Investment policy analysis of commercial Banks ( comparative study of Himalyan Bank Limited Standard Charted Bank Limited and Nepal Bangladesh Bank Limited)

Abstract

The commercial bank plays a vital role in accelerating the temps of growth in developing counter like Nepal. It mobilizes the savings of the people and then divers them into productive channels. It is through this function that it seems as an index of commercial, industrial and financial stability and growth of the nation. The investment policy of the bank has to be considered in this respect. But the investment policy of the commercial bank is affected by central bank. So the investment policy should be laid down and make more liberal for mobilize the idle money to the productive sector. To accelerate the Nepalese public enterprises financial facilities need joint venture bank plays a vital role to develop the industry in the country. The study has been undertaken to analyze as well as to compare the investment policy of three joint venture commercial banks.

The comparative analysis of liquidity ratio of SCBNL, NBBL an HBL reveals the that the mean ratio & CV of current ratio SCBNL is satisfactory. Only the SCBNL seems capable of paying current obligations. The ratio of HBL seems improving but the NBBL trend is deteriorating. The mean ration & CV of cash and bank balance to total deposit ratio of HBL is higher. Higher ratio of HBL shows that it is able to server the demand of its customers i.e. it is operating at the lower risk. The mean ratio of SCBNL and NBBL are lower than HBL but seems satisfactory. On the basis of CV it can be conducted that the ratio of SCBNL and NBBL are more consistent than that of HBL. The comparative analysis of assets management ratio reveals that the mean ratio of loan & advances to total deposit of NBBL is higher. HBL seems to be more stable than others. Large proportion of total deposit of NBBL has been utilized on loans & advances than HBL & SCBNL. The mean ratio & CV of total investment to total deposit of SCBNL is higher and stable i.e. SCBNL mobilizes its more deposits on investment. HBL stands in average with greater volatility and NBBL made low investment. The comparative analysis of profitability ratio reveals that the average ratio & CV of return on loans and advances of SCBNL has been found to be better with greater stability. NBBL and HL have been failure to maintain high return on its loans an advances. The mean ration of CV of return on assets (ROA) of SCBNL is better than that of NBBL and HBL.

The coefficient of correlation analysis between different variables reveals that the value of coefficient of correlation between deposit and loans & advances HBL is higher than SCBNL and NBBL, which indicates that HBL is in better position to grant loan and & advances for mobilizing the collected deposits in comparison to SCBNL and NBBL. NBBL takes second place on the same. The value of coefficient of correlation between deposit and total investment of HBL is higher than that of SCBNL and NBBL, so HBL is in better position and NBBL on same SCBNL takes better place after HBL.