Financial Institution in Nepal

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TABLE OF CONTENTS

ACKNOWLEDGEMENT…………………………………………………………………………i

ABSTRACT………………………………………………………………………………………ii

TABLE OF CONTENTS1
LIST OF FIGURES3
1.INTRODUCTION4
1.1.Background4
1.2.Objective4
1.3.Methodology4
2.LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION4
2.1.Liberalization4
2.1.1.Introduction4
2.1.2.Causes for Liberalization5
2.1.3.Pros and Cons of Liberalization5
2.2.Privatization6
2.2.1.Introduction6
2.2.2.Causes for Privatization7
2.2.3.Pros and Cons of Privatization7
2.3.Globalization8
2.3.1.Introduction8
2.3.2.Pros and Cons of Globalization8
2.3.3.Measures for Globalization9
3.BANK10
3.1.Introduction10
3.2.Types11
3.2.1.Central Bank11
3.2.2.Development Bank11
3.2.3.Commercial Bank12
3.3.History of Banking Sector in Nepal13
4.REQUISTIE OF A BANK AND FINANCIAL INSTITUTIONS14
4.1.The capital adequacy to be maintained14
4.2.Classification of Capital Fund14
4.3.Total Risk-weight Assets17
4.4.Description to be sent with regard to capital fund17
4.5.Provision for Auditing18
4.6.Actions may be taken in case Directives as to capital fund are not followed:18 4.7.Repeal and Saving18
5.TREND ANALYSIS OF BANKS IN NEPAL19
6.CONCLUSION25
7.REFRENCES25

LIST OF FIGURES

Figure 1 Showing the growth rate of real per capita GDP because of Globalization9 Figure 2 Chart showing the trends of financial institutions in Nepal19 Figure 3 Banking Operations: Public vs. Private19

Figure 4 Graph showing the Deposit/Credit of Commercial Banks (2001-2011)20 Figure 5 Graph showing the GDP (Rs. in million) from 2001 to 201121 Figure 6 Graph showing the number of bank branches.21

Figure 7 Graph showing the population per bank branches22
Figure 8 Graph showing total deposits (Rs. in million ) from 2001 to 201123 Figure 9 Graph showing Total Credit (Rs. in million) from 2001 to 201123 Figure 10 Graph showing the total investment (Rs. in million) from 2001 to 201124

INTRODUCTION

1 Background

The banking sector is the most dominant sector of the financial system in any country and so is in Nepal. Significant progress has been made with respect to the banking sector in the post liberalization period. The financial health of the commercial banks has improved manifolds with respect to capital adequacy, profitability, and asset quality and risk management. Further, deregulation has opened new opportunities for banks to increase revenue by diversifying into investment banking, insurance, credit cards, depository services, mortgage, securitization, etc. Liberalization has created a more competitive environment in the banking sector

2 Objective

• To be familiar with Liberalization, Privatization and Globalization.

• To be acquainted with the history of banking sector in Nepal.

• To know about the requisites of commercial bank, development bank as well as financial company.

• To know about the present trend of banks in Nepal.

3 Methodology

To fulfill the above stated objectives, we searched the internet, different books related to banking and different sites. We have taken the website of Nepal Rastra Bank as our main source of reference for the collection of our necessary information.

LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION

1 Liberalization

1 Introduction

Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities. The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a "bigger pie" for everybody. Thus, liberalization in short refers to "the removal of controls", to encourage economic development. [1]. It refers to relaxation of previous government restrictions usually in areas of social and economic policies. Thus, when government liberalizes trade it means it has removed the...
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