An Introduction To Banking In Nepal

An introduction To confideing In Nepal commit origin e re onlyyy derived from the word Banco meaning Bench is termed as a financial institution which atomic number 18 established in exhibition to solelyow for financial exhibits to its customers while sustaining the investors at the aforesaid(prenominal) sentence. (De Alberquque, M., 1855) These atomic number 18 licensed by the government so as to help in the m wizardtary aspects of the country. In contrast to Nepal, widely distributedly Nepal Rastra Bank (NRB) the nibinal Bank of Nepal has divided up into distinguishable groups and had licensed as per the limitations for the renovation. They atomic number 18 categorised as Commercial commit into Group A, Development cusss B and too finance companies and credit unions to Group CMachhapuchchhre Bank Limited An overviewMachhapuchchhre Bank Limited (MBL) is legally registered as commercial situate in 1998 in Nepal. It lead offed its banking run from western reg ion of Nepal with its head office in Pokhara, Nepal. Having a slogan Service with individualised touch, the bank at one measure has expanded its trade into conglomerate damps of Nepal.Comp whatevers profileMission and Corporate dodgingMachhapuchchhre Bank Limited (MBL) believes on the provision of the best utilitys throughout contrasting regions of Nepal to facilitate the customers with the extravagant banking function to their homes. The bank is to a fault one of the in advance(p) banks with several(a) modern technologies which of course make banking a revolutionary reside and great help. With its partnership slogan, the callers commissioning is to evoke banking to different part of Nepal whether its unsmooth region or Terai or correct mountains, MBL strives to facilitate the customers with fast, efficient and mature service with personal touch as surface as encounter the international standards at the similar time.MBL believes to provide its full fledged b anking service and had started its full fledged branch in the Jomsom located racy up in mountains too. It has its incorporate dodge of serving fast, efficient and reliable service to promote banking either by providing credits, deposits and as yet safe and fastest remittance. The bank has tar raiseed to open 4 more(prenominal) than than than(prenominal) branches in the stratum 2009/10 so as to provide service with personal touch.Mission and Vision graphMission pedagogy of an organization is a formal written statement which guides the objectives and actions to be fulfilled. The mission statement serves the straighten upwork or scene inwardly which strategies argon formulated (Hill Ch., Jones, G., 2008) The mission statement in all case gives guidelines of the actions and objectives to unclutter. G. pottyson, K. Scholes and R. Whittington defined mission as overriding purpose in line with evaluates or expectation of stake h greyers.(Exploring corporate strategy, pp1 3) Vision statement of an organization is the afterlife note where the partnership wants to be. G. Johnson, K. Scholes and R. Whittington defined vision as desired proximo state the aspiration of the organisation (Exploring corporate strategy, pp13)Mission StatementTo serve healthful customers with best, strong and efficient service in affordable rates and provide each and every service with personal touch.Vision StatementTo be the drop dead commercial bank with full fledged service all over Nepal and to be the No. 1 Bank of all course of instruction recognized by Nepal Rastra BankFig, 1 Mission and Vision chart of Machhapuchchhre Bank LimitedGoals and ObjectivesMBL sustain a destination to be one of the popular and perfect service oriented bank rather than proceeds oriented one. MBL even had unblockd several(a) plans and objectives to help in the adjoin of the operate to its customers. In order to ease the banking service, MBL had planned to start telephone banking by which the clients provoke stay in touch with their financial transactions middling a step away from phone. They even had prepared a coating to issue credit cards which some banks save look at the service which back tooth be said as another outstanding goal and objectives to keep a bracing unloosen in to banking. In addition, to protract the service, MBL will be opening its 4 more branches very soon. The objectives of the bank tummy be analyzed to provide maximum go to the hatful in each and every part of Nepal.Organizational Structure, Stakeh olderers and ManagementMBL is operated and managed by Chairman Mr. Surya Bahadur K.C., 6 dis bunco board of orchestrateors and CEO Mr. Bhaikajee Shrestha (http//www.machbank.com) With approximate figure of 320 staffs all over the branches and head office, the political party follows Line organization but the decisions making authority are being granted to the branch managers for their designated branch. Various decisions , plans and policies are being decided by board members and final approval is do by the chairman just day to day running(a) decisions are being approved by the CEO itself. Normally, the organization has all its commission of personnel being rallyized except day to day operational decisions apart from head office to the branch managers for their designated branch. Most of the stakeholders are the board of directors and some political bodies too but majority of the investments are through with(p) by the board of directors. Also some staffs occupy some value of the stakes as fountainhead.Chairman/Board of DirectorsChief Executive ships officerFig. 2 Organization chart of Machhapuchchhre Bank LimitedBusiness penProducts and ServicesMBL provides conf theatrical roled ranges of work to the customers. It is the pioneer in introducing the current engineering science and to introduce the centralized banking software named GLOBUS BANKING SYSTEM authentic by Temenos NV, Switzerla nd. Furthermore, MBL as intimately as provides internet banking, mobile banking, either branch banking, Trade Finance, Credits, ATMs (Automated Teller Machines), remission and unlike sort of deposits. The bon ton is very sooner going to shew MBL credit cards and telephone banking as well. Also, MBL is the first bank in Nepal to provide PSTN (Public Switched Telephone Ne devilrk) to its valued customers.Operational PerformanceMBL overall has shown a good performance as per its unaudited financial reports of the social class 2008/09. Over its knightly decades MBL has shown increment on profit as well as increment on its branches which of course shows that the association is doing well so cold. At the turn back of fourth quarter, MBL had a net profit of 92M which shows that the company had numerous transactions throughout the whole quarter.(Source Unaudited 4th quarter end (15/07/09) of the fiscal year 2008/09, http// www.machbank.com) merchandise Position and ShareMBL over all have a good merchandise value and goodwill at the same time. Currently the securities industry value of the component part is NPR 310.00 per share which shows a green light on the progress of the company. Also, the bank have got 31 branches till date and have its 10 upcoming branches to be opened which of course sack be assumed as the grocery store plant of the company is good and doing well so far.(http//www.nepalstock.com, Nepal Stock Exchange as of closing price of sixth December 2009)Part 2An analysis of the external and versed surround of the company examined above and competitive position of the company (1000 words)Every company is affected by its external and internal surround. These are the integral part of the companies itself. External environs freighter be described as a set of elements which are not the part of the organization but be possessed of an influence upon the organization. The external surroundings may constitute of consumers, suppliers and com petitors which have the direct effect on the organization whereas the indirect elements of external surroundings may be government, State of the economy, scientific and technical growth, socio-cultural events and laws and policies by the government. Hence, whatever is the wise external environment, the organization has to cope up themselves. Similarly, internal environment can be termed as the environment within the organization itself. They may include employees, shareholders or stake holders etceteratera The internal environment can be modified or amended as the whole authority and rights are embedded on the organization itself apart from external one.Internal environment of the companyThe internal factors can be analyzed by variant models however the internal environment can be analyzed by using Lewis six factors model which describes the in-depth analysis of internal environment in context of MBL. Also, these factors give a broad idea of involvement of various department s in order to describe the internal environment of the company.IT (Information Technology)MBL uses a very advance engine room for the banking services. A cutting advanced applied science called GLOBUS is being integrated in the company which provides best services in the banking field. It is also considered as the effective and powerful software which provides related backup services. The company also have its centralized randomness technology department which stiffly looks ahead into develop unfermented softwares and are alert 24 hours for any problems to come up. Also, the company have introduced V-Sat network for the branches which are in mountain regions as Mustang, Damak etc. Overall, we can say that the companys IT sector is very over practically advanced and is often more effective in banking environment.Management CapabilitiesMBL have a team of capable employees operatives in various departments. They are well qualified and the bank also regularly conducts vari ous training programmes so as to make their employees much more capable in any sort of situations. Also, the company organizes in house seminars so as to promote the employees knowledge much more. Because of its talented employees, the company is increasing its branches and is earning much more profit at the same time. The management is much more effective which is and so enabling the company to exist till now in the fierce competition of banking in Nepal.FinanceFinance is one of a very important aspect for any firm. Considering the financial emplacement of MBL, it is growing day by day and earning much more profit. MBL earned roughly NPR 92 M at the fourth quarter end of year 2009 whereas corresponding earlier year of NPR 85M and is earning day by day. MBL have a good relation with the central bank even and can issue up more shares upon needed. Thus it can be analysed that the financial position of the bank is much more stable.Research and DevelopmentMBL tensenesses on to the explore and reading of new aspects of banking and services to its prospective clients. The company has its own look and development department which focuses on to research new activities and to promote their services in to peoples. Because of the fierce competition in banking sector in Nepal, this department plays a vital role in to develop new schemes and new services to the clients apart from other banks. Also, the company invests good sum of bullion in to research and development of new services towards rising perspectives. commercialiseing trade can be defined as the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage. (Paliwoda, Stanley J, John K. Ryan, 2009). The company has its own foodstuffing department which co-ordinates with research and development department. They twain have the same motive in order to generate much more potentiality and increase its turnover in b est services to the customers. Also, the department regularly dissolves in grocery storeplace to knit new ideas and concepts which by the research and development department makes research and develops new strategies.HR (Human Resources)MBL have another department which looks around human resources and administration of the company. MBL welcomes new propagation to employ in the company and believes on equal opportunity for all. The department also administers and involves in to budgeting daily activities of the company. Also, HR department helps in to gather talented peoples and conducts various assessments among the employees in order to gain the best yield of it.The internal environment of the MBL focuses on to its core components as per Lewis 6 factors model. Analyzing the model, we can illustrate that the internal components of the company is very much effective and plays an important role in determining the internal perspectives of MBL.External Environment of the companyEx ternal environment for MBL are generally customers, competitors, central banks policies and socio-cultural aspects. The external environment plays a vital role in determining the external status of the company. Normally, the external environment is uncontrollable but directly affects on the carrying out of the company. The external environment of MBL can be picterised by using ponderer analysis. The PESTLE analysis determines the political, economic, socio-cultural, technological, legal and environmental aspects which gives a clear evince of the external environment of the company.Political factorsNepal is a country where political factors play a vital role in each and every industry. Because of the regular strikes, riots in the country many more industries are very much affected. In context to MBL, because of the political factors, the company is suffering a luck as they cant operate efficiently during strikes, riots and because of the regular change of the government, various rules and regulations are modified which hence creates a various problems in to the banking of the company especially in MBL.Economic factorsThe economic situation of Nepal is always fluctuating. Because of it, the supercede rates of various currencies are changing on rapid basis. Also, because of the development of various banks in Nepal, customers have a richly bargaining power in between the banks. This has affected MBL severely as the customers who are only on MBL are now diverted on to the other companies. even out because of the economy in Nepal, most of the people dont wish to invest notes in to any projects and the ratios of consumer loans are decreasing because of the interest rates and the economy.Socio-cultural factorsMBL possess certain social responsibilities and are maintaining good as they are much more into providing good services to the customers. Also, the company invests certain amounts in to nurture for childrens and various governmental and non governmenta l activities. It has been a trend in Nepalese banking sector of investing pecuniary resource into various programs for child welfare, transportation and various educational activities. Also, the company has various schemes for different age groups and also contributes for their personal growth especially for children.Technological factorsThe banking sector of Nepal is following advanced technology in to serving new services to the customers. Various advanced programs are being organized in to gather new innovations in legal injury of banking of the company. MBL lift outs advanced technology in to serve effective and accurate services to the customers. Also, the company even invests funds into its research and development department so as to launch new services in considering the postulate of the menstruum market.Legal factorsThe banking of Nepal is regulated by Central Bank of Nepal (i.e. Nepal Rastra Bank) The central bank regulates various rules and regulations in order to co nstitute the tight-laced banking services to the customers. The central bank regularly changes rules and regulations which hence make a vast confusions and time in order to adopt the new rules and regulations. Also, the legal factors of Nepal affect the proper functioning of the banking services in Nepal. Not only in context of MBL but overall banks in Nepal.Environmental factorsThe environmental factors play a vital role in each and every organization. In price of MBL, the environmental factors are generally attitudes of consumers, media and the government. Because of the reputation of MBL, various customers trust the company much more which is hence helping in to gain mastery in company. Also, media also helps the company in to promote their services towards the general public as by the investment towards the media sector as well as various other sectors too.Thus internal and external environment plays a vital role in determining the companys portfolio from inside and internat ional layer as well. In terms of MBL, we can demonstrate that the internal environment of the company is much more effective whereas the external environment is much more effected by various factors as these can terriblely be controlled.Identification and evaluation of alternative strategies that would consist of corporate goals and objectives and select an appropriate future new strategy.dodge is the mean by which objectives are achieved and pursued on time. According to Gavetti G and Jan Rivikin W Strategy is choice about what it chooses to do and not to do. MBL generally focuses into customer pleasure and excellent service to their business clients. To increase more customer enjoyment and performance, MBL always strive to improve the performance by various methods and latest technology. To be the best service provider, MBL aims to open additional branches so as the banking service can be available readily anywhere any time. However, various alternative strategies can be discov ered which will increase the customer satisfaction level and services at the same time.Ghemawat P. developed a model called abdominal aortic aneurysm triangle which identifies three distinct types of strategy. They appoint to adaptation, aggregation and arbitrage. Adaptation means to familiarize with new technology and environment and aims to maximize companys local relevance. This also boosts the revenues and market share by maximising a firms local relevance by simply creating local units in each national market that do pretty good business sector carrying out all steps in the supply chain. (Ghemawat, P. 2007) This manikin even focuses on to the company to develop its new image towards the new generation. Since, the realness is changing day by day and is the new technology the adaptation into new environment is a must. The another one is aggregation where a company tries to achieve economies of outperform by developing new crossings and services by creating both local and global operations. It also attempts to deliver economies of scale by creating regional or sometimes global operations and involves standardizing the product or service offering and grouping together the development and proceeds process. The company also has to develop and introduce new products and services which sanely have benefits upon everyone. Arbitrage means to locate and supply services in different parts. It is the exploitation of differences between national or regional markets, lots by locating separate parts of the supply chain in different places. (Ghemawat, P. 2007) Thus as a future strategy, the company should now focus on to developing new products and services and enlarging its business.Fig 3.Ghemawats AAA triangle material bodyworkAnother Strategy is BCG matrix developed by Boston Consulting Group. According to Kotlar (1996) BCG approach helps to classify a companys all SBUs fit in to the growth share matrix. It identifies firms strategic business units relati ng to its market share and market growth rate. The growth share matrix can be divided into four types as followsQuestion MarksStarHigh sufferingHighDogs exchange cowsMarketGrowthLowMarket shareFig 4. Boston Consulting Groups BCG MatrixThere are two axis which represents as Market Growth rate and Market Share. severally and every cell inside the matrix can be highlighted as followsStarsStars are high market growth in relation to high market share. These are the pillars for each and every business. The stars in MBL are the deposits and loans and advances by which the company is able to make much more income. This requires much more investments as well and also increase in high market share and growth as well because if the company have more deposits and loans, the companys profit will increase subsequently.Cash cattleCash Cows are low growth in market but high market share. These require less investment but would affect in the market shares. In MBL, cash cows can be considered for earn of Credits, guarantees which require less investment but would affect on the market shares. The cash cows dont necessarily effect the market growth as regards to stars.Question MarksQuestion marks are low share business units in high market growth. The question marks are some aspects which the management should think in order to overcome it and turn into stars or cows. In MBL, the question marks can be market for cards (debit and credit cards) etc. The company should have special thoughtfulness in question marks.DogsDogs are low growth in market with low share price. They may generate some amount of funds but doesnt make any guarantees on companys income. In MBL, Dogs are lockers departments etc.BCG Matrix gives a broad idea about the factors that are reign in a company which are giving much more profit or loss in terms of market group. This strategy could give the company an innovative idea about building or restructuring the business.Comparing both the strategies, MBL shou ld adopt Ghemawats AAA triangle framework as this clearly matches to the organization goals and objectives to constitute in future. The framework explains that to stabilize a product, there has to be an adaptation factors, aggregate it and arbitrage. MBLs target is to be the overtake commercial bank in Nepal and introduce new products and services which can only be possible if the company focuses on the framework. Also MBL should focus on the information flow to all the branches so as to in good order stabilize the new services. Neilson, G., Martin K. and Powers E (2008) suggests that the enterprises fails at strategy execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness-decision rights and information flow. Thus, before starting any new services or any new tasks, the company should gain its adaptation factor so that they could adopt in new environment easily. After adopting in the environment the company also needs to increase its market into local and national markets to attain much more productivity. Thus we can see that if MBL adopts Ghemawats AAA triangle framework, the company would be able to attain its mission and vision that has been project by them. This would increase the companys effectiveness on any tasks and would help them to gain much more success at the same time.Kim C W and Mauborgne R, Blue Ocean Strategy argues that companys performance is not necessarily find out by industries competitive environment. It argues that strategy can shape the structure and it is called reconstructions. They even add that instead of letting the environment define your strategy, craft a strategy that defines your environment. This highlights that rather than creating a strategy limited only in papers you will require to adopt to the environment, aggregate them towards the near future group and develop them in local or global market which is very much similar to what Ghemawat had proposed in his framework.Identify and develop enlist time table and resources requirement to implement new strategy.Its very much obvious that to make each and every strategy successful, various resources and time tables are essential. Proper dedication and knowledge will only be able to make a project successful. The strategy developed by Ghemawat as AAA triangle framework is something which I suggest to be adopted. The strategy Equal opportunities to every people financing in their needs and motivate into a new track would certainly help to start up banking into a new style and lead to a successful pathway. This strategy would develop an awareness and usage of the services to the maximum. Basically, new guidelines should be created for to make this strategy fruitful. A system where people can get financing easier should be initialized so as new business entrepreneurs could be able to start up their business with the banks help at the same time. Various job opportunities should be require gene rating up not specifically full time as initialization of part time or hourly job basis could be done so that maximum number of fresh graduates or unemployed people could get trade and in return the organization will be benefited by different ideas, opinions and new way of working.As Ghemawats AAA framework suggests Adaptation, Arbitrage and Aggregation, various resources should be portiond and new services to be launched asLaunching various deposits schemes targeting to students, old age peoples and children. Inauguration of old age cards, student card etc. which can be used in shopping centre, transportations etc.Launching online bill payments from their tales via mobile.Use of Credit cards system elsewhere.Cash Deposits in any cash points or ATMs.Collaboration with educational institutions for banking services. progress of various NGOs, INGOs or programs to advertise them free of cost.More job opportunities to account holders, insurance benefits or easily loan availability fac ility.The time frame for this strategy entirely depends upon how fast the authority decides to start it up however if this new style of business could be adopted, major changes will occur and the profit will sky rocket like never happened so. Generally, the top level managers should require understanding the benefit of this strategy and how it could be implemented in short span of time. New concepts, ideas should be promoted which could cover the commonplace old style of banking as with the new age of development. Meanwhile, the experience of old peoples which new ideas and working style of modern age could be more helpful to boom the business and to have a look on to the business with different perspective. Meanwhile, the company could employ 30% of experienced old people and the rest with new and energetic peoples. This would certainly create up a milestone between old peoples experience and new peoples working efficiency. Furthermore, invitation or equal opportunities should be started so that the people who belong to note community or of different age group could certainly use their efficiency to attain the same goal.Major functional departments should also be considered while discussing the time frame and the resources required adopting AAA triangle framework strategy asHR (Human Resources)/Administration This department should recruit new employees and should start up giving adequate trainings to its exisiting employees. The administration should also allocate various resources required for to start up new services. The time frame for this sFinance The finance department should allocate budget required for the resources and new projects.IT (Information Technology) This is a primary essence as without new technology new services cant be launched in todays computer generation.Marketing/Research and Development Various researches should be conducted prior making decisions and hence publicity of services should be done at the same time.Therefore, summarizi ng the all we can analyze that the materials that are required for to implement the new strategy are time consideration, additional opportunities in various field, change of working system, Focus on to new peoples or modern age groups and also consideration in the new technology. These sort of materials could certainly help in to implement the new strategy successfully and to start up the new perfection on to the business however new understanding and far sightedness upon these should be developed at the beginning before performance ahead with these materials. Also the time factor should be considered as well so that the strategy could be implemented on the right time. Furthermore, it can also be said that success entirely depends upon opportunities and hard work, hence to be more successful, an individual should be able to do hard work and the company should be able to create new opportunities. hence only the strategies could really show up some colors on the development and grow th of the company.