Rastriya Banijya Bank Internship Report

CHAPTER I

Introduction

         1.1 Background of the study

This report is prepared in partial fulfillment of the degree of Master in Business Administration (MBA) under the faculty of management, Internship which is a course that has blended the management concept together with the information technology. For the completion of MBA, students are required to undergo comprehensive on-the-job Internship in the Fifth Trimester.

The internship program is a practical of all the subjects learned in the classrooms and it comprises of the three crucial credit hours. The main objective of the internship is to help students understand the real working environment as well as to apply the knowledge they have gained in the classroom into the real business practices. The internship enables the students to be acquainted with the practical aspect of the Nepalese business environment. This program also helps to know how the organization as a whole operates and also how communication takes place and activities are coordinated in the corporate world. Thus, the internship program can be regarded as a fruitful opportunity for the students of MBA to be familiar with the corporate work environment of Nepal.

The report prepared consists of the internee’s work experience gained during the 8 weeks of internship dated from 16^th January 2011 to 15^th March 2011 at the Rastriya Banijya Bank. The report is generated on the basis of the work done and the careful study made by the internee on the sectors like Remittance department, Credit department, Letter of Credit department and few days only for information purpose in Treasury department and Human Resource department.

1.2 Objective of the study

The major objective of the study is to get better understanding of the overall banking activities and assess contribution of Rastriya Banijya Bank in overall economic development.

The other specific objectives are as follows:

§  To gain an experience to work independently to formulate projects like these.

§  To gain practical insight of the real working conditions.

§  To acquire sound knowledge about the organization’s policies and principles.

§  To know about the operating procedures of different departments in general.

§  To understand the real complexity and unforeseen problems and opportunities on the job.

§  To know about the different strategy of Rastriya Banijya Bank and how is it successful in dealing with its customers.

§  To help to develop the managerial skills within ourselves to be successful managers in future.

§  To be familiar to the banking practices, rules and regulations of Nepal.

1.3     Methodology of the study

A systematic approach and methodology is needed in order to do any type of study and prepare report on that study. An intense research has to be done in order to get the appropriate results. This internship report has been designed to give a clear picture of the operations performed in Rastriya Banijya Bank.

1.3.1        Placement

Regarding the placement, the internee was appointed to conduct his internship at the head office and Main Branch Office (MBO). However, the internee was also sent to Tangal branch of Rastriya Banijya Bank during the course of internship. During the internship period the internee was placed in different departments of the bank so that he could have the overall knowledge of the banking operations.

1.3.2        Duration

According to the Faculty of Management, the duration of internship period has been defined for eight weeks. However, the internee did his internship for about 8 weeks. The internee started the internship in the bank at 16^th January 2011 to 15^th March 2011. During this internship period of 8 weeks the internee was able to learn about the bank’s culture, work environment and the working procedure of the various departments of the bank.

1.3.3        Nature and Sources of Data

In this internship report, both the primary and secondary data have been used.

·         Primary source: An in-depth interview with the bank personnel of RBB, day to day observations, problems and instructions of supervisor.

·         Secondary source: The data has also been collected from the annual report of RBB, brochures other published documents and also the site of RBB.

1.3.4        Activities performed in the Organization

The internee performed various activities in different department under the supervision of the head of the department. In doing this the internee was able to gain in-depth knowledge regarding the functioning of the various department of the bank that helped a lot in grooming the interpersonal skills with full confidence.

The departments visited were: Remittance department, Credit department, Letter of Credit department and few days only for information purpose in Treasury department and Human Resource department.

1.4      Limitations of the study

This study has been prepared on the basis of observations and experience gained during internship period. It is confined only in the Retail banking, Human Resource Department etc.

The following are the limitations of the study:

·         The bank’s policy on keeping some matters confidential prevented from analyzing different activities.

·         This study may not be applicable to other organizations of similar nature.

·         The interpretation and conclusion were drawn within the limitations of individual’s knowledge and judgment abilities and on the basis of data provided and other published and unpublished sources. So it may lack the professional and expert touch.

·         This study takes into consideration only about general activities and does not include the minor details about each and every activity performed in the bank due to the time constraint.

1.4   Overview of Rastriya Banjiya Bank:

Rastriya Banijya Bank (RBB) is fully government owned, and the largest commercial bank in Nepal. RBB was established on January 23, 1966 (2022 Magh 10 BS) under the RBB Act. Now, the bank is running under bank and financial institute act 2063. RBB has been contributing to socio economic development of the country for the last four and half decades. The Bank has currently entered into 46 years of service. RBB provides various banking services to a wide range of customers they include elite to poor individuals, institutional customers, and the customers from industry / business communities.

RBB is a commercial bank which is service oriented and of philanthropic nature. At beginning it started its operation with 30 employees at Kathmandu. Currently it is employing 5627 employees and 128 branches in different part of the country. It has been running in profit from the very first of its operation but recently it is going on loss. Currently the bank has authorized capital of 1 billion, 17 million and 32 lakhs. This bank has authority of holding cash up to Nrs.1,80,00,000 and good also work that amount.

RBB has Nepal's most extensive banking network with over 128 branches (101 ABBS Branches). Through its widest branch and ABBS network RBB has been catering modern Banking services to millions of customers. The Bank was transformed in company in 2063-1-6 B.S.

Following this historical transformation the bank has successfully completed its first ever general assembly on 2067-05-31 BS. According to recent information it has also authorized of 38 crores, total amount to 3000 crores. It is also authorized to act as the agency or representative bank of NRB ltd.

The bank is also in the frontline towards   fulfilling corporate social responsibility. The bank has been working as a development partner by acting as a fund administrator of Poverty Alleviation Fund (PAF). Similarly, the bank has been working as a chief administrator in the Educational Assistance Project (run with the assistance of World Bank) aimed at assisting poor and diligent students learning at higher secondary and bachelor level.

CHAPTER II

Activities undertaken and Analysis of data

During eight weeks internship at Rastriya Banijya Bank, Tangal branch and main branch office, I visited mainly two departments remittance and LC and spended much of the internship period in these two departments but as information collection I also visited in credit department, HR department and treasury department. I have participated in the real life organizational setting outside the classrooms and I have been provided the opportunities to study the overall management and business skills with particular emphasis upon LC and remittance department of RBB. I have attempted to submit this report as the result of internship programme.  

2.1 Letter of Credit

Letter of credit (LC) is a (conditional) bank undertaking of payment. It is a written undertaking by a bank (issuing bank) given to the seller (Beneficiary) at the request, and on the instructions of the buyer (applicant) to pay at sight or at a determinable future date up to a stated sum of money, within a prescribed time limit and against stipulated documents or other conditions. The issuing bank is putting out its credit and good name for the sake of the buyer.

2.2 Parties involved in LC:

During internship period I was assigned to learn about the parties involved in LC and the process of opening LC. I learned that there are some banks who act as intermediaries between the applicant and beneficiaries. Parties involved in LC are:

Ø  Applicant.

Ø  Issuing bank.

Ø  Advising bank.

Ø  Confirming bank.

Ø  Beneficiary.

Ø  Negotiating/collecting bank.

Ø  Reimbursement.

2.3 Types of LC:

To suit the nature of requirement of the involved parties, documentary LC are classified into various categories depending upon nature, features and the function of the LC.  Security wise there are two main LC they are:

Ø  Revocable LC:

Ø  Irrevocable LC:

2.4 Procedures of opening LC:

§  Verify signature in application form.

§  Check file carefully and ensure that no shipping documents have been received nor any communication conforming the shipment of the goods or negotiation of the documents has been received.

§  Prepare a message for the LC advising Bank instructing them to call back the original LC and confirm cancellation by SWIFT.

§  After sending the message debit the customer’s a/c by the communication charge.

§  Upon receipt of SWIFT confirmation of cancellation:

Ø  Reverse LC liability.

Ø  Refund margin deducting LC cancellation and any charges left unrecovered.

Ø  Fill up form (Bank’s part) and dispatch to NRB.

Ø  Close the file.

§  If LC is expired for negotiation and neither the documents not any confirmation of negotiation is received for long(15-30 days) depending on the applicants request and long standing relation LC can be cancelled in our books with consent only from the openness. However, branch manager approval required for this kind of actions.

§  If the LC bears direct reimbursement clause and the LC is cancelled the reimbursement authorization should also be cancelled debiting the party’s a/c for the communication charge.

§  In case of the LC with reimbursement bank has to be communicated not to make payment by tested message. If the payment has already been made to the negotiating bank then the reimbursement should be requested to get the amount back. The LC can be cancelled only on receiving back of full amount.

2.5 Payment of the letter of credit:

The payment of the LC can be one of the following two basis:

Ø  The negotiating bank can purchase the accepted documents and get payment from the reimbursing bank,

Ø  The bank can send the payment to the negotiating bank on demand.

2.6  Documents needed for LC

Document needed for Bank

·         Bill of exchange (BOE).

·         Commercial invoice.

·         Packing list.

·         Certificate of origin.

·         Bill of lading (BOL).

·         Bank covering.

Document for port (Calcutta port):

·         Commercial invoice.

·         Packing list.

·         BOL.

·         Insurance.

·         Proforma invoice needed only for amendment.

Document for custom office:

·         Cheque (10% total amount).

·         Bank covering.

·         Bi. Bi. Ni. Fa. No. 4.

·         Commercial invoice.

·         Packing and weight list.

·         BOL.

·         Proforma invoice for amendment.

2.7 LC charges:

ü  Discrepancy charge for local will be Rs. 2000.

ü  Discrepancy charge for US will be $ 50.

ü  Discrepancy charge for India will be INR 2000.

2.8 Activities carried out in the LC Department

The works assigned in LC department are as follows

·         Helping customer to fill the form and correcting the filled form.

·         Comparing the form filled by customer and pro-forma invoice send by supplier.

·         Recording the Bi. Bi. Ni. Form returned from different place custom office. That verifying the customer has cleared their goods from custom office.

·         Recording the document send to custom office after customer has cleared their amount in the bank.

·         Filling the part of the forms that should be filled by organization which specify that the amount of LC and the exchange rate during the LC opening.

2.9 Remittance

Remittance means transfer of money from one place to another for different purpose. Originally transfer of fund were used to be done through Hawala (HUNDI) in which the spending person deposit the transfer money and commission to a businessman at the originating centre, who in turn would inform his agent in the different place at receiving centre to pay money to the beneficiary on identification.

Channel of remittance can be broadly divided into two types formal and informal. Banks, Post office and Money Transfer Operators (MTO) such as western union money transfer, RBB Remit, Ez Remit, Instant Cash Global Money Transfer are the active participant of formal channel where as Hundi/Hawala or similar service and self/relative/friends constitutes the informal channel of remittance.

Remitters from any part of the world can send money from any bank to an account at RBB. The originating bank will send the money through one of RBB's correspondent banks (listed below).

The remitter must provide the following to the sending bank:

·         Beneficiary's name

·         Beneficiary's bank account number

·         Beneficiary's branch name or address, and

·         Beneficiary's Bank:(ie Rastriya Banijya Bank-SWIFT Code: RBBANPKA)

RBB primarily processes foreign remittance via SWIFT (The Society for Worldwide Interbank Financial Telecommunication) and Telex.

2.10 Parties involved in remittance:

Ø  Remitter: Person or organization who sends money.

Ø  Remitting bank: Remitter’s bank which receives fund from the remitter and sends fund.

Ø  Paying bank: Bank which receives message from remitting banks and pay to the          beneficiary.

Ø  Beneficiary: A person who is intended to receive money.

For the purpose of transferring funds, banks maintain account (Nostro and Vostro account) and correspondent banking relations with various banks in the world.

2.11 Modes of remittance:

There are various instrument used for fund transfer service in RBB. Normal consideration for choice of one particular instrument against other will be based on factors such as speed, cost, purpose etc.

 Some of the forms of outward bill transfer in RBB are:

§  Demand draft.

§  ABBS transfer.

§  Mail transfer.

§  Pay order.

§  SWIFT transfer.

§  Telex/Fax transfer.

§  Bill transfer.

§  Miscellaneous transfer.

2.12 Activities carried out in the Remittance department

SWIFT

By the help of this system the remitter anywhere in the world can remit or transfer the fund in Nepal very easily and quickly. SWIFT is a kind of software that links many banks together around the globe to make the remittance process faster and convenient. The remitter can transfer the money in Nepal through RBB just by mentioning the bank’s SWIFT identity and beneficiary details.

Telex and Mail transfer

The bank have arrangement made with major banks in financial centers as well as with banks in neighboring countries to receive funds through tested telegraphically transferred funds. The bank also honors the mail transfer from major banks. This service enables the faster service through its network.

The bank provides this service in the very rural part of the country, where the branches are located. The sender needs to fill the detailed information in the form. The final sending and receiving is done after the approval of the department head, as the information needs to be verified.

Drafts

Drafts is one of the service provided by the bank through which customer can transfer the money within and outside the country. RBB has been providing this facility at a minimum charge of only Rs 100 for the customers not having an account at RBB and to others where ABBS are available is free of cost for those who have account in RBB. But those branches without ABBS, RB system is used for which Rs. 100 is charged for minimum Rs. 50,000 more than it 20% will be for urban area will be charged and 15% for rural area. After all these procedures have been made the schedule and cheque along with the customer information are taken for verification to the head of the department before giving the draft to the customer.

RBB performs its remittance department activities through Citizenship, FAX and RB system or Any Branch Banking System (ABBS). Money is transferred mostly within the national boundary. Money is transferred through fax and telephone in which, detail of the receiver is needed to be correctly entered with identification id is needed in time of withdraw of money.

These transactions should be recorded in 3 books TT, JAWABI and PAY ORDER book.  Teller cash are directly cash and only recorded in TT where transaction with citizenship and draft need to be recorded in JAWABI after verification of all transaction payment is done and those transactions are recorded in PAY ORDER book.

Transactions are done through RB system and ABBS. There are almost 101 branches with ABBS and money can be transfer from one account to another without any charges but in past 0.05% charged used to taken of the transferring amount.

But those branches without ABBS, RB system is used for which Rs. 100 is charged for minimum Rs. 50,000 more than it 20% will be for urban area will be charged and 15% for rural area.

2.13 Relationship between theory and practice

The report basically focuses on the overall banking activities especially highlighting the functional departments. The general objective of this study is to get the better understanding of the corporate environment of RBB. In general it tries to assess the contribution of RBB in the overall economic development. The purpose of the study also is to do practical work, in the field and apply the knowledge of classroom lectures to the real life situations.

In different courses I had acquired only the theoretical knowledge but during internship program I got a chance to gain practical knowledge and cope with the working environment. The theoretical knowledge that had required is very useful in understanding the practical situation and in reducing the difficulties which many student face during the internship program. But many gaps between the theoretical aspects learnt and observed in the company.

2.13.1 Findings

Every organizations faces difficulties but it depend on their ability to solve it and makes worth out of it. In RBB there are some difficulties that I faced during internship period. These difficulties may create lots of problem in achieving the goal of bank and capture the market. Such problems if not solved affects on organization environment, individual performance and finally affects on the success.

LC department

Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. RBB facing problem in intending all the policies of International Chamber of Commerce Uniform Customs and Practice for Documentary Credits applies (UCP 600 being the latest version). They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, storm water ponds, etc.) will be built. The customers are the main drivers of any financial institutions, they should be pleased by offering the quality which are basically depends on the quick service and the pleasing personality of the staffs.

Remittance department

RBB provides a wide range of remittance facilities to the remitters not only within the country but also throughout the globe. It is also known as one of the income generating branches of the bank. The wide network of the branches of RBB takes care of the needs of the remitters to receive funds from outwards as well as to transfer the funds anywhere through the inward and outward remittance facilities. The main problem is there is only one branch which looks after foreign remittance so it’s difficult to the people who live outside valley for claiming their transfers. Due to lack of know-how of employees better and faster works are not being performed and it takes time for clearing the transfer.

2.13.2 Lesson learnt

The banking sector is the one of the service sectors which is vital for the uplift of the economy for the country and is dominant in the present context. The work in the bank is a really challenging one which was learnt during the internship at the Rastriya Banijya Bank. I would be able to know the banking system through my internship and get the practical exposure but I found it was quite different experience.

Moreover, willingness to learn and taking initiative is essential to gain comprehensive knowledge about the work. The eight weeks long internship at RBB did not only gave me an opportunity to learn about the basic activities of the various departments but also helped to shape personality and character to greater extend.

Some of the experiences that are gathered during the internship period are:

·         Dealing with people from different background mostly in remittance department.

·         Develop strong work ethics from internship.

·         Learn to work in team and individually to perform the assigned task.

·         To build communication skills, analyze work place relationship, build greater networking, and socialize with many people.

·         Learn the organization environment.

·         Motivated employees are needed to grow the organization.

·         Organization should maintain good relations with customers to survive.

·         About importance of the time management and the need of the communication skills are very much needed in service department.

CHAPTER III

Summary, Conclusion and Recommendation

3.1 Summary

This report is based on the internship that is required in partial fulfillment of MBA and the internship was done at the RBB. The report basically focuses on the overall banking activities especially highlighting the functional departments like Customer Letter of Credit and Remittance. The general objective of this study is to get the better understanding of the corporate environment of RBB. In general; it tries to assess the contribution of RBB in the overall economic development with its huge involvement.

The main reason for which the internee had selected RBB was its policy to provide opportunity for the internees to learn about the working environment. The prime objective is to obtain the professional experience by exposing to the corporate culture and implementing the knowledge that has been learnt.

In the course of the internship, the internee visited departments like the LC which mainly emphasizes on maintaining a good relationship with the clients. As each customers are different from one another and to make their money risk safe Remittance and LC is responsible for carefully handling the customer’s money and trying to solve their transfer of money problem and trade problem.

The cash and the remittance department is another important functioning department of RBB. The remittance department handles the foreign exchange facilities, and remitting money into the country as well as outside Nepal too. On the other hand the LC department handles the security of transaction between parties involved in LC transaction where instructions of the buyer (applicant) to pay at sight or at a determinable future date up to a stated sum of money, within a prescribed time limit and against stipulated documents are guided which helps to perform the transaction and for receiving and payment bank acts as mediator.

            3.2 Conclusion

During my two months of internship program it was different experience and exposure to the real work scenario. I learnt a lot about the banking sector and banking operations, about RBB. This report had made to know about various kinds of information/ service offered to customers by RBB. This internship period helped me know how an organization can be different from other through people resources which are inimitable to gain competitive advantage. In such a work environment, various activities could be performed that not only helped in building a professional but hopefully benefited the organization to some extend as well.

This report is based on the internship done in RBB for the period of eight weeks of which 2 weeks in Tangal branch and 6 weeks in main office Bishal bazar. During the internship period, the area worked on remittance and Letter of Credit. It was great opportunity for me to have a practical knowledge of banking activities in a real environment of RBB.

I got the chance to socialize with people and found that people of RBB are highly committed to serve the customers and deal with their issues. At the work environment, I got an opportunity to observe, how people work in team and how they put their synergized effort for better outcome. RBB is constantly attempting to provide better and quality service to the customers. The behavioral issues are also critical as they make customer feel satisfied.

Remittance and LC department are one of the crucial part of the RBB where I got the chance to gather knowledge how one of the big government bank which bound almost Nepal in its successful service. At last, I would like to once again thank RBB, all the staffs of RBB for their support, suggestions and cooperation. As a whole, my internship was interesting, memorable and knowledgeable.

3.3 Recommendation

By working as an intern at Rastriya Banijya Bank and observing its working environment and procedures some areas of improvement has been identified. Therefore, the following measures are recommended to the bank for enhancing its performance:

·         Customer satisfaction is the most important thing in any organization. But it was seen that some of the customers of the bank were not satisfied by the time taken to render service. Thus taking this into consideration RBB should focus more on providing quick and satisfactory services to the customers.

·         RBB should increase the number of ATM machines both within and outside the valley so as to attract more customers towards the bank.

·         There is large number of over staffing in RBB so it should downsize lots of staff and in RBB there is lack of younger employees also.

·         Adopting efficient marketing strategies to encourage more of the customers will help RBB to successfully compete with other banks.

·         Though at present RBB is providing training programs to its employees at a certain level, it should organize such programs on a regular basis so as to enhance the skill and competency of staff.

·         It was also seen that the customers had to wait for a longer period of time in the cash counters due to limited counters with which the customers were dissatisfied. Therefore, RBB should also try to increase the number of cash counters to minimize the waiting time of the customers.