Where the term "Bank" is mentioned, the general picture that comes to mind is that it is a finical institution, which receives money from the public as deposit and it to those who need it. Credit can be defined as the process through which the bank provide funds to those who need it. As such lending is an important function of commercial banks. After fulfilling the fixed assets needs and statutory obligation major portion of the funds available is dispersed in the form of loans. Beside this the amount charges in the form of interest in the loan is a major source of income to the organization. As such we can safely say that the institution which can mobilize large amount of credit is most likely to earn profit.
IN Nepal Rastriya Baniyya Bank is giving the strong economic support of loan and advance to various sectors. RBB is a commercial firm whose objective is naturally to maximize profit by providing banking services, the large amount of profit however, earns from loans and advances. It has earned more than 90% interest from granting loans and advances. The banks used the money deposited by the depositors to grant loans and advances. A loan is an advance the borrower has the liberty to repay the advances with a view to make use of subsequent drawl of loan once the loan is sectional the borrower has to draw out the amt. and pay interest. After that, all that the borrower to so is repay the loan together with interest either in lump sum or in number of installment.