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An Introduction To Banking In Nepal

"Lender" originally produced from the term "Banco" signifying "Bench" is referred to as a financial institution which are set up in order to provide financial services to its customers while supporting the investors at the same time. (De Alberquque, M. , 1855) These are licensed by the federal government so as to assist in the monetary areas of the country. As opposed to Nepal, generally Nepal Rastra Loan company (NRB) the central Bank or investment company of Nepal has split into different organizations and had accredited according to the limitations for the service. These are grouped as Commercial lender into Group 'A', Development banking institutions 'B' and likewise boat loan companies and credit unions to Group 'C'

Machhapuchchhre Bank Small: An overview

Machhapuchchhre Bank Small (MBL) is lawfully listed as commercial loan provider in 1998 in Nepal. It started its bank services from american region of Nepal with its head office in Pokhara, Nepal. Possessing a slogan "Service with personal touch", the lender now has extended its business into differing of Nepal.

Company's account:

Mission and Commercial strategy:

Machhapuchchhre Bank Limited (MBL) feels on the provision of the greatest services throughout different regions of Nepal to accomplish the clients with the extravagant banking services to their homes. The bank is also one of the present day bankers with various modern solutions which of course make bank a cutting edge interest and great help. Using its company slogan, the business's mission is to market banking to different part of Nepal whether its hilly region or Terai or even mountains, MBL strives to help in the clients with fast, useful and reliable service with personal touch as well as achieving the international criteria at the same time.

MBL feels to provide its full fledged bank service and had began its full fledged branch in the Jomsom located high up in mountains too. They have its corporate and business strategy of providing fast, efficient and reliable service to promote banking either by providing credits, debris and even safe and quickest remittance. The bank has targeted to open up 4 more branches in the year 2009/10 to be able to provide service with personal touch.

Mission and Eyesight chart:

Mission assertion of a business is a formal written affirmation which leads the targets and actions to be fulfilled. The mission affirmation serves 'the platform or context within which strategies are formulated' (Hill Ch. , Jones, G. , 2008) The quest statement also provides guidelines of the activities and objectives to get. G. Johnson, K. Scholes and R. Whittington described objective as 'overriding goal in line with ideals or expectation of stake holders'. (Exploring corporate strategy, pp13) Perspective statement of an organization is the future note where the company would like to be. G. Johnson, K. Scholes and R. Whittington defined eye-sight as 'desired future talk about: the aspiration of the company' (Discovering corporate and business strategy, pp13)

Mission Statement

"To Serve customers with best, effective and efficient service in affordable rates and offer every single service with personal touch. "

Vision Statement

"Being the top commercial bank or investment company with full fledged service around Nepal and be the No. 1 Loan provider of all 12 months identified by Nepal Rastra Bank"

Fig, 1 Quest and Vision chart of Machhapuchchhre Loan provider Limited

Goals and Goals:

MBL possess an objective to be about the most and perfect service focused bank alternatively than profit oriented one. MBL even experienced issued various programs and goals to assist in the increment of the assistance to its customers. In order to ease the banking service, MBL decided to start mobile phone banking by which the clients can stay static in touch using their financial transactions simply a step from telephone. They even had prepared a goal to issue bank cards which some banks just have the service which is often said as another important goal and targets to have a new turn in to banking. Furthermore, to broaden the service, MBL will be beginning its 4 more branches soon. The goals of the lender can be analyzed to provide maximum services to the people in every single part of Nepal.

Organizational Framework, Stakeholders and Management:

MBL is handled and been able by Chairman Mr. Surya Bahadur K. C. , 6 mother board of directors and CEO Mr. Bhaikajee Shrestha (http://www. machbank. com) With approximate figure of 320 staffs all over the branches and head office, the company uses Line organization but the decisions making power are being awarded to the branch managers for their chosen branch. Various decisions, ideas and policies are being decided by board users and final endorsement is done by the chairman however daily operational decisions are being approved by the CEO itself. Normally, the business has all its delegation of electric power being centralized except daily operational decisions aside from head office to the branch professionals for their specified branch. A lot of the stakeholders are the mother board of directors and some political systems too but most the opportunities are done by the plank of directors. Also some staffs take up some value of the stakes as well.

Chairman/Table of Directors

Chief Executive Officer

Fig. 2 Company chart of Machhapuchchhre Bank Limited

Business Account:

Products and Services:

MBL provides various ranges of services to the customers. It's the pioneer in adding the latest technology and to create the centralized banking software named GLOBUS BANK OPERATING SYSTEM developed by Temenos NV, Switzerland. Furthermore, MBL also provides internet banking, mobile bank, any branch bank, Trade Financing, Credits, ATMs (Automated Teller Machines), Remittance and various sort of debris. The company is very quicker going to release MBL credit cards and telephone bank as well. Also, MBL is the first loan company in Nepal to provide PSTN (People Switched Phone Network) to its respected customers.

Operational Performance:

MBL overall shows a good performance as per its unaudited financial records of the year 2008/09. Over its previous decades MBL shows increment on earnings as well as increment on its branches which of course demonstrates the company does well up to now. By the end of fourth quarter, MBL got a net income of 92M which ultimately shows that the business had numerous trades throughout the complete quarter.

(Source: Unaudited 4th quarter end (15/07/09) of the fiscal year 2008/09, http:// www. machbank. com)

Market Position and Share:

MBL overall have a good market value and goodwill at the same time. Currently the market value of the show is NPR 310. 00 per show which ultimately shows a green light on the improvement of the business. Also, the lender have got 31 branches till date and have its 10 future branches to be exposed which of course can be assumed as the market position of the company is good and doing well so far.

(http://www. nepalstock. com, Nepal STOCK MARKET as of closing price of 6th December 2009)

Part 2:

An examination of the external and interior environment of the business evaluated above and competitive position of the business (1000 words)

Every company is afflicted by its external and inside environment. They are the integral area of the companies itself. Exterior environment can be described as a couple of elements that are not the part of the organization but have got an influence upon the organization. The exterior environment may constitute of consumers, suppliers and competition which have the direct effect on the organization whereas the indirect elements of external environment may be federal government, Condition of the current economic climate, scientific and specialized growth, socio-cultural events and laws and regulations and procedures by the government. Hence, whatever is the new external environment, the business has to deal up themselves. In the same way, internal environment can be referred to as the environment within the organization itself. They may include employees, shareholders or stake holders etc. The inner environment can be customized or amended as the complete authority and rights are embedded on the business itself apart from exterior one.

Internal environment of the company:

The inner factors can be analyzed by various models however the inside environment can be analyzed by using Lewis six factors model which describes the in-depth analysis of inner environment in context of MBL. Also, these factors provide a broad idea of involvement of varied departments in order to describe the inner environment of the company.

IT (Information Technology):

MBL runs on the very advanced technology for the bank services. A new advanced technology called 'GLOBUS' is being integrated in the business which provides best services in the bank field. It is also regarded as the effective and powerful software which provides related back up services. The business likewise have its centralized it department which regularly looks ahead into develop new softwares and are alert 24 hours for just about any problems that occurs. Also, the company have released V-Sat network for the branches that are in mountain areas as Mustang, Damak etc. Overall, we can say that the business's IT sector is very much indeed advanced and is a lot far better in bank environment.

Management Functions:

MBL have a team of competent employees employed in various departments. They are really well certified and the lender also regularly conducts various training programs so as to make their workers much more in a position in any kind of situations. Also, the company organizes in house seminars to be able to promote the employees knowledge much more. Due to its talented employees, the company is increasing its branches and is also earning a lot more profit at exactly the same time. The management is much far better which is hence allowing the company to exist till now in the fierce competition of banking in Nepal.


Finance is one of an essential aspect for any firm. Considering the financial position of MBL, it is growing daily and earning much more profit. MBL received around NPR 92 M at the fourth quarter end of yr 2009 whereas matching earlier season of NPR 85M and is also earning day by day. MBL have a good relation with the central bank even and can concern up more stocks after needed. Thus it could be analysed that the budget of the lender is a lot more steady.

Research and Development:

MBL targets to the study and development of new areas of bank and services to its potential clients. The company has its own research and development division which focuses on to research new activities and to promote their services in to peoples. Because of the fierce competition in banking sector in Nepal, this section plays a essential role in to develop new plans and new services to the clients aside from other banking companies. Also, the business invests good amount of cash directly into research and development of new services towards future perspectives.


Marketing can be explained as "the management process that seeks to maximize dividends to shareholders by producing relationships with appreciated customers and creating a competitive advantages. " (Paliwoda, Stanley J, John K. Ryan, 2009). The business has its marketing section which co-ordinates with research and development division. They both have the same motive in order to build a lot more potentiality and increase its turnover in best services to the customers. Also, the team regularly dissolves in market to gather new ideas and principles which by the research and development office makes research and builds up new strategies.

HR (Human Resources):

MBL have another department which looks around human resources and administration of the company. MBL welcomes new generation to employ in the business and believes on equal chance for all. The section also administers and consists of in to budgeting day to day activities of the company. Also, HR division helps in to gather talented peoples and conducts various assessments on the list of employees to be able to gain the best end result of computer.

The internal environment of the MBL focuses on to its key components according to Lewis 6 factors model. Inspecting the model, we can demonstrate that the internal components of the company is very much effective and performs an important role in identifying the inner perspectives of MBL.

External Environment of the business:

External environment for MBL are usually customers, rivals, central bank's plans and socio-cultural aspects. The external environment performs a essential role in deciding the external status of the company. Normally, the exterior environment is uncontrollable but straight affects on the performing of the company. The external environment of MBL can be picterised by using PESTLE analysis. The PESTLE analysis determines the politics, economic, socio-cultural, scientific, legal and environmental aspects gives a specific picture of the exterior environment of the company.

Political factors:

Nepal is a country where politics factors play a vital role in every single industry. Because of the regular hits, riots in the country many more business are extremely much infected. In context to MBL, because of the political factors, the company is enduring a lot as they can't operate effectively during strikes, riots and because of the regular change of the federal government, various regulations are modified which hence creates a various issues into the banking of the company especially in MBL.

Economic factors:

The monetary situation of Nepal is always fluctuating. Due to it, the exchange rates of various currencies are changing on rapid basis. Also, as a result of development of various finance institutions in Nepal, customers have a higher bargaining power among the banks. This has affected MBL severely as the customers who are only on MBL are actually diverted on to the other companies. Even as a result of current economic climate in Nepal, most of individuals don't wish to invest money in to any projects and the ratios of consumer loans are decreasing because of the interest levels and the economy.

Socio-cultural factors:

MBL have certain social responsibilities and are retaining good because they are a lot more into providing good services to the clients. Also, the company invests certain sums directly into education for children's and different governmental and non governmental activities. It has been a development in Nepalese banking sector of making an investment money into various programs for child welfare, transportation and various educational activities. Also, the business has various schemes for different age groups and also contributes for their personal growth especially for children.

Technological factors:

The bank sector of Nepal is following advanced technology in to offering new services to the clients. Various advanced programs are being organized in to accumulate new improvements in terms of banking of the company. MBL adopts advanced technology directly into serve effective and accurate services to the clients. Also, the company even invests cash into its research and development office so as to unveiling new services in considering the needs of the current market.

Legal factors:

The banking of Nepal is governed by Central Lender of Nepal (i. e. Nepal Rastra Loan provider) The central standard bank regulates various regulations to be able to constitute the proper banking services to the clients. The central standard bank regularly changes regulations which hence make a huge confusions and amount of time in order to look at the new regulations. Also, the legal factors of Nepal have an effect on the proper performing of the banking services in Nepal. Not only in context of MBL but overall lenders in Nepal.

Environmental factors:

The environmental factors play a essential role in every single organization. In terms of MBL, environmentally friendly factors are usually behaviour of consumers, mass media and the government. Due to the reputation of MBL, various customers trust the business a lot more which is hence aiding in to gain success in company. Also, marketing also helps the company in to promote their services towards the general public as by the investment towards advertising sector as well as several other sectors too.

Thus inside and exterior environment performs a essential role in determining the company's stock portfolio from outside and inside level as well. In terms of MBL, we can show that the inner environment of the company is much more effective whereas the exterior environment is much more effected by various factors as these can barely be managed.

Identification and analysis of substitute strategies that would consist of commercial goals and aims and select a proper future new strategy.

Strategy is the mean by which goals are achieved and pursued on time. Corresponding to Gavetti G and Jan Rivikin W 'Strategy is choice in what it decides to do rather than to do'. MBL generally focuses into client satisfaction and excellent service to their business clients. To increase more customer satisfaction and performance, MBL always make an effort to increase the performance by various methods and latest technology. To be the best service provider, MBL aims to start additional branches so as the bank service can be accessible readily anywhere any moment. However, various choice strategies can be found out which will increase the customer satisfaction level and services at exactly the same time.

Ghemawat P. developed a model called AAA triangle which recognizes three different types of strategy. They refer to adaptation, aggregation and arbitrage. Version methods to familiarize with new technology and environment and aims to maximize company's local relevance. This also improves the profits and market show by making the most of a firm's local relevance simply by creating local models in each countrywide market that very good job undertaking all steps in the resource string. (Ghemawat, P. 2007) This platform even focuses on to the company to build up its new image on the new era. Since, the world is changing day by day and it is the new technology; the version into new environment is crucial. The a different one is aggregation where a company tries to achieve economies of range by developing services and services by creating both local and global procedures. It also attempts to provide economies of size by creating local or sometimes global procedures and involves standardizing the product or service offering and grouping together the development and creation process. The company also has to build up and introduce new products and services which moderately have benefits after everyone. Arbitrage means to locate and supply services in different parts. It is the exploitation of distinctions between nationwide or regional markets, often by locating separate elements of the supply string in several places. (Ghemawat, P. 2007) Thus as a future strategy, the company should now focus on to developing services and services and enlarging its business.

Fig 3. Ghemawat's AAA triangle framework

Another Strategy is BCG matrix produced by Boston Consulting Group. Relating to Kotlar (1996) BCG procedure helps to classify a company's all SBUs in line with the growth talk about matrix. It recognizes firm's strategic sections associated with its market show and market expansion rate. The progress show matrix can be divided into four types as follows:

Question Marks


High Low



Cash cows




Market share

Fig 4. Boston Consulting Group's BCG Matrix

There are two axis which signifies as Market Progress rate and Market Talk about. Each and every cell inside the matrix can be highlighted as follows:


Stars are high market expansion with regards to high market share. These are the pillars for each and every and every business. The personalities in MBL will be the deposits and loans and advances where the company can make much more income. This involves much more ventures as well and also increase in high market share and progress as well because if the business have more debris and loans, the business's profit increase subsequently.

Cash Cows:

Cash Cows are low growth in market but high market talk about. These require less investment but would impact on the market stocks. In MBL, cash cows can be viewed as for Letter of Credits, promises which require less investment but would have an impact on on the market shares. The money cows don't actually effect the marketplace growth with reference to stars.

Question Grades:

Question grades are low talk about sections in high market development. The question marks are some aspects that your management should think in order to conquer it and become superstars or cows. In MBL, the question markings can be market for cards (debit and bank cards) etc. The company must have special consideration involved marks.


Dogs are low development in market with low share price. They may create some amount of funds but doesn't make any guarantees on company's income. In MBL, Canines are lockers departments etc.

BCG Matrix gives a wide-ranging idea about the factors that are prevailing in a business which are giving much more profit or loss in terms of market group. This strategy could give the company an impressive idea about building or restructuring the business enterprise.

Comparing both the strategies, MBL should adopt Ghemawat's AAA triangle platform as this clearly matches to the business goals and targets to realize in future. The construction talks about that to stabilize a product, there should be an adaptation factors, aggregate it and arbitrage. MBL's aim for is usually to be the top commercial loan provider in Nepal and create services and services which can only just be possible if the company focuses on the platform. Also MBL should focus on the information movement to all the branches to be able to properly stabilize the new services. Neilson, G. , Martin K. and Forces E (2008) suggests that the corporations fails at strategy execution because each goes straight to structural reorganization and neglect the most effective drivers of effectiveness-decision privileges and information movement. Thus, prior to starting any new services or any new tasks, the company should gain its version factor so that they could adopt in new environment easily. After adopting in the surroundings the company must also increase its market into local and countrywide markets to achieve much more efficiency. Thus we can easily see that if MBL adopts Ghemawat's AAA triangle platform, the company would be able to attain its objective and vision that has been projected by them. This might raise the company's efficiency on any tasks and would help them to get much more success at the same time.

Kim C W and Mauborgne R, Blue Ocean Strategy argues that company's performance is not necessarily determined by market sectors competitive environment. It argues that strategy can condition the structure and it is called 'reconstructions'. They even add that rather than letting the surroundings determine your strategy, build a technique that identifies your environment. This features that rather than creating a strategy limited only in paperwork you will require to look at to the surroundings, aggregate them towards the longer term group and develop them in local or global market which is very much indeed similar to what Ghemawat had proposed in his construction.

Identify and develop outline time stand and resources necessity to use new strategy.

It's quite definitely apparent that to make each and every strategy successful, various resources and time furniture will be required. Proper devotion and knowledge is only going to have the ability to make a job successful. The strategy developed by Ghemawat as AAA triangle construction is something It is suggested to be implemented. The strategy "Equal opportunities to every people funding in their needs and inspire into a fresh track" would definitely help to start up bank into a fresh style and lead to a successful pathway. This strategy would develop an awareness and usage of the assistance to the utmost. Basically, new guidelines should be created for to make this strategy fruitful. Something where people can get financing easier should be initialized in order new business enterprisers could have the ability to start up their business with the bank's help at the same time. Various job opportunities should be require making up not specifically full time as initialization of in your free time or hourly job basis could be done so that maximum amount of fresh graduates or unemployed people could get employment and in return the organization will be benefited by different ideas, viewpoints and new way of working.

As Ghemawat's AAA framework suggests Version, Arbitrage and Aggregation, various resources should be allocated and new services to be launched as:

Launching various deposits schemes concentrating on to students, later years individuals and children. Inauguration of later years cards, student greeting card etc. that can be used in shopping centre, transportations etc.

Launching online monthly bill payments using their company accounts via mobile.

Use of Credit cards system in other places.

Cash Deposits in any cash tips or ATMs.

Collaboration with educational institutions for banking services.

Promotion of various NGO's, INGO's or programs to advertise them free of cost.

More job opportunities to account holders, insurance benefits or easily loan availableness facility.

The timeframe for this strategy entirely will depend on after how fast the power decides to start out it up however if this new style of business could be adopted, major changes will appear and the revenue will sky rocket like never took place so. Generally, the most notable level managers should require understanding the good thing about this strategy and how it could be implemented in a nutshell span of energy. New principles, ideas should be marketed which could cover the usual old style of banking as with the new age of development. Meanwhile, the experience of old peoples which new ideas and working style of modern age could become more helpful to boom the business also to take a glance on to the business with different perspective. Meanwhile, the company could use 30% of experienced old people and the others with new and enthusiastic peoples. This would certainly create up a milestone between old people's experience and new peoples working efficiency. Furthermore, invitation or similar opportunities should be started out so that the people who participate in lower community or of different age group could certainly use their efficiency to achieve the same goal.

Major practical departments also needs to be looked at while discussing the time frame and the resources required implementing AAA triangle construction strategy as:

HR (RECRUITING)/Administration: This office should recruit new employees and really should start up presenting sufficient trainings to its exisiting employees. The supervision should also allocate various resources required for to start up new services. Enough time frame because of this s

Finance: The financing department should allocate budget required for the resources and new tasks.

IT (IT): This is a primary substance as without new technology new services can not be launched in today's computer generation.

Marketing/Research and Development: Various studies should be conducted prior making decisions and hence publicity of services should be achieved at exactly the same time.

Therefore, summarizing the all we can analyze that the materials that are necessary for to apply the new strategy are time account, additional opportunities in various field, change of working system, Focus on to new peoples or modern day groups and also thought in the new technology. These sort of materials could certainly help in to apply the new strategy successfully and to start up the new efficiency on to the business however new understanding and very good sightedness after these should be developed at the start before proceeding ahead with these materials. Also enough time factor is highly recommended as well so that the strategy could be executed on the right time. Furthermore, it can be said that success entirely depends after opportunities and hard work, hence to be more successful, an individual can do effort and the business should be able to create new opportunities. Then only the strategies could really show up some colors on the development and development of the business.

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