Penetrating Accounts of Deposit

As we know that well thinker is always been appreciated and rewarded. But the core thing is of time bounding. A judgment, an analysis or making hypothesis is the core matter behind making invention and the policy making. The only constraint is how we thought about that hypothesis and how we analyze it. Conceptually, the tank of thought without the quantitative reasoning and empirical observation is regarded as only a mere theory, we called it as hypothesis.

History showed us the development of economy of developed country is from the influence of 18^th and 19^th century's hypothesis of different economists. Hypothesis of them was regarded as the canon of their core concepts and exercised so that become the catalyst behind the fast track growth of their development.

After the achieving point of the ambitious monetary policy of Nepal Rastra bank that to increase the share capital of commercial banks and financial institutions by 4 times, they increase the capital by the required figure but by this trend, they couldn’t increase their business so that every banks and financial institutions of the Nepal after the second quarter of FY 2074/75 show the decreasing Earning Per Share (EPS), that indicator is the critical for the wealth generation of the shareholders. However, financial market (banking sectors) of Nepal show the full utilization of the available resources (deposits) in to lending, that is proved by the tight CDD ratio in every banks' financial highlights.

Major constraints arise after the tight CDD ratio of banks and financial institutions is to seek more deposits from the market to expand the business more. So the every banks and financial institutions is now concerning to seek more deposits and make marketing strategies whether by offering higher rates or by offering the attracting offers. The deposit rate is at average of 11-12% of every banking institution now. This is the biggest concern to the investment as higher lending rate gives the investors to think more on his/her investment to run or not ? Whether the increasing lending rate is suitable according to the increasing rate of national productivity or not? How increasing bank rate react to the inflation of the nation? Whether there is the coordination between the monetary policy with fiscal measures or not? Increasing the rate on interest and taking over the deposit of other institution is of short term strategy to take deposit in the business. One bank opt that strategy to attract deposit, and other banks increase rate of interest to hold that deposit. So the rate is higher in the market.

In macro sense, if we look up to the data of saving account holders of the country, there is still 33 % of the population is out of the banking channel (Upto mid October 2017, only 20507612 deposit accounts were opened in Nepal- this percentage is calculated basing the base population of approx. 30 million)Source : Nepal Rastra Bank. All know that this is only the mechanism to promote the banking business by availing them to the banking channels. Policy makers of the country need to re-think about that data as soon as possible. Compulsory establishment of commercial banks in the every rural municipalities of the federal Nepal is the admiring policy that is recently opted by the government. Recent move of disbursing the social security allowance (Briddha Bhatta ) to the peoples by the mean of banking account is also the admiring subject to the Nepalese policy makers.

 Besides this, we can arrange other strategies too to increase the penetration of the public to the banking channels. What I am pointing out here is that of networking (making agents for account opening) for banking. However, this is only thinking and mere hypothesis, but the achievement after making the proper mechanism of it can able to add up more value to the business. Networking will put the synergistic effect to achieve the penetration of the saving accounts, investment too.

As we looking to the history of network marketing, Back in the 1930′ there was a man by the name of Carl Rehnborg. Whilst in China in between 1917 and 1927 he was first introduced to the benefits of using supplements in your diet and the additional health benefit that it gives people. When Carl got back to America he set up a company called The California Vitamin Company. In 1939 he re-branded the company as Nutrilite. It wasn’t until 6 years later that Carl invented the multi level marketing strategy to help boost the sales of his company. The big turning point came when two new consultants Jay Van Andel and Rich DeVos became distributors of the Nutrilite products and noticed the real power of this business modal as sales were growing at an exponential rate. They set up a competing company called Amway and bought a controlling interest in Nutrilite in 1972. In 1994 Amway then took over full ownership in is one of the largest companies today. Network marketing is basically just a different way of selling products to the end user. In traditional business, products and services are made by the manufacturer or by the business and service institutions; they are then sold to a retail shop and then sold on again to the end user. The banking institutions even sold the money market products to the accountholders by the traditional way of exploring products to the customers directly, but they couldn’t sell the information of products to the hidden customers.

By the mean of networking, the banks then use the money that would have been spent on advertising on paying their existing customers for recommending the products to the prospective customers. It is a much cleaner way of doing business. (Source: networkmarketinghq.co.uk)

As information costs change, so also does the institutional structure of the economy and so the whole way that businesses worked and interacted evolved to a system where both collaboration and competition could effectively coexist. As mentioned, trust is central to collaboration and business where you may be trusting large sums of money with other people.

The way a person developed trust was by how they act. A great deal was placed upon general conduct including personal integrity, keeping promises, paying debts and having a general sense of solidity and respectability. And that net worker made a further difference as they gave additional strong indication of your underlying values and concern. The codes of how mere banking business dressed and treated the prospective customers by making urge to open deposit accounts were not such an appropriate way besides the net-workers' recommended language to widely understand.

These factors became even more important than structural or religious affiliation as the rules of doing business grew, including working well with others and building an effective and worthwhile network of associates. What value of insurance companies are adding to penetrate for the increment of the national productivity by the means of networking (agency relationship), is the proof behind the enthusiasm to write this hypothesis.