Deposit Mobilization of Himalayan Bank
Deposit Mobilization of Himalayan Bank
Deposit Mobilization of Himalayan Bank
INTRODUCTION
With the financial liberalization, the number and types of financial institution in
developing countries have surged within recent years. The financial system has
become more complex day-by-day comprising of government as well as private
sectors financial institutions including bank, insurance companies, mutual fund,
finance companies and investment banks. Financial institutions have great influence
in the country’s economy as they assist in economic development of the country. The
role of banks in a financial market is that of a financial intermediary, which makes use
of loan and deposit services to effectively channel the idle funds of the public into
valuable production and other investment projects helping people to reach their goals.
It enables people to save for the future, invest in profitable business opportunities and
to protect themselves against unpredictable shocks. Banking system is the backbone
of financial intermediation through the mobilization and channeling of financial
resources. The recent developments in banking technology have transformed banking
from the traditional brick-and-mortar infrastructure of staffed branches to a system
supplemented by other channels like Automated Teller Machines (ATM), credit/debit
cards, internet banking, online money transfers, etc. (Bello, 2005). Banks in
performing their pivotal role in the economy, facilitate financial settlement through
the payment system, influence money market rates and provide a means for
international payment. The sector mobilizes funds from the surplus-spending units
into the economy and by on lending such funds to the deficit spending units for
investment, banks in the process increase the quantum of national savings and
investment (Mordi, 2004) Individual and entities need money to pursue their daily
business, so they place their money at money market to earn interest is termed as
deposit. It is a liability owed by bank and other financial institution to the depositor.
Deposits of commercial banks are the money deposited by the individuals and the
corporation in different form of accounts with the expectation of earning certain stable
return, safety, easy transaction and so on.
The background of the study on deposit mobilization typically focuses on
understanding the factors that influence individuals and businesses to deposit their
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savings or funds into financial institutions such as banks. This area of study is crucial
for banks and policymakers as it directly impacts a country's financial stability and
economic growth. Overall, the background of the study on deposit mobilization aims
to provide a comprehensive understanding of the drivers and barriers to deposit
growth, thereby informing strategies for banks, policymakers, and regulators to
enhance financial inclusion, stability, and economic development.
sponsorship budget of the Bank is committed towards activities that assist the society
as large.
The major objective of this study is to determine the effects of deposits mobilization
on the financial performance of Himalayan Bank Ltd. This research work is to
examine the efficiency of Himalayan Bank by making a study of deposits
mobilization. It studies how they utilize deposits to fulfill the financial needs of the
different sector of economy. The specific subjective of the study are given as below:
Deposit is one of the basic sources of the bank to mobilize the fund, without deposit
bank cannot operate its activities. Therefore, bank has to focus on in collecting scared
small deposit and transfer this deposit into productive sector for the economic
development of nation. Hence, the study is to examine the performance of Himalayan
bank in deposit mobilization. Analyzing growth of deposit, loan and advances,
investment, and interlink of financial performance and deposit mobilization, give the
ideas of the banks functioning, strength and weakness of the bank’s strategies.
Therefore, the policies and programs can be made to improve the performance of the
bank. This study is significance to know the challenges in deposit mobilization for
Himalayan bank.
The study deals with profitability in subject to total deposit, loan and advances,
investment, Net Profit, as an aid to economic development of the country by making
research of deposit mobilization of Himalayan bank and their utilization to fulfill the
need of the different sector of the economy. It is helpful to investor, customers and
management team to know how BFIs are utilizing deposit gather from general people
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and mobilizing into lending activities either by loan or capital market in order to
generate profit.
The other significance of this study is, to support further investigation on the area.
Since, there are no sufficient studies conducted on this area of deposit mobilization in
Nepal, it will also help other researchers through revealing issues for further research.
A literature review is scholarly paper, which includes the current knowledge including
substantive finding, as well as the theoretical and methodological contribution to a
particular topic. Literature reviews are the secondary source, and do not report new or
original experimental work. Effective research is based upon the past knowledge and
a survey of past literature. A review of previous related research includes review of
various research/scholar journals and articles and dissertation and other related
studies. It can be illustrated in the following manner (Larabee, 2007). A review of the
literature on deposit mobilization reveals a rich field of research that spans economics,
finance, and banking. Overall, the review of literature on deposit mobilization
underscores its critical importance for financial stability, economic growth, and
inclusive development. By understanding the complex interplay of factors influencing
deposit behaviour, researchers and policymakers can formulate effective strategies to
promote savings mobilization and enhance the resilience of financial systems.
to increase the income of bank. Deposit analysis of the bank help to mobilize the
deposit of bank effectively. There are different types of deposit. They are given
below:
Fixed deposit
Fixed deposit is a type of savings or investment account that promises the investor a
fixed rate of interest. In return the investor agrees not to withdraw or access their
funds for a fixed period of time which could range from 3 months and above. Interest
rate varies according to different time period of deposit.
Saving deposit
A saving deposit is a type of bank deposit that an individual can start to save money
and earn interest for future earn. A saving account is one of the primary services
offered by the banks. Saving account also helps to perform various other financial
activities like paying bills, making online purchases and investing in equity. Interest
rate varies according to different types of saving deposit according to the rules of
bank.
Current deposit
Current deposit is a type of savings deposit with no deposit term specified. Current
deposit means a form of non-interest bearing demand deposit where withdrawals are
allowed, any number of times, depending upon the balance in the account or up to a
particular agreed amount. It is also known as demand deposit.
Call deposit
A call deposit account is a bank account for investment funds that offers the
advantages of both a savings and a current account. Like a current account, a call
deposit account has no fixed deposit period, provides instant access to funds and
allows unlimited withdrawals and deposits. The call deposit also provides the benefits
of a savings account through the accrual of interest.
Collecting small scattered amount of capital through different media and investing the
deposited fund in productive sector with a view to increase the income of the
depositors is meant deposit mobilization. In other words, investing the collecting fund
in the productive sectors and increasing the income of the depositors, also supports
increase in the saving through the investment of increased extra amount. When we
discuss about deposit mobilization, we are concerned with increasing the income of
the low income group of people and to make them able to save more and invest the
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collected amount in the development activities. Fiscal policy of the government and
monetary policy of the
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The depositors must be made to understand that the bank is fully solvent. The
depositor’s confidence could be secured only have the bank is able to meet the
demand for cash promptly and fully. The banker has to keep adequate cash for this
purpose. Cash is an idle asset and the bankers can’t afford to keep a large possession
of his assets in the form of cash. Cash brings in no income to the bank. Therefore, the
bankers have to distribute his assets in such a way that he can have adequate profits
without sacrificing liquidity.
Shrestha, R.L. (2018), in his article, “A study on deposit and credit of commercial
banks in Nepal”, Conclude that the credit deposit ratio would be 51.30, other things
remaining the same. In Nepal, which was the lowest under the period of review.
Therefore, he had strongly recommended that the joint venture banks should try to
give more credit entering new field as far as possible, otherwise they might not be
able to absorb even the total expenses.
Pradhan, S.B. (2016), in his article “Deposit Mobilization, Its Problem and
Prospects” has present that deposit is the life-blood of very financial institution like
commercial bank, finance company, co-operative or non-government organization.
He further adds consider the most of banks and finance companies that the latest
figure does produce a strong feeling that serious review must be made on problems
and prospects of deposit
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sector. Leaving few joint venture banks, other organizations rely heavily on the
business deposit and credit disbursement.
Most of the Nepalese do not go for saving in institutional manner, because of lack
of good knowledge. However, they are very much used of saving in the form of
cash or ornaments. Their reluctance to deal with institutional system is governed
by the lower level of understanding about financial organization process,
withdrawn system, and availability of deposing facilities and so on.
There is unavailability of the institution services in rural areas.
Due to lesser office hours of banking system people prefer holding cash in the
personal possession.
There this no more mobilization and improvement of the employment of deposits
and loan sectors.
The writer has also recommended the following points for the prosperity of deposit
mobilization which are as follows:
To see the impact of interest rates of loan on the credit extended by RBB with
special case study of Kirtipur branch.
To study the increasing or decreasing trend of deposit mobilization of RBB,
Kirtipur branch.
The researcher found that the commercial banks in Nepal are doing well but they are
not giving satisfactory results due to some internal and external factors. He also found
that RBB, Kirtipur Branch is successful to collect deposit but it is facing the problem
of utilization of its found. Bank has good deposit collection but it has maintained low
investment policy on loan and advances. So, there is very much wider gap between
total deposit and total credit. The researcher further fund that the bank has not tried to
find out the new sectors of investment and he also found that the control office has not
also given authority to the branch manage to invest in government securities.
In this thesis, the researcher has fund the ways of utilizing the surplus deposit and the
right reinvestment for the economic development of a country. The specific objectives
of the study are as follows:
To analyze the deposit position of the banks under study.
To analyze the reinvestment position of the banks.
To analyze the gap between deposits and loan and advances.
To provide suggestions for the improvement on the basis of findings.
The writer found that the deposit credit ratio is only 52% on average, which shows
unutilized resources are increasing. The security-marketing corporation, which is
recent established, can play an active role for utilization of unutilized resources. The
writer further found that NBL should not only concentrate in the extension of short-
term credit only. Bank should increase the level on priority sector and extent its
branches to meet growing needs of the country.
This chapter contains the tools and techniques these are applied on the study. The
financial and statistical tools which are used for the analysis and presentation of data
are described in this chapter. This chapter includes research design, justification for
the selection of study unit, nature and sources of data, methods of data collection, and
data analysis tools.
Financial Tools
Deposit mobilization is analyze through the use of two important tools. The basic tool
is deposit analysis. Besides it, total investment and total income analysis were used.
Deposit analysis
Deposit analysis refers to the process of examining and evaluating the deposits made
by individuals, businesses, or organizations into a financial institution such as a bank.
It involves analyzing various aspects of the deposits to gain insights into the deposit
patterns, trends, and characteristics of customers or account holders. Deposit analysis
can provide valuable information to financial institutions, helping them make
informed decisions regarding risk management, marketing strategies, product
development, and customer service. By understanding deposit behaviors and
preferences, banks can tailor
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their offerings to meet the needs of different customer segments effectively. There are
different types of deposit such as fixed deposit, saving deposit, current deposit, call
deposit, etc. Deposit analysis can be done through the study of various types of
deposit and their ratios.
Statistical Tools
Some important tools are used to achieve the objectives of this study. In this study
statistical tools such as mean, standard deviation and co-efficient of variation have
been used.
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Arithmetic mean
Arithmetic mean of a given set off observation is their sum divided by the number of
observation. In general, x1, x2…............x3 are the given number of observation, their
arithmetic mean can be derived in this way;
̅X= ∑x
N
Where,
x̅ = Arithmetic mean
∑x = sum of observation
N = Number of pairs of observation
Standard Deviation
The standard deviation is the absolute measure of dispersion in which the draw back
present in other measure of dispersion as it satisfied most of the requisites of a good
measure of dispersion. Standard deviation is defined as the positive square root of the
mean as square of the deviation takes from the arithmetic mean. It indicates the ranges
and size of deviance from the middle or mean. It measures the absolute dispersion.
Higher the standard deviation Higher will be the variability and vice versa. Dispersion
measures the variation of the data from the central value. In other words, it helps to
analyze the quality of data regarding its variability. Standard deviation is determined
in the following way:
∑𝑋− 𝑋2̅
S.D =√
𝑛
Where,
N= number of observations
X = individual value
𝑋̅ = simple arithmetic mean
Coefficient of Variation
Coefficient of variation is the relative measure of dispersion based on the standard
deviation (Kothari, 1989). It is most commonly used to measure the variation of data
and more useful for the comparative study of variability in two or graphs or
distribution. The relative measure of dispersing based on the standard deviation is
known as the measurement of coefficient of standard deviation. The percentage of
measure of co- efficient of so is called co-efficient of variation. Less CV is the more
uniformity and consistency and vice versa. Symbolically, the coefficient of variation
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is defined as:
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S.D
CV = X̅
Where,
S.D. = standard deviation
̅X = mean
CV = Coefficient of variation
Bar diagram
A bar chart or bar graph is a chart of graph that presents categorical data with
rectangular bars with heights or lengths proportional to the values that they represent.
The bars can be plotted vertically or horizontally. Bar graphs with vertical bars are
sometimes called vertical bar graphs. A bar graph will have two axes. One axis will
describe the types of categories being compared, and the other will have numerical
values that represent the values of the data. It does not matter which axis is which, but
it will determine what bar graph is shown. If the descriptions are on the horizontal
axis, the bars will be oriented vertically, and if the values are along the horizontal
axis, the bars will be oriented horizontally.
A vertical bar chart is sometimes called a column chart. Bar graphs/charts provide a
visual presentation of categorical data. Categorical data is a grouping of data into
discrete groups, such as month of the year, age group, shoes sizes, and animals. These
categories are usually qualitative. In a column vertical bar chart, categories appear
along the horizontal axis and the height of the bar correspond to the value of each
category.
There are many different types of bar graphs. They are not always interchangeable.
Each type will work best with a different type of comparison. The comparison we
want to make will help determine which type of bar graph to use.
Line graph
A line graph is a type of chart used to show information that changes over tie. We plot
line graphs using several points connected by straight lines. We also call it line chart.
The line graph comprises of two axes known as ‘x’ and ‘y’ axis
The horizontal axis is known as the x-axis.
The vertical axis is known as the y-axis.
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The study is based on different assumptions and suppositions. So, this study however
is not free from the restraints. The following are the limitations of the study:
Primarily, the study is based on the secondary data.
The study covers the different deposit position & its ratios of HBL based on the
reveals made by the financial position of the bank.
The study covers the related data of the Bank from the F/Y 2075/76 to 2079/80
only.
The accuracy of this study is based on the data available from the management of
Himalayan Bank and the various published documents of the Bank and the
response made by the respondents during the informal talk.
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CHAPTER-II
This chapter deals with the results and analysis of data collected from the different
sources. The purpose of this chapter is to study evaluate and analyze the financial
performance of Himalayan Bank Ltd. in the framework of Deposit Mobilization.
The data collected from different sources has been refined and document in Excel
tables, which are further processed to analyse and arrive at the findings on the
financial conditions of HBL in terms of Deposit Mobilization framework.
Table 1
Deposit Position of HBL (in Million)
25000
20000
15000
10000
5000
0
2075/76 2076/77 2077/78 2078/79 2079/80
Total Deposit
Table 2
Current Deposit Position of HBL (Rs. In Million)
Year Current Deposit Growth (Rs.) Growth %
2075/76 2704 - -
3500
3000
2500
2000
1500
1000
500
0
2075/76 2076/77 2077/78 2078/79 2079/80
Current Deposit
Table 3
Saving Deposit Position of HBL (Rs. in million)
Year Saving Deposit Growth Rs. Growth %
2075/76 4972 - -
2076/77 5230 258 5
2077/78 5994 764 14
2078/79 7026 1032 17
2079/80 8771 1745 25
(Source: Himalayan Bank Ltd., Annual Financial Statement 2075/76 to 2079/80)
10500
9000
7500
6000
4500
3000
1500
0
2075/76 2076/77 2077/78 2078/79 2079/80
Saving Deposit
Table 4
Fixed Deposit Position of HBL (Rs. in million)
Year Fixed Deposit Growth (Rs.) Growth (%)
2075/76 2446 - -
2077/78 2310 58 3
4000
3500
3000
2500
2000
1500
1000
500
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fixed Deposit
Table 5
Interest Bearing Deposit Trend of HBL (Rs. in million)
2075/76 12363 - -
17500
15000
12500
10000
7500
5000
2500
0
2075/76 2076/77 2077/78 2078/79 2079/80
Interest Bearing Deposit
Table 6
Non-Interest-Bearing Deposit Trend of HBL (Rs. in million)
Non-Interest
Year Growth (Rs.) Growth (%)
bearing deposit
2075/76 3143 - -
2076/77 3424 281 9
2077/78 3012 -412 -12
2078/79 3140 128 4
4000
3500
3000
2500
2000
1500
1000
500
0
2075/76 2076/77 2077/78 2078/79 2079/80
Non-Interest bearing deposit
Deposit ratio is the ratio between different types of deposit and the total deposit of the
bank. It shows the deposit condition of the bank. It is the proportion of deposits of the
bank. Deposit ratio talks about the percentage of deposit like fixed deposit, saving
deposit, current deposit and call deposit of the total deposit of the bank.
Table 7
Fixed deposit to total deposit ratio ( in Rs. Million)
20
16
12
0
2075/76 2076/77 2077/78 2078/79 2079/80
From the above table and figure we can get the ratio of fixed deposit to total deposit
of Himalayan bank limited from the FY 2075/76 to FY 2079/80. The fixed deposit to
total deposit ratio of FY 2075/76 is 16%, FY 2076/77 is 17%, FY 2077/78 is 16%, FY
2078/79 is 14% and FY 2079/80 is 18%. The highest ratio is 18% in FY 2079/80 and
the lowest ratio is 14% in FY 2078/79 during the five year study period.
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Table 8
Saving deposit to total deposit ratio ( in Rs. Million )
60
50
40
30
20
10
0
2075/76 2076/77 2077/78 2078/79 2079/80
Table 8 and figure 8 shows saving deposit to total deposit ratio of Himalayan bank
limited. The ratio of FY 2075/76, FY 2076/77, FY 2077/78, FY 2078/79 and FY
2079/80 is 32%, 39%, 42%, 48% and 45% respectively. The highest saving deposit
ratio is 48% in FY 2078/79 and the lowest saving deposit ratio is 32% in FY 2075/76
during the five year study period. It has increasing trend except the last year of study
period.
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Table 9
Current deposit to total deposit ratio ( in Rs. Million )
25
20
15
10
0
2075/76 2076/77 2077/78 2078/79 2079/80
Table 9 and figure 9 show the current deposit to total deposit ratio of Himalayan bank
limited from FY 2075/76 to FY 2079/80. According to table and figure the current
deposit ratio are 17%, 22%, 19%, 19% & 15% in FY 2075/76, FY 2076/77, FY
2077/78, FY 2078/79 & 2079/80 respectively. It has fluctuating trend during the five
years of study period.The highest current deposit ratio is 22% in FY 2076/77 and the
lowest current deposit ratio is 15% in FY 2079/80 during the five year study period.
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Table 10
35
30
25
20
15
10
0
2075/76 2076/77 2077/78 2078/79 2079/80
Table 10 and figure 10 show the call deposit to total deposit ratio of Himalayan bank
limited from FY 2075/76 to FY 2079/80. According to table and figure the call
deposit ratio are 32%, 19%, 20%, 16% & 20% in FY 2075/76, FY 2076/77, FY
2077/78, FY
2078/79 & 2079/80 respectively. It has fluctuating trend during the five years of study
period.The highest call deposit ratio is 32% in FY 2075/76 and the lowest call deposit
ratio is 16% in FY 2078/79 during the five year study period.
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Over the five-year period, HBL's total deposits initially decreases by 13% in FY
2076/77 but begin to rise after FY 2077/78. The growth rate increases to 33% in
FY 2079/80, with significant increases across all deposit types. Overall, the
deposit trend is fluctuating.
Himalayan Bank Limited's current deposit growth rate started at 12% in FY
2076/77, and decreases by -11% in FY 2077/78, and then remain constant at 4%
for FY 2078/79 and FY 2079/80. The highest current deposit is Rs. 3034 million
in FY 2076/77, and the lowest is Rs. 2688 million in FY 2077/78, indicating a
fluctuating deposit trend over the five-year period.
The saving deposits at Himalayan Bank Limited shows a consistent increase over
the study period. Starting at Rs. 4972 million in FY 2075/76, it rise to Rs. 8771
million in FY 2079/80. The growth rate is lowest at 5% in FY 2076/77 and highest
at 25% in FY 2079/80. Overall, the saving deposit position is strong and
improving.
Bank’s fixed deposit position is not that good. The decreasing trends keeps on
increasing for four years continuously but there is an abnormal increase in the
final year (FY 2079/80)..
Himalayan Bank Limited's interest-bearing deposits decreases by 19% to Rs.
10,022 million in FY 2076/77. They then increases by 11% to Rs. 11,106 million
in FY 2077/78, and 3% rise to Rs. 11,446 million in FY 2078/79. In FY 2079/80,
the deposits increases by 40% to Rs. 16,071 million.
Himalayan Bank Limited's non-interest bearing deposits has been fluctuating over
the five-year period. Customers are more likely to deposit money for transactional
purposes rather than for saving or earning interest.
The ratio of fixed deposits to total deposits at Himalayan Bank Limited varies
over the five-year period: 16% in FY 2075/76, 17% in FY 2076/77, 16% in FY
2077/78, 14% in FY 2078/79, and 18% in FY 2079/80. The highest ratio is 18% in
FY 2079/80, and the lowest is 14% in FY 2078/79.
The saving deposit to total deposit ratio at Himalayan Bank Limited is 32% in FY
2075/76, 39% in FY 2076/77, 42% in FY 2077/78, 48% in FY 2078/79, and 45%
in FY 2079/80. The ratio increased each year except for the last year, where it
slightly decreases from its peak of 48% in FY 2078/79.
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The current deposit to total deposit ratio at Himalayan Bank Limited fluctuates
over the five-year period: 17% in FY 2075/76, 22% in FY 2076/77, 19% in FY
2077/78, 19% in FY 2078/79, and 15% in FY 2079/80. The highest ratio is 22% in
FY 2076/77, and the lowest is 15% in FY 2079/80.
The call deposit to total deposit ratio at Himalayan Bank Limited varies over the
five-year period: 32% in FY 2075/76, 19% in FY 2076/77, 20% in FY 2077/78,
16% in FY 2078/79, and 20% in FY 2079/80. The highest ratio is 32% in FY
2075/76, and the lowest is 16% in FY 2078/79, indicating a fluctuating trend
throughout the period.
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CHAPTER-III
3.1 Summary
According to the study, Himalayan Bank Limited (HBL) shows fluctuating deposit
trends and ratios over the five-year period. Total deposits initially decrease by 13% in
FY 2076/77 but rise significantly, reaching a 33% growth rate in FY 2079/80. Current
deposits peak at Rs. 3034 million in FY 2076/77, dropping to Rs. 2688 million in FY
2077/78. Saving deposits increase steadily from Rs. 4972 million in FY 2075/76 to
Rs. 8771 million in FY 2079/80. Fixed deposits decline overall, with an unusual spike
in the final year. Interest-bearing deposits grow substantially by 40% in FY 2079/80.
Non- interest bearing deposits fluctuate over the study period. The ratios of fixed
deposits, saving deposits, current deposits, and call deposits to total deposits show
variability: fixed deposits range from 14% to 18%, saving deposits increase from 32%
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to 48% but
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drop to 45%, current deposits fluctuate between 15% and 22%, and call deposits vary
from 16% to 32%.
3.2 Conclusion
The deposit of HBL is in increasing trend. The share of fixed deposit is more than that
of savings, current, margin and other deposits in the deposit mix of HBL. The trend of
interest bearing deposit has been gradually increasing but there has been more
fluctuation in non-interest bearing deposits, similarly, there is also more fluctuation in
interest expenses on total deposits. The trend analysis shows that the deposit of HBL
is in increasing trend. In addition to this, the bank is being able to satisfy its customers
and in providing higher quality and newer services to them. Interest rate on deposit
should be competitive with other commercial banks.
Customer services should be diversified and should further be accommodated. The
bank should aim towards increasing its customers but it must also provide the quality
services to the present customers. For this the bank must make plans and policies
keeping customers in mind. Bank should also pay attention towards the priority sector
and industrial sector for lending loans to develop the economic condition of the
country. Bank should provide more facilities to the staff, it has to provide job
satisfaction, training and should encourage its staff.
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REFERENCE
Website:
www.google.com
www.himalayanbank.co
www.nepalrastrab.com.np