Internship Report On Machhapuchchhre Bank - Chapter Three 2023

In this chapter, we delve into the internship report of Machhapuchchhre Bank Itahari Branch, where I had the opportunity to gain practical experience and firsthand insights into the banking industry. This chapter aims to provide a comprehensive overview of my internship journey, highlighting the activities, observations, and learnings during my time at the bank.

Throughout the report, I will discuss the organizational structure of Machhapuchchhre Bank, focusing on the Itahari Branch and its operational framework. This includes an exploration of the various departments, their functions, and the roles of key personnel within the branch.

Furthermore, I will delve into the specific tasks and responsibilities assigned to me during the internship period. This will include a detailed account of the projects and assignments I undertook, providing valuable insights into the practical application of theoretical knowledge in a real-world banking environment.

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CHAPTER THREE

3. BRIEF INTRODUCTION OF THE ORGANIZATION

3.1 The context

Machhapuchchhre Bank Limited was established in 1998 as the first regional commercial bank in the western region of Nepal. It is classified as an "A" class commercial bank and began conducting banking operations in 2000 from its headquarters located in Pokhara, a town near the foothills of the Machhapuchchhre Mountain peak.

The Bank facilitates its customer needs by delivering the best of services in combination with the latest state of the art technologies and prudent international practices. The Bank is the pioneer in introducing the latest technology in the banking industry in the country. It is the first bank to introduce centralized banking software, GLOBUS BANKING SYSTEM of Temenos NV, Switzerland. The Bank provides modern banking facilities such as Any Branch Banking, Internet Banking, Mobile (SMS) Banking, Safe Deposit Locker Facilities, Utility Bill Payment (Telephone & Mobile), ATM(VISA Debit card associated with SCT Network) to its valued customers. Besides these, the Bank is providing 365 Days banking and Evening Counter services to the customers through many of its offices.

With a commitment to offering the greatest financial goods and services in the most effective and professional manner, the Bank has been supported by highly regarded non-residential Nepalese, famous businessmen, and entrepreneurs. Machhapuchchhre Bank Limited, or MBL, has achieved a number of milestones since it was established in 1998. Some of the key achievements of the bank include: First regional commercial bank from the western region of Nepal, Strong financial performance, Wide range of banking services, Strong network of branches and ATMs, Awards and Recognition, Adoption of technology.

It is now one of the full-fledged national level commercial banks functioning in Nepal, with a paid up capital of around 10.25 billion rupees, 165 Branch Offices, 133 Branchless Banking Units, 11 Extension Counters, and 205 ATMs dispersed across the nation. (Source: https://www.machbank.com/our-profile)

3.1.1 Vision, Mission and Core Values

Vision Statement

The bank shares a common vision of “service with a personal touch” and become the bank of the people's first choice and one of the most reputable banks in the country based on honorable behavior and long-term financial success.

Mission statement

To be one of the most preferred banks in Nepal, easily recognized as the bank which satisﬁes and cares for its customers through quality service, innovative products, professionalism and wide branch network, offering full array of ﬁnancial services using modern technology and with good corporate governance practices.

Corporate Values

In order to foster a shift from rule-based to value-based behavior, the bank operates with the following five core values:

Integrity

The bank operates with the highest level of integrity and maintains complete honesty in all of its business practices and interactions with customers, employees, regulators, and other parties that it interacts with.

Accessibility

Easy accessibility through traditional as well as modern means of communication.

Value Creation

For shareholders, customers, employees and the nation.

Quality Service

Through unmatched professionalism and excellent customer care.

3.2 Present Situation

MBL is now one of the full-fledged national level commercial banks functioning in Nepal, with a paid up capital of around 10.25 billion rupees, 165 Branch Offices, 133 Branchless Banking Units, 11 Extension Counters, and 205 ATMs dispersed across the nation. It takes pride in having its own buildings for its Head and Corporate Office in Lazimpat, and Branch offices in Naya Bazar, Pokhara, Jomsom, Baglung and Damauli.

The general public, businesses and corporations, hotels and restaurants, and industries make up the majority of MBL's markets. Savings account deposits, recurring account deposits, and fixed deposits are just a few of the sorts of deposits that MBL takes from the general public, particularly from its clients. In contrast, it offers a variety of loans and advances, such as an overdraft facility, cash credit, bill discounting, money at call, etc. (source: https://www.machbank.com/our-profile)

In order to mobilize the funds, MBL primarily deals with people, institutions, financial businesses, restaurants, schools/colleges, and students. The depositors with demand deposits, savings deposits, and fixed deposits are its clients in terms of the source of funds.

3.2.1 Product and Services of the Bank

MBL offers a variety of products and services to meet the requirements of its customers. Deposits, Loans, Remit, and other services are the main products and services which are explained below:

A. Deposits

MBL provides a variety of deposit plans for both short-term and long-term needs, which allow customers to increase their savings and gain a good return on investment. The bank has different types of accounts for customers to deposit their funds.

a. Saving Deposit

MBL offers a comprehensive range of saving deposit products for individual small-scale depositors. These include options for senior citizens, youths, children, women and the general public. These are interest-bearing saving accounts that offer a nominal interest rate, but also give customers flexibility in making withdrawals. The total saving deposit portfolio for MBL is 31%.

Some of the plans for Saving Deposit of Machhapuchchhre Bank Ltd are as follows:

· MBL Smart Bachat Khata

· MBL Student Saving Account

· MBL Surakshit Talab Khata

· MBL Premium Saving Account

· MBL Online Account

· MBL Remittance Bachat Khata

· MBL Balbalika Bachat Khata

· MBL Normal Saving account

· MBL Pewa Bachat Khata

· MBL Salary Management account

· MBL Shareholders Saving Account

· MBL Uchha Sikshya Nikshep Yojana,

· MBL Yuba Bachat Khata

b. Current Account

MBL offers a non-interest bearing account called Current Deposit Account, which is specifically tailored for companies, institutions, NGOs and INGOs. This account allows for unlimited withdrawals and is flexible for users. The total current deposit portfolio for MBL is 4.40%.

c. Fixed Deposits

MBL's Fixed Deposit account offers a higher than average rate of return to the account holders for a pre-determined period of time. This account is designed to fulfill both saving and investment needs of customers. The total fixed deposit portfolio for MBL is 56.08%. These products are tailored to meet the specific saving and investment needs of both individual and institutional depositors.

d. Call Accounts

MBL's Call Account is a deposit scheme that offers the flexibility of a current account, while also providing the interest benefits of a savings account. This account is particularly popular among high net worth individuals and corporate customers and accounts for 7% of MBL's total deposits.

B. Loan products

Machhapuchchhre Bank Limited is dedicated to provide a full range of banking products and services to the public. The bank provides a large selection of tailored funded and unfunded credit facilities to meet the financial needs of both private individuals and public institutions.

a. Retail / Consumer Lending

MBL offers a variety of retail lending products to individual consumers, including home loans, mortgage loans, hire purchase loans, education loans, loans against shares and government assets. The bank is also focused on offering lending facilities to small and medium-sized businesses.

b. Corporate Credit / Project financing

MBL offers a range of project financing options, such as consortium financing, working capital financing, fixed term loans, and various trade finance services to its corporate customers. The bank provides long-term financing for infrastructure and industrial projects based on the projected cash flow of the project instead of the balance sheet of the sponsor. It has a diverse range of industry experience, from financing various industries, to hydro-power projects of different scales, and mega-hotels, always being ensure that the repayment is entirely from the project cash flow and not on the general assets or creditworthiness of the project sponsors. MBL may act as a lead bank or participate in a consortium of banks formed to finance projects.

c. Deprived Sector Lending

MBL offers a variety of flexible and customized financial products for Deprived Sector Lending. The bank has refined its products to provide credit options to individuals and entities engaged in agriculture, agro-based businesses, cooperatives, small agro-industries, and intermediaries trading in agro-products. The major products associated with DSL are Mahila-Uddhyami Loan, Small Farmers Individual Loan and Yuba Tatha Sana Byabasayi Krishi Karja. These loan schemes are tailored to specific needs of farmers, agro-businesses, cooperatives and small agro industries, with flexible requirements and easy access.

d. SME Financing

The Small & Medium Enterprise (SME) Financing provided by MBL are flexible and reliable financial options for entrepreneurs running small and medium-sized businesses for start-up and expansion. The services include:

· Financing for small and medium businesses

· Financing for working capital, as well as capital expenditure

· Financing for trade-related facilities such as Letters of Credit/Trust Receipts and non-funded facilities such as bank guarantees.

This type of financing will help small and medium entrepreneurs to meet their financial needs and help in their businesses to grow, providing working capital and trade-related facilities, funding for start-up and expansion.

C. Remittance

MBL Remit is a remittance product offered by MBL that allows for real-time money transfer using state-of-the-art web-enabled technology. It facilitates the process of sending money in a fast and secure way, enabling customers to perform remittance transactions in real-time.

D. Digital Banking

Machhapuchchhre Bank offers a variety of alternate banking channels to its customers, such as ATM, Debit Card, Credit Card, Mobile Banking, Internet Banking, Branchless Banking Unit and many more. These products aim to save customer's time by allowing them to perform banking transactions without physically visiting a branch. The Alternate Banking channels are also customer-centric which helps to provide an easy and convenient banking experience to the customers

E. Other Facilities

Besides above product and Services, Machhapuchchhre Bank provides following Facilities:

· Locker Facilities

· ABBS Facility

· SWIFT Service Facilities

· Internet Banking Facilities

· Foreign Currency Draft

· Share Facilities

· MBL Mobile Money (M3) etc.

3.2.2 Organization Structure

Organizational structure refers to the way in which roles, responsibilities, power, and information flow are organized within a company. It sets up a hierarchy and defines the relationships between different levels of management, including job functions and

reporting lines. The organizational structure is created to support the company's operations and help it achieve its objectives. It is a framework that outlines how tasks and responsibilities are divided and how information flows between different levels of management. Organization design is the process of arranging the structural elements of an organization, including the relationships among them, in order to manage the entire organization effectively. It allows organizations to align their structure with their goals, strategy and changing environment to support their growth and development.

Figure no. 3.1 organizational structure of Machhapuchchhre Bank Limited

3.2.3 Board of Directors (BOD)

The bank is governed by a highly qualified and visionary group of individuals known as the Board of Directors. This group of individuals is responsible for creating policies, making strategies, and providing direction to the management team. They are the highest level of decision-making authority within the bank and the organization's

operation is under their guidance. The current Board of Directors is composed of individuals as listed.

Name Of Director	Designation
Dr. Upendra Mahato	Chairman
Mr. Roshan KC	Promoter Director
Mr. Mukunda Mahat	Independent Director
Mr. Jaya Mukunda Khanal	Public Director
Mr. Bishow Prakash Gautam	Public Director
Mr. Hari Bhakta Sigdel	Promoter Director
Ms. Bandana Karki	Public Director

(https://www.machbank.com/board-of-directors) (11/01/2023)

3.2.4 Financial structure

The financial structure is the way in which company’s assets are financed, such as short term borrowing, long term borrowing and shareholder’s equity.

Table no. 3.2 Statement of financial position of MBL

Particulars	Bank	1st Quarter 2079/80
Cash and cash equivalent	8,883,082,346	10,574,583,992
Due from Nepal Rastra Bank	4,794,127,104	6,047,353,545
Placement with Bank and Financial Institutions	-	-
Derivative financial instruments	-	-
Other trading assets	511,399,128	507,975,922
Loan and advances to B/FIs	3,061,522,073	2,872,865,317
Loans and advances to customers	133,540,888,304	128,562,254,560
Investment securities	27,286,361,977	25,892,936,247
Current tax assets	191,392,001	393,145,046
Investment in subsidiaries	200,000,000	200,000,000
Investment in associates	-	-
Investment property	249,412,570	244,182,570
Property and equipment	1,576,742,756	1,583,543,723
Goodwill and Intangible assets	123,204,443	127,061,769
Deferred tax assets	121,549,877	101,849,936
Other assets	2,410,538,130	1,624,397,798
Total Assets	182,950,220,708	178,732,150,425

Liabilities
Due to Bank and Financial Institutions	6,200,724,259	5,071,832,173
Due to Nepal Rastra Bank	6,886,340,768	3,612,515,768
Derivative financial instruments	182,800	1,784,400
Deposits from customers	144,916,993,702	145,026,049,850
Borrowing	1,327,228,971	1,286,243,901
Current Tax Liabilities
Provisions	-	-
Deferred tax liabilities
Other liabilities	2,878,198,959	3,299,872,628
Debt securities issued	5,369,903,473	5,492,759,107
Subordinated Liabilities	-	-
Total liabilities	167,579,572,932	163,791,057,827
Equity
Share capital	10,257,155,581	10,257,155,581
Share premium	30,881,765	30,881,765
Retained earnings	1,544,808,568	1,328,405,771
Reserves	3,537,801,862	3,324,649,481
Total equity attributable to equity holders	15,370,647,777	14,941,092,598
Non-controlling interest	-	-
Total equity	15,370,647,777	14,941,092,598
Total liabilities and equity	182,950,220,708	178,732,150,425

*Annual Report of 2079 (https://www.machbank.com/reports)

Table no. 3.3 financial structure of MBL

Authorized Capital	NPR 15,00,00,00,000
Issued Capital	NPR 10,25,71,55,600
Paid up Capital	NPR 102,57,15,56,000

*Annual Report of 2079 (https://www.machbank.com/reports) (11/01/2023)

The above table shows the financial structure of Machhapuchchhre Bank Limited. Here, the authorized capital of MBL is NPR 15,00,00,00,000 issued capital of MBL is NPR 10,25,71,55,600 and paid up capital is NPR 102,57,15,56,000.

3.3 SWOT analysis of Machhapuchchhre Bank

SWOT analysis is a tool used by organizations to identify internal strengths and weaknesses, as well as external opportunities and threats. The purpose of this analysis

is to help organizations understand their current position and to create a plan for moving forward. By identifying internal strengths and weaknesses, organizations can use them to take advantage of opportunities and mitigate threats in the external environment. It is being used to create a sustainable position for the organization. SWOT analyses of MBL bank, are analysed below:

One of the strengths of Machhapuchchhre Bank is its strong brand recognition and reputation in the Nepalese banking market. The bank has a wide network of branches and ATMs across the country and is known for its strong focus on customer service and satisfaction. Additionally, the bank has a strong financial performance and stability which are important factors for a bank. They also have a wide range of banking products and services which can cater to the diverse banking needs of the customers.

However, Machhapuchchhre Bank also has some weaknesses. One of the major weaknesses is the bank's limited international presence. Additionally, the bank has relatively high operating costs which can affect the bank's profitability. The bank is also dependent on the Nepalese economy and political environment which can be a risk factor. Another weakness is the bank's limited investment in advanced technology and digital banking which can impact the bank's efficiency and competitiveness. The bank also lacks diversification in revenue streams which can be a concern.

Despite these weaknesses, Machhapuchchhre Bank also has several opportunities for growth and expansion. One of the opportunities is the bank's potential to expand into international markets. Additionally, investing in advanced technology and digital banking can improve efficiency and customer experience. The bank can also develop new products and services to diversify revenue streams. Partnering and collaborating with other financial institutions and expanding services to the underbanked and unbanked population of Nepal can also be an opportunity for the bank.

However, Machhapuchchhre Bank also faces several threats in the market. One of the major threats is increasing competition from domestic and international banks. Economic instability or political turmoil in Nepal can also be a threat. Changes in government regulations or policies can also impact the bank's operations.

Cybersecurity threats and data breaches are also a concern. Natural disasters or other external events that could disrupt operations can also be a threat to the bank.

Overall, Machhapuchchhre Bank has a good reputation and a wide range of products and services but it also has areas of improvement. The bank has to take strategic decisions to overcome its weaknesses and capitalize on its opportunities. It also needs to be prepared for the potential threats in the market.

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