NEW MARKET ANALYSIS PROJECT for Nabil Bank INTERNATIONAL BUS

Contents INTRODUCTION 4 1.1 Background of the study 4 1.2 Need of the Study 4 1.3 Objectives of the Study 5 1.4 Methodology of the study 5 1.5 Process of Data Collection 6 THEORETICAL FRAMEWORK AND ORGANIZATIONAL BACKGROUND 6 2.1 Theoretical Framework 6 2.2 7 Qualitative Analysis of Organization 7 2.2.1 Mission Statement 8 2.2.2 Vision 8 2.2.3 Values 8 2.2.4 Objectives 9 2.2.5 Share Capital and Ownership 9 2.2.6 Share Ownership of NBL 9 2.2.7 Organizational Structure 10 2.2.8 Product and Services 11 2.2.9 Human Resources and Training 12 2.2.10 Awards and recognition 14 2.2.11 The Kamladi Branch 14 2.2.12 Analysis of Organizational Functions 15 2.2.13 Current Status of the organization 17 2.2.14 Current Problems 18 2.2.15 SWOT Analysis 19 ANALYSIS AND PRESENTATION 20 3.1 Remittance Distribution in Nepal 20 3.2 Remittance and Nepalese Economy 21 3.3 Major Players in the Market: 24 3.4 Remittance at Nabil Bank 24 3.5 Framework of Inward Sourcing Unit 25 3.6 Remittance Products of Nabil Bank 26 3.7 Process of Internship 28 3.8 Western Union 29 3.9 Western Union and Nabil Bank 32 3.10 Income generated by NBL through Western Union 33 3.11 Analysis of Statistical Data of Western Union 34 3.11.1 Average Daily Transactions 35 3.11.2 Average transactions from various nations 36 3.12 Nabil Bank and Sub-Agents of Western Union 37 3.13 Nabil Remit 39 3.14 Process of Nabil Remit 39 3.15 Income generated by NBL through Nabil Remit 41 3.16 Analysis of Statistical Data of Nabil Remit 42 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 44 4.1 Summary 44 4.2 Conclusions 46 4.3 Recommendations 47 BIBLIOGRAPHY 49

INTRODUCTION

1.1 Background of the study
An internship is a pre-professional work experience that provides students, recent graduates, and those seeking to change careers with the opportunity to gain experience in a particular career field. For students, internship also supplements academic classes and, in some cases, earns college credit. Internship is an excellent way to integrate the theoretical knowledge with a practical work experience. It brings about an opportunity to develop professional work habits, provides an understanding of corporate cultures, gives an opportunity to analyze the business settings and offers platforms to compare differences in work styles. Internship can be viewed as a platform to build up one’s competence in facing the real business challenges and a foundation for one’s career path that sets a platform for personal development as well as a professional career.
It is a opportunity of developing the overall skills and this study compiles the experience and the functional activities undertaken during the internship period in the organization. The study interprets a brief analysis of the organization (NBL) and the overall framework.

1.2 Need of the Study
The need of such study is to monitor and evalute how students can tackle the professional issues and handle them. The study is an opportunity to gain an exposure to an organizational settings and learn their functions, such that it becomes easier to adapt and adjust to the real organizational environment in the future date. The study can help build the self confidence of the internee and various other personal development skills to enhance the overall competence of the internee. Thus, learning and gaining a professional experience are the main need of the study.

1.3 Objectives of the Study
The main objective of the study is to prepare a summary. The other specific objectives of the study involve: 1. To have an indepth understanding of existing organization culture and functions. 2. To stregthen the competence so as to fit in the real business settings. 3. To gain some degree of professional experience in dealing and handling such professional issues. 4. To analyze and summarize the remittance procedure of Western Union and Nabil Remit at Nabil Bank.

1.4 Methodology of the study
Internship is the primary method used to conduct this study and since the internee is good in finance, banking sector was the main concern for the selection of the organization for the purpose of the internship. The internee had choosen Nabil Bank Limited, Kamladi, one of the leading commercial bank of Nepal for the purpose of the study and it had been the focas point for the study.
The Kamladi branch of NBL is an inward sourcing unit and it only deals with the remittance services, the internee focused at Western Union and Nabil Remit section of the remittance department.
The study has thus been conducted to analyze these two section of NBL and is descriptive and analytical study.

1.5 Process of Data Collection
The internship report is based upon both qualititative and quantitative data, collected from the primary as well as the secondary sources. The other sources of data collection includes:
Primary source: An in-depth interview with the bank personnel of NBL, instruction of supervisors.
Secondary sources: The data has also been collected from annual report of NBL, website of NBL, brochures, online newspapers and other published documents and various web sites.

THEORETICAL FRAMEWORK AND ORGANIZATIONAL BACKGROUND

2.1 Theoretical Framework
Remittance, in simple terms refers to transfer of money. However, more specifically, remittance is a transfer of money by a foreign migrant worker to his or her home country and this transfer of money by migrants constitutes the second largest financial inflow to many developing countries, exceeding international aid. Remittance contributes to the economic growth and to the livelihoods of people worldwide, promotes access to financial services for the sender and recipient, thereby increasing financial and social inclusion. Remittances also foster, in the receiving countries, a further economic dependence on the global economy instead of building sustainable, local economies. While other capital flows tend to expand during favorable economic cycles and decline in periods of economic downturn, remittances react less violently and reveal amazing stability over time.
For Nepal, remittances, has been providing an important safety net for the economy both in terms of bringing stability to the external sector and helping to stabilize consumption levels of a significant number of households in the country. At the household level, remittances have helped to reduce poverty, improve standard of living and attain higher educational levels. Moreover, these inflows have been instrumental in maintaining the current account surplus despite a widening trade deficit, subsequently enabling Nepal to maintain a growing level of foreign exchange reserves.
Workers’ remittances have increased from Rs. 46 billion in 2003/04 to Rs. 310 billion in 2010. This figure only reflects the transfers through official channels, the unrecorded flows through informal channels such as “Hundi”* may add up more to the recorded flows.
Similarly, the remittances to GDP ratio increased from 17.4% in 2007/08 and further to 21.8% in 2008/09. As a matter of fact, according to the World Bank’s new report “Migration and Remittance Fact book 2011″, Nepal has been ranked among the top five countries in terms of the contribution of remittance to the GDP and the share of remittance amounts to 23 percent of the GDP.

2.2

Qualitative Analysis of Organization
Nabil Bank Limited, the first foreign joint venture bank of Nepal, started operations in July 1984, 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 47 points of representation across the kingdom with its head office at Teendhara, Durbarmarga and over 170 reputed correspondent banks across the globe. Nabil bank has a history and a culture of its own, setting standard of operations and providing services of an international quality.
Nabil, 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.

* “Hundi” is an informal mechanism by which money is transferred to a person by a third person.

2.2.1 Mission Statement
NBL is branching out on a national scale through its wide-ranging points of representation representing different geographic and economic zones along with its broad global network as a “1St choice provider of complete financial solutions.”

2.2.2 Vision
Nabil Bank look forward to emerging as a “First rate Bank across all stratums of the nation.”

2.2.3 Values
Nabil Bank incorporates the core values ‘CRISP’ to accomplish its mission and internalize its vision: * Customer focused (C) * Result oriented (R) * Innovative (I) * Synergistic (S) * Professional (P) 2.2.4 Objectives
The objectives of NBL include: 1. To be the bank for all and across all geopolitical zones and socioeconomic stratums of the nation, 2. To provide myriads of financial solutions and create value for all the stakeholders, to stand in the community with its economic and civic roles, 3. To differentiate its presence in the market by reengineering its product and services with the best technologies and management philosophy, 4. To work for its stakeholder and grow together for the long term and sustainable growth, 5. To institute corporate social responsibility.

2.2.5 Share Capital and Ownership
The share capital of NBL has the following structure: * Authorized capital: NPR 1,600,000,000 /- * Issued Capital: NPR 965,747,000 /- * Paid up capital: NPR 965,747,000 /-

2.2.6 Share Ownership of NBL
The promoters have the 70% of the ownership while the 30% of the ownership has been offered to the general public by NBL.

Table 1: Share Ownership of NBL Particulars | % | NPR | 1. Promoters | 70% | 67,60,22,900/- | a) Foreign Institutions | 50% | 48,28,73,500/- | b) Other Licensed Institutions | 6.15% | 5,93,94,900/- | c) Other Entities | 11.08% | 10,70,30,100/- | d) Individuals | 2.77% | 2,67,24,400/- | 1. General Public | 30.00% | 28,97,24,100/- | Total | 100.00% | 96,57,47,000/- | Source: Annual Report 2009/10

Figure 1: Share Ownership of NBL 2.2.7 Organizational Structure
The organizational structure of NBL is a flat structure with few layers of management hierarchy, expansion of the functional areas and a wide span of control.
The command and the authority flows downwards from the top level in a hierarchical pattern while the reporting is done upward from the lower level management. The CEO is liable to report to the board of directors while the other departments are subject to report to the CEO. The organization is divided into various functional departments and for each functional department, a specialized authority and responsibility has been delegated.
The authority-responsibility relationship followed at NBL is depicted by the following organizational structure:

2.2.8 Product and Services
The current products and services available in the bank can be listed as below (Nabil Bank Limited, 2010): 1. Business Banking 2. Privilege Banking 3. Bancassurance 4. Personal Lending 5. Remittance 6. Trade Finance 7. Clean Bills 8. E-banking 9. Card Products * Credit Card * Debit Card * Prepaid Cards * Acquiring services * Other Services * Schemes/Offers * Nabil Installment * ATMs 10. Others * U.S. Visa Fee * Safe Deposit Locker * Balance Certificate * Advance Payment Certificate

Nabil Invest renders its institutional and retail clients wide range of services some of which are delivered currently while others will be delivered in due course with required exploration & innovation and due approval received from the Regulators as and when required, detailed as under: 1. Management of Public Offers/Further Public Offers 2. Underwriting 3. Portfolio Management 4. Registrar to Securities (RTS) 5. Trusteeship Services 6. Advisory Services 7. Project Counseling 8. Loan Syndication 9. Valuation 10. Venture Capital/Private Equity 11. Assets Management Company (AMC)

2.2.9 Human Resources and Training
Nabil throughout a period of 26 years in the industry has always been capitalizing on human resources. With its talent pools Nabil is growing and expanding its branch network from Mechi to Mahakali. Nabil is growing into a size that can house people of diverse proficiencies and professionalisms in the interest of the organization. Nabil’s strength is its people amongst other resources, since the bank for the most part can surge with a pool of talents since it is service industry. Nabil runs with a people of expertise in different domains of business. In fact it is a generator of talents since one can come across ex- Nabilians in most big banks in the nation.
At Nabil, human resources are considered a prime factor and it ensures human resources are productive. Humans react to a good work culture and Nabil fosters that culture all the time. One of the key movers in Nabil’ management is it places right people in right assignments considering his or her natural bends and talents, not in the mold that everyone must know everything, the obsolete management idea and respects therefore individual differences and leanings. Every employee has a stake in the organization that presupposes the fact that employees are stakeholders. Nabil aligns human resource strategy to the business strategy. Nabil works towards attracting, developing and retaining an efficient work force. The mantras are therefore to enhance team Nabil that demonstrate good alliance and strategic partnership, business acumen, relationship building and execution.
One of the focuses at the bank is growth and the growth of the bank must go with the transparent career paths of the employees of the bank. The bank has set certain yardsticks that distinctly specify the career path, and the corporate ladder at Nabil.
The mission of steering Nabil through all ups and downs against the ravages of time and circumstance is the thread that string all its staff and stakeholders together. In togetherness, Nabil emerge.
The training needs are assessed and programs are designed to enhance the skills, technical knowledge and efficiency of the staff. The bank provides close camp trainings and In-house orientation at regular intervals. The training requirements of the staff members are fulfilled through both external and internal training, seminars and workshops. The focus will remain to improve the efficiency, competence and productivity of the staff through suitable placement and continuous training.

2.2.10 Awards and recognition
For the excellence of services offered by Nabil bank to its customers and creating a milestone in the industry, The Banker, a publication of the Financial Times Group in London, had awarded Nabil Bank with the “bank of the year country award” for Nepal in 2004. There were 133 banks from around the world that had participated in the initial round of the competition. There were five banks from Nepal for the final selection process and Nabil bank was awarded as the Bank of the year, 2004.
Nabil bank was the first bank in Nepal to receive an international rating. Dun & Bradstreet (D&B), one of the leading credit rating agencies that has rated the top South Asian banks, rated Nabil 5A (2) in 2008, which indicates it to be a financially sound institution with a consistent performance record.

2.2.11 The Kamladi Branch
The Kamladi Branch initially functioned as the head office of NBL. However, later in November 2010 the head office was relocated at Teendhara, Durbarmarga and since then, Kamladi branch has been functioning as Inward Sourcing Unit (Remittance Business Unit) and handling only the remittance services of NBL. Yet, no any cash transaction is conducted by the branch; it only handles the appointment of sub-agents for Western Union and agents for Nabil Remit and makes payment and collection on the request of the agents through the system.
The branch manager is the immediate boss to the Inward Sourcing Head and the Inward Sourcing Head monitors, regulates and supervises all the remittance functions of the branch. Western Union, Nabil Remit, FCY and Operations are the major units under the Inward Sourcing Unit in the branch.

2.2.12 Analysis of Organizational Functions
Based on an interview with a staff and the analysis of the internee, the major functions of all the departments and employees of the Kamladi branch were accessed, which are listed below:
Branch Manager
The primary functions of branch manager can be listed as below: * To approve memorandums, agreements with the sub agents and agents of Western Union and Nabil Remit, * To study the reports of remittance department and analyze the performance, * To regulate and monitor all the activities of the branch, * To function as the operation manager, whenever necessary.

Western Union Department
This department is responsible for the following functions: * To handle the documentations for appointing new sub agents of Western Union(WU), * To deal with the sub-agents, * To assist the sub- agents and provide them with guidance in dealing with the customer, * To tackle the issues that arises with the system of the sub-agents through the phone conversations, * Arrange for dissemination of ‘TRM’ forms. * To follow-up the sub-agents and regularly monitor their performance. * To make payments through the system on the request of the sub-agents based on telephone conversations. * To arrange for training programs for the sub-agents of Western Union, whenever necessary.

Nabil Remit Department * To handle the documentations for appointing new agents of Nabil Remit, * To make payments and collection of money within the nation, through the system on the request of the agent through the phone conversation. * To assist the agents in working with the system on their own. * To make payment settlements, daily reconciliation report, handle pending transactions, cancellation of the transactions, * Arrange for fund transfers and credit settlements, * Arrange for dissemination of ‘send money’ and ‘receive money’ forms, * To tackle the issues that arises with the system of the agents through the phone conversations, * To deal with the agents of Nabil Remit,

FCY Department * To make payments on request of the agents, * To handle the queries and problems of the agents, * Arrange for fund transfers.

Operations * To assist all the other departments, * To make the advance payment of WU sub-agents, * To deal with the customers and agents as well, * To handle cards products’ services, * To provide with statements to the agents and sub-agents, * Preparations of TDS of the agents and sub-agents, * To act as a mediator among all the departments.

2.2.13 Current Status of the organization
NBL is now in its 27th year of its operations - a defining moment of its history. The bank has grown significantly in terms of its capital base, network building and business expansion.
The following table presents the major achievements:
Table2: Major indicators as at Mid July Particulars | 2000 | 2005 | Growth (%) | 2010 | Growth (%) | Net Worth | 1,047 | 1,658 | 58.36 | 3,835 | 131.30 | Deposits | 12,780 | 14,587 | 14.14 | 46,411 | 218.17 | Loans & Advances | 7,335 | 10,586 | 44.32 | 32,269 | 204.83 | Investments | 5,883 | 4,267 | (27.47) | 13,671 | 220.39 | Total Asset | 15,315 | 17,186 | 12.22 | 52,150 | 203.35 | Profit After Tax | 329 | 519 | 57.75 | 1,139 | 119.46 | Capital Adequacy Ratio (%) | 12.3 | 12.4 | 0.1 | 10.5 | (1.9) | Points of Representation | 16 | 18 | - | 39 | - | Market Capitalization | 5,499 | 7,399 | 34.55 | 34,547 | 366.69 | Cash Dividend | 698 | 1,952 | 179.66 | 4,048 | 107.38 | Source: Annual Report 2009/10 (Amt. in NPR Million) The above table represents the achievements of NBL that follows a progressive pattern; the overall performance of the bank has been highlighted above to signify the growth attained by the bank in its investments, profits, net worth and the market capitalization.
Two important aspects to portray Nabil’s performance are consistency and sustainable growth. Nabil has a strong capital base now growing to NPR 3.67 billion and with supplementary capital included, total capital fund at NPR 4.39 billion. The Bank’s net worth grew by 22.5 % in the fiscal year 2009/10 compared to previous year. This discloses the fact that the bank’s risk absorbing capacities have grown remarkably. Nabil registered operating profit of NPR 2.06 billion, the highest in the industry with 36.39 % return on capital employed. Deposit growth records 24.26 % reaching NPR 46.4 billion compared to growth of 11.94 % in the market. Likewise loans and advanced grew by 17.97 % to reach NPR 33.03 billion in the year.
The market capitalization of Nabil’s share as on 16 July 2010 is NPR 34.55 billion (14,491,240 x NPR 2,384) which is among the highest in the market.

2.2.14 Current Problems
NBL has had a remarkable history and has created a milestone in the banking industry. The current status of the organization is also very impressive, yet there were some few problems monitored by the internee in the Kamladi branch during the period of internship: 1. The working space for the employees does not seem to be much comfortable, 2. The number of staff in the CSC department of the Western Union unit is not sufficient, 3. The customers are not fully aware about the Kamladi branch being an inward sourcing unit and the customers may be frustrated at times when the bank cannot provide the services to them.
2.2.15 SWOT Analysis
Every organization is exposed to various sorts of environmental issues, some poses with opportunities and allows the organization to identify the prospects for its strength while some create threats to the organization and weaken its operations. The four major dimensions to analyze the performance of an organization are the strength, weakness, opportunities and threats to an organization which have been evaluated by the internee for the Kamladi branch:
Strength
NBL is one of the primary agents of Western Union which is a trusted name for the transfer of the money and add up to the strength of the organization. The tie-up of the bank with the numerous international banks for the remittance services is also the strength of the bank.
Weakness
The branch does not conduct any cash transactions while the customers are still unaware of it. Customers have been served many years from this branch and still approach the branch for its services; this can have a negative impact upon customer satisfaction, which is a vital motto of the organization.
Opportunity
The employees from the Kamladi branch are young, energetic and talented; they are dedicated and have fresh ideas, the efficient manpower of NBL can optimize the growth of the bank.
Threats
The growing number of domestic and international money transfers can pose a threat to the remittance services of NBL. In addition, the increasing operating cost of the bank resulting from the frequent load shedding is a major threat to the overall profitability.

ANALYSIS AND PRESENTATION 3.1 Remittance Distribution in Nepal
The increasing inflow of remittance into the country does not allow Nepal to boast off a consistent decline in absolute poverty despite a swing of negative economic indicators. The growth rate of remittance to Nepal may have slowed from double digits to single digit in recent years, but the country ranks among the top five in terms of the share of remittance of the Gross Domestic Product. Remittance has contributed significantly to the reduction of poverty in the last fifteen years. The World Bank’s new report ‘Migration and Remittance Factbook 2011’ says Nepal is among the top five countries with remittance amounting to 23 percent of the GDP.

Table 3: Yearly Inflow of Remittance to Nepal in US$ Year | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Inflow | 1,212 | 1,453 | 1,734 | 2,727 | 2,986 | 3,507 |
Source: World Bank, 2009/10

Figure 3: Yearly Inflow of Remittances to Nepal in US$
From the above table and figure, we can analyze that the trend of inward remittance to Nepal has been rising from the previous years. The rise in the tendency of migration to the foreign countries for employment opportunities can be highlighted as the cause for this increase in the flow of remittance to the country. In nominal dollar terms, recorded remittances sent home by migrants from developing countries have reached US $3507million by 2010 as stated by the World Bank, however, it reflects only transfers through official channels, the unrecorded flows through informal channels such as Hundi may add up more to the recorded flows.

3.2 Remittance and Nepalese Economy
Migrant remittances represent the most direct, immediate and far reaching benefit to migrants and their countries of origin. They are a more constant source of income to developing countries than official development assistance, foreign direct investment and other private flows.
Remittances can generate a positive effect on our Nepalese economy thorough various channels such as savings, investment, growth, consumption, and poverty and income distribution. At the national level, remittances contribute significantly to GDP. Remittances can also contribute to stability by lowering the probability of current account reversals. Since they are a cheap and stable source of foreign currencies, remittances are likely to stem investor panic when international reserves are taking a downward trend or external debt is rising. The poverty reducing and income distribution effect of remittances is also significant.
As per the NLSS (Nepal Living Standard Survey) report, Nepal´s absolute poverty has declined to 25.16 per cent in 2010/2011 from 30.85 per cent in 2003/2004. This means that only a fourth of Nepalese are currently unable to earn Rs 53 -- required to buy basic food calories every day.
The decline in absolute poverty is largely due to a sharp rise in the number of remittance-receiving families. Today, 55.8 per cent of total households receive remittance from within or outside the country, an impressive increment of 24 percentage points over the last seven years.
In 2003/2004, when the second NLSS was held, only 31.9 per cent of households received remittance. In 1995/96, at the time of the first NLSS, the percentage of remittance-receiving families was just 23.4.
According to a recently-published preliminary report of population census-2011, almost two million people are currently outside the country. A majority of them are believed to be working in several Gulf countries, Malaysia and India. They regularly send money to their families back home, which has caused a decline in absolute poverty.

Table 4: How much remittance in which sector? Sector | Distribution | Household Consumption | 78.9 % | Repaying loans | 7.1% | Household Properties | 4.5% | Children’s Education | 3.5% | Capital Formation | 2.4% | Saving | 0.6% | Business | 0.4% | Other Activities | 2.5% |
Source: NLSS-III, 2010/11

Figure 4: How much remittance in which sector?
Based on its one-year-long survey, the third NLSS report states that Nepal receives Rs 259.1 billion as remittance every year, though Nepal Rastra Bank (NRB) presents a slightly bigger figure. And, the largest pie of the total remittance, 78.9 per cent to be precise, goes for household consumption followed by 7.1 per cent used to repay loans.
The third largest chunk of remittance, 4.5 per cent, is spent on purchase of household properties followed by 3.5 per cent on children´s education. The use of remittance in business activities and long-term savings are very nominal, only 0.5 and 0.6 per cent, respectively.
The trace of the remittance-related figures presented by the above figure is clear: Nepali migrants are desperate to repay their loans, lent by local moneylenders at high interest rates, besides helping their families support out a living. Having spent much of their earnings in consumption and repaying loans, they get little to spend for other purposes like long-term savings and other business-activities.

3.3 Major Players in the Market:
Major players of remittance business in Nepalese market are Himalayan Bank, International Money Express, NABIL Bank and Bank of Kathmandu. Himalayan Bank brings almost USD 20 million per month. It has deputed its staff in Gulf countries and in Malaysia and provided excellent delivery system to capture the major share. International Money Express (IME) is in second position in the market and brings almost USD 12 million per month mostly from Malaysia that comes to USD 10 million per month. It transfers money through remittance system and has branches in UK and Malaysia. Similarly, Nabil Bank is also entering the remittance in Nepal through Nabil Speed Remit.
Another company, which is global and major player in the market, is Western Union. Currently Western Union is doing 18,000 remittance transactions per month with the record of 30% increment p.a. and an average amount of USD 700 per transaction.

3.4 Remittance at Nabil Bank
Nabil Bank has been providing remittance service since the beginning years of its establishment. Remittance has also been an integral aspect to support the profitability of the bank. The remittance department known as Inward Sourcing Unit, formerly named Remittance Business Unit (RBU) at Nabil bank is headed by a Remittance head followed by an in-charge. In-charge is responsible for monitoring the activities conducted by the various marketing executives (who are also supported by assistant marketing executives) and staffs looking after the operation part. Though all the marketing executives and staff in operation work independently, the upper level decision making and approval is mandatory in case of major decisions like appointing new sub-agents of Western Union and Nabil Remit.

3.5 Framework of Inward Sourcing Unit
Like each department, inward sourcing unit also has its own framework. The framework of Remittance Business Unit can be seen in the figure below:
Remittance Head
In charge
Marketing Executive (Nabil Remit)

Marketing
Executive (TC Demand Draft)

Operations

Marketing
Executive (Western Union)

Figure 5: Framework of Inward Sourcing Unit at NBL
From the above structure, it can be seen that the inward sourcing unit is headed by a Remittance head that is followed by an in-charge. In-charge is responsible for monitoring the activities conducted by the various marketing executives and staffs. All the marketing executives and staff in operation work independently, however upper level decision making and approval is mandatory in case of major decisions like the appointment of Agents.
The unit provides different services with remittance products such as Western union, Nabil Remit, SWIFT, TC, and Convertible Foreign Currency.
3.6 Remittance Products of Nabil Bank
Nabil's remittance products are of top-quality and it has a diverse and selected service range designed to cater to the different and exclusive requirements of its valued customers since Nabil capitalizes on its large international network and branches at different parts of the country:
1. Western Union:
Nabil is the only principal Bank Agent for Western Union Money Transfer Services. Now through more than 750 authorized subagents located at different parts of the country, Nabil ensures its services reach one and all, no matter what geographic regions its customers come from.
2. Nabil Remit:
Nabil Remit is a project designed to cater to domestic remittance services for money transfers from one place to another in Nepal, the bank has selected over 900 Nabil Remit agents established in different parts of the country to deliver domestic money transfer services.
3. Foreign Inward Remittances:
Nabil Bank has established remittance relationships with a number of exchange companies and banks in Qatar, UAE, Kuwait, Saudi Arabia and so forth for rendering foreign inward remittance services.
4. SWIFT Transfers
Through the SWIFT transfer mechanism, funds can be transferred to virtually anywhere in the world. Likewise funds can also be received into the customers’ accounts from virtually any bank in the world. SWIFT stands for Society for Worldwide Interbank Financial Telecommunication System, which is a reliable communication network speeding up fund transfer and other financial messages.

5. Traveler's Cheques
Instead of carrying cash, a lot of people prefer to carry traveler's cheques for safety reason, while they travel. Nabil Bank purchases and issues Traveler's Cheques at competitive prices.
6. Demand Drafts
To meet the customers’ need for sending demand drafts, Nabil Bank uses its network of its correspondent banks located all over the world.
7. Anywhere Branch Banking Service (ABBS)
Nabil Bank uses state-of-art technology, software and hardware to provide the best services to its customers. All the branches are connected through VSAT link or Radio link, so that its customer can access their account from any of the branches located throughout the kingdom. All the branches of the bank serve the customer for deposit and withdrawal of cash, balance enquiry, statement, balance certificate etc.
8. Manager's Check
It is a cheque drawn by Nabil bank on itself, especially used for payments made by Nabil Bank. Beneficiary can send the cheque on collection or through clearing or can deposit it in his or her account with Nabil Bank itself.
The table below lists out some of the main remittance products of NBL:
Table 5: List of Remittance Products List of Remittance Products | S.No | Sending Country | Product Name | Digits in Secret key | 1. | Any | Instant cash | 9 | 2. | Any | Western Union | 10 | 3. | Any | Nabil Remit | 10 | 4. | Any | EZ Remit | 12 | 5. | Baharain | Turbo Cash | 8 | 6. | India | Axis Bank | 10 | 7. | Qatar | Dremit | 7 | 8. | Qatar | AFX Fast Remit | 16 | 9. | U.A.E. | Cash Express | 7 | 10. | UK /Qatar | Samsara | 11 | 11. | Qatar | Srammik Remit | 8 |

3.7 Process of Internship
The internee was placed at the Inward Sourcing Unit at Kamladi branch of NBL. The internship is an eight weeks program; however, the internee was posted there for nine weeks. The internee was placed at the Western Union and Nabil Remit for 6 weeks and 3 weeks respectively. The internee had an opportunity to gain a practical exposure to the actual organizational functions and was allowed to deal with the customers. Most of the remittance functions were to be carried out through the phonic conversations with the agents and the sub-agents.
However, there was a prohibition for the internee to work on the Finnacle software because of the security reasons.
Table 6: Activities performed at Remittance Department Remittance Department | Activities Performed | Western Union | * Understanding the documentation process necessary for appointing new sub agents, * Preparing memos and some documentation jobs, * Making payment through the system on request of the sub-agents through a telephone or online payment for sub agents who are on network circle through yahoo messenger, * Fax the receipts of payment to the sub-agents, * Dealing with the sub-agents as far as possible through the phone conversations, | Nabil Remit | * Domestic collection and payment through the system on the request of agents of Nabil Remit, system * Providing agents with secret key for the customer after collection through the system, * Handling the pending transactions, * Payment settlements, * Handling credit settlements, * Dealing with the agents’ queries and solving their problems as far as possible. * Correction of beneficiary’s name. | 3.8 Western Union
Western Union Money Transfer was incorporated in the year 1851. It has a history of adapting business to meet the changing needs of the people. It is a leading financial services provider specializing in money transfer business. It is the trusted, easy and swift medium of money transfer in the world. It is a global leader in money transfer and message services, with a history of pioneering service dating back more than 150 years.
In 2006, the number of operating units of the Western Union Money Transfer was 2,70,000 and the branches of this renowned financial service provider operate in more than 200 countries of the world. The services of WU are available in Latin America & the Caribbean islands, the United States and Canada, Europe, Middle East, Africa, South Asia, and Asia Pacific. Western Union continues today to help consumers and businesses transfer money or make payments using money orders and other electronic systems. It offers one of the easiest ways for families and friends to send money and stay connected almost anywhere in the world. WU now has just over 355,000 agents locations worldwide in over 200 countries and territories - the largest network of its kind. Millions of people trust WU to send and receive money worldwide.
WU is also a trusted name for all Nepalese citizens living abroad and keen on sending money to their relatives in Nepal. There are basically five principal agents of WU in Nepal. They are: * Annapurna Travels and Tours * CG Finco * Nabil Bank Ltd. * Hulas Remittance * Sita Travels

Market share of the principal agents of Western Union have been presented in the table below.
Table 7: Market Share of Agents of Western Union Principal Agents | Market share (%) | Annapurna Travels & Tours | 33% | CG Finco | 27% | Nabil Bank | 15% | Hulas Remittance | 13% | Sita Travels | 12% |
Source: Estimation of NRB officials

Figure 6: Market Share of Principal Agents of Western Union

From the above table and figure, we can analyze that Annapurna Travel and Tours occupies the highest market share of 33% of the total market of Western Union. NBL occupies 15% of the total market share which is the third highest among the entire principal agent.
Nabil Bank is the only bank from a banking industry that is the principal agent of Western Union.

3.9 Western Union and Nabil Bank
Nabil bank is the only commercial bank in Nepal which is the principal agent of Western Union Money Transfer. NBL has been providing the remittance service since 1998 and has arrangements with established entities all over the country to facilitate the money transfer service in form of the sub-agent of WU. NBL has provided service throughout Nepal with the sub-agency of WU to about 997 agents. The bank has appointed sub-agents in 57 districts until now and is planning to cover all the 75 districts.

Most of the sub-agents have been facilitated with the WU software and they use it make their payments to the customer. However, some agents do not have the software installed because of various circumstances and they call the bank to get payment made through the system.

1. Procedure to be followed by sender to make payment via WU 1. The sender in a foreign country needs to visit a nearby location of the WU outlet, 2. The sender fills up the form with details (receiver name, money, country to be sent etc.) and deposits the amount to be transferred. 3. The agent gets the details entered the system and once the insertion is through, the agent obtains a 10 digit code called Money Transfer Control Number (MTCN). 4. The agent provides the sender with MTCN and the receipt of the amount. 5. The sender then passes on the MTCN and information about the amount to the receiver in Nepal. 2. Procedure to be followed to receive the money in Nepal 1. The receiver selects a convenient agent of WU. 2. Receiver has to fill out the ‘To Receive Money’ (TRM) Form and provide the agent of WU with the following details: a. Any of the identification cards like citizenship certificate, passport, driver's license or other government-issued ID b. Receiver’s current address and contact number, c. MTCN number given by the sender, d. Sender’s name, name of the place from where is being received. 3. The agent needs to enter the details required and verify the given details in the system, 4. The agent needs to get the customer sign the receipt and then handover the amount and a copy of the receipt. 3.10 Income generated by NBL through Western Union NBL has been serving the nation via its remittance services, acting as the principal agent of Western Union and NBL has been able to produce a commendable result in generating inflows of remittances from various foreign countries. The actual amount of inflows to NBL could not be accessed from the bank because of the bank’s security measures; however, the bank guarantees that 2% of total inflow of remittances to Nepal has been circulated through the channels of NBL. The table below indicates the amount of remittance fees collected by NBL through the representation of WU that has added up to the total income generated by NBL. Table 8: Yearly Remittance Fees generated via WU F/Y | 2005/06 | 2006/07 | 2007/08 | 2008/09 | 2009/10 | Fees | 34,470,010 | 32,123,215 | 39,764,835 | 53,749,826 | 60,501,593 | Source: Annual Report of NBL

Figure 7: Yearly Remittance Fees generated via WU The above table and figure illustrates the yearly commission generated by NBL as remittance fees. NBL, being the principal agent of WU shares the commission on remitted amount and the rate of commission on the amount varies with the country from where the amount originates and the volume of the amount being remitted. The 50% of the commission earned is held by NBL while the other 50% belong to the sub-agent of WU. We can clearly see an increasing trend of remittance fees generated by NBL; with NRs. 60,501,593 in the F/Y 2009/10 which is a 12.56% increment from NRs. 53,749,826 in F/Y 2008/09. Thus, we can generalize a growth in the inflow of inward remittance at NBL.
3.11 Analysis of Statistical Data of Western Union The internee had collected some data during the internship through observation and record keeping of assigned tasks. The internee was allowed to conduct the remittance transactions and thus, was able to maintain a record of the day-to- day transactions that took place. The data that were collected has been depicted and analyzed to observe the inflow of remittance at the Kamladi branch.

3.11.1 Average Daily Transactions The table below summarizes the number of inward remittance transactions that took place daily at WU department on an average from the month of August-October at Kamladi branch: Table 9: Average Daily Transactions of WU Months | August | September | October | Average Transactions per day | 53 | 89 | 97 |

Figure 8: Average Daily Transactions of WU The above table and figure states that the average number of transactions that took place daily during the month of August was 53 and likewise, the number of transactions was higher during the month of September-October, The festive season of Dashain and Tihar is the reason for the increment as it’s the time of the year when maximum number of Nepalese abroad send money to their families to cover up the necessary expenses.

3.11.2 Average transactions from various nations NBL has been able to maintain its correspondence relationship with banks around the world via the network of Western Union. The table below indicates the average number of remittance transactions brought in by the Kamladi branch each day from different countries. Table 10: Average transactions from different countries S.N. | Name of the Country | Average transactions/day | 1. | U.A.E. | 8 | 2. | Bahrain | 6 | 3. | U.S.A. | 5 | 4. | Malaysia | 6 | 5. | India | 5 | 6. | Qatar | 10 | 7. | Hong kong | 2 | 8. | Canada | 4 | 9. | Kuwait | 6 | 10. | Saudi Arabia | 5 | 11. | Others | 5 | Figure 9: Average transactions from different countries The above table and figure, clearly states that the large number of remittance flows in from the Gulf regions-Bahrain, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates (UAE).Among the Gulf regions, largest remittance is received from Qatar, from where an average of 10 transactions are received per day. Large numbers of Nepalese workers are exported to these countries which is the reason that Nepal receives majority of its remittance from Gulf countries. 3.12 Nabil Bank and Sub-Agents of Western Union
Sub-agents have an important role in increasing the business of remittance via western union for Nabil bank. There are about 997 sub-agents located at different places all over Nepal striving to provide better service to customers. Sub-agents are from different sectors engaged in different businesses from banking industry, co-operatives to supermarkets, grocery stores, check cashers, mailbox centers, drug stores, travel agencies, depots, and other retailers.
The agents act as the representative of banks in getting the remitted money for the customers especially in those places where there isn’t any branches of Nabil Bank. Thus in a way Nabil bank has reached to its various customers and fulfilled their need of getting the remitted money from their near and dear ones via its various sub agents.
Thus sub-agents are an integral part of remittance business at Nabil bank. There are basically two ways of appointing a sub agent for carrying out the remittance business for Nabil bank. They are: 1. Solicited appointment: Under this type of appointment, marketing executives visit different probable and potential places and look out for parties who can be efficient to carry out the functions of WU and approach them for the sub-agency of WU. 2. Unsolicited appointment: Under this type of appointment, Nabil Bank receives different unsolicited or uncalled proposals for the sub agency of WU from different entities. Representative of those entities visit the bank and make a proposal to receive the sub-agency of western union. Generally, appointment of sub agents is handled by the Inward Sourcing Unit.
No matter what type of measure is used for appointing the sub-agents for western union, a well-structured documentation process is to be followed and all the documents are sent to the head office of western union for initial and final approval, after the head in charge reviews the details of the details of the party.
The party can initiate the functions of western union even after the initial approval; however, the agreement is made between the party and NBL only after the final approval from WU. The sub-agents and NBL share commission on a 50-50 earning sharing basis. The amount of total commission varies with the amount and the country from where the amount is received.

3.13 Nabil Remit
Nabil Remit is a project designed to cater to domestic remittance services for money transfers from one place to another in Nepal, the bank has selected over 900 Nabil Remit agents established in different parts of the country to deliver domestic money transfer services.
Nabil Remit is an automated remittance system that has covered over 57 districts of the nation and efficiently functioning to provide its services over all the 75 districts. Nabil Remit acts as a bridge between the remitter and beneficiary, providing the geographical coverage and enabling domestic and remittances through a formal remittance delivery channel.

3.14 Process of Nabil Remit
Nabil Remit is primarily involved two activities, that is, remitting and paying the amount to the concerned customer. Although the actual cash transaction does not take place in the Kamladi branch, the reason behind those transactions is originated here.
Nabil Bank has its agents in the different part of the nation who actually contributes in getting the money transferred around the corner of the nation.
Nabil Remit is an online system through which the transfer of money takes place, the agents can use the system on their own after getting it installed with the help of NBL’s personnel or they call the CSC department to get the money remitted or paid. 1. Process of Collection 1. Each agent of Nabil Remit has their own login, which is available only to the respective agent and is crucial to conduct any transaction. 2. The system needs to be logged in with agent’s id and password. 3. The details of the sender, receiver and the amount are entered in the system. 4. The system will automatically generate secret code on successful transaction. 5. The secret code is ten digits number, unique for every transaction and the main basis for payment at the receivers' end, which is handed to the sender along with the receipt of the amount transferred.

2. Process of Payment 1. The system is logged in with the id and password of paying agent. 2. The 10 digit number handed by the receiver is entered in the system. 3. The name of the receiver and the amount must be verified; an ID of the receiver is compulsory for the payment. 4. After a proper verification, the payment is made.
This internal circulation of the money benefits the paying, collecting agents as well as NBL and the beneficiary. The bank and the collecting agent receive 35% commission of the total commission, while the remaining 30% is earned by the paying agent.

Table 11: Commission on Domestic Money Transfer S.N. | Amount | Commission | 1. | 0-10,000/- | Rs. 100 | 2. | 10,001-1,00,000/- | Rs. 200 | 3. | 1,00,001-3,00,000/- | Rs.300 | 4. | Above 3,00,000/- | 0.1% of the amount | 3.15 Income generated by NBL through Nabil Remit The commissions earned through collection and payment of amount also add up to the income of NBL. An analysis of this income generated through Nabil Remit is done below: Table 12: Yearly Collection Fees generated via Nabil Remit FY | 2005/06 | 2006/07 | 2007/08 | 2008/09 | 2009/10 | Fees | 2,243,020 | 2,774,728 | 2,829,593 | 2,968,464 | 2,931,518 | Source: Annual Report of NBL

Figure 10: Yearly Collection Fees generated via Nabil Remit
From the above table and figure, we can evaluate that NBL had been able to maintain a growth in its collection fees from the F/Y 2005/06 to F/Y 2008/09. However, during the F/Y 2009/10, NBL realized the total commission of NRs. 2,931,518, which is 1.24% less than the commission, NRs. 2,968,464 in the F/Y 2008/09.F. Thus, during the last F/Y, Nabil Remit could not generate a satisfactory level of commission fees and we can also generalize that either the number of domestic transactions through Nabil Remit have declined or the amount transferred were lower than the previous F/Y.
The reason behind this could be the mushrooming number of domestic money transfers. NBL needs to highly focus on branding of its Nabil Remit agents in order to maintain a good level of transactions and thus the source of income via Nabil Remit.

3.16 Analysis of Statistical Data of Nabil Remit
The internee was also assigned to make collection and payments for domestic money transfer and during this period, a record of the daily transactions was kept which have been analyzed below. Nabil Remit deals daily with collection and payments of amount transferred around the country and the table below depicts the average number of collection and payment that is made through on a daily basis the Kamladi branch from the month of August-October: Table13: Average Daily Transactions of Nabil Remit Months | August | September | October | Collection/day | 123 | 137 | 194 | Payment/day | 86 | 94 | 148 |

Figure 11: Average Daily Transactions of Nabil Remit The above table and figure, states that the number of collections and payments during the month of August was 123 and 86 respectively. Likewise, the numbers of transactions were higher during the month of September-October. Just like the transactions at WU, the festive season of Dashain, resulted a rise in the transactions of Nabil Remit as well. Thus, the collection and payment averaged highest in October with 194 payments and 148 collections per day.

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

4.1 Summary
Internship, an experience gained through pre-professional work exposure brings about an opportunity to develop professional work habits, provides an understanding of corporate cultures, business settings and offers platforms to compare differences in work styles.

The study mainly focuses on the analysis of remittance service provided by Nabil Bank Limited at the Kamladi branch of NBL which is an inward sourcing unit (RBU) of NBL.

NABIL completes a history of 26 years’ unwavering services in banking in the nation; this in essence leads to a marked evolution and breakthrough in the industry. As a new entrant partnering with Dubai Bank Ltd. through a Technical Service Agreement (TSA) the birth of NABIL was on the 12th of July 1984. With this long length of time the bank has gone through various experiences, and of course through phases of different socioeconomic and political scenarios. Not that the bank had for all time smooth goings unhindered and today it stands firmly as a seasoned organization. The market capitalization of Nabil’s share as on 16 July 2010 is NPR 34.55 billion (14,491,240 x NPR 2,384) which is among the highest in the market.

The Kamladi Branch initially functioned as the head office of NBL. However, later on November 2010 the head office was relocated at Teendhara, Durbarmarga and since then, Kamladi branch has been functioning as Inward Sourcing Unit (Remittance Business Unit) and handling only the remittance services of NBL.

Remittance basically refers to the transfers, in cash or in kind, from a migrant to household residents in the country of origin. Remittances represent the most direct, immediate and far reaching benefit and these foreign remittances, whether channeled through formal or informal modes from host countries to receiving countries, contribute positively towards the economic development both at the household level and country level, although remittances through formal channels are more amenable to policy interventions and are generally believed to have greater developmental impacts.

The World Bank’s new report ‘Migration and Remittance Fact book 3.7 Process of Internship 28 2011’ says Nepal is among the top five countries with remittance amounting to 23 percent of the GDP. According to the World Bank, remittance inflow to Nepal amounted US $ 3507 million in the F/Y 2009/10 with remittance growth remaining at 10.5 percent in the last F/Y 2009/10.

As per the NLSS report, Nepal´s absolute poverty has declined to 25.16 per cent in 2010/2011 from 30.85 per cent in 2003/2004 and this decline in absolute poverty is largely due to a sharp rise in the number of remittance-receiving families. Similarly, NLSS states that the total amount of remittance received has increased from Rs. 46 billion in 2003/04 to NRs. 310 billion in 2010.

The major players of remittance business in Nepalese market are Himalayan Bank, International Money Express, NABIL Bank and Bank of Kathmandu. Nabil Bank has been providing remittance service since the beginning years of its establishment and remittance has also been an integral aspect to support the profitability of the bank. NBL guarantees that 2% of total inflow of remittances to Nepal has been circulated through the channels of NBL. Nabil capitalizes on its large international network and branches at different parts of the country to provide top-quality remittance products such as Western Union, Nabil Remit, Foreign Inward Remittances, SWIFT Transfers, Traveler's Cheques, Demand Drafts, ABBS and Manager’s Check.

4.2 Conclusions
Labor migration and remittances are the major economic mainstays for Nepalese economy. Remittances can generate a positive effect on the overall Nepalese economy thorough various channels such as savings, investment, growth, consumption, and poverty and income distribution. Likewise, at the national level, remittances contribute significantly to GDP.

Remittance is an integral aspect of Nabil Bank facilitating as a major source of income for the bank that is earned in terms of collection fees and remittance fees. It has been providing remittance service through varieties of products and services. The bank’s current remittance operation mechanism and its share in remittance product are remarkable. It has a huge coverage with its network for the operation of the remittance services. The market for remittance industry has become very much competitive and in such cases, NBL has to adopt an aggressive marketing and promotion strategy along with better corporate and business strategies to sustain and even increase its market share. Thus remittance business at NBL can increase if it is able to capitalize on its strength, overcome its weaknesses, grab or utilize the opportunities existing in the external environment and cope up with the threats of cut throat competition.

4.3 Recommendations In the course of over two and half decades Nabil has experienced sea changes as a bank and also on a macroeconomic level. Combined with that, there were significant changes in the global financial system as well as its performance and has always been a pioneer in the banking industry. Similarly, Nabil is always concerned about how it can create values for its customers- the best in the market. Nabil's remittance products have been of top-quality and it has a diverse and selected service range designed to cater to the different and exclusive requirements of its valued customers. Yet, even with all its exemplarily practices in the industry, there are always rooms for improvements, no matter what industry an organization belongs. Being part of NBL for more than two months, the culture and practices at Nabil was highly monitored and below are some recommendations for NBL to enhance the overall performance of the organization: * Both Nabil Remit and Western Union requires an online processing system, and at times the problem of system breakdown arises. The transactions are usually slowed down at all the branches, agents and sub-agents along with the system failure, and this has a great impact on the performance, profitability of the organization and can also lead to dissatisfaction and frustration of the customers. Hence, NBL can use a manual procedure at times of system breakdown and get the transactions updated after the system recovery such that customers are served in a timely manner and the transactions of NBL are unhindered. * Gaining customer’s trust is an important attribute to an organization, thus Nabil needs to continuously make an effort to make its customers believe that it is one of the reliable and secured mode of money transfer and this can be done with integrated communication with the customers as well as providing customer with appropriate feedbacks on their queries. * Agents and sub-agents are an integral part of remittance business for NBL and they are to be motivated for active participation in increasing the number for transactions and for this purpose training programs as well as incentives mechanism such as holiday packages and gift hampers can be introduced. * The extension of competition in the market demands superior marketing and advertising efforts. Advertisement through materials like brochure, flex stand, flex banner, are common phenomenon and thus the bank needs to focus on ways to stand out as a superior service provider and bring the feeling of being close to the customers by appreciating and adhering to their emotions. * The necessity of a better HR planning has been identified for the Kamladi branch; some departments are understaffed resulting in burden for the work to the limited staffs which can hinder the performance of the employees and thus the overall organization. Similarly, the work space for employees is another matter the HR department must consider.

BIBLIOGRAPHY

Annual Report 2009/10

Central Bureau of Statistics. 2011. Nepal Living Standards Survey-III 2010/11. http://www.ekantipur.com/the-kathmandupost/2010/11/09/money/nepal-among-top-5-countries/214646/

http://www.worldbank/prospects/migrationandremittances

http://www.nabilbank.com

Nepal Rastra Bank. 2008. “Mobilizing Remittances for Productive Use” http://red.nrb.org.np/publications/working_papers/NRB_ Working_Paper --NRB-WP-4.pdf