Vol. III No. 1
Application of Management Control System in Nepalese Commercial Banks Saroj Rijal ABSTRACT
This paper attempts to examine the application of management control system in Nepalese commercial banks. The Nepalese commercial banking sector is very competitive. The commercial banks are competing mainly in service and many of them adapting differentiation strategy. The priority of the majority of commercial banks is customer retention. Commercial banks are encouraging employees to upgrade their knowledge and skill. The working environment is also congenial in Nepalese commercial banks and the informal organization and communication system also gradually exist in some of the commercial banks of Nepal. However, the future research needs to examine the relationship between management control system and effectiveness of the commercial banks of Nepal.
Key words: commercial bank, management control system IN NEPAL, DURING 1990S AND later many organizations faced major changes in competitive business environment. Before 1990s organizations such as those operating in the airlines, utilities, and financial sectors were either government owned monopolies or operated in a highly regulated and non-competitive environment. These organizations were not subject to any great pressure to improve the quality and efficiency of their operations or by eliminating services that were making losses. Some public enterprises were getting direct subsidies from government for equalizing their operational losses. Privatization of some of the government owned enterprises and deregulation in early 1990s changed the competitive environment in Nepalese business environment. Large number of joint venture commercial banks and development banks were established and the process is being continued. Commercial banks play significant role in the economic development in the nation. In Nepal 19 commercial banks are in operation and providing services to the business and industries through long-term and short-term loans and facilitating business for foreign exchange and remittance via national and international network. The development of banking system in Nepal was emerged after the liberalization and free market concept. In the beginning of 1980s, private commercial banks came into operation in collaboration with foreign banks. It took pace after 1990s and number of financial institutions has been increased. All the newly established commercial banks tired to operate efficiently and effectively resulting high competition in Nepalese banking industry. In this connection, the service operation of commercial banks has become more important for the number of reasons: ● Competition in financial markets has intensified with the entry of new joint venture and domestic banks, and other financial intermediaries. ● The cost of operating the bank branches has been increased with the need of better quality service. ● Increased in Non Performing Assets and 92
Application of Management Control System in Nepalese Commercial Banks
Increased in liquidity position Today and more precisely in future, companies, organizations and other decision making entities whether profit making or not, will face major management challenges. Irrespective of whether the main goal of the organization is to make profit or not, it becomes necessary to institute a mechanism in those entities to control the activities of managers so that they remain on track of the proper routes as established by management. In order to keep activities of the organization in track a management control system is essential. Control in the broad sense of the term relates both organizational structure (Chandler 1962) and informal process (Cyert and March 1963). Management control system a logical integration of techniques to gather and use information to make planning and control decision, to motivate...