Chapter 1

1.1 Introduction to fieldwork study:

The following report is prepared as the rules of T.U. for the student of
management partial fulfillment of requirement for the degree of BBS III year.
This fieldwork is prepare to know how general people are getting help and how
is co-operative society have function will for the economic development of our
country. While preparing this report a field report a fieldwork report is compulsory to
select one subject in a particular ground. Therefore, I have selected a topic “Loan
Repayment Policy” on GCS of Birtamode, which the subject have been related to our
course, which should give extra about it.
Co-operative society are the financial institution which performs many multi
function such as they except deposit, provide loan and advance to general people. So
taking this in mine I took to prepared a report on the Loan policy. The Co-operative
society “Gorkha co-operative society” is small commercial banks, which is
establishing with limited capital with the joint venture of the people.

1.2 General background of fieldwork study:

Among the various under developed countries of the world, Nepal is also one
of them. The economic position of the country is very low. Most of the people are
below the poverty line that hardly fills their stomach cannot think starting up their
own business.
As we know that, the development country depends upon the number of the
small and large. Scale industries, business, firm which required lost of capital. As
discussed earlier, the economic condition of the people of our country is weak.
Therefore, they have to depend upon various sources to collect the fund. Among them,
Co-operative societies are the one of them, which grants the authority to take the
financial for starting the firm or institution.
GCS is a co-operative bank whose main aim is to generation profit. GCS was
established on 2060 B.S. in Birtamode.
GCS has made a large contribution to modern banking system of Nepal by
accepting the deposit of the customer monitoring the saving of the people and granting
appropriate credit facilities people to the people and helping in economic development
of people the bank collects the saving of such people and provide them a certain intent
so as to attract large saving towards it. Such saving is collected through various
deposits such as current saving and finds deposit. The depositories the utilize to
provide loan to those who want to start some kind of business or use to make
productive use of it. It increase their economic status, which can be automatically
increases, its economic strength as well as to develop the sectors.

1.3 Purpose of preparing fieldwork report:

As we know that GCS is helping poor people of Nepal for incoming their
economic strength. It helps to develop their economic condition by giving short, mid
or long term loan. The major purpose of this fieldwork is to know how GCS of
Birtamode is helping people in various sectors. Some of this purpose is as follows:-
  To have detail knowledge about the loan policy of GCS Birtamode.
 To analysis the position of loan transaction.
 Procedures to be fulfilled while borrowing loan by GCS.
 To evaluate the areas of loan follow of GCS, Birtamode.
 Facilities provide by bank to its customers.
 To evaluate the importance and process of utilizing loan investment to obtain
certain income to recover expenditure.
 Credit collecting policy and process of GCS.

1.4 Fieldwork Procedure:

I went to the field referring to the books, magazine paper, published by the Co-
operative society and the subject, I took the informational document such as question,
consent letter, identify card to collect the necessary data to know details about the loan
policy of the Co-operative society through different sources. It was enjoying and
memorable visiting the different people and has a lot of knowledge regarding income
gaining policy and loan policy of the Co-operative society.

Research Methodology:
Research methodology in connection of preparing is of two types:

(a) Primary Data:

This is very simple method of collecting relevant information under this
method; dates regarding the subject matter are collected by visiting the
concerned person or by self’s include observation and questionnaires method.

(b) Secondary Data:

It is second hand data collection method. Secondary data are also of different
types. It can collect through the public or private section.
I have prepared this report on the basic of face to face communication with
concerned person and the annual progress report. Beside these I have gone
through various related to GCS bank and have fulfilled the major part of the
study.

1.5 Importance of fieldwork report:

Fieldwork report is equally importance to both the investigators as well as to
bank, which are described below:

Importance for investigation:

 It has to increase practical knowledge. (Practical skill of the investigator).
 To gain detail knowledge about the report.
 To develop their skill and activity.
 To meet with person of particular office to collect various data related to report.
Importance to Bank:
 To know about its progress.
 To grant knowledge for future planning.
 To get true and real report of GCS from the primary as well as reliable
secondary data.

Limitation of the study:

I have faced several problems while collecting data and preparing this report. It is
quite difficult to prepare this fieldwork report. Some major problems creates while
collecting these reports are follows.

 Subject matter of the study is bit complicated.

 While collecting primary data more effort is needed, to collect secondary data I
worked hard too.
 Managing time becomes hard job for me. While preparing this fieldwork.
 Unavailability of the sufficient data reference and resources to also limit the
study.
 Chapter 2

Introduction of Gorkha co-operative society

2.1 Background of the Co-operative society:

Co-operative societies are one of the most important financial institution in the
economy and essential business in thousand of local town and cities. GCS was
established for the development of certain sector. They collect fund by issuing share
capital, debenture and long deposit and refinance from general people.
Co-operative society is also one of types and financial institution, which
performs all types of banking functions such as their economic status, which can
automatically increase its economic strength as well as to develop such sector.
Nepal multi purpose co-operative society was established in 2060 B.S. in
Birtamode, Anarmani-4. There are about eight shareholders of this banks among they
Mr. Mohan Bahadur Limbu is the president of the bank. Since this bank is a co-
operative society, so it has its limited fund of the purpose of investment. This co-
operative society tries to collect the small fund from the general people, pays certain
some of interest, and invests those funds in some profitable area where it can get the
surplus from those funds.

2.2 Organization structure of GCS:

Act general manager
Deputy General Manager
Account, fund Management, Computers and priority sector credit Dept.
Act. Management & Secretary

Board of Director

Chief Manager Chief Manager Chief Manager

Personal Dept. Person Loan Loan investment
Recovery Dept. Marketing Dept.
Chief Accountant Department Manager Departmental
Est. Dept. Manager Loan recover Dept.
Departmental Manager Departmental Manager inspection Departmental Manager Loan
Planning Research & internal Audit Report recover Dept.
& Development Dept.
A/C Department Manager Departmental Manager inspection Departmental Manager Loan
Legal Dept. internal Audit Report. recover Dept.

Source: Nepal Patrika 337, Quarterly publication, Baisakh 2066.

2.3 Name of the shareholders:

In this co-operative society there are about 8 share holders with total capital
investment of 4500000. The name of the share holders are given in the following
table. They are as follows:-
Name of Shareholders
Mohan Bahadur Limbu
Mohan Bahadur Uprety
Ram Prakash Timsina
Damber Basnet
Ujhal Rai
Mohan Limbu
Pardip Ghimire
Shree Prashad Mainali

2.4 Importance of GCS:

As we know that in our country of the people are poverty line below i.e. more
than 50% of the population in Nepal are living below the poverty line. Such people are
always in need of money. Sometimes they wanted to start small cottage industries in
this case, GCS provide them fund to establish it and it provide different kind of
facilities to easier. Such facilities provide them are as follows.

(a) Provide foreign currency in exchange of national currency.

(b) Provide national currency in exchange of foreign currency.
(c) Provide loan by discounted bill of exchange.
(d) Issue of credit instrument such as letter of credit, draft, traveler’s cheque
etc.
(e) Provides loan and advance for the money received by the way of deposit.
(f) Grants loan against the securities of movable & immovable assets.
(g) Remittance of fun on behalf of customers.

2.5 Banking Services:

Following are the banking service provided by the GCS to its customers, which
has already describe above. Among them some of them are:

(a) GCS Acts as a guarantee of its customer.

(b) IT provides cash resilience facilities.
(c) It purchase bill & discount bill.
(d) It provides loan facility in various productive sections.

2.6 Accounting Policies of GCS:

Accounting to policies refers to the specific accounting principal and method
adopted by bank in the preparation and financial statement. The financial statement
prepared and presented on the basic of such accounting policies should present a true
and fail view of the state of affairs of the bank balance sheet and operational result
from income and expenditure as well as profit & loss account for the period ended.
Income and expenditure items in respect of branches have been translated at the
rate f exchange of prevailing on the last of transaction. It helps to fine the net profit
discount in profit and loss of the making adequate provision such as provision for
taxes or income in accordance with other usual necessary statutory provision.
2.7 Investment Policies of GCS:
It applies the following policy while investing:-
1) Liquidity:
In concentrates its credit policy over the liquidity. It analysis whether it can
reply the customer according to their demand or not. This policy is significance
because in the basic of the policy there may be the change of looking the
customer’s confidence.
2) Profitable:
While, granting loan it initially analysis the return of its investment because if
aims in generation profit.
3) Safety & security:
This investment policy of the bank is safety & security as the bank deals in
other people money, it cannot sacrifice the principle of safe and security. That
is why GCS Birtamode also takes care of the safety & security belonging to the
public.
4) Suitability:
While providing loan it provides loan according to the agreement.

2.8 Necessary document needed for loans approval:

After contracting the chief loan management, I came to know that loans
approved by approving authority only after being convincing that the loan can be
collected within interest after a certain time period. Here are some points and list of
necessary document, which GCS need to approve the loan.
1. Application
2. Interviews
3. Credit Analysis
4. Return from investment
5. Liquidity capacity of custom of replay.

Necessary document generally needed by GCS from loan.

1. Citizenship
2. Register certificate
3. Plans of Business
4. Statement of income and expenditure
5. Other necessary document
 Chapter 3

Presentation and Analysis of Data

3.1 Strategy Relating to Loan Recovery of GCS:

Birtamode is a VDC, which will be converted to a city in new future. It is
located in rural area of Jhapa District out of 49 VDC of this District. In this VCD
population is much density that the others VCD. The bank GCS is a co-operative
society, which do not, got its any branches. It is got this main head office in
Birtamode, Jhapa this bank flow loan without any collateral to the farmer,
entrepreneurs with income focus program. According to the President Mohan Bahadur
Limbu this bank has got the good cover area to in Anarmani, Garamani, Sanischare
etc. As comber to the past report the bank has able to make rustic incensement in this
capital structure and the amount of loan in the general people. The Bank hopes to
make good profit and hopes to increase its branches in much of its covering areas in
future.
Here is shown the loan investment and repayment condition within a 5 year
from 2061/62 to 2063/2066 B.S.

Presentation of individual Payment of different types of loan last 5 years:-

Fiscal Year 2061/62 2062/63 2063/64 2064/65 2065/66

Common Loan 9555 11300 13440 12561 18541
Seasonal Loan 272 875 996 1995 3375
Group Loan 281 300 260 317 351

Graphical Representation Figure-1

Findings:-
Following bar diagram show the total different types of loan from GSC from the year
2060/61 to 2064/65. This data shows that the banks loans amount has been increased
with respect to the year.

Investment Data of GCS:

Year Investment (in 000)

2061/62 9555
2062/63 11300
2063/64 13340
2064/65 12561
2065/66 18551
Total 65397

Graphical Representation Figure-2

Findings:-
The above data show that the loan investment of this bank indifferent year. It was
established in 2060 and operates day to day. The data indicates that the bank holds
strong investment policy in its coverage areas. The amount of loan has been increasing
per year with initiative way. The following data indicates that is the banks loan
amount in the year. 2065/66 was much more that the others year.
Repayment Data of GCS:

Year Repayment (In 000) Effect (In 000)

2061/62 8705 -
2062/63 10227 1522
2063/64 11948 1721
2064/65 11430 518
2065/66 17335 5905
Total 59645

Graphical Representation Figure-3

Major Findings:
From the above data and diagram we can clearly see that this co-operative society has
got good repayment policy that the others co-operative society in the area. The data
and diagram gives us clear details of repayment policy of the society from the year
2061/62 to 2065/66.

Comparative between Investment and Repayment of GCS of 5 years.

Year Investment Repayment Outstanding Rep (%)

(In 000) (In 000)
2061/62 9555 8705 850 91.1%
2062/63 11300 10227 1073 90.51%
2063/64 13340 11948 1492 88.89%
2064/65 12561 11430 1131 90.99%
2065/66 18551 17335 1206 93.49%
Total 65397 59645 5732 100%
Graphical Representation Figure-4

Major Findings:
The above data and bar diagram clearly shows the Total Investment, Loan repayment
and outstanding in loan of GCS. The diagram shows the compression of investment
and repayment of the loan. The data clearly indicate the increasing trends of the bank
from the year 2061/62 to 2065/66. This indicates that the bank holds strong position in
its market with respect to its investment and repayment of loan.
 Chapter 4

Summary, Conclusion and Major Finding

Summary:
Co-operative society is a financial service providing institution. It acts as a monetary
intermediary between the two types of customers depositors and credit takers. GCS
was established on July 2060 B.S. in Birtamode. It was established with a view to
providing various facilities of a commercial bank to its customers, via remittance,
letter of credit, loan, deposit, guarantees etc.

Loan advances are one of the typical services provided by GCS. The funds
accumulated in the deposit accounts are invested in different productive sectors of the
country, and certain rate of interest is charged by GCS in its loans and advances.
Therefore, GCS, like any other co-operative society serves as the intermediary
between the deposit and the credit takers. The remains from this intermediation are the
profit of the bank.

For the intricate and authentic evaluation of loan advances of GCS the required data
and interpretation have been extracted from various publication, of GCS as well as
govt. publication. Likewise, when necessary; the concerned staffs of GCS were also
interrogated on the subject matter to get clear view or things. However, deposit all
effort; the study is certainly not devoid of some limitations, which have already been
discussed earlier.

Conclusion:
One can get a clear picture regarding the loan advances trend of GCS the presentation
and analysis of the data, it depicts that trend of genera; public to open their saving
accounts with GCS has been increasing every year. This undoubtedly pops up the fact
that till data, the reputation of GCS among its customers has beam soaring, loans the
fall in the interest rates triggered by the economic stagnancy during these last few
years, the loan advances trend of GCS does not seem to have been affected so much.
In an average, still 67% of the total deposit is contributed by the loan advances. This
proves the reliability GCS has ensured among its customers.

The analysis of data also reveals that there exist a positive relationship between saving
deposit and profit of the bank. But one cannot really deny that fact that the increasing
in profit compared to the deposit is not so tantalizing this could be because either the
funds are being catapulted in the unproductive sectors or the available funds are not
utilized to the optimum level. So GCS should really contemplate hard on this matter.

Briefly, it can be said that the GCS is doing a good job regarding the saving deposit
facilities. It has managed to maintain consistency in the saving tends which shows that
it has proved its worthiness in the eyes of the customers. Lets hope that it has a
scintillating future ahead.
Major Findings:
1) Loans advancing are the major contributors of this co-operative society.
2) Loans advancing of GCS have been increasing incessantly, but at a
diminishing rate.
3) In an average, the loans advancing of GCS contributes by 67% of total
deposit.
4) In an average 11.5325% the profit from loans advancing.
5) As compared to others banks, % of loan advancing is much more in GCS
bank.

Recommendations and Suggestions

The GCS has been doing pretty well in the banking sector but it has been able to
excel. Deposit its strong financial position; it is sill lagging behind many other
commercial banks. One those note, I would like to put forth certain suggestion, which
I presume will be helpful in tacking the contemporary jeopardy.
1. GCS should launch new customer-oriented schemes different and more
promising than the ones offered by the conventional banks in order to attract
more customers.
2. New and verging areas should be covered on marketing to meet existing
customer’s feed back.
3. GCS should increase its interest on deposit so that it can pull more customers
towards it.
4. The bank should be able to properly prioritize the productive sectors when
mobilization its funds keeping in mind the economic development of the
country.
5. GCS should maintain the increasing trend of foreign currency, which will
ultimately lead to the balance of payment.
6. Staffs mobilization should be maintained, so that they help the customers when
needed with humble and with respect.
7. Last, but not the list, GCS should maintain its quality service with 100%
loyalty and devotion……… who knows, GCS could just established itself as
the ICON of Nepalese banking tomorrow.