A Comparative Study of Portfolio Management in Commercial Banks of Nepal

Abstract

Financial companies are perhaps the fastest growing institutions in Nepal. The chief reason behind this may be its flexibility and benefit to adjust the demand of borrower and depositors of the growing economy of the country. With the rapid growth in the banking sectors, investment in various sectors like production sector has increased and become more and more competitive in market. The investment in consumer lending, specifically housing loan and auto loan has increased rapidly due to lesser risk and higher profit involvement. Now-a-days the demand for loan for auto-loan, housing loan is increasing not only due to the increase in the living standard of people , but also due to the easy lending process, lesser EMT {equal monthly installment}, longer tenure and more competitiveness and better service. The open market has made the competition more rigorous in portfolio investment. Nepal Bank Ltd. is the first commercial bank of Nepal, Nabil bank ltd is the first joint venture bank of Nepal, NIC Bank is the only bank which has not been owned or managed by foreign banks and EBL is the joint venture bank of PNB of India.All the four sample banks have their own way of portfolio management. The study aims to compare the strategies for diversification of assets by four banks: NBL,Nabil Bank Ltd., NIC Bank Ltd. and EBL and their implementation. It also examines various deposit and lending schemes and other schemes of sample banks and surveys the customer’s reaction towards the schemes and strategies of these banks. It also tries to explore the overall market scenario of portfolio investment management in Nepal with reference to NBL, Nabil Bank Ltd., NIC Bank Ltd. andEBL. For this purpose, both primary and secondary data has been used. Here primary data includes data collected from the interview with respective personnel in concerned department of the respective banks. Similarly in order to know the competitiveness in the market interviews from the customers of respective banks has also been taken, for this a sample of customers from each of the banks has been taken.Secondary data are collected from the annual report of the concerned banks, NRB directives, banks publications brochures, previous dissertations journals magazines and newspapers, various statistical tools have been used in order to analyze the research.