CREDIT MANAGEMENT OF KUMARI BANK LIMITED

A Project Work Report

By

Sumita Lama

T.U. Registration Number: 7-2-0530-0109-2015

Southwestern State College

Submitted to

The Faculty of Management

Tribhuvan University

Kathmandu

In partial fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu

March, 2019

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 DECLARATION

I, Sumita Lama, hereby declare that this submission is my own work and that, to the best
of my knowledge and belief, it contains no material previously published or written by
another person nor material which has been accepted for the award of any other degree or
diploma of the university or other institute of higher learning, except where due
acknowledge has been made in the text and reference list.

------------------------------------
Sumita Lama
Date:

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 SUPERVISOR'S RECOMMENDATION

The project work report entitled "Credit Management of Kumari Bank Limited"
submitted by Sumita Lama of Southwestern State College, is prepared under my
supervision as per the procedure and format requirements laid by the Faculty of
Management, Tribhuvan University, as partial fulfillment of the requirements for the
degree of Bachelor of Business Studies (BBS). I, therefore, recommend the project
work report for evaluation.

----------------------------------------
Name of Supervisor
Date:

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 ENDORSEMENT

We hereby endorse the project work report entitled "Credit Management of Kumari
Bank Limited" submitted by Sumita Lama of Southwestern State College, Kathmandu,
in partial fulfillment of the requirements for the degree of the Bachelor of Business
Studies (BBS) for external evaluation.

------------------------------------------ ---------------------------------------------
XXXXX XXXXX
Chairman, Research Committee Campus Chief

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 ACKNOWLEDGEMENT

I would like to express my profound gratitude to my supervisor Mr. XXX for his
guidance and constructive criticism not only in academic but in my general welfare. He is
largely responsible for the success of this work and I am very much grateful.

I would like to thank my honorable teachers, who made me strong student morally and
physically to my studies and made me reach this level.

I would also like to extend my sincere gratitude and big thanks go to my discussion group
members whose friendship was so supportive in one way or another for the time I was at
Southwestern State College, and in the course of this study.

Finally, I wish to thank all authors of various research works and articles I made use of in
the writing of this work, indeed your research works and articles have served as major
sources of literature and knowledge.

Sumita Lama

Researcher

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 TABLE OF CONTENTS

Declaration ii

Supervisor's Recommendation iii

Endorsement iv

Acknowledgement v

Table of Contents vi

List of Tables viii

List of Figures ix

List of Abbreviation x

CHAPTER- I: INTRODUCTION 1

1.1 Background of the study 1

1.2 Statement of the Problem 2

1.3 Profile of Kumari Bank Limited 2

1.4 Objectives of the Study 5

1.5 Significance of the study 5

1.6. Literature Review 5

1.6.1 Credit risk management: A theoretical framework 5

1.6.1.1 Credit 6

1.6.1.2 Credit Risk 6

1.7 Methods of Study 7

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 1.7.1 Research Design 7

1.7.2 Nature and Sources of Data 7

1.7.2.1 Primary sources 7

1.7.2.2 Secondary sources 7

1.7.3 Data Analysis 8

1.8 Limitations of the Study 8

CHAPTER-II RESULTS AND ANALYSIS 9

2.1 Credit Management in KBL 9

2.1.1 Credit policy of KBL 9

2.1.2 Credit principles of KBL 10

2.1.3 Global Credit Portfolio limit of KBL 10

2.1.4 Types of Credit 10

2.2 Credit Ratification Authority of KBL 18

2.2.1 Credit Evaluation Principles 19

2.2.2 Pre-disbursement Compliance 20

2.2.3 Documentation of the Loan 21

2.2.4 Advance 22

2.2.4.1 Security against Advances 22

2.2.4.2 Types of advance 22

2.2.5 Objective Basis of Classification 24

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CHAPTER-III: SUMMARY, CONCLUSION & RECOMMENDATION 28

3.1 Summary 28

3.2 Conclusion 28

3.3 Recommendation 28

REFERENCES 30

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 LIST OF TABLES

Table No. Page No.

2.1 Classification of term loans 11

2.2 Status of loan and interest in KBL 12

2.3 Status of cash credit in KBL 13

2.4 Status of Overdraft in KBL 14

2.5 Status of bills purchased and discounted 15

2.6 Status of personal loans in KBL 17

2.7 Analysis among credit facilities offered by KBL 17

2.8 Categorization of substandard loan 25

2.9 Categorization of doubtful loans 26

2.10 Categorization of bad loans 27

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 LIST OF FIGURES

Figure No. Page No.

2.1 Status of loan and interest of KBL 13

2.2 Status of cash credit in KBL 14

2.3 Status of Overdraft in KBL 15

2.4 Status of bills purchased and discounted 16

2.5 Analysis among credit facilities offered by KBL 25

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 ABBREVIATIONS

BBS Bachelor's in Business Studies

FY Fiscal Year

GPRS General Packet Radio Service

GSM Global System for Mobile

IP Internet Protocol

ISP Internet Service Provider

KBL Kumari Bank Limited

LTE Long Term Evolution

MMDS Multichannel Multipoint Distribution Service

NRB Nepal Rastra Bank

SMS Short Message Service

UTL United Telecom Limited

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