Internship Report: Internship at Kumari Bank in CRM Department

Executive Summary

As per the Curriculum of Pokhara University, Internship program is the pre-requisite for the MBA at Apex College. Classroom discussion alone cannot make a student perfect in handling the real business situation; therefore it is an opportunity for the students to know about the real life situation through this program.

These reports broadly cover the relevance of internship topic, detail about organization, experience during Internship period and analysis of organization from different corner. The first chapter details the objective and relevance of internship and internship topic. Here the objective is to understand the gap between theory and practice in the field of management as well as to evaluate the correspondence of our dream in our dream field thereby our mind will make inside track to choose secure, one best way. That will be the golden step to spring up our career. The second chapter includes about organization, its industry and its products and services. The function of organization and other contents in this chapter are described based on practical understanding. Internship experience and critical analysis of Internship activities is covered in last chapter. Which try to portray the personal view on “What is Kumari Bank Limited now?” and “What it must be?” This Internship report is finalized with some more specific personal opinions about the organization.

During my Internship and report writing the major breakthrough is that the theoretical knowledge matches with practical knowledge in various real sectors in many extents. But too there exists deviations in various level of organization hierarchy.

Chapter 1

Introduction

1.1   Background

One of the most important factors for industrialization and economic development of a country is the availability of the credit facility. The continuing crisis of accumulation of non-performing and default banking loans has emerged as most of the serious constraint in the path of economic development of Nepal as banking remains the main intermediary vehicles in harnessing capital for accelerating the growth of the productive sectors in Nepal in the absence of a healthy capital market. The most recent quarterly data of Bank and Financial institutions shows the increasing cash balance on their balance sheet which is increasing the possibility of lending crisis. Most of the Banking and Financial Institutions are crossing the threshold of lending limit and set of standards given by Nepal Rastra Bank. But providing loans without proper appraisal are even more dangerous as the depositors are put into great risk of losing their money and at the end, the crisis might go beyond overcome. So, I think it is very important to gather the technical as well as theoretical know-how regarding the critical analysis of credit approval procedure and credit risk management in the Neplease context.

In Nepal today financial sector is one of the most established areas in the macroeconomic sector. Economy and finance is carrier of the country. So for the aspects of economic development, banking sector must be reformed. In the process of forming a good economic system, private banks are paling an important role compare to the government banks in the country. For this reason I prepared my internship report on Kumari Bank Limited.

After all this I think the dream holders in banking sector need to have a good knowledge of Credit Risk Management as well as Credit Approval process to make their dream come true and dreamt as an idol by others.

1.2   Objectives        

The objectives of this report are:

Ø  To understand the credit approval, their securities and monitoring process of Kumari Bank Limited.

Ø  To be accustom with the management practices in banks.

Ø  To gain practical insight of the real working conditions.

Ø  Discover where further competence is needed.

Ø  To learn how to deal with customer tactfully.

1.3   Placement

Regarding the placement, the internee was appointed to conduct his internship at the head office of KBL. During the internship period the internee was placed in Credit Risk Management Department.

1.4   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 12^th January 2012 to 8^th March 2012.

1.5   Limitation of the study

This study has been prepared on the basis of observations and experience gained during internship period.

The following are the limitations of the study:

i.        Lack of information in a manner required for analysis and the secrecy of the bank.

ii.      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.

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

Chapter 2

Industry and Organization Profile

2.1   Commercial banks

A commercial bank is a type of financial institution and intermediary. It is a bank that provides transactional, savings, and money market accounts and that accepts time deposits. The term commercial bank is used to differentiate these banks from investment banks, which are primarily engaged in the financial markets. Commercial banks are also differentiated from retail banks that cater to individual clients only. In non-English-speaking countries the term commercial bank is used interchangeably with the term trading bank. Commercial banks play a number of roles in the financial stability and cash flow of a countries private sector. They process payments through a variety of means including telegraphic transfer, internet banking and electronic funds transfers. Commercial banks issue bank checks and drafts, as well as accept money on term deposits.

Commercial banks also act as moneylenders, by way of installment loans and overdrafts. Loan options include secured loans, unsecured loans, and mortgage loans. A secured loan is one where the borrower provides a certain property or asset as collateral against the loan. The main condition of these loans is that if the loan remains unpaid, the bank has the right to use the property in any way they like to realize the outstanding amount. Unsecured loans have no collateral and therefore command higher interest rates. There are a variety of unsecured loans available today and these include credit cards, credit facilities such as a lines of credit, corporate bonds, and bank overdrafts. Mortgage loans that are provided by commercial banks are similar to secured loans but are used specifically to buy real estate property for commercial purposes. In most of these cases, the banks hold a lien on the title to the particular property purchased with the loan. If the borrower is unable to pay the loan back, the bank leverages this item against the loan to generate funds or recover the principal.

Commercial banks provide a number of import financial and trading documents such as letters of credit, performance bonds, standby letters of credit, security underwriting commitments and various other types of balance sheet guarantees. They also take responsibility for safeguarding such documents and other valuables by providing safe deposit boxes.

Currency exchange functions and the provision of unit trusts and commercial insurance are typically provided by the relevant departments in larger commercial banks.

Commercial bank being the financial institution performs diverse types of functions. It satisfies the financial needs of the sectors such as agriculture, industry, trade, communication, etc. That means they play very significant role in a process of economic social needs. The functions performed by banks are changing according to change in time and recently they are becoming customer centric and widening their functions. Generally the functions of commercial banks are divided into two categories viz. primary functions and the secondary functions. The following chart simplifies the functions of banks. The list of Commercial Banks in Nepal is shown in Appendix 1.

2.2   About Kumari Bank

Kumari Bank Limited, came into existence as the fifteenth commercial bank of Nepal by starting its banking operations from Chaitra 21, 2057 B.S (April 03, 2001) with an objective of providing competitive and modern banking services in the Nepalese financial market. The bank has paid up capital of Rs. 1,485,000,000 of which 70% is contributed from promoters and remaining from public.

Kumari Bank Ltd has been providing wide - range of modern banking services through 29 points of representations located in various urban and semi urban part of the country, 20 outside and 9 inside the valley. The bank is pioneer in providing some of the latest / lucrative banking services like E-Banking and SMS Banking services in Nepal. The bank always focus on building sound technology driven internal system to cater the changing needs of the customers that enhance high comfort and value. The adoption of modern Globus Software, developed by Temenos NV, Switzerland and arrangement of centralized data base system enables customer to make highly secured transactions in any branch regardless of having account with particular branch. Similarly the bank has been providing 365 days banking facilities, extended banking hours till 7 PM in the evening, Utility Bill Payment Services, Inward and Outward Remittance services, Online remit Services and various other banking services.
Visa Electron Debit Card, which is accessible in entire VISA linked ATMs (including 33 own ATMs) and POS (Point of Sale) terminals both in Nepal and India, has also added convenience to the customers. The bank has been able to get recognition as an innovative and fast growing institution striving to enhance customer value and satisfaction by backing transparent business practice, professional management, corporate governance and total quality management as the organizational mission.

The key focus of the bank is always center on serving unfulfilled needs of all classes of customers located in various parts of the country by offering modern and competitive banking products and services in their door step. The bank always prioritizes the priorities of the valued customers.

2.3   Products and Services Offered by Kumari  Bank Limited

Kumari Bank Limited is responding to the market demand for a complete range of modern banking products and services. The major products and services offered in different sector are enlisted below:

i.        Liability Products

Kumari Bank is collecting large portion of deposit by using innovative range of products. Recently it is offering Current, Super, Kumari, 50 Plus, Subha Lakshmi, Twinkle Star and BIG Saving along with different form of Fixed deposit.

ii.      Asset Products

The major assets products of Kumari Bank includes Home Loan, Consumer Product Financing, Education Loan, Travel Loan, Vehical Loan, Overdraft, Short Term Loan, Commercial Vehicle Loan, Deprived Sector Loan, Export Credit.

iii.    Services

Kumari Bank is successful to keep it a step forward being a first introducer of different services in Neplease Banking sector. It includes Internet Banking, SMS Banking, Locker, ATM Card, VISA Credit Card, Utility Bills, Letter of Credit and Remittance service.

Chapter 3

Activities Undertaken and Analysis of Job Performed

The eight weeks internship at Kumari Bank Limited, Durmarg Head office in Credit Risk Management Department is found quite different than any other previous experiences. That was a really an extraordinary opportunity to participate in the real life organizational setting outside the classrooms and to study the overall management and business skill.  Every experience at Kumari Bank are so precious balance the staggering moment in career building process.

3.1   Activities undertaken in the organization

The internship in Credit Risk Department of Kumari Bank provides an opportunity to understand the risks associated with credit and its management practices. The objective of CRM Department are managing credit exposure of the bank, maintaining credit risk, compliance of NRB, recovering or collecting dues of loans. At present credit division of KBL is performing following activities:

i.        Preparation of loan proposal and evaluation of risk

ii.      Provide approval for SME, Retail, Corporate and Deprive sector loan

iii.    Collection and Monitoring Activity: Recovery and Risk management

3.2   Responsibilities at Credit Risk Management Department

i.        Receiving and checking Proposals

KBL classified loan in major four types and accordingly it assign authority for preparing and evaluation of proposal. So proposal from different branches are received and checked for possible mistakes and omission of necessary documents. After the first day of my internship I started to check the proposal received from different branches. But corporate loans are checked only by the RM and ARM in head office to mitigate the risk. In the beginning days checking proposal was really complicated. But later with the assistance of senior and self-study it goes quite interesting.

ii.      Entry on system

All forwarding proposal during my internship period are recorded in KBL’s system by mine. This entry are used to respond follow up from several branches as well as to  maintain the record of different types of proposals on processing which will be used to produce quarterly report and annual one. The system was simple to make an entry.

iii.    Forwarding proposals

After recording the proposal they must be forwarded to HCRM, CCO and CEO for approval. For this me, myself have to reach on respective cabin who approve proposal as per requirement. Some time I used to collect approved proposal from different cabin of senior personnel.

iv.    Attending telephone calls

Attending phone calls of branch manager, transferring the call to the respective personnel and providing status of forwarded proposal for follow up calls were some other responsibilities carried out at Credit Risk Management department.

v.      Entry after approval

Maintaining the record of all approved proposal on different sheets and submitting the daily report to H/CRM is another major tasks assigned to intern. During this careful entry on approved sheet, clearance from processing sheet, making record of all proposals approved that day and submitting to H/CRM are the major tasks performed as an internee at KBL.

vi.    Photocopy and Fax

There are also the frequent job of an intern in photocopy machine and fax.  Interns were assigned to fax some urgent proposal and create photocopy of approved proposal for maintaining records.

vii.  Sending mail of approved proposals

Sending mail of approved proposal not omitting the comment mentioned in proposal is another task performed as internee at KBL. The information must be sent as soon as possible to provide fast and efficient service to customers. This is the most sensitive task which require awaken mind as a small mistake may cause loop whole in banks.

viii.Maintaining Proposal Files

After sending approved proposal, I was also assigned to manage the duplicate copy of approved proposal, for further smooth and efficient functioning, which would benefit overall corresponding departments. These documents where correctly managed with the objective to provide reference in future.

3.3   Internship achievements

Avid interest to work in a banking sector make inside track in mind before selecting KBL as internship destination. This eight weeks internship duration is beneficial to large extent to understand the real banking practices in Neplease banking industry but not to the extent expected to get practical exposure. Self-effort to submerge in deep knowledge and rich experience of KBL’s management and its role at verge make me to reach to the fact that the banking sector is the one of the service sector 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 as well as interesting.

Moreover, willingness to learn and taking initiative is essential to gain comprehensive knowledge about the work. The eight weeks long internship at KBL 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.

 3.4   Evaluation of Internship work and the organization

As an intern in MBA, one will expect to have prolific, fruitful experience along with exposure. Everyone with high level of motivation are looking for playing field where they can use their creativity, knowledge and skills they gather till now rather than working as a vending machine. My internship at KBL was limited to CRM department. Even after several request to shift me in different department, no favorable decision was taken. It was really frustrating to the student who wants to exposure, experience and extensive challenges at workplace. Though the overall internship was satisfactory, it did not out earth something brilliant that I ever expect from.

KBL already achieve noticeable success in some previous year. But due to its current plummeting market value and decreasing customer confidence its management is struggling to revive its previous success to maintain the same stand in market. They are doing their effort but assuming themselves what they are doing is sufficient is the main reason for increasing decreasing rate of their market value and customer confidence. They never turn back to observe what is missing with them that is pulling their galloping legs. They have highly dissatisfied customer but they never make any effective effort to understand them and to make best corrective action. They have sufficient space to decrease cost, increase branch performance, increase employee efficiency and effectiveness, recapture the loosen market but their efforts are not directing their direction towards them.  

Chapter 4

Conclusion and Lesson Learnt

4.1   Lesson Learnt

Some of the lessons learnt during the internship period are:

i.        Team work is the better way to result best outcome only if honesty, co-cooperativeness and caring attitude towards each other is maintained.

ii.      Need to carry the feeling of pride for working in the organization where the job is.

iii.    Working environment must be electrifying where employee can gives their full effort to their work.

iv.    Some decisions will be best when they are made on more practical way rather than if they are made by sticking with principles and ethics.

v.      Growth opportunity, challenging task, motivational program, and training are some major ways to increase employees’ efficiency and effectiveness rather than high payoff and short working hour.

vi.    Nerves-“employees” and hearts-“customers” are the key for any organizations success.

4.2   Gap between theory and practice

While doing the internship, I experienced real working environment of the KBL. Whatever I learned through the text I made a mental picture regarding the things, but after internship the internee found complete difference between practice and theory. The major gaps observed are as follows:

i.        Most of the decisions in banking operations are more situational and practical rather than based on specific theoretical lesson we learnt.

ii.      The knowledge about use of various equipment like fax, printer, scanner etc. and software programs are not covered by our course.

iii.     The topic frequently we studied in our MBA i.e. planning, performance evaluation, team work etc. are limited only in top level management.

4.3   Conclusion

During my eight weeks 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 KBL. As a commercial bank the KBL has already earned the reputation of top banking operation in Nepal. Though there is something wrong in recent years, with a bulk of qualified and experienced human resource, KBL can exploit any opportunity in the banking sector to resurrect from current market stand. Credit Risk Management department of KBL has a very qualified and dedicated group of officers and staffs who are always trying to provide the best service to the clients. They always monitor the credit in different sectors and their position. Before providing the loan they analyze the loan will be profitable and whether the client is good enough to repay the loan within the given period of time. They have good performance in Credit Risk Management in comparison of other commercial bank.

This eight weeks internship is really a chance to socialize with people and found that people of KBL are highly committed to serve the customers and deal with their issues. Just the lacking is the best working environment that is still to create by KBL. During this internship I got opportunity to observe, how people work in team and how they put their synergized effort for better outcome. KBL is constantly attempting to provide better and quality service to the customer. But there is still long painstaking way to conquer to restore the stand they achieved few years ago as severe cut throat competition is going in this sector.

Credit Risk Management department is one of the crucial part of the KBL where I got the chance to gather knowledge how one commercial bank with its successful history and scrambling to bound Neplease market.