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Chapter-I: 1.1 Background of The Study

Commercial banks are profit-making institutions that hold deposits from individuals and businesses in checking and savings accounts. They use these funds to make loans and earn profits from the difference between lower deposit costs and higher loan rates. As demand for better banking services increases, banks introduce innovative products and services to survive in competitive markets. Financial analysis examines bank statements to identify past or potential problems and provide recommendations for improvement by comparing financial components and examining their context. Commercial banks in developing countries like Nepal play an important role in economic development by mobilizing scattered public savings and channeling funds to businesses and production through their branches across the country.

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Pratikshya Karki
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56 views2 pages

Chapter-I: 1.1 Background of The Study

Commercial banks are profit-making institutions that hold deposits from individuals and businesses in checking and savings accounts. They use these funds to make loans and earn profits from the difference between lower deposit costs and higher loan rates. As demand for better banking services increases, banks introduce innovative products and services to survive in competitive markets. Financial analysis examines bank statements to identify past or potential problems and provide recommendations for improvement by comparing financial components and examining their context. Commercial banks in developing countries like Nepal play an important role in economic development by mobilizing scattered public savings and channeling funds to businesses and production through their branches across the country.

Uploaded by

Pratikshya Karki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER- I

1. INTRODUCTION
1.1 Background of the Study

Generally by the word – Bank we can easily understand that the financial institution deals with
the money. But there are different types of banks like; central bank, commercial banks, saving
banks, investment banks, industrial banks, cooperative banks etc. But when use the term bank
without any prefix or qualification it refers to the commercial banks.

Commercial banks are primary contributors to the economy of a country. So we can say
commercial banks are a profit making institution that holds the deposits of individual and
business in checking and saving account and then uses these funds to make loans. As banks are
profit earning concern; they collect deposit at the lowest possible cost and provide loan and
advanced at a higher cost. The differences between two are the profit for the bank. As the
demand for better service increases day by day, they are coming with different innovative ideas
and products. In order to survive in the competitive field of the banking sector, all banking
organization are looking for better service opportunity to provide their fellow clients. As a result
it has become essential for every person have some idea on the bank and banking procedure.
Now a day the banking sector reached to the most remote areas of the country and has gain a
good experienced in the growth of the economy. The present structure of the financial
institution is based on commercial banks.

Financial analysis is to analyze the achieved statement to see if the results meet the objectives of
the firms to identify problems, if any in the past or present and or likely to be in the future and to
provide recommendation to solve the problems. Financial analysis is the pinpointing of the
strengths and weakness of a business undertaking by regrouping and analysis of figures
contained in financial statement by making comparison of various components and by
examining. Their context, this can be used by financial managers as the basis to plan future
financial requirements by means of forecasting and budgeting procedures.

In developing country development banks are very important of the financial approach. They
always concern about how to make funds and how they lending and investing to their borrowers.
Financial institutions provide capital to the entrepreneurs for the development of industry,
trade and business by investing saving collected as deposits. They also providing good
services to their customers, facilitating their economic activities, thus, integrated and speedy
development of the country is only possible. When competitive and reliable banking services
are developed and carried to every hook and corner of the country.

One of the basic objectives of establishing a bank is to earn optimal profit by proper utilization
of fund. By mobilizing public money and channeling the same to various business and
production activities. Commercial banks contribute to the development of the country. In a
developing country like Nepal, saving is low and scatters in small amounts which individuals
residing in different number of the mobilization of such savings is made by commercial banks
through their branches established in different parts of the country.

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