Introduction to Banking Industry

Bank is a licensed and regulated financial institution that lends money,

accepts deposits, and carries out other financial transaction for its client.
The banking system plays an important role in the modern economic
world. Banks collect the savings of the individuals and lend them out to
business- people and manufacturers. A bank is a financial institution
licensed to receive deposits and make loans. Banks may also provide
financial services such as wealth management, currency exchange, and
safe deposit boxes. Banks plays an important role in developing economy
in a country because it provides important services for consumers and
businesses. It also plays a vital role in maintaining financial stability of a
country.

The prime objective of the bank is to mobilize idle resources in a

productive area after collecting resources in a productive area after
collecting resources from various sectors. In today’s world, banking
sector acts as the backbone of modern business for the development of
the nation. As banks play an important role in financial stability and
economy of a country, most jurisdictions exercise a high degree of
regulation over banks.

Nepal Rastra Bank Act, 2022 states “A Bank is a financial institution,

which provides financial services that may be in the form of accepting
deposits, advancing the loan, providing necessary technical advice,
dealing over foreign currencies, remitting funds, etc.”

Oxford Dictionary defines a bank as “an establishment for custody of

money, which it pays out on customer’s order.”

Bank is an institution for receiving, lending, exchanging, and

safeguarding money and, in some cases, issuing notes and transacting
other financial business. Banks are providing a wide range of services
like remittance, financial counseling, securities investment, bank
assurance, lock-box facilities, swift transfer etc. In present time, more
emphasis should be given to digital system. Investment in information
system can also create room for growth. Banks should also pay special
attention to risk management opportunities. The banking industry today
needs to coordinate across business functions, employee health, lending
portfolio and recovery.

The Central Bank of Nepal classifies the licensed financial institutions

into Class “A”, Class “B”, Class “C” and Class “D” on the basis of the
minimum paid up capital required. A commercial bank is an A Class
financial institution with paid up capital minimum 8 billion.

A commercial bank is an institution that provides services such as

accepting deposits, providing business loans, and offering basic
investment products. Commercial bank can also refer to a bank, or a
division of a large bank, which more specifically deals with deposit and
loan services provided to corporations or large/middle-sized business
- as opposed to individual members of the public/small business - retail
banking, or merchantbanks (www. [Link]).

It accepts deposits, offers checking account services, makes various

loans, and offers basic financial products like certificates of deposit
(CDs) and savings accounts to individuals and small businesses. A
commercial bank is where most people do their banking, as opposed to
an investment bank. Commercial banks make money by providing loans
and earning interest income from those loans. The types of loans a
commercial bank can issue vary and may include mortgages, auto loans,
business
loans, and personal loans. A commercial bank may specialize in just one or a few types of
loans.
The banking sector of Nepal is facing its ultimate test amidst political instability,
liquidity crisis, and unfavorable policies of the regulating body, sluggish economy and
various macro and micro economic factors. Further, the global outbreak of Covid 19
has hit Nepalese banking sector badly. By strengthening the regulatory system and
improving the implementation of new standards on quality and quantity of capital and
liquidity and risk management, opportunities can be created for the banking sector such
as branch outreach to rural areas, developing hydro power and tourism etc. But there
are certain challenges that hinder the smooth operation and development of Nepalese
banking sector.
The banking sector of Nepal is facing its ultimate test amidst political instability,
liquidity crisis, and unfavorable policies of the regulating body, sluggish economy and
various macro and micro economic factors. Further, the global outbreak of Covid 19
has hit Nepalese banking sector badly. By strengthening the regulatory system and
improving the implementation of new standards on quality and quantity of capital and
liquidity and risk management, opportunities can be created for the banking sector such
as branch outreach to rural areas, developing hydro power and tourism etc. But there
are certain challenges that hinder the smooth operation and development of Nepalese
banking sector.
Some challenges are
● Investment in unproductive sector
● Cybercrime in banking
● Banking frauds
● Competition
● NPAs
● Merger acquisition etc

Nabil Bank Limited

In July 1984 Nabil bank limited is established as the nation's first joint venture bank with
the objective of extending international standard modern banking services to various
sector of society. It was earlier known as Nepal Arab bank ltd. Pursuing its objective,
Nabil provides a full range of commercial banking services through its seventy nine
points of representation. In addition to this, Nabil has presence through over fifteen
hundred Nabil Remit agents throughout the nation. It has its head office located in Nabil
Centre, Durbar Marg, which is also a premium location of the capital. The present Chief
Executive Officer of Nabil bank is Mr. Gyanandra Prasad Dhungana.

Nabil is a milestone in the Nepalese banking industry that not only commenced private
sector banking but also helped to flourish the industry through the introduction of modern
technologies, innovative customer focused products and efficient processes.

As a reputed and one of the pioneer commercial bank of Nepal, Nabil bank is introducing
many innovative products and marketing concepts in the domestic banking sector,
represents a milestone in the banking history of Nepal as it started an
era of modern banking with customer satisfaction measured as a focal objective while
doing business. Operations of the bank including day-to-day operations and risk
management are managed by highly qualified and experienced management team. Bank is
fully equipped with modern technology which includes international standard banking
software that supports the E-channels and E-transactions. Nabil is determined in
delivering excellence to its stake holders in an array of avenues. Not just one parameter
like profitability or market share. It is reflected in its Brand Promise "Together Ahead".
Bank has set C.R.I.S.P i.e. Customer Focused, Result Oriented, Innovative, Synergistic
and Professional as its values, which it lives by in day to day operation of the bank's
business (Nabil Bank, Limited.).

Nabil Bank as an institution is defined by our Vision, Mission and Values. Each member of Team
Nabil, every ‘Nabilian’ regardless of what department, branch or unit we are a part of,
or what our designation or rank is, lives our Values in everything we do as we drive to deliver on
our Mission Statement while striving to attain our Bank’s Vision. Nabil have started online
account opening system, Card apply and have connect with digital wallet application for cashless
transaction like fone pay, Esewa etc. And it has also started a dollar card for the international
transaction currently.
SWOT analysis is an effective way to conduct environmental scanning. It helps to identify
the strategic factors- those external and internal elements that will determine the future of
a corporation.

1. Strength of Nabil Bank:

● Nabil bank is a pioneer in introducing modern banking an numerous innovative

products in Nepal
● It is ranked among top financial institution in Nepal in terms of its market share in
handling Nepal’s trade.
● Major strength of Nabil bank is that it is the first joint venture bank; Therefore it
has gained years of experience in banking industry and has gained paramount trust
in public.
● Dedicated and experience manpower.
● Wide range of network among the kingdom. It has the largest branch network
amongst any joint venture bank in Nepal.
● Wide array of products and services offered.
● State of the art technology “Financle”.

2. Weakness of Nabil Bank:

● Less marketing activities and promotion of services offered by the bank.

● Delay in decision making.
● High employee turnover.
 ● It increases recruitment and training costs.
● Stringent control mechanism.
● Nabil has rigid lending policy compare to other banks. Loan applicant has to
fulfill strict rules of documentation, which increase lead time for final
disbursement of loans.

3. Opportunities for Nabil Bank

● Investment opportunities in Hydro power projects, Floriculture, electrical and

electronic industries, computer and software development.
● Use of proper IT base and Branch Network.
● Increasing banking knowledge amongst people gives an opportunity to provide
better banking services to customers.
● New products can be introduced.
● Capturing new emerging banking technologies like internet banking, SMS
banking, I Card and others.
● Opportunity to maintain better USD debit card, Dollar card and ATM visa
electronic service with minimal downtime in comparison to others Banks.

4. Threats of Nabil Bank

● Highly competitive industry

● Growing financial institutions which provide similar service as of bank to
customers.
● Political instability of the nation.
● Unstable socio-economic condition in the country.
● Bringing in technologies to compete in ever- changing dynamic world