Week 5

Being a finance student, most of the time I refer to Investopedia, it is a search engine related with financial subject matters. Although it started as an online financial dictionary, as the time passes it offers an abundance of financial content, from articles, dictionary terms, tutorials and video, to frequently asked questions and exam preparation quizzes. Notable is Investopedia's Stock Simulator and FXtrader, where users can register for free and practice their investing skills with $100,000 in virtual cash in either the stock market or fast paced foreign exchange market.

While going through this search engine, I found out that financial services sector is the largest in the world in terms of earnings and comprise the widest range of business. I also found an interesting article published by Harvard University named "The role of the financial services sector in expanding economic opportunity", which is a very good article. This article deals with the reach of financial services companies to the different class of the people. While going through this article I found how microfinance has changed the outlook of the financial services industries and some important facts about microfinance. Microfinance has become an important source of debts for people living under poverty line and the growing awareness has led to growing recognition of two important facts:

• The poor are able to pay(often very high interest rates) for financial services, and
• They present no greater credit risk than the average higher-income borrower. In fact, many microfinance institutions have better repayment rates than traditional commercial financial institutions.

By these shocking facts, it is clear that it is better to provide loan to poor people rather than providing it to higher-income borrower. It will help banks or financial institutions to reduce their bad debts and be secured of where they are investing their money.

In context of Nepal, banking industry is high-risk business but not necessarily high profit industry. It is quite difficult to manage risk and return in banking industry. May it be because of the political instability or due to liquidity crunch it has always been a high risk market. Likewise, internal management system in some of the commercial banks of Nepal is still following traditional management system of government. The pyramid shape organizational structure of some banks caused adverse effect in their business development. Hence, some banks are still lacking modern approach of reaching their customers or existing in the market.

Although we don't care about politics but politics will somehow care about us or affect our daily lives. Trade unions inside an organization gives pressure to the management to select their supporters as an employee which can prohibit selection of  independent graduates like us. Likewise, too much of liquidity crunch can lead to bankruptcy which will lower the rate of employment opportunities. Internal and external environmental forces could also affect our entrance to these industries. Internal forces like traditional management system, pyramid shaped organization structure and existence of trade unions and external forces like rules and regulations of government, change in market interest rates, inflation rates and political instability could affect our entrance. 

There will always be some factors which can affect our career whether in positive or negative way, it is better  if we prepare ourselves to tackle these factors and move on with our careers. 

Week 3: My career Industry

Being a finance student and having a management background, I have always aimed of being an entrepreneur or be a financial analyst else work in a financial services industry. As banking or financial institution sector is regarded as one the reputed sector and comprise of most of the financial studies, I want to pursue my career in banking sector.  With the thought of pursuing career in this sector, I did intern in Central Bank of Nepal which helped me to know more about the banking market. Likewise, financial services market in Nepal is increasing everyday and there are many opportunities in this market so career in this industry would be a best choice.

There are several categories of financial service providers active in formal and informal sectors in Nepal. Apart from the commercial banks, the financial system has outgrown to including development banks, microfinance development banks, finance companies, nongovernment micro-credit institutions, and non-government cooperative societies. Likewise there are many financial consultant firms operating in the market.

The initiation of formal banking system in Nepal commenced with the establishment of Nepal Bank Limited (NBL) in 1937, the first Nepalese commercial bank. The country's central Bank, Nepal Rastra Bank (NRB) was established in 1956. A decade after the establishment of NRB, Rastriya Banijya Bank (RBB), a commercial bank under the ownership of the Government of Nepal was established.  After declaring free economy and privatization policy, the government of Nepal encouraged the foreign banks for joint venture in Nepal and for the first foreign joint venture bank was set up as Nepal Arab Bank Ltd (now called as NABIL Bank Ltd). Following this, two foreign joint venture banks, Nepal Indosuez Bank Ltd (now called as Nepal Investment Bank) and Nepal Grindlays Bank Ltd (now called as Standard Chartered Bank Nepal Ltd.) was established. The banks

Today there are 32 commercial banks, 89 development banks, 76 finance companies, 22 micro finance development banks, 16 cooperatives and 37 nongovernmental cooperatives societies. This is one of the biggest industries in Nepal and comprise of US$ 15.2 billion. Two public banks, Nepal Bank and Rastriya Banijya Bank still dominate the market with a combined market share of 32.95 percent in deposits and 31.92 percent in loans. These two combined with the third largest commercial bank, Himalayan Bank with a 9.74 deposit market share and a 9.44 credit market share constitute almost half of the banking sector. In aggregate, the three largest banks possess 50.36 percent of total assets of all commercial banks.

The Banking sector of Nepal is facing its ultimate test amidst political instability, liquidity crisis, and unfavorable policies of the regulating body, sluggish economy and various other macro and micro economic factors. By strengthening the regulatory/supervisory system and improving the implementation of new standards on quality and quantity of capital and liquidity and risk management, opportunities can be created for the banking sector such as branch outreach to rural areas, developing hydro power and tourism etc. Though there are a lot of challenges in the banking sector, many opportunities still exist which are yet to be exploited to their potential for the benefit of the Nepalis.