculty of Management, Tribhuvan
University, Kathmandu is an original piece of work under the supervision of Mr. Narayan
Pauel, faculty member, Swoyambhu International College, Lagankhel, Lalitpur, and is
submitted in partial fulfillment of the requirements for the degree of Bachelor of Business
Studies (BBS). This project work report has not been submitted to any other university or
institution for the award of any degree or diploma.

Signature:
Name of Student: Sanjana Chaudhary
Date:February,2025

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ACKNOWLEDGEMENTS

The author would like to extend his sincere gratitude to Faculty of Management, Tribhuvan
University, Kathmandu for designing the final report project program as requirement for the
partial fulfillment of Bachelor of Business Studies (BBS). This report is prepared, on the
topic of “DEPOSIT MOBILIZATION OF SIDDHARTHA BANK LIMITED”.

The author is also grateful to the coordinator of Swoyambhu International College as well as
Mr. Narayan Paudel for providing necessary guidelines for preparation of report. The author
would also thankful to all the teachers and friends for their support during the period of report
preparation.

Finally, the author would like to thank all whom the author has forgotten to mention.

__________________
Sanjana Chaudhary, Author Date: February,2025

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TABLE OF CONTENTS
Title Page … … … …… … … … … … … … … … … … … … … … … … … … … … … i
Declaration … … … … … … … … … … … … … … … … … … … … … … … … … … ii
Supervisor’s Recommendation … … … … … … … … … … … … … … … … … … … iii
Endorsement … … … … … … … … … … … … … … … … … … … … … … … … .... . iv
Acknowledgements … … … … … … … … … … … … … … … … … … … … … … … ...v
Table of Contents… … … … … … … … … … … … … … … … … … … … … … … …vi
List of Tables … … … … … … … … … … … … … … … … … … … … … … … … …vii
List of Figures… … … … … … … … … … … … … … … … … … … … … … … … … vii
Abbreviations … … … … … … … … … … … … … … … … … … … … … … … … … viii

CHAPTER I: INTRODUCTION … … … … … … … … … … … … … … … … … … 1
1.1 Background … … … … … … … … … … … … … … … … … … … … … ...... 1
1.2 Statement of the Problem … … … … … … … … … … … … … … … … … …. 6
1.3 Objectives of the Study … … … … … … … … … … … … … … … … … … ... 6
1.4 Significance of the Study … … … … … … … … … … … … … … … … … …. 7
1.5 Conceptual Review … … … … … … … … … … … … … … … … … … … … 7
1.6 Review of Literature … … … … … … … … … … … … … … … … … … …. 11
1.7 Methods … … … … … … … … … … … … … … … … … … … … … … … 14
1.8 Limitations of the Study … … … … … … … … … … … … … … … … … … 18

CHAPTER II:RESULTS AND ANALYSIS … … … … … … … … … … … … … … 19

2.1 Presentation of data … … … … … … … … … … … … … … … … … … … 19
2.2 Analysis of Results … … … … … … … … … … … … … … … … … … … 24
2.3 Finding … … … … … … … … … … … … … … … … … … … … … … … 25

CHAPTER III: SUMMARY AND CONCLUSION … … … … … … … … … … … 26

3.1 Summary … … … … … … … … … … … … … … … … … … … … … … 26
3.2 Conclusion … … … … … … … … … … … … … … … … … … … … … . 27

BIBLIOGRAPHY … … … … … … … … … … … … … … … … … … … … … … 28

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LIST OF TABLES

Table No. Table Heading

2.1 Total Deposit Structure o SBL
2.2 Total Loan & Advance to Total Deposit Ratio
2.3 Total Investment to Total Deposit Ratio
2.4 Cash Reserve Ratio

LIST OF FIGURES

Figure No. Table Heading

2.1 Total Deposit trend of SBL
2.2 Total Credit to Total Deposit Ratio
2.3 Total Investment to Total Deposit Ratio
2.4 Total Cash & Bank to Total Deposit Ratio

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ABBREVIATION

AGM - Annual General Meeting

ATM - Automated Teller Machine
B.S. - BikramSambat
BBS - Bachelor of Business Studies
CB - Central Bank
CBS - Central Bureau of Statistics
SBL - Siddhartha Bank Limited
i.e. - that is
LTD. - Limited
MOF - Ministry of Finance
NABIL - Nepal Arab Bank Limited
NG - Government of Nepal
NRB - Nepal Rastra Bank

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CHAPTER I

INTRODUCTION

1.1 Background

The word ‘Bank’ came from Italian word “bank” which means the bench in which Italian
merchants did the transaction of money. The first bank in the world was also established in
Italy in 1157 A.D. named “The Bank of Venice”. The second bank was the “Bank of
England” established in 1844 A.D.

Banks mobilize deposits by making finances and by investing in various financial markets.
Basically deposit mobilization is related to the creation of credits. The banks would have
special campaigns where they would interact with a lot of people and invite them to make
deposits with their bank. As you might already know, the main business for banks is
accepting deposits and granting loans. The more the loans the banks disburse the more profit
they make. Also, banks do not have a lot of their own money to give as loans. They depend
on customer deposits to generate funds for granting loans to other customers. So a deposit
mobilization scheme would encourage customers to deposit more cash with the bank and this
money in turn will be used by the bank to disburse more loans and generate additional
revenue for themselves. Since people living in rural locations don't use banking services
much, they might have a significant amount of cash at home in safety vaults. So if banks can
convince rural customers to deposit their money with them, they might mobilize a good
amount.

Deposit mobilization is an integral part of banking activity. Mobilization of savings through

intensive deposit collection has been regarded as the major task of banking in Nepal.
Acceptance of deposits is the primary function of commercial banks. As such, deposit
mobilization is one of the basic innovations in current Nepalese banking activity.

Hence, in this paper, an attempt is made to evaluate the trend and growth in deposit
mobilization of scheduled commercial bank Siddhartha Bank Limited in Kathmandu.

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1.1.1 Introduction to Commercial Bank

The commercial bank refers to those banks that accepts saving from public invest it into
productive sectors. Bank collects deposits in order to repay the amount with certain interest
amount. Bank invests it into profit earning business. They provide loans in the form of cash,
credits and overdrafts. Services such as correction of bills and cherubs agency functions are
provided by bank.

Generally, commercials banks interrelate with finance, commerce and trade. Commercial
bank advance short term loans to investors and traders. Hence, “Commercials banks refers to
such type of bank deals in money exchange, accepting deposits, advancing loan and
commercial transactions except specific banking related to co-operative, agriculture and
industry and other objectives.

According to Commercial Bank Act 2013 B.S. “A commercial bank is that which exchange
money, accepts deposits, grant loans and perform banking functions.

1.1.2 Historical Development of Commercial Banks in Nepal

In context of Nepal, the history of commercial bank isn’t ancient for us. In Nepal,
‘TejarathAdda’ was established in 1993 B.S for clear banking transaction. Infact Nepal Bank
Ltd is the first commercial bank in Nepal which was established in 1994 B.S.

Nepal Rastra Bank is established in 2014 B.S to issue paper note which is also central bank of
Nepal. NRB plays the important role in development of banking system by formulating
necessary policies and procedures. RastriyaBanijya Bank was [Link] 2022 B.S. under the
RBB Act 2021, with fully ownership by government Nepal Arab Bank Ltd was established in
2041 B.S which is first joint venture bank in Nepal. At present, there are 32 commercial
banks in Nepal. Establishment dates of commercial banks are shown as follows:

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Name of Banks Establishment Year (B.S)
01. Nepal Bank Limited Kartik 30 1994
02. RastriyaBanijya Bank Limited Magh 10 2022
03. Agriculture Development Bank Limited Poush 18 2024
04. Nabil Bank Limited Ashar 29 2041
05. Nepal Investment Bank Limited Falgun 16 2042
06. Standard Chartered Bank Nepal Limited Magh 16 2043
07. Himalayan Bank Limited Magh 5 2049
08. Nepal SBI Bank Sharwan 2 2049
09. Nepal Bangladesh Bank Limited Jestha 2051
10. Everest Bank Limited 2051
11. Bank of Kathmandu Lumbini Limited Falgun 2051
12. Nepal Credit and Commerce Bank Limited Ashwin 28 2053
[Link] Bank Limited Ashar 11 2057
14. Kumari Bank Limited Chaitra 21 2057
15. Laxmi Bank Limited Baisakh 2059
16. Prabhu Bank Limited 2063
17. Global IME Bank Limited Jestha 2064
18. Citizens Bank International Limited Ashar 7 2064
19. Prime Commercial Bank Limited Ashwin 4 2064
20. Sunrise Bank Limited Ashwin 25 2064
21. NMB Bank Nepal Limited Baisakh 2065
22. NIC Asia Bank Limited Shrawan 5 2055
23. Machhapuchchhre Bank Limited 2055
24. Mega Bank Nepal Limited Shrawan 2067
25. Civil Bank Limited Mangsir 10 2068
26. Century Bank Limited Magh 9 2067
27. Janata Bank Nepal Limited 2067
28. Sanima Bank Limited Falgun 2068

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1.1.3 Introduction of Siddhartha Bank Ltd

Siddhartha Bank Limited (SBL), established in 2002 and promoted by prominent

personalities of Nepal, today stands as one of the consistently growing banks in Nepal. While
the promoters come from a wide range of sectors, they possess immense business acumen
and share their valuable experiences towards the betterment of the Bank. Within a short span
of time, Siddhartha Bank has been able come up with a wide range of products and services
that best suits its clientele. Siddhartha Bank has been posting growth in its portfolio size and
profitability consistently since the beginning of its operations. The management of the Bank
has been thoroughly professional.

Siddhartha Bank has been able to gain significant trust of the customers and all other
stakeholders to become one of the most promising commercial banks in the country in less
than 10 years of its operation. The Bank is fully committed towards customer satisfaction.
The range and scope of modern banking products and services the Bank has been providing is
an example to its commitment towards customer satisfaction. It is this commitment that has
helped the Bank register quantum growth every year. And the Bank is confident and hopeful
that it will be able to retain this trust and move even further towards its mission of becoming
one of the leading banks of the industry.

The Bank focuses on business growth, human resource development and reaching out to its
customers in various ways by ensuring full compliance with the regulatory requirements.
Besides, the Bank is constantly identifyingand creating opportunities for itself to serve the
needs of its customers in an efficient and effective manner. The Bank also provides sample
opportunities for its customer, capitalizing on which they can ensure a better future for
themselves and the country. The Bank understands the dynamics of customer needs, and to
truly justify the motto: “One Bank: Endless opportunities”. Modern IT capabilities and
competent human resources help the Bank to innovate for change. The bank has upgraded its
IT infrastructure to provide international. Standard technology-based banking services like
internet Banking (iConnect), Mobile Banking (mConnect), Branchless Banking (Sajilo
Banking Sewa), Mobile Wallet Service (Siddhartha Hello Paisa Service) and various card
products. The Bank firmly believes on improving the quality of its employees to be amongst
the best in the industry.

4
1.1.4 Products and Services of Siddhartha Bank Limited:

DEPOSIT PRODUCTS Loans and Advances Remittance Services

Savings Deposits Consumer Loans: SBL Remit (International)
Siddhartha Bal Bachat Siddhartha Home Loan SBL Remit (Domestic)
Siddhartha Nari Bachat Siddhartha Auto Loan Demand Draft
Siddhartha Sarvottam Bachat Siddhartha Personal EMI SWIFT Payment
Loan
Siddhartha Jestha Nagarik Siddhartha Mortgage Loan Sale/Purchase of Foreign
Bachat Currency
Siddhartha Bishes Bachat Education Loan Advance Payment
Siddhartha Bachat Loan Against Fixed Deposit
Siddhartha Students’ Savings Small and Medium Ancillary Services
Account Enterprises (SME) Loans
Remit Account Debit Card
Siddhartha Investor’s Business Loans: Credit Card
Savings Account
Siddhartha Super Salary Overdraft/Cash Credit Prepaid Card
Account
Siddhartha Mega Savings Import Loan Branchless Banking
Siddhartha Kantipur Savings Working Capital Loan Internet Banking (iConnect)
Account
Term Loan Mobile Banking
Export Finances International Card Acquired
Fixed Deposit Siddhartha Online Payment
Siddhartha Awakash SMS Banking
Muddati Khata
Siddhartha Premium Muddati
Khata
Siddhartha 180 Days Fixed Treasury and Trade Finance
Deposit Correspondent
Structured Fixed Deposit

Current Deposit Bank Guarantee Other Customer Services

Call Deposit Balance Certificate

5
1.2 Statement of the Problem

Banks mobilize deposits by making finances and by investing in various financial markets.
Basically deposit mobilization is related to the creation of credits. Acceptance of deposits is
the primary function of commercial banks. As such, deposit mobilization is one of the basic
innovations in current Nepalese banking activity. Hence, in this paper, an attempt is made to
evaluate the trend and growth in deposit mobilization of Siddhartha Bank Ltd. A financial
institution will typically conduct its own deposit mobilization policy. Banks and financial
institution are facing huge competition and lots of challenges regarding liquidity risk, credit
risk, inflation risk, operational risk and interest rate risk. Banks should be very careful while
mobilizing its deposits. Thus the present research raised the following questions.

➢ What is the trend of deposit mobilization of Siddhartha Bank Ltd in Nepal?

➢ What is the relationship among deposit, loan and advances and investment of the
Siddhartha Bank Ltd?
➢ What is the impact of deposit mobilization on profitability of Siddhartha Bank Ltd.?
➢ What is the impact of Ideal deposit?

1.3 Objectives of the Study

Objective of this Study are as follows:

➢ To analyze the mobilization of deposits of different accounts.

➢ To trace-out the portion of deposits used in investment and loan.
➢ To compare various types of deposits with total deposits of Siddhartha Bank Ltd.
➢ To draw the trend of deposit of Siddhartha Bank Ltd.
➢ To find out the composition of deposit.

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1.4 Significance of the Study

The detail study on any topic must give significance to the reader. Considering the fact, the
reader can obtain following significance after studying this field work report in detail.

➢ This fieldwork is impotent to student, because it helps them to complete their BBS level
➢ This fieldwork report helps those who are willing to know the various account of
Siddhartha Bank Ltd such as utilization of deposit, structure of deposits etc.
➢ This study helps the other future researcher to use this as secondary data.
➢ This fieldwork report will help the future students who will be writing same type of field
report.
➢ This fieldwork report is useful for library purpose.

1.5 Conceptual Review

The excess of income over consumption requirement is saved. Such savings are deposited in
commercial banks, even amounts to be spent for consumption purposes are deposited in
commercial banks. Payment for goods and services is made in cheques drawn on banks.
Banking habit is growing faster. People deposit their earnings in commercial banks because
banks vaults are safer than home coffers and they pay interest according to the kind of
deposits.

Banks accept deposits to lend the same at a higher rate of interest. Deposits and credits are
just like inflow and outflow of funds of the banks. Banks deploy funds by way of providing
credits to needy people. Credits (loans and advances) are the largest income earning asset of
the bank and the most profitable and high risk associated item on the asset side of the bank
balance sheet. It is important that the commercial bank’s deposit policy is the most essential
policy for its existence. The growth of banks depend primarily upon the growth of its
deposits. The volume of funds that management will use for creating income through loans
and investment is determined largely by bank’s policy governing deposit. In other words,
when the policy is restrictive, the growth of bank is restated or accelerated with the

7
liberalization in the deposit policy. In banking business, the volume of credit extension much
depends upon the deposit base of a bank.

The deposit creating powers of commercial banks forces to raise the assets along with the
liabilities side of the balance sheet. In other words, assets give rise to liabilities. Traditionally,
the deposit structure of a commercial bank was thought to be determined by the depositors
and not by bank management. There are regular changes 20 in this view in the modern
banking industry. Thus banks have evolved from relatively passive acceptors of depositors to
achieve bidders for funds. Depositors are one of the aspects of the bank liabilities that
management has been influencing through deliberate action. Thus, bank deposit is subject to
various form of classification. The deposits are generally classified based on ownership,
security and the availability of funds. There are two types of deposit which are as follows.

2.1.1. Interest Bearing Deposit

Deposit in which banks are required to pay interest is known as interests bearing deposit.
Saving, Term (Fixed), Call and Recurring deposit are interest bearing deposit.

➢ Saving deposit:
A saving deposit is one in which middle class people and general server open a limited
amount of money that can be withdrawn and low level of interest will be provided by
bank. This is a very common and general deposit account, which is suitable for those
classes of people who want to save some portion of their earnings or the money left after
the consumption. Initial deposit as decided by the bank must be made to open the Saving
Accounts. There are some restrictions in withdrawing money at the same time the
limitation depends as per nature of the economy and from one country to the other
country or every one bank to the other.

A savings account is a deposit account held at a retail bank that pays interest but cannot
be used directly as money in the narrow sense of a medium of exchange (for example, by
writing a cheque). These accounts let customers set aside a portion of their liquid assets
while earning a monetary return. In some jurisdictions, deposits in savings accounts do
not incur reserve requirements.

8
The main features of such account are as follows:
i. Interest bearing.
ii. Restriction in respect of both the amount of withdrawal and frequency withdrawal.
iii. Purpose and period of such deposit is for saving purpose for the individuals who do
not want frequent withdrawals and who do not want to keep money for fixed long
period.

➢ Fixed Deposit:
This is a kind of deposit in which banks offers fixed interest rate on the deposit and
repays principal together with interest at fixed maturity or pays interest on regular
interval. So the money deposited in this account can be utilized by banks for medium or
long term credit freely being confident that the depositors will not come to claim until the
time lapses. Normally higher interest rate is offered for long term deposit and lower
interest rate for short term deposit. The time deposit is the main source of commercial
banks for their credit operation. Investment in medium term and long purposes is possible
only through this type of deposit. However, the depositor can take loan under security. In
this context of Nepal, fixed deposit has been classified on the basis of, Quarterly, Semi-
annually, Annually and above.

A fixed deposit (FD) is a financial instrument provided by banks which provides

investors with a higher rate of interest than a regular savings account, until the given
maturity date. It may or may not require the creation of a separate account. It is known as
a term deposit or time deposit in Canada, Australia, New Zealand, and the US, and as
a bond in the United Kingdom and India. They are considered to be very safe
investments. Term deposits in India and Pakistan is used to denote a larger class of
investments with varying levels of liquidity.

The main features of such account are as follows:

i. Specific period.
ii. Non operative.

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➢ Call deposit
It incorporates characteristics of both saving and current account. Current in a sense that
it can be withdraw able at call and saving in a sense that it can earns interest. Generally
business house prefer this type of account. Interest rate on this type of account is
negotiable between banker and the depositor. Hence, it is normally not published in
public but NRB required the rate on this kind of deposit. Normally, interest is applied on
average balance. Withdrawal restriction is not imposed on call deposit but the balance
should not go below the minimum requirement.
The main features of such account are as follows:
i. Non operative.
ii. Short term: overnight stay.
iii. Interest rate not fixed.
iv. Payable at demand.

➢ Recurring deposit
Concept of recurring deposit was developed to encourage the thrift among the people of
regular earning (fixed). In a regular deposit scheme the depositor is required to deposit
the fixed amount in each installment and is paid a fixed amount at maturity.

Recurring Deposit is a special kind of Term Deposit offered by banks which help people
with regular incomes to deposit a fixed amount every month into their Recurring Deposit
account and earn interest at the rate applicable to Fixed [Link] is similar to making
FDs of a certain amount in monthly installments, for example Rs.1000 every month. This
deposit matures on a specific date in the future along with all the deposits made every
month. Thus, Recurring Deposit schemes allow customers with an opportunity to build up
their savings through regular monthly deposits of fixed sum over a fixed period of time.
Minimum Period of RD is 6 months and maximum is 10 years.

The main features of such account are as follows:

i. Negotiable with prepaid interest having fixed maturity.

ii. No particulars of depositor contained in the certificate.
iii. Opening of account is not required.
iv. It could be discontented before maturity.

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2.1.2. Interest free deposit

Deposit in which bank do not pay interest are known as interest bearing deposit.

➢ Current deposit
Current deposit is also known as demand deposit as the deposit is withdraw able on
demand. Anyone can open current account in bank however it is normally open by
business people, business organization that have to with draw such fund at any time
because no bank gives interest as it has to maintain higher liquidity to meet customers
demand. Also if minimum balance is not maintaining the bank also charges service
charge.

➢ Margin deposit
Bank issues L/C, guarantee etc. on behalf of customer for a specified sum so money.
These amounts have to be paid to the beneficiaries of a foreside instrument provide that
they claim as per the terms and condition agreed upon. Thus, bank are expose to
contingent liability, bank ask customer to deposit certain amount as a margin of safety
which is known as margin deposit.

1.6 Review of Literature

Shrestha (2014) studied on Deposit Mobilization of selected Commercial Banks of Nepal.

The objective was to analyze the trend of deposit mobilization. According to research, Banks
had total deposit of Rs Forty four billion seven hundred twenty two million seventy three
Thousand two hundred sixty one (44,722,073,261) and concluded that the commercial banks
have increasing trend from the past years in total deposit.

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Panta (2008) published a report on Deposit Analysis of Nabil Bank. The objective was to
analyze the mobilization of different deposit accounts of Nabil Bank. According to research,
Nabil Bank had total deposit of Rs. Ninteen billion three hundred forty seven million only
and concluded that fixed deposit account provided maximum contribution to the total deposit
of the Nabil Bank.

Maharana, Choudhury and Panigrahi (2015) studied on Deposit Mobilization of

Commercial Banks: A Comparative Study of BOB and Axis Bank in Bhubaneswar City. The
main objective of the study was to survey the method Strategies and the trends in deposit
mobilization of commercial banks in India. It was concluded that there was a significant up
trend and growth in current deposits but in terms of growth of deposit year by year is
fluctuating.

Tuyishime, Memba and Mbera (2017) studied on The Effects of Deposits Mobilization on
Financial Performance in Commercial Banks in Rwanda. The objective was to establish the
effects of deposit mobilization on the bank financial performance in commercial banks in
Rwanda. The findings indicated that the marketing strategy used made the bank to increase in
terms of customers and it has led to the increase in deposits over the years. The study
revealed that the introduction of innovative banking technology has led to the increase in
deposits at a low cost as opposed to the usual way of getting deposits through term deposits
and made financial services accessible in the unbanked people. The study recommends the
bank to develop other strategies towards marketing and mobilize more deposits as they are
indispensable tools towards the profitability of the bank.

Kafle (1990) studied on Monetary and Financial Reform in Nepal: Implication for
Adjustment and Growth. It states that, consideration and liberalization of interest rate reform
measure are initiated with a view to provide more option to commercial banks in the
mobilization of savings and portfolio management through market determined interest and
lending rates.

Bajracharya (1990) studied on Fiscal Deficit in Nepal: Its sources and Monetary
Implications. He has mentioned, mobilization of domestic savings is one of the prime

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objectives of the monetary policy in Nepal. For this purpose Commercial Banks stood as the
active and vital financial intermediary for generating resource in form of deposit of the
private sector. So far providing credit to the investors is a different aspect of the money.

Morris (1980) studied on Latin America’s banking systems in the 1980s. The main objective
of the study is to better understand the role and performance of the banking systems. The
study concluded that, most of the banks concentrated on compliance with central bank rules
on resources requirement, credit collection and interest rates. While analyzing loan portfolio
quality, operating efficiency and soundless of bank investment management has largely been
overlooked. The huge losses now find in the bank’s portfolio in many developing countries
and testimony to the poor quality of this ever sight investment function.

Karmacharya (2004) studied on implementation of management information system in

banking system. The objective was to study of different management information system in
banking system. The study concluded that commercial banks play a crucial role in
accelerating growth of a country. The bank mobilizes the savings of the people and diverts
them into productive channels. The expansion of branches as more as possible to encourage
the savings i.e. to increase the savings habits of people and thereby to mobilize the available
financial resources efficiently and effectively in a productive way and concluded that the
branch expansion helps to collect more deposits and utilize the available resources. The
conclusion is derived from the analysis of seven years data from 1970 A.D. to 1977 A.D.
using Karl’s Pearson’s formula, percentage and ratio to meet the objective; the writer has
analyzed how far the bank is able to utilize the collected deposits.

Rayamajhi (2009) studied on Investors preferences in financial instruments in Nepal. The

objective was to list out the investors preferences in financial instruments in Nepal. The study
concluded that commercial banks play a crucial accelerating the growth in the country. The
bank mobilizes the savings of the people and diverts them into productive channels. The
expansion of branches as more as possible to encourage the savings i.e. to increase the
savings habits of people and thereby to mobilize the available financial resources efficiently
and effectively in a productive way and concluded that the branch expansion helps to collect
more deposits and utilize the available resources. The conclusion is derived from this
analysis.

13
Joshi (2011) studied on financial strengths and weakness of various commercial banks. The
objectives of finding the comparative financial strengths and weakness of various commercial
banks, return rate and expected return to the shareholders, systematic and unsystematic risk
of the banks and providing recommendation on the basis of research findings, by using
financial ratios, it is calculated that lending condition of banks are in decreasing trend. Banks
in strong condition are holding good customers and discouraging low rated and less
amounted loans. Instead of that, they are initiated towards remittance, bank guarantees and
other commission generating activities, while other banks are showing aggressive and are
spontaneously increasing loan loss provision. Deposits in the banks are also decreasing while
some banks are holding enough funds.

Venkatesan (2012) carried out a study on an empirical approach to deposit mobilization of

commercial banks in the context of Tamilnadu. The data are first subjected to descriptive
statistics, namely mean, standard deviation and coefficient of variation in order to know the
central tendency, dispersion and volatility in the data. Next simple linear regression technique
was used and the variables were current deposit, fixed deposit and term deposit. The study is
based on secondary data for the span of ten years from 1990-00 to 2008- 09. The data were
obtained from statistical handbooks and broachers published by Reserve Bank of India (RBI).
The major findings of the study were that there was a significant trend and growth in current
deposits in terms of value despite there was a significant decline in number current deposits
accounts in scheduled commercial banks in Tamil Nadu during the period from 1990-00 to
2008-09. Regarding saving deposits, there was a significant trend and growth in it both in
terms of number of accounts and in value (amount). But the scenario was different in the case
of term deposits in scheduled commercial banks. The number of term deposits exhibited a
significant growth and trend but there was neither decrease nor increase in it when evaluated
by value. Hence, it was concluded that the scheduled commercial banks in Tamil Nadu
performed well in deposit mobilization in ten years from 1999-00 to 2008-09.

1.7 Methods

1.7.1. Research Design

Research design is a research plan that determines the type of research to be conducted,
design of data collection process and instruments, determine sampling method and plan, and

14
select tools for data analysis. According to Donald Tull and Del Hawkins “Research design is
the specification of procedures for collecting and analyzing the data necessary to help
identify or react to a problem or opportunity.”

1.7.2. Research Methodology

Research is common phrase refers to a search for knowledge. Research is defined as a
scientific and systematic search for relevant information on a specific topic. It is art of
scientific investigation. The process used to collect information and data for the purpose of
making business decisions is also known as research methodology. It is a movement from
known to unknown. It is actually voyage of discovery. It is an academic activity and as such,
the term should be use in technical sense. It is systematic approach concerning, generalization
and formulation of theory. The methodology may include publication research, interviews,
surveys and other research techniques, and could include both present and historical
information.

1.7.3. Population and Sample

Population refers to the industries of the same-nature of its service & product. It is the
collection or the aggregate of objects or the set of results of an operation. On the other hand
sample means the representative parts of population selected from it with the objectives of
investigating its properties. Thus, a sample is just a portion of the population selected with a
view to draw conclusions about the population under study. Population of study is deposit
mobilization of Siddhartha Bank Ltd. but it is impossible to study of all data related to these
deposit of Siddhartha Bank Ltd. Then only 3-4 analysis is done as a sample.

1.7.4. Types of Data

➢ Primary Data
Primary data are collected for the first time for solving a particular problem under
investigation. Primary data is collected directly from the respondents through the methods of
observation and questionnaire survey. Primary data is information that you collect
specifically for the purpose of your research project. An advantage of primary data is that it is
specifically tailored to your research needs. A disadvantage is that it is expensive to obtain.

15
➢ Secondary Data
Secondary data has limited use in business, as a general rule, no research should be
conducted without a search for secondary data sources. Search for secondary data should be
undertaken during the exploratory investigation of the problem. Secondary data analysis can
save time that would otherwise be spent collecting data and, particularly in the case
of quantitative data, can provide larger and higher-quality databases that would be unfeasible
for any individual researcher to collect on their own. In addition, analysts of social and
economic change consider secondary data essential, since it is impossible to conduct a new
survey that can adequately capture past change and/or developments. However, secondary
data analysis can be less useful in marketing research, as data may be outdated or inaccurate.
And this research also based on secondary data i.e. annual report of Siddhartha Bank Ltd.

1.7.5. Data Collection Procedure

The study is mainly based in Secondary data. Secondary data are those data that are collected
by someone else or used already & made available to other in the form of published statistics
such as annual reports, periodicals, newspapers, magazines etc. Although the study mainly
used secondary data, high level of efforts and more time was paid to get data. The relevant
secondary data has been collected mainly through the annual report of Siddhartha bank Ltd,
available in the official website of SBL, various reports and other studies like journals,
magazines, reports, Master’sDegree thesis papers, Website articles, Books and articles have
also been referred to. The study is confined only to the specific areas such as deposits
mobilized by Siddhartha Bank Ltd, Loans and Advances, Investments, Liquidity , Assets
management , and risk ratios for the five years period starting from the year 2070/71 to the
year 2074/2074.

1.7.6. Instruments
The motive of this study is to identify the deposit mobilization trends of Siddhartha bank Ltd
of Nepal. Various financial ratios including total credit to total deposit, investment to total
deposit ratio, and cash reserve ratios have been used to identify the position of the Siddhartha
bank Ltd. Various statistical tools like, Mean, Trend analysis, coefficient of correlations
performed for the better analysis of the data.

16
1.7.7. Technique of Analysis
Technique of analysis contains, technique used in research. In this research following
technique are used

• Total credit to Total deposit ratio

This ratio is calculated to find out how successfully the selected banks are utilizing their total
collections or deposits on loan and advances for the purpose of earning profit. Greater ratio
shows the better utilization of total deposits. If the ratio is lower than 1, the bank relied on its
own deposits to make loans to its customers, without any outside borrowing. If, on the other
hand, the ratio is greater than 1, the bank borrowed money which it re-loaned at higher rates,
rather than relying entirely on its own deposits. This ratio can be obtained dividing loan and
advances by total deposits, which can be shown as
𝐿𝑜𝑎𝑛 𝑎𝑛𝑑 𝐴𝑑𝑣𝑎𝑛𝑐𝑒𝑠
𝑅𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡𝑠

• Total Investment to Total Deposit Ratio

Commercial Bank mobilizes its deposits by investing its funds in different securities issued
by government and other financial institution. In this ratio is calculated to know how the
banks are mobilizing their deposit in the investment of the various securities. A high ratio
indicates the success in mobilizing the funds in securities. This ratio is computed by using
following formula:
Total Investment
Ratio =
Total deposit

• Cash and Cash balance to Total Deposit Ratio

Cash and Bank Balance to Total Deposit Ratio helps to identify the total cash balance a bank
has with it and in other bank. It identifies the liquidity position of the bank. Cash and bank
balance to total deposit ratio is calculated as,
Total Cash and Cash balance
Ratio =
Total deposit

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1.8 Limitations of the Study

The proposed study has certain limitation on its part, which are as follows:
➢ This research work is confined to the resource mobilization, liquidity and profitability
position of Commercial Banks in Nepal.
➢ Siddhartha Bank Limited is taken for the study.
➢ The study has undertaken the data of last five years from 2070-71 to 2074-75
➢ The coverage of study was limited by time cost and area of course coverage.
➢ Most of the data are taken from secondary sources such as audit report, booklets,
annual reports and websites.

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CHAPTER - II

RESULTS AND ANALYSIS

2.1. Presentation of data

Presentation and analysis of the data is the core of each and every research work. This study
requires some financial and statistical tools to accomplish the objective of the study. The
various results obtained with the help of financial, accounting and statistical tools are
tabulated under different headings. As the main objective of the study is to analyze the
deposit mobilization of selected banks; the necessary financial facts and figures as well as
descriptive information are gathered through the financial statement. The major variables for
the study are cash and bank balance, total investment of Siddhartha bank Ltd.

2.1.1. Deposit Structure of SBL

Table 2.1: Total Deposit Structure of SBL (Rs. In millions)

Year Fixed Non-Interest Saving Call Total Growth

Deposit Bearing Deposit Deposit rate
Deposit (in%)
2070/71 11876 2505 9523 11510 35414
2071/72 14035 2976 12418 15312 44741 26.34%
2072/73 19634 4254 19832 21215 64935 45.14%
2073/74 33334 4780 18020 21184 77318 19.07%
2074/75 40667 11364 26039 16175 94245 21.89%
(Source: Annual Report of 2070/71 – 2074/75)

Above table no. 2.1 shows that total deposit trend of SBL from fiscal year 2070/71 to fiscal
year 2074/75. This table shows total deposit mix of Siddhartha Bank during period of five
years. During the current years the deposits are in increasing trend.

19
Here total deposit on Siddhartha Bank in 2070/71 was Rs. 35,414 million which rose to Rs.
44,741 million in 2071/72 which was 26.34% more than the year 2070/71. In the year
2072/73 deposit increased by 45.14% to make a total deposit of Rs. 64,935 million. For the
next fiscal year 2073/74 deposit increased to Rs. 77,318 million which was 19.07% increase
than previous year. For the fiscal year 2074/75 deposit rose with an increase of 21.89%
amounting to Rs. 94,245 million.

From the above analysis, we have found increasing trend of the deposit. Due to proper
policies it has been increasing from the beginning and shall continue to increase in future.

100000

90000

80000

70000

60000

50000

40000

30000

20000

10000

0
2070/71 2071/72 2072/73 2073/74 2074/75

Fixed Deposit Current Deposit Saving Deposit Call Deposit

Figure 2.1: Total Deposit trend of SBL

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2.1.2. Total loan and advance to Total deposit ratio
The total advancing to government and others sectors. Total deposit to total credit is
represented by this ratio. This ratio explains the total credit to total deposit of bank.

Table 2.2: Total loan and advance to Total Deposit Ratio (Rs. In millions)

Year Total Deposit Loan and Advance Ratio

2070/71 35414 27186 76.77%
2071/72 44741 36339 81.22%
2072/73 64935 55350 85.24%
2073/74 77318 65986 85.34%
2074/75 94245 83238 88.32%
(Source: Annual Report of 2070/71 – 2074/75)

Above table no 2.2 represents total credit to total deposit ratio of SBL if 100% deposits are
being utilized. Here deposit lending ratio of Siddhartha Bank in the year 2070/71 was
76.77%. Similarly, in the year 2071/72 the deposit lending ratio was 81.22% of total deposit.
Further, in the year 2072/73 the deposit lending ratio increased to 85.24% of the deposit. In
the year 2073/74 deposit lending ratio nominally increased to 85.34%. And finally in the year
2074/75 claiming to be the highest deposit lending ratio till now it increased to 88.32%.

It clears that the bank has increasing ratio in total credit to total deposit ratio. Such trend
should be maintained by implementing proper management policies.

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90.00%

88.00%

86.00%

84.00%

82.00%

80.00%

78.00%

76.00%

74.00%

72.00%

70.00%
2070/71 2071/72 2072/73 2073/74 2074/75

Ratio

Figure 2.2: Total credit to Total Deposit Ratio

2.1.3. Total investment to Total deposit ratio

Various deposits deposited by clients in the banks are invested in various sectors such
as govt. securities, shares and debentures, bonds and other. It implies the efficiency of
investment management of total deposit.

Table 2.3: Total Investment to Total Deposit Ratio (Rs in millions)

Year Total Deposit Investment Ratio

2070/71 35414 3327 9.39%
2071/72 44741 6664 14.90%
2072/73 64935 9823 15.13%
2073/74 77318 11272 14.58%
2074/75 94245 18878 20.03%
(Source: Annual Report of 2070/71 – 2074/75)

The above table no 2.3 represents Total Investment to Total Deposit Ratio. Here investment
deposit ratio of Siddhartha Bank in the year 2070/71 was 9.39%. Similarly, in the year
2071/72 the investment deposit ratio was 14.90% of total deposit. Further in the year 2072/73

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investment deposit ratio increased to 15.13%. But in the year 2073/74 due to some reasons
the deposit lending ratio decreased to 14.58% of the deposit. And finally in the year 2074/75
investment deposit ratio increased to 20.03%.

Above table shows that, the ratio between investment and deposit is fluctuating. Effective
measures must be used by management to control such things.

25.00%

20.00%

15.00%

Ratio
10.00%

5.00%

0.00%
2070/71 2071/72 2072/73 2073/74 2074/75

Figure 2.3: Total investment to Total deposit ratio

2.1.4. Cash Reserve Ratio (CRR)

Cash reserve ratio is used to measure ability to meet its current ratio obligation. It is
determined by the ratio of cash and bank balance (including money at call & short notice) to
total deposit.

Table 2.4: Cash Reserve Ratio (Rs in millions)

Year Total Deposit Cash and Bank balance Ratio

2070/71 35414 8410 20.49%
2071/72 44741 6238 11.43%
2072/73 64935 7225 10.23%
2073/74 77318 10552 13.65%
2074/75 94245 12581 13.35%
(Source: Annual Report of 2070/71 – 2074/75)

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The above table no. 2.4 shows the CRR of SBL for the last 5 years. Here Cash Reserve Ratio
of Siddhartha Bank in the year 2070/071 was 20.49%. Similarly, in the year 2071/72 the Cash
Reserve Ratio was 11.43% of total deposit. Further in the year 2072/73 the Cash Reserve
Ratio decreased to 10.23% of the deposit. In the year 2073/74 Cash Reserve Ratio increased
to 13.65%. And finally in the year 2074/75 Cash Reserve Ratio decreased to 13.35%.

The CRR was fluctuating in nature. Measures shall be taken by the management to control
these issues.

25.00%

20.00%

15.00%

Ratio
10.00%

5.00%

0.00%
2070/71 2071/72 2072/73 2073/74 2074/75

Figure 2.4: Total cash and bank balance to Total deposit ratio

2.2. Analysis of Results

This research study has been conducted to find out the deposit, loan and investment ratios,
deposit mobilization sectors. Siddhartha bank Limited that is taken for the study out of 32
commercial banks in Nepal. Researcher has achieved that the main functions of the
commercial banks are the accepting of deposit and lending of surplus of deposited money by
maintaining the minimum cash balance as per the directives of central bank. The presentation
and analysis of data show that deposit is increasing trend in five years of 2070/71, 2071/72,
2072/73, 2073/74, 2074/75. Firstly, analysis of total loan and advance to total deposit is
increasing trend. But bank was highly advancing loan to customer from deposit. It implies

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that bank’s maximum portions of deposits are mobilized through advancing loan. Secondly,
analysis of investment to total deposit relation from 2070-075. Bank was only mobilized few
percentage of total deposit on it. And it also had fluctuating trend. Finally, analysis of cash
and bank balance to total deposit. It found that, the bank has fluctuating trend. Bank had
maximum around 20% or minimum around 10% cash reserve ratio from total deposit during
the past five years.

2.3. Findings
From the data presented and analysis done, the following are the major findings:

➢ There is increasing trend in collection of total deposits.

➢ Saving deposit is also increasing Ratio compare with total deposits.

➢ Fixed Deposit possess maximum share of total deposit.

➢ The position of total loans and advances has increased each year.

➢ The bank has mobilized maximum portion of the Total deposit in loan and advances

and the ratio is in increasing trend.

➢ The position of total Investment has increased each year.

➢ The ratio of Total investment to total deposit is in fluctuating trend.

➢ Cash and Bank balance of the bank is in increasing trend each year.

➢ The cash reserve ratio of the bank is in fluctuating trend.

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CHAPTER III

SUMMARY AND CONCLUSION

3.1. Summary
A bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities. Deposit mobilization is the core part of
banking. Banks mobilize its deposits in suitable and profitable banking activities. Banks and
Finance companies are facing huge competition. Banks are competing on the basis of various
attractive products with attractive rates. Various deposit products like call deposit, saving
deposit, fixed deposit are introduced in the market to attract customers. Similarly various loan
products like, auto, home, overdrat, are introduced with attractive rates. Banks are trying to
mobilize its fund so it can gain profits.

Deposit Mobilization is to utilize its funds in suitable area and right sector. Banks cannot
achieve its goals until and unless it mobilizes its deposits in right sectors and by performing
different activities. Commercial banks need to keep optimum relation among deposit
collection procedure, investment policy and loan policy. This research study has been
conducted to find out the relationship between deposit, loan and advances, investment trends
and cash balance.

SBL contributes to the process of capital formation by converting dispersed saving into
meaningful capital investment in order to aid industry, trade, commerce and agriculture for
the economic development of a nation. Saving deposits are the obligation of SBL. So, SBL
must allocate the funds in different loans and advances and investments and purchase of
assets. Deposit mobilization plays a vital role for the economic development of an
underdeveloped and developing country rather than developed one.

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3.2. Conclusion
Under this study, we use various accounting tools to identify position of deposit mobilization
of Siddhartha Bank Limited. This study concern from 2070-075 fiscal years. We found that
SBL has increasing trend in deposit collection as well as mobilizing maximum percentage of
deposit in loan and advance to customer. Siddhartha bank has total deposit of Rs 94245
millions in 2074/75. The percentage of growth of total deposit of SBL is 21.89% from
2073/74 to 2074/75.

In loan and advance, higher percentage of advancing loan to total deposit is 88.32% in
2074/075 which is higher compare to all the five years studied. This implies that SBL is
increasing the mobilizing of its deposit in loans and advances. Siddhartha bank has total loan
and advances of Rs 83238 millions in 2074/75. Similarly in investment ratio bank highly
mobilized in 2074/75 i.e. 20.03% and low in 2070/71 i.e. 9.3%. The investment amount of
SBL is gradually increasing every year. The total investment amount of SBL is Rs. 18878
millions in 2074/75.

Finally, in cash and bank balance higher reserve in 2070/071 i.e. 20.49% and low in
2072/073 i.e. 10.23%. The cash and bank balance o SBL is increasing each year. It reflects
strong liquidity position of SBL. The total cash and bank balance of SBL is Rs. 12581
millions in 2074/75.

In Nepalese context it has best performance in comparison to other banks. It has increasing
ratio total deposit, saving deposit, loans and profit. SBL should conduct a market research on
a periodic basis to identify and attract the potential borrowers by using various promotional
tools. SBL should come up with newer products to compete in the cut throat competition and
to stand the challenged rising from new upcoming bank. Lastly bank has good condition in
collection of deposit from customer as well as in advancing loan to needy people.

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