CHAPTER1
INTRODUCTION1.1 ORGANIZATION PROFILENabil Bank Limited is
Nepal's first major joint venture Bank, which commenced operation
on 12th July 1984. Dubai Bank Limited was the initial foreign joint
venture partner with 50% equity investment. The shares owned by
Dubai Bank Limited were transferred to Emirates Bank International
Limited, Dubai by virtue of its annexation with the latter. Later
on, Emirates Bank International Limited sold its entire 50% equity
holding to National Bank Limited, Bangladesh. Nabil Bank was
initially established under the name of Nepal Arab Bank Limited.
However, later on with the help of special resolution passed on the
Annual General Meeting, the name Nepal Arab Bank Limited had been
changed to Nabil Bank Limited on December 31st, 2001. Nabil was
incorporated with the objective of extending International Standard
modern banking services to various sectors of the society. Pursuing
its objective, Nabil provides a full range of commercial banking
services through its 43 points of representation across the kingdom
and over 170 reputed correspondent banks across the globe. Nabil
Bank has a history and culture of its own of setting standard of
operations and providing services. It provides international
quality of services to its customers and some invaluable advices to
its clients with the help of professionals hired by the bank.Nabil
Bank, as a pioneer in 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. It provides international quality
of services to its customers and some invaluable advices to its
clients with the help of professionals hired by the bank. Nabil
Bank has expanded its size and volume of transactions and it gives
employment to more than 900 staff members who are dedicated
professionals workers
There are total 50 branches and 77 ATMs lounges launched by
Nabil Bank to provide intense facilities to their customers.(See
Annex I for the list of Branches of Nabil Bank) Today Nabil Bank
holds one of the strongest networks in and outside Nepal compared
to other financial institutions of Nepal. Nabil Bank today can be
termed as a full service bank in every sense, which is able to meet
entire range of financial requirements and services of its
customers and clients. It is the pioneer commercial bank of
Nepalese economy, which sets the benchmark for the industry. The
management and the board members are the true assets of the
organization who have made it what it is today.1.1.1 OBJECTIVE OF
STUDY
The primary objective of this study is to get a better
understanding of Centralized Trade Operation in commercial bank and
the operational procedure of different administrative departments
of CTO. Following are the objective of study broken down into
specific and general objectives.
General:
To understand overall activities of Central Trade Operation
department of Nabil Bank Head office, Teendhara.Specific:
To understand mechanism and processes regarding Letter of
Credit. To understand different department functions and structure
of CTO department To understand different issues and challenges of
CTO department
1.1.2 SCOPE OF THE STUDY
This internship report will help individuals to understand the
operational processes of CTO department of Nabil Bank Ltd which
discusses the mechanism of LC. This report involves methodology
used under the study and hints candidates for their future
internship.
As far as possible, every effort has been made to ensure that
all available data are included and reported without any systematic
or natural biasness.
1.1.3 LIMITATION OF THE STUDY As this research was conducted
along with the internship and other semester course, adequate
detail effort that these researches require could not be devoted.
Secondly, the source of information is very limited as it is based
on the observation; mentors quotes and literature review and is in
comply with some limited boundary of objectives. This report is
carried out for the academic reason and does not contain the
crucial information. So, the outcome may differ if carried out for
other reasons by experts. Some other limitations are as follows:
Repetitive types of activities were specialized and assigned as
specific and given importance too.
So, had to wait for some chance like old intern absenteeism to
learn new things like preparing Bi.Bi.Ni, check filling, recording
in DBMS etc.
Busy schedule of employees and mentor was limitations on getting
replies to the questions spontaneously.
Softcopy note provided by the banks mentor to my mail id was
strictly prohibited by Nabils authority and was unable to get
access to the files for more beneficial references.
The report is mainly focused on particular sector i.e. Letter of
Credit, so it fails to cover up the other aspects of the banking
system2. LITERATURE REVIEW
CENTRAL TRADE OPERATION: central trade operation is simply the
centralized version of trade operations of different branches of
Nabil Bank at its head office. It deals with the different
mechanism of trade finance like import letter of credit, export
letter of credit, forward contract, bid bond, performance bond,
counter guarantee, advance payment guarantee and shipping
indemnity.
2.1 MEANING AND DEFINITION OF LETTER OF CREDITDocumentary Credit
(DC), popularly known as letter of credit is the safest and
convenient means of paying for exports among all other existing
methods of payment. It is widely used to effect payments in
domestic and international trade. A written undertaking is issued
by a bank (usually referred to as the issuing bank) on the
instructions of the buyer of goods to the seller. The payment is
made under conditions stated in the undertaking. Payments are
always up to a stated limit and against stipulated documents. As
per the definition of International Chamber of Commerce (ICC)
"documentary credit is any arrangement however named or described
whereby a bank, (the issuing bank) acting at the request and in
accordance with the instructions of a customer (the applicant), is
to make payment to or to the order of a third party (the
beneficiary) or is to pay, accept or negotiate bill of exchange
(drafts) drawn by the beneficiary, or authorise such payments to be
made or such drafts to be paid, accepted or negotiated by a other
bank against stipulated documents in compliance with stipulated
terms and conditions."2.2 IMPORTANCE/ADVANTAGE OF LETTER OF
CREDITThe importance/Advantages of LC (mentors hands out) are :To
the Buyer
Assurance his bank will refuse payment to seller unless terms
and condition given by him to his bank as stipulated in the credit
are met.
Extended terms of payment which in any other form of payments
would not be available.
Refinance of goods until they are marketed.
To the Seller
Relies more on the credit extending bank or the confirming bank
rather than on the buyer.
Less apprehensive that payment for goods might be delayed or
jeopardized by political acts or other problems in the buyers
country.
Enable to obtain loan from banks to prepare goods for shipment
prior to making a shipment or just after the shipment.
2.3 TYPES OF LC
The various types of letter of credit are as follows:
1. Revocable LC: These are the LCS that maybe amended/cancelled
at anytime by the buyer without the approval of the seller. Thus,
it does not provide any sort of protection to the seller and is not
much in use these days
2. Irrevocable LC: This type of LC cannot be cancelled or
amended without the agreement of all the parties including the
exporter. The issuing bank provides a binding undertaking to the
beneficiary given that all the terms and conditions have been met.
Irrevocable LC provides assurance to the beneficiary that the
payment for his goods or services will be received as soon as the
LC process comes to an end. Under UCPDC all letters of credit are
irrevocable.
3. Unconfirmed LC: It is that Letter of Credit that is forwarded
by the advising bank to the beneficiary (exporter) without adding
its own undertaking to make a payment at a future date but confirms
the authenticity of the credit.
4. Confirmed LC: This is type of LC where a bank usually in
exporters country adds confirmation to the LC where confirming bank
must make the payment to beneficiary if the complaint documents are
presented at their counter. Also, if the issuing bank or the
applicant fails to make the payment ,confirming bank holds this
commitment. In such LC confirmation is added to the LC for the
beneficiary on the request of the beneficiarys bank. The
Confirmation LC gives a sense of security in the case when the
issuing bank is unknown or the economic/political scenario is
unsuitable. A bank will make an additional charge for confirming a
LC. Countries that is considered high risk the cost lies between
2%-8%
5. Revolving LC: The Revolving LC is used in the case of regular
shipment of the same commodity between the same exporter and
importer. The credit must show that it is a revolving LC. The LC
may revolve automatically or under some provisions. It helps to
avoid the repetitious task of opening/amending the letter of
credit.
6.Transferable LC: Under the Transferable LC, the exporter can
make a request to the paying/negotiating bank to make partial/full
payment of the credit value that is available to the third
parties.
7. Back to back LC: Back to back LC can be used as a substitute
to the transferable LC. In this type of LC, one LC is used as a
security to open a second LC that is issued by the advising bank in
favor of the exporters goods supplier rather than handing over the
original LC to the supplier. Most of the banks are reluctant to
issue this type of letter of credit due to the high degree of risk
involved in it.
8. Sight LC: The payment needs to be made at sight i.e., within
5 working days in sight LC after receiving the original documents
of the credit complaint by the issuing bank.
9. Time LC (Usance): In the Time LC, the payment needs to be
made at the maturity after receiving the original documents of the
credit complaint by the issuing bank.
10. Standby LC: The standby letter of credit is different from
the documentary letter of credit. The documentary letter of credit
is the primary payment mechanism whereas the standby letter of
credit acts as the secondary payment mechanism. This type of
guarantee provides guarantee to the beneficiary regarding the
performance of the applicants obligations.
2.4 TERMS AND CONDITIONS IN LC
Banks deal in documents not with the goods Non documentary
conditions should thus be avoided Banks will ignore any non
documentary conditions mentioned in the LC Terms and conditions
mentioned in the LC should be precise Terms and conditions
requiring documentary evidence should clearly mention the assures
of such documents Conditions put in the LC should be practically
feasible Unusual terms and conditions should be avoided Regulatory
conditions to be ensured Any other specific conditions2.5 MAIN
CONTENTS AND FIELDS OF LC
INCOTERMS: The word Inco term is the abbreviation of
International Commercial Terms. Incoterms are the price terms used
to define the responsibilities of the buyer and seller as to the
cost, insurance, freight, export and import clearance and other
charges incurred during the shipment of goods from the sellers
warehouse to buyers place.
The INCOTERMS was first published in 1936 and it is revised
periodically to keep up with changes in the international trade
needs. The complete definition of each term is available from the
current publication---INCOTERMS 2010.
The seven rules defined by incoterms 2010 for any modes of
transportation are:
EXW- Ex works (named place of delivery)
The seller makes the goods available at its premises. This term
places the maximum obligation on the buyer and minimum obligation
on the seller. The Ex works term is often used when making an
initial quotation for the sale of goods without any costs included.
EXW means that a seller has the goods ready for the collectioin at
his premises (works, factory, warehouse, plant) on the date agreed
upon. The buyer pays all transportation costs and also bears the
risks for bringing the goods to their final destination. The seller
doesnt load the goods on collecting vehicles and doesnt clear them
for export. If the seller does load the good, he does so at buyers
risk and cost. If parties wish seller to be responsible for the
loading of the goods on departure and to bear the risk and all
costs of such loading, this must be made clear by adding explicit
working to this effect in the contract of sale.FCA- Free Carrier
(named place of delivery)
The seller hands over the goods, cleared for export, into the
disposal of the first carrier (named by the buyer) at the named
place. The seller pays for carriage to the named point of delivery,
and risk passes when the goods are handed over to the first
carrier.
CPT- Carriage Paid To (named place of destinatioin)
The seller pays for carriage. Risk transfers to buyers upon
handing goods over to the first carrier.
CIP- Carriage and Insurance Paid to (named place of
destination)
CIP is the containerized transport/multimodal equivalent of CIF.
Seller pays for carriage and insurance to the named destination
point, but risk passes when the goods are handed over to the first
carrier.
DAT- Delivered at Terminal (named terminal at port or place of
destination)
Seller pays for carriage to the terminal, except for costs
related to import clearance, and assumes all risk up to the point
that the goods are unloaded at the terminal.
DAP- Delivered at Place (named place of destination)
Seller pays for carriage to the named place, except for costs
related to import clearance, and assumes all risks prior to the
point that the goods are ready for unloading by the buyer.
DDP- Delivered Duty Paid (named place of destination)
Seller is responsible for delivering the goods to the named
place in the country of the buyer, and pays all costs in bringing
the goods to the destination including import duties and taxes.
This term places the maximum obligations on the seller and minimum
obligation on the buyer.
PROFORMA INVOICE/SALES CONTRACT: Proforma invoice includes name
of the contracting parties; the seller and the buyer. It should be
signed and stamped by both the parties. It should include
Tenor(sight, usance or otherwise), description of imported Goods,
eight digit Harmonic code that denotes the imported goods, proper
incoterm in the proforma invoice, proper country of origin,
validity of contract and unit price and total amount.
SWIFT: SWIFT refers to Society for Worldwide Interbank Financial
Telecommunication. It is the fastest and most secured mode of
transmission of financial messages. Specific message types (MTs) as
per the nature of the transaction is indicated. Pre-formatted
template, require specific values in each field, conditional values
as well in some fields. Certain characters are not allowed
e.g!,@,#,$,%,&,*etc.
2.6 MAJOR RULE OF NRB IN DC OPERATION:
No DC is required for import of goods worth USD 35000or
equivalent. The importer can send advance payment to the supplier.
This is valid for import from third countries other than India.
2.7 AMENDMENT OF LC
Seller may ask for amendment if any of the conditions mentioned
in the LC is practically not possible for him to comply with. LC
will also be amended if the underlying contract between the seller
and he buyer is amended. An irrevocable LC can be amended only by
the consent of the all the concerned parties, viz the buyer, the
seller, the issuing bank and the confirming bank (if any). Further
amendment must be advised to the same bank to which the original LC
is advised.CHAPTER 3METHODS AND METHODOLOGY
According to the designed patterned of this program, students
need to complete internship for the period of 8 weeks and prepare
the report. The report is prepared by using the information that is
obtained from different sources like booklet, websites, and report
from the Nabil bank. Some of the methods followed to successfully
accomplish this internship are as follows:3.1 Organization
selection
Being a BDFin student specializing in Finance, doing an
internship in a reputed financial institution is always in a top
priority. Nevertheless, selecting an organization has been a tough
job because of the numbers of alternatives available in the market
and of all the dilemmas regarding the top bank with hunger of ample
of work experience lead to one. Internship from a reputed financial
institution helps to build career by creating bond between
classroom knowledge and practical business world experiences. So,
Nabil Bank Limited came as preference for the internship program so
that the intern can mould his class room knowledge into real life
working experience. The recommendation letter provided by the
college was dropped in the head office, Durbar Marg, along with the
CV. Then and there, the intern was informed that he was selected
and was asked to commence the internship period at the head office
itself in Central Trade Operation department. Finally, the intern
began the internship with Nabil Bank with effect from 5th November
and continued till 4th January , completing the stipulated 8 weeks
of internship.3.2 PlacementRegarding the placement, intern was
placed at Head Office, Durbar Marg in Central Trade Operation(CTO)
department under the supervision of the CTO chief Mr. Jyoti Bahadur
KC and CTO supervisor Mr. Manish Raj Maharjan along with my mentor
Mr. Rabi Acharya(CTO-officer) and other various department staffs
as well. The intern worked under the supervision of staffs and
performed each and every task efficiently to meet their
expectations. During the period, intern got an opportunity to learn
about working procedures and, get familiar organizational culture
and working environment most specifically related to letter of
credit. During the period, the student got full support and
cooperation from the staff members and maintained working
environment with each of them.
Department PlacedSupervisorMentor
Central Trade OperationMr. Manish Raj MaharjanMr. Rabi
Acharya
Table 1.1: Department Placed and Supervisor and Mentor.
3.3 Duration of Internship
As per the TU curriculum intern has eight weeks to learn about
the organization functions and its operation. During the duration
of eight weeks intern was only placed at CTO. Even though intern
was placed in CTO for eight weeks, it was ample for anyone as even
the eight weeks looked lesser to work and know all the process of
the department. As per the curriculum intern worked in Nabil bank
corporate office from 5th November, 2014 to 4th January, 2015.
WEEKS12345678
Central Trade Operation
Table 1.2: Duration of Internship3.4 Methods used
Nabil Bank has its CTO department as competitive advantage in
compare to other very few trade operations of commercial banks that
operate its CTO. Nabil Banks CTO department facilitates trade
operation by saving the cost of hiring employees at different
branches for trade operations. The followings are few general
function of CTO department, where it was allowed to participate and
learn during the internship period. The general functions of CTO
department were classified mainly on the basic of Import LC, Export
LC and settlement of LC. The methods used for the preparation of LC
are based on:
1. Observation: Observation method is concerned with watching
rather than taking part in the context. Observation method helped
me to get familiarize with the organizational environment and its
behavior and be proactive in the nature of my work. This method is
useful in understanding different emerging issues in organization
and how organization solves it. 2. Interaction with mentors:
Confusion and an urge for good understanding in the context of my
activities had stimulated me to a situation of Interaction with
mentors. Interaction with mentors is helpful in understanding the
moral of employees, organization behavior, reflecting importance of
effective communication and understanding linkage between different
activities of CTO department.3. Learning by doing: This method
involves observation as well as interaction with mentor. In this
method personal attitude and efficacy are important personal
factors. This factor synergizes the organizational performances.
3.5 SOURCES OF DATAFor the report the data are collected from
primary source and secondary source. They are as follows:Primary
DataPrimary Data refers to the raw data that has neither been
processed nor manipulated. It is the data that has been collected
to carry out a specific task and they are mainly the first- hand
data. While studying about the project I came across primary data
from different sources which are as follows: Direct formal and
informal interaction with the staff
Informal questionnaire responses the knowledge on that specific
department.
Scrutiny of working environment of bank
Observation of various departments of banks
Secondary Data:The secondary sources of data include the data
that have been prepared by others , for their use which are not
original .They are the readily available data that can be used for
reference although they may not be as accurate as the primary data.
The main sources of secondary data are as follows: Annual Reports
of Nabil Bank Brochures Policy Manuals Articles published in
different newspapers aboutLC operations Banks website Paper
documents used by the bank like LC application, checklist, etc NRB
Directives and Circulars on commercial banks reports on the
internet, etcCHAPTER 4
RESULTSThe results are in form of description of understanding,
the operation of the department, and general overview of CTO
department, which came out of the study upon use of methods and
methodology stated in previous chapter.
The results are process oriented and the necessary discussions
are included consecutively to better describe the results. This has
resulted in merger of the two sections of the report; result and
discussions. The results of LC operation are discussed as:4.1
LETTER OF CREDIT FLOW
Letter of credit flow at Nabil Bank Limited:Part-1
1. At first thecredit worthiness of customer is checked and on
the basis of collateral, cash deposits of customer, they are issued
a certain line of credit .
2. Customers fills LC Application form at the Nabil Bank which
is made as per current version of UCPDC6003. Customers should
submit proforma invoice/sales contract (which should be signed and
stamped by both the parties) along with LC application form which
should clearly mentionthe name of contracting parties i.e. buyer
and seller, tenor (sight, usance or otherwise),Harmonic code
number(should be of 8 digits), Incoterm, country of origin, expiry
of contract, unit price and total amount.4. Customer attaches the
important documents such as Insurance Certificate, Firm
registration certificate and Bi Bi Ni Form-3 along with proforma
Invoice.5. After the above steps are completed by applicant ,
employees of Nabil Bank checks whether the Goods that are being
imported are not prohibited by the central bank orotherregulatory
authorities, application submitted by customer is free of error or
not, Permission of the concerned authority is obtained wherever
applicable or not.6. Then employees create LC through after doing
necessary entry in software known as Finacle.7. The
advising/confirming bankis informed about the LC . These banks are
communicated with the help of SWIFT.Part-2
8. After the confirming bank have received LC they check and
inform thebeneficiary so as to get thegoods ready.9. Then the
beneficiary goesto the transport company and shipping company
generates transport documents and hand it over to beneficiary. The
shipping company ships the goodsto the destination port and after
which the transport documents along withotherdocuments are
submitted to the advising/confirming bank by the beneficiary.10.
The documents are send to the issuing bank i.e. Nabil bank Limited
after rechecking the documents by the advising/confirming bank.11.
Nabil Bank re-checks the received documents whether they are in
accordance with the LC terms and conditions, if they find any
discrepancies applicant is informed about the discrepant documents
but if the document is clean it gives the documents to theapplicant
and forwards thepayment to the advising Bank.12. The applicant then
uses the transport documents to release the goods from thebank to
the destination port. Then he comes to the bank and takes the
BiBiNi 4 form to clear the goods through the custom office and get
the duty clearingcertificate.13. Then all the remaining documents
are send to Nabil Bank along with duty clearing certificate.14.
Bank then examines all the documents received from applicant and
closes the file.In this way, LC process at Nabil Bank is completed.
There are total 14 employees in Import LC section who perform all
their tasks in a given manner.
4.2 Major Documents required for LC:Commercial Invoice: A
commercial invoice must contain description of the goods that has
been shipped like the description of the items, cost of items per
unit, number of items supplied, various transport charges and fees,
date of shipment and mode of transport, prices, discounts as well
as the delivery and payment terms and must be issued by the
beneficiary made out in the name of the applicant.
Transport document: They are the rail/truck receipt, parcel post
receipt, inland waterway bill of lading (canal, river, etc), airway
bill, etc. Some transport documents such as Bill of lading is
negotiable if it transfers title to goods. A bank will only accept
a clean transport document.
Bill of lading: It is a document used in foreign trade. It is a
contract for delivery from the port of shipment to the port of
destination. A bill of lading must indicate the name of the carrier
and also must indicate that the goods that has been shipped.
Moreover, it also must show shipment from the port of loading to
the port of discharge stated in the credit.
Insurance Policy: It is the document that is given by the
insurance company if the exporter is responsible for arranging
insurance and minimum insurance should be 110% of invoice value. It
shows the important provisions of the insurance contract. Insurance
policy generally covers all risks excluding risks such as war,
strikes and riots.
Bill of Exchange: It is an unconditional demand for the payment
made by one party to another. It must be in written form and must
be signed as well as dated. A bill of exchange is also called a
draft.
Certificate of Origin: This document must state that the goods
in a particular shipment have been wholly produced/manufactured or
processed in a particular country. And may provide importer with
preferential duty rate. It is in a printed form that is completed
by the exporter and is certified by the issuing body. Normally, it
is issued by the Chamber of Commerce.
Packing List: It is the list of packing of goods being sent that
is usually included in each shipping package and gives the
information about the quantity and weights. It is prepared by the
shipper and is sent to the consignee for the accurate tallying of
the goods that has been delivered.
Inspection Certificate: It is requested by an agent of the
applicant to ensure quality of goods.
Weight list: It is a document stating weight of goods.
4.3 DOCUMENTS REQUIRED FOR ISSUANCE OF LC IN Nabil Bank
Limited:
For issuing a LC, at first applicant needs to have approved
credit limits sanctioned by the bank. According to Central
bank(Nepal Rastra Bank ) regulations, following documents should be
presented by applicant along with the LC Application form :
Proforma Invoice/sales contract containing the following:
- Harmonic Code number of the goods that is being imported.
Harmonic code should be of at least 8 digits.- Country of origin -
Payment term
PAN (Permanent Account number) Certificate
Company Registration Certificate
Nabil offers various products to finance the trade, it offers
Import loan and import bill discounting for the importers.
4.4 REGULATORY REQUIREMENTS:
All the LCs that are opened are reported next day to The Central
Bank. Also, as a result of the restrictions on for ex trading
imposed by Nepal Rastra Bank (Central Bank) all the transactions in
currencies other than the Indian currency (INR) has to be reported.
The applicant availing to the LC facility need to fill the forms on
Foreign Exchange Regulations called Bi. Bi. Ni. 3 which the bank
need to submit to the central bank for recording. Bi.Bi.Ni. 3 is
divided into two halves among which 1st half is filled by applicant
itself and second half is filled by issuing bank.(Refer to the
Appendix 2 for the Bi.Bi. Ni. 3 format).
4.5 PROCESSES FOR LCThe use of DBMS and Finacle has gained
popularity. Original documents are managed in a file with LC number
and Applicants on the cover page. There are many files in a proper
order managed on the storage box. The use of DBMS and Finacle are
for the accountability and conveniences of employees in data
management. There are many LC files in CTO department, and as an
intern it was my basic duty to manage the necessary LC file in
proper place and submit it to the mentor when it was necessary. I
was also engaged in the recording information in DBMS. The major
activities that were performed as an intern in the CTO division are
listed below:
Assist department staffs in making a LC file.
Helped in the proper handling and storing of the respective
files.
Served as a helping hand in the filling of the LC file and
application.
Helped in the checking of the files like: amount, date,
information mentioned.
Helped in tallying the different documents provided by the
respective parties involved in the LC to approve the documents are
legitimate.
Helped in keeping tracks of the documents arrival and copy
documents.
Helped in keeping records of the files through the software WDMS
used by the department.4.6 Risks Associated with Letter of
Credit:
The risks associated with import LCs can be broadly classified
into:
Financial standing of the importer: He should be in a position
to arrange for funds required at the time of retirement of bills
under LC. This involves an appraisal of the credit worthiness of
the importer as a borrower.
Acceptability and sale ability of the goods: This is a generic
risk associated with all modes of international trade, and may
affect the importers ability to pay for his consignment.
Status of the exporter (or beneficiary of the LC): This is the
risk inherent in a situation that an errant may ship substandard
goods.
Country Risk: This includes risk elements like the political and
economic stability of a country and exchange controls etc. Country
risk is, however more pertinent for exporters rather than importer
of goods.
Foreign exchange risk: A depreciation in the local currency i.e.
the transaction currency may lead the importer to pay more for the
consignment than originally envisaged. This may render the LC
account irregular from the very beginning.
CHAPTER 5DISCUSSIONS
5.1 ISSUES OF CTO DEPARTMENTSometimes during the processes of LC
it was found that proper communication between different
departments was at utmost necessity. The conflicting situations
regarding documents may arise and be solved by discussions with the
head officer and managers. Monitoring and evaluation was done by
CTO head.Mr. Jyoti Bahadur karki was head of CTO department.
Further activities of CTO head was to check, verify and correct
documents, monitoring and assuring corrections for the mistakes of
employees and assigning important work to employees. Hence this
reflected as knowledge to me for the importance of monitoring and
evaluationThe numbers of LC opened on an average were 20 per day.
After 3pm bank does not accept any LCs request. LC which yields in
USD amount and INR were the most frequent cases then followed by
EUR, NPR, JPY and others respectively. Birgunj customs, Trivuwan
International Airport customs, Bhairahawa Customs and Biratnagar
Customs are the places through which the goods are received by
applicant. NCELL and Nepal Telecom are found to be among the
applicant who orders goods with high amount
figure.CHAPTER6CONCLUSION AND RECOMMENDATION
6.1 Conclusions During whole period of internship and the
preparation of this report, intern learnt a lot about the banking
operations, about Nabil Bank in particular. The internship has been
fruitful in many ways to the intern. Before, the intern knew only a
little about the banking sector but internship helped her to
analyze and examine the banking system and the operations raising
different questions in the mind.
The growth of financial sector in Nepal is much better compared
to other sectors in the country. The economic reform initiated by
the government more than one and half year decade ago have changed
the landscape of several sectors of the Nepalese economy including
financial sector. Despite the decades long conflict and political
insurgency, this sector has continued to grow. As the Nepalese
financial market witnesses the domination of banking sector, it is
necessary to monitor the banking system properly and enhance
competitiveness with a strong and credible regulatory.
Nabil bank is the first joint venture which aims to serve valued
customers through quality and advancement of services throughout
the nation and widely providing its product and services through
the largely extended network. It represents a milestone in the
banking history of Nepal by introducing many innovative products
and marketing concept in the domestic banking sector and measures
customer satisfaction as a focal objective of doing business. Nabil
services reach the extreme of the country to facilitate its
customer and build the trust of individual and business houses for
the commercial banking industry. The recuperation of the bank in
terms of its financial position, its adjustment to technological
advancement and customer faith and trust shows that the bank at
present and in future touches the sky in banking performance.
During the internship period, intern got an opportunity to learn
a lot about the banking sector and analyze its various aspects.
Intern has worked in the areas of Letter of Credit in the CTO
department. This department has helped the intern to gain knowledge
about SWIFT messages, procedures of issuing letter of credit,
process of how trade operations actually takes place among the
importer and exporter, the legitimate documents required, filling
of forms like application checklist, copy document checklist, BI BI
NI forms, cheque writing etc. The activities that are performed in
these departments include making a new LC file, recording the entry
of document arrival in wdms software as used by the department
employees, filing, verifying the copy docs with original ones etc.
Intern worked in the department to learn about the process of how
LC is used and plays a major role in the trade business as we
know.The internship at Nabil Bank helped intern to gain in-depth
knowledge about real working environment, interpersonal and
communication skills, organizational culture and behavior,
professional qualities and team building spirit as well as working
principles of commercial banks. Besides, observing and learning the
various activities in the department, intern performed the various
task. During that period, intern found that costumers are the key
focus and greatest asset of the bank and time management was
everything. Thus, the bank always focused to maintain long term
relationship with customer and retain them by providing better
services and completing its aligned task in time. Similarly, proper
coordination and cooperation among the entire department is needed
for growth of organization.6.2 RecommendationIf the three most
important things in the Real Estate are location, location,
location, the three most important things in commercial and standby
credits are documents, documents, documents. Hence for the
operation of Letter of Credits or Documentary credits one should
educate themselves on the rules incorporated by UCP and UCC Article
5. Parties involving in LC should be able to control the process
from the start by limiting the number and complexity of documents
required under the credit. One should not permit the documents
which are contingent upon the approval of buyer, and do not allow
documentary requirements which are impossible to fulfill. One
should be disciplined in their presentation of documents. One
should request the confirming bank if they are uncertain of the
Issuing Banks ability to pay. Competent counsel can also be
instrumental in helping you to handle technical issues involved in
commercial credits.Likewise recommendation to the organization
would be that, the behavior of organization depends upon the
surroundings of working place in organization. Hence proper
resources and positive attitude is most for organizational growth.
It was found that the furniture to keep the file is on its expiry
date which created limitation on maintenance of file. Therefore I
would like to recommend the organization to procure new
furniture.
REFERENCESWEBSITES:http://www.hg.org/article.asp?id=28956http://www.osec.doc.gov/ogc/occic/letcred.htmlhttp://www.nabilbank.com/ImportLC/16/http://en.wikipedia.org/wiki/Letter_of_credithttp://www.tradev.net/downloads/tools/guide2lc.pdfBooks:Saunders,
A., & Cornett, M. M. (2007). Financial Market and Institution.
New Delhi: The McGraw-Hill Companies.Shrestha, M. K., &
Bahadur, B. D. (2007). Financial Market & Institutions.
Kathmandu: Asmita Publication.
Thapa, K. (2011). Fundamentals of investments . Kathmandu:
Asmita Books Publications Pvt. Limited.
APPENDIX
Appendix II: Nabil BranchesSN.BranchesLocation
1Teendhara BranchDurbarmargh, Kathmandu
2Nabil HouseKamaladi, kathmandu
3Kantipath BranchKantipath, Kathmandu
4Tripureshwor BranchTripureshwor
5Newroad BranchNewroad, Kathmandu
6Jorpati BranchJorpati, Kathmandu
7Birjung BranchAdarsh Nagar, birjung
8PHC BranchPowerhouse Chowk, Birjung
9Biratnagar BranchGoswara road, Biratnagar
10Lalitpur BranchKupondal, lalitpur
11Itahari BranchMain road, Itahari
12Butwal BranchMain road Butwal
13 Pokhara BranchNewroad, Pokhara
14Bhairahawa BranchNayapath, Bhairahawa
15Nepalgunj Branch
Dhamboji, Nepalgunj
16Lakeside Branch
Lake Side, Pokhara
17Exchange Counter
Tribhuvan International Airport, Kathmandu
18Dharan Branch
Mahendra Chowk, Dharan
19Bhalwadi Branch
Bhalwadi, Rupandehi
20Maharajgunj Branch
Maharajgunj, Kathmandu
21Birtamod Branch
Birtamode, Jhapa
22Damak Branch
Damak, Jhapa
23Hetauda Branch
Bank Road, Hetauda 4, Makawanpur
24Narayangadh Branch
Sahid Chock ,Narayangadh, Chitwan
25Baglung Branch
Mahendrapath, Baglung
26. Tulsipur Branch
Shitalpur Road, Tulsipur
27Ghorahi Branch
Ghorahi, Dang
28Dhangadhi Branch
Main Road, Ward 4, Dhangadhi
29Mahendranagar Branch
Mahendranagar, Kanchanpur
30New Baneshwor BranchNew Baneshwor, Kathamandu
31Halchowk Branch
Halchowk, Swoyambhu
32Thamel Branch
Thamel, Kathmandu
33Kaushaltar Branch
Kaushaltar, Bhaktapur
34Chabhil Branch
Chabhil, Kathmandu
35Maitidevi Branch
Maitidevi, Kathmandu
36Satdobato Branch
Satdobato, Lalitpur
37Balaju Branch
Balaju, Kathmandu
38Kuleshwor Branch
Kalimati, Kathmandu
39Khandbari Branch
Khandbari, Shankhuwashabha
40Charikot Branch
Charikot, Dolakha
41Dhulikhel Branch
Dhulikhel, Kavre
42Gorkha Branch
Gorkha Municipality, Gorkha
43Besisahar Branch
Besisahar, Lamjung
44Chandragadhi Branch
Chandragadhi, Jhapa
45Dhapashi Branch
Dhapshi, Kathmandu
46Anamnagar Branch
Anamnagar, Kathmandu
47Sinamangal Branch
KathmanduMetropolitan city, Sinamangal
48Gwarko BranchGwarko, Balkumari
49Attarkhel BranchJorpati,Attarkhel, Kathmandu
50Janakpur BranchJanakpur Dham, Dhanusha
(Source: www.nabilbank.com)Appendix II: List of Commercials
Banks in Nepal
S.NoN Name Operation Date (A.D.) Head Office
1Nepal Bank Limited1937/11/15Kathmandu
2Rastriya Banijya Bank1966/01/23Kathmandu
3Agriculture Development Bank Ltd.1968/01/02Kathmandu
4NABIL Bank Limited1984/07/16Kathmandu
5Nepal Investment Bank Limited1986/02/27Kathmandu
6Standard Chartered Bank Nepal Limited.1987/01/30Kathmandu
7Himalayan Bank Limited1993/01/18Kathmandu
8Nepal SBI Bank Limited1993/07/07Kathmandu
9Nepal Bangladesh Bank Limited05/06/1994Kathmandu
10Everest Bank Limited1994/10/18Kathmandu
11Bank of Kathmandu Limited1995/03/12Kathmandu
12Nepal Credit and Commerce Bank Limited1996/10/14Rupendehi
13 Lumbini Bank Limited1998/07/17Chitwan
14Nepal Industrial & Commercial Bank Ltd1998/07/21Morang
15Machhapuchhre Bank Limited2000/10/03Pokhara
16Kumari Bank Limited2001/04/03Kathmandu
17Laxmi Bank Limited2002/04/03Birgunj, Parsa
18Siddhartha Bank Limited2002/12/24Kathmandu
19Global IME Bank Ltd.2007/01/02Birgunj, Parsa
20Citizens Bank International Ltd.2007/6/21Kathmandu
21Prime Commercial Bank Ltd2007/9/24Kathmandu
22Sunrise Bank Ltd.2007/10/12Kathmandu
23Bank of Asia Nepal Ltd.2007/10/12Kathmandu
24Grand Bank Nepal2008/05/25Kamaladi
25NMB Bank Ltd1996/11/26Babarmahal
26Kist Merchant Banking & Finance
Ltd.2003/02/21Kamalpokhari,
27Janata Bank Nepal Ltd2010/04/28New Baneshwor
28Mega Bank Nepal Limited2010/07/23Kantipath,Ktm
29Commerz & Trust Bank2010/09/20Kamaladi
30Civil Bank Ltd2010/11/26Kamaladi
31Century Bank Ltd2011/03/10Putalisadak
32Sanima BankNaxal
(Source: www.nabilbank.com)
7 | Page