Intershi Report on Uttora Bank Ltd

1.

Foreign Exchange Trading

Stamford University Bangladesh

Foreign Exchange Trading of Uttara Bank Limited

Internship Report On

Foreign Exchange TradingOf

“Uttara Bank Limited”

Submitted to: Sajeda AfrozLecturer(Internship supervisor)Department of Business Administration (Marketing)Stamford University Bangladesh

Submitted by: Sayed Sirajul IsalmBBA 03009614Batch no: 30(I) (A)Major: MarketingDepartment of Business Administration (Marketing)Stamford University Bangladesh

Date of submission…



December 6, 2009

Sajeda Afroz

Lecturer (internship Supervisor)

Department of business administration

Stamford University Bangladesh.

Sub: Submission of internship report.

Dear Madam

I hereby submit the internship report on the topic “Foreign exchange trading of Uttara bank

Ltd” intended to fulfill the partial requirement of my BBA program.

It would be difficult to me to get the work done without your proper supervision &guideline.

Tried my best to work sincerely to cover all aspects regarding the matter. Though I faced some

limitation in preparing this report, I have thoroughly enjoyed in preparing this internship report,

which has contributed significantly to my understanding on the essentials and important practical

knowledge.

I therefore hope that the report will fulfill the requisite objectives that you wanted to get done by

me.

Sincerely yours

…………………………

Sayed Sirajul Islam

BBA 03009614

Batch: 30(I)

Major: Marketing

Department of Business Administration



Student Declaration

I do hereby declare that this report entitled “Foreign exchange trading of Uttara bank Ltd” is

an original one and work done by myself in the fulfillment of Bachelor of Business

Administration of Stamford University Bangladesh as a part of academic curriculum.

………………………….

Sayed Sirajul Islam

BBA 03009614

Batch: 30(I)

Major: Marketing




certification

This is to certify that Sayed Sirajul Islam, student of Business administration (BBA) major in

Marketing of Stamford University Bangladesh has completed the internship report on “Foreign

exchange trading of Uttara bank Ltd”. I believe that he has completed this report by himself

while he has doing his internship in Uttara Bank ltd. This report is an authentic work on the

foresaid subject. No part of this report has been submitted by him for any degree, diploma, title

or recognition before.

He is permitted to submit the internship report & I wish him every success in life.

…………………………….

Sajeda Afroj

Lecturer

(Internship Supervisor)


Stamford University Bangladesh.


Head of Department’s Declaration

STAMFORD UNIVERSITY BANGLADESH

The internship report, entitled “Foreign exchange trading of Uttara bank Ltd”, submitted by

Sayed Sirajul Islam, ID No- BBA 03009614 Batch number 30( I ) is a student of the Department

Of Business Administration, Stamford University Bangladesh, has been accepted as satisfactory

for the partial fulfillment of the requirement for the degree of Bachelor of Business

Administration and approved its style, method and contents.

-----------------------------------------

(Mohammad Nazmul Huq)

Assistant Professor & Head of Marketing)




Preface

The field of banking has always been a source of inspiration for me during my entire academic

career. To work in a bank, to acquaint with its working mechanism was always a point of interest

for me and God gave me a golden opportunity to complete my internship at UBL, one of the

leading bank in Bangladesh. I had a general idea about the banking, but once I practically started

the internship in banking field I observed much about banking, I realized the importance and

significance of commercial banking for the development of economy. To adjust myself in such a

large commercial organization was not an easy task, but by the grace of Almighty Allah aid my

internship in a befitting manner and I learned a lo about the overall banking arena. This

expanded my vision about the banking sector, which in turn enabled me to make an appraisal of

the economic situation of our country.

This report is a thorough essence of my rigorous studies which I undergone

through in a period of three months in a commercial bank. I have exclusively

studied and observed the operations/ functioning of the bank and tried my best to

abreast myself with all the dimensions of the banks. The purpose of this report is

to evaluate the performance of UBL in diversified avenues and give concrete

recommendation for further improvement. Although the bank is functioning

satisfactory, but the path to ultimate success is still full of threats and hurdles.

It was a great experience to work there. I am thankful to all those who helped me in one-way or

the other and guided me n the preparation and compilation of this report in a presentable fashion


ACKNOWLEDGEMENTInitially, I would like to thank the almighty Allah for giving me the strength to complete this

internship report. Then to say that I could not be able to complete this report without the help of

some honorable person who gives me proper guideline to go ahead.

First I like to express my deepest sense of gratitude to my honorable teacher & supervisor of my

internship program Sajada Afroz.

I am very much pleased to offer my thanks and gratitude to the HRD of Uttara bank Ltd. For

giving me the opportunity to work with the bank in its Jatrabari Branch. I would like to give

thanks to Tanvir Ahmed (2nd Officer), Bushra Mazid, Abdul Hamid, S M Rafiqul Islam of

Jatrabari Branch to help me throughout my internship program.

Very special thanks to Branch manage and Relationship Manager.

I also give a special thanks to all the personnel of Jatrabari Branch of Uttara bank ltd for

helping me to collect data.


Executive summary

This internship report is a partial requirement for the Bachelor of Business Administration

program. The report is based on working experience on UTTARA Bank Ltd (UBL). I was

assigned in the Jatrabari Branch, Dhaka of Uttara Bank Ltd. This report gives a clear idea of the

activities, operation strategies and the performance of UTTARA BANK LTD.

There are several variable taken for analyses of the report which are number of letter of credit

opening, irrevocable letter of credit, commission on foreign exchange, volume of import, back-

to-back L / C, foreign documentary bills for purchase, export finance, volume of export, foreign

currency deposit etc, exchange gain, foreign remittance.

The data has been collected from primary and secondary source. Primary sources are group

discussion, practical work experience, case study. Secondary sources are DSE library, several

books and periodicals related to the banking sector, Bangladesh banks report, different circular

sent by the head office and Annual report of Uttara bank limited (UBL)

The report consists of six parts. The first part describes the introductory matters of a formal

report which includes objectives, methodology, limitations etc.

The second part gives a concise description of the organization. These include origin &

evaluation of Uttara bank limited.

Mr. Azharul Islam is the chairman of the bank. His progressive leadership and continuous

inspiration provided a boost for the bank in getting a foothold in the financial market of

Bangladesh. The bank was formally known as the Eastern Banking Corporation Limited which

started journey on and from 28/1/1965. Now with 211 branches it has created a strong network in

Bangladesh. Besides, to create a strong connection with the globe 600 affiliates are active to

support the bank.


The third part of the report analyzes the theoretical aspects of Foreign Exchange Activates of

Uttara bank limited. There are three kinds of foreign exchange transaction –Export, Import and

Foreign remittance. Foreign exchange business starts with a letter of credit (L/C).This part I also

describes various terms used in foreign exchange business like back-to-back L/C, FOB,

understanding shipment, LIM, LTR etc.

According to export and import control act 1950 the officer of the chef controller of import and

export provides the registration (IRC) to the importer. After obtaining this, this person has to

secure a letter of credit authorization (LCA) from Bangladesh bank and then a person becomes a

qualified importer. He is the person who requests or instructs the opening bank to open and L/C.

He is also called opener or applicant of the credit.

UTTARA BANK LIMITED is an authorized dealer (AD) to operate foreign exchange

transaction. With the legal formalities the bank serves the customers with export, import &

remittance service. In the process of providing remittance service it sells and buys foreign

currency, the conversation of one currency to another takes place at an agreed rate of exchange,

which banker quote one for buying and another for selling. There are various types of income of

the bank in Foreign Exchange Sector.

The forth part of the report provides leanings through my internship and comparison between

textual works in school and in internship.

The fifth part is the analysis & findings of the report. The working environment of UTTARA

BANK LIMITED is very conductive and friendly. Although they don’t maintain strict

hierarchical protocol among the staffs the environment is much more relaxed and easy. The

staffs are specialized in their respective fields. Each of them works on their own and there is

close supervision from the top. The motivation of the employees comes from the very sense of

responsibility.

The sixth part ends up the report with complementary remarks & conclusion.


With all analyses and judgment, I have tried to evaluate the performance of UTTARA BANK

LIMITED (UBL) in foreign exchange activities. I express my heartiest gratitude to all the parties

related to make the work done.

Contents

List of acronymsList of TableList of Graphical Presentation

1.1 Introduction1.2 Objective of the study1.3 Methodology of the study1.4 Scope & limitation of the study

2.1 Background of UBL2.2 Board of director2.3 Vision of UBL2.4 Mission of UBL2.5 Hierarchy of UBL2.6 Risk Management2.7 Product & service2.8 Bank operational area2.9 List of Branch2.10 Capital & reserve2.11 At a Glance Profitability Position of UBL2.12 Total Asset Position2.13 Shareholder equity position2.14 Historical performance of UBL2.15 About the department I worked

3.1.1 Import3.1.2 Export3.1.3 Foreign remittance


3.1 Foreign Exchange Activities

Chapter three: Foreign Exchange Trading and Loan & Advance

Chapter Two: Overview of UBL

Chapter one: Orientation of the study

Particular Page no

3.1.4 Miscellaneous Services by this Department3.1.5 Risk in Foreign Exchange Business

4.1 Learning through my task

5.1 Analysis5.2 Finding & Discussion

5.2.1 Investment income position5.2.2 ROA5.2.3 Investment income as % of total deposit5.2.4 Cash as % of total assets5.2.5 Dividend as % of net income5.2.6 Return on investment5.2.7 Return on equity5.2.8 Price earning ratio5.2.9 Earning per share5.2.10 Market value per share

6.1 Recommendation6.2 Conclusion


Chapter Four: Assessment of Internship

Chapter Five: Report Analysis & Findings

Chapter Six: Recommendation & Conclusion

Bibliography

Acronyms

Terms ElaborationAD Authorized DealerALCO Asset Liability CommitteeALCOM Asset Liability Management CommitteeBDT Bangladesh TakaBAS Bangladesh Accounting standardsBIBM Bangladesh Institute of Bank

ManagementCA Current AccountCRA Credit Rating AgencyCRM Credit Risk ManagementCRR Credit Reserve RequirementCRISL Credit Rating information & Service

Ltd FD Fixed DepositFDR Fixed deposit ReceiptsDDP Demand Draft PurchasedDPS Deposit Pension SchemeGD General DiaryHO Head OfficeIBCA Inter Branch Credit AdviceIBDA Inter Branch Debit AdviceIBP Inland Bill PurchaseID International divisionLO Local officeLC Letter of creditMGRM Money GramNBR National Board of RevenueNFCD Non Resident Foreign Currency Deposit

AccountPO Pay OrderRDS Return Dealing SystemRFCD Resident Foreign Currency Deposit

Account


RM Relationship ManagerSB Saving AccountSTD Short Term DepositTT Telegraphic TransferUBL Uttara Bank Limited

List of Tables

Particular Page noBoard of DirectorDouble Benefit schemeMonthly Deposit SchemeHistorical PerformanceTransfer Scroll for TTParties to the L/CAccounting Procedure in case of L/C OpeningRemittance ProcessSector wise loans & advances positionLoans, Cash Credit and Over DraftBills Discounted and PurchasedNet loan & advanceMaturity grouping of loans & advancesLoans & advances on the basis of significant concentrationGeographical area basis loans & advances


List of Graphical Presentation

Particular Page noCapital & Reserve FundAt a Glance Profitability Position of UBLTotal Assets position of UBLShareholder Equity PositionInsert paid on different accountImport businessExport businessForeign remittanceLoans & AdvancesSector wise loans & advances positionROAInvestment income as % of total deposit(2008)


Chapter oneOrientation of the study


Introduction of the topic

The necessity of foreign Exchange activities and Risk management can not be ignored in any

ways because of its dependency in the banking sector. It can be considered as the backbone of

any bank as it shows the ways to do all the banking tasks and it is actually the starting point of all

the banking operations. It provides the opportunity to its clients to deposit money and at the same

time attractive services are ensured as per the customer needs, wants and close accounts, mail

transfer, demand draft, receive Cheque for clearing etc. It also offers the customers to deposit

money for FDR (Fixed Deposit Receipts) with attractive interest rate at maturity. So, all the

operations are started from the Foreign Exchange activities and all of these are based on the

monetary transition. As a result, recording of all monetary transaction has become compulsory in

the modern business sector. Not only recording, but also it includes the process of

communicating, summarizing and explaining the economic events of a bank within a specific

period of time. So considering all of these reasons, I have chosen the “Identify and Evaluate

Foreign Exchange Trading and Risk Management of Uttara Bank Limited (UBL)” as my

internship topic. Where I will considerate on marketing practice and remittance program of UBL.

I strongly believe that any business graduate thought to have the basic understanding about

Foreign Exchange Trading and Risk Management as it can show the ways to enter in the new

business of its strong relation with all of the financial activities. In all of my internship report I

have tried of my best to provide almost all of the basic idea of Foreign Exchange activities and

Risk Management and basic accounting procures that’s practiced in all of the branches of UBL. I

have also concerned about the performance evaluation from different perspective.


Objective of the Report

Broad Objectives:

The main objective of this report is to know about the Foreign Exchange activities and

evaluating the performance of the bank and also to find out the ultimate solution to solve all

of the problems that the bank is facing. That will cover mainly foreign remittance department

of UBL and some basic accounting practice of the Bank.

To make familiar with the terms what I have studied during BBA course.

To know about the banking sector in Bangladesh.

To get an overall idea about the management terms and operation strategy and the

limitation of a bank by going though the Uttara Bank Ltd.

To get the general idea about corporate level.

Specific Objectives:

To represent an overview of and foreign Exchange activities and basic accounting

practice.

To find out the difference of academic and real life accounting practice those are

practiced in the bank.

To know the tasks of different department of the bank.

To know how the bank is concerned about the changing environment.

To understand about day to day operations of the bank.

To realize how the customers are behaved in different situation.

To identify the usages of modern technology in different operation.

To identify how the bank is careful to segregate the duties & responsibilities of all

employees.


To represent what types of analysis the bank undertakes for its financial events.

To know about the culture that the bank follows.

To find out where the bank was and where the bank is standing at present time.

To identify the main problems that the bank is facing.

To recommend on how the problems can be fixed.

To know the objectives and planning of a bank.

To be familiar with the banking sector.

To gather comprehensive practical knowledge on the total banking function.

Critically analyze the functions and the operation of each level of the Uttara Bank

Limited.

To fulfill the partial requirement of BBA degree.

To get the practical idea about what we learn during our course.

Create a chance to know the corporate culture.

To analyze the Islamic Banking situation and performance of Uttara Bank Ltd.


Methodology of the Study

To meet the objectives of the study I have applied various qualitative & Quantitative techniques

like statistical tools & software and other relevant methods. Formal and oral discussion, direct

observation, questioning clients and printed papers of the bank were found useful.

Source of information

Primary Source:

The primary data were collected from Jatrabari Branch of ULB that was my working place for

last two months. During that time, interviews of the manager & different officials of different

departments were taken. Besides that various organizational procedures & structures were

observed & communication directly wit the customers was helpful, Primary data were mostly

gathered from the discussion with the employees & through surveys on customers of the

organization.

Secondary source:

Secondary sources of information have also been used for the research study that can be

presented like the following:

Internal Sources

● Annual Report of UBL

● Various publication of the bank

● Various circulars issued by head office


● Any information regarding the Banking sector

External Sources

● Different books and periodicals related to the banking sector

● Stamford University library

● Magazines & newspapers


Scope and Limitation of the report:

Uttara Bank Limited is one of the traditional banks of Bangladesh. The scope of the report

covers the organizational overview & structure, background, basic functions, transaction

procedure, customer dealings & performance of the bank. With a view to completing the whole

report, it was required to concentrate on the overall banking process. However, in this report, the

presentation of the basic functions & process of Foreign Exchange activities and Risk

Management with the basic accounting practice are focused that the bank is following and also

different analysis & comparison are showed to evaluate the performance of the bank. But to

complete all of these mentioned above, following limitations were present.

Enough time to concentrate on all of the investigations was required.

All sufficient data & information were not enough for the purpose of study & assumptions

were made in some cases.

The website of the Bank was not that much rich to collect data.

This report has been prepared on the activities of all branches, but visiting all the branches to

collect data & information was not possible.

Sometimes such kinds of asks were given in the Bank that was no way related to my topic &

really it was responsible to beak my concentration in my major area of investigation.


Chapter TwoOverview of UBL

Background of Uttara Bank Limited

Uttara Bank formed in 1972 as a scheduled bank with assets and liabilities of the Eastern Banking Corporation set up in East Pakistan on 28 January 1965. It started banking business 22


June 1965 and became a member of the Dhaka Clearing House on 17 September 1965. At the time of establishment, Eastern Banking Corporation had a paid up capital of Tk 1.42 million and deposit resources of about Tk 10 million. It was the only scheduled bank formed with capital raised entirely from the small income group of people of East Pakistan.

Eastern Banking Corporation was nationalized under the Bangladesh Banks Nationalization Order 1972 and its name was changed to Uttara Bank. At that time, the bank had 182 branches. The government retracted 95% of its share capital and allowed it to operate as a private bank. It was transformed into a limited company on 15 September 1983. On 31 December 2000, the authorized capital of the bank was Tk 200 million divided into 2 million ordinary shares of Tk 100 each. It’s issued and paid up capital was Tk 100 million, of which Tk 5 million is subscribed by the government. The bank is listed with both Dhaka and Chittagong Stock Exchanges.

The bank performs all traditional commercial banking functions. It renders agency services to the government in food procurement and collection of government revenue through the network of its branches all over the country. The total volume of foreign exchange business handled by the bank during 1998-99 amounted to Tk 16,600 million which comprised exports servicing Tk 4,450 million, imports financing Tk 10,560 million and remittances facilities Tk 1,590 million. The bank has correspondent relationships with 300 foreign banks/bank offices and exchange houses in 72 countries. With the objective of attracting the Bangladeshi wage earners abroad and the non-resident foreigners to invest in Bangladesh, the bank offered them the opportunity to open non-resident foreign currency deposit accounts and foreign currency current deposit accounts with it. Further, the bank floated Wage Earners' Development Bond and established Wage Earners Investment Cell. The bank has some other schemes to induce the wage earners to invest their savings in the securities market of the country.

The volume of deposits at the bank in 1972 was Tk 4.43 million of which Tk 2.44 million comprised demand deposits. Prior to privatizations in 1983, the deposits were Tk 21.81 million and their volume increased to Tk 24,730 million in December 2000? Total loans and advances including bills purchased and discounted amounted to Tk 2.34 million in 1972 and Tk 22,307 million in December 2000. The interest rate offered by the bank on the savings deposits in both rural and urban areas is 7.25%, while the lending rates charged by it on different sectors varied between 10% and 16.5%, the lowest being charged on export credits. The broad economic areas in which the bank provided lending and the total outstanding amount of advances to those areas up to June 1999 were (a) agriculture and fisheries Tk 26 million, (b) small and cottage, large and medium sized industry Tk 4,675 million, (c) retail/wholesale trade and hotels and restaurants Tk 2,202 million, (d) transport/communication and storage Tk 169 million, (e) special credit programmers including POVERTY alleviation Tk 134 million, (f) INSURANCE, real estate and business services Tk 5,523 million, and (g) others Tk 3,771 million.

In December 2000, the total assets including off-balance sheet items of the bank were valued at Tk 31,296.5 million. The quality of assets was severely deteriorated due to accumulation of a huge amount of non-performing loans. The bank's classified loans amounted to Tk 7,372 million in December 2000. The bank's investments in government securities, TREASURY BILLs, debentures and shares and other approved securities were Tk 108.5 million in 1972 and Tk 2,564 million in 1999. Up to December 1999, its loans to the government amounted to Tk 50 million.


http://banglapedia.search.com.bd/HT/T_0217.htm

http://banglapedia.search.com.bd/HT/I_0077.htm

http://banglapedia.search.com.bd/HT/P_0240.htm

In addition, the bank lent Tk 115 million in 1999 in poverty alleviation projects and Tk 129 million in a special project called Uttara, the objective of which was to assist the customers with credit facility for buying consumer goods.

In 2000, the total and net income of the bank was Tk 3,060 million and Tk 1,040 million respectively. The bank's net interest income increased during the period from 1992 to 2000. But the increase in operating expenses arrested the growth of its net income. Also, the compulsory maintenance of provisions for classified loans from profit is responsible for slow growth of its net income.

The management of the bank is vested in a 15-member board of directors consisting of a chairman and 14 directors. The managing director is the chief executive assisted by a deputy managing director and 2 assistant managing directors. In 2001, the bank had 198 branches (150 urban and 48 rural) and the number of employees in all its branches 2,822 including 84 executives, 1,756 officers, 326 assistant officers, and 656 employees of non-officer grades. The bank's branch banking is supervised through its 12 zonal offices in different parts of the country.

Transportation:

In the year of 2007, total vehicles of the Bank were 98. The vehicles are being used to

transportation the Banks employees & to transfer money from feeding branches to other

branches.

Premises of Bank:

UBL has its own building of 18 stored that is using as head office located at Motijheel

Commercial Area of Dhaka city. Bank has also its own building in the following locations-

Local office,

Eastern Plaza branch,

Hotel Isakha branch,

Dar-us-salam road branch,

Lease financing unit in Eastern Tower Building,

Training institute of the Bank at Eastern plus ( 145, shantinagar), Dhaka,

Nabagram branch in Manikgonj,


Zonal office and KDA branch in Khulna and Shaheb Bazar branch in Rajshahi,

SWIFT:

At present International Division of Head Office and 38 branches are under SWIFT operation.

As a result the bank has been able to transmit letter of credit, fund and message instantly

throughout the world at low cost.

Vision of the UBL

To be the most efficient bank of terms of customer service, profitability and technology application.


Mission of the UBL

Cost reduction through integration of technology at all levels.

Continuous improvement in its business policies and procedures.

Goal:

On delivery of quality service of all areas of banking activities with the aim to add increased value to

shareholders investments and offer the highest possible benefits to the customers.

Objective

The main objective of Uttara Bank Ltd. Is to maximize the profit through customer satisfaction

which very much reflects the idea of fundamental marketing concept. It has been pursuing to earn

maximize profit by providing best and improved customer service.

To ensure high return on investment and with different products and services.

To remain as the market leader, diversification of business and the automaton of banking

operation.

To play a significant role in the economic growth of this country.

To strive for profit and sound growth.


2.4 Board Of Directors Of Uttara Bank Ltd.

ChairmanMr. Azharul Islam

Vice ChairmanMr. Iftekharul Islam

Managing Director Mr. Shamsuddin Ahmed

Mr. Shah Habibul Haque

Director

Mr. Abul Barq Alvi Director


Mr. Faruque Alamgir Director

Col. Engr. M. S. Kamal (Retd)Independent Director

Mr. Syed A. N. M. Wahed Director

Mr. Sk. Amanullah Director

Major General Prof. M. A. Mohaiemen (Retd) Director

Dr. Md. Rezaul Karim Mazumder Director

Lt. Col. Dewan Zahedur Rahman (Retd) Director

Engr. Tofazzal Hossain Director

Mr. Mohammed FarooqDepositor Director

Mr. Muhammad Quamrul AhsanDepositor Director

HIERARCHY OF UBL

BOARD OF DIRECTORS


Azharul Islam Chairmen

Iftekharul Islam Vice-Chairman

Shah Habibul Haque Able Barq Alvi Col.Engr.M.S.Kamal(Ret) Director Director Director

Sayed A.N.M.Wahed Sk.Amanullah M.J.Prof.M.A.Mohaiemaen Director Director Director

Dr.Rezaul Karim Mazumder L.Col.Dewan Zahedur Rahman (Ret) Eng.Tofazzal Director Director Director

Mahammaed Farooq Muhammad Quamrul Ahsan Asif Rahman Director Director Director

Mr. Shamsuddin Ahmed Managing Director

NAME OF THE SENIOR EXECUTIVE


Managing DirectorShamsuddin Ahmed

Additional Managing Director Shaikh Abdul Aziz

Deputy Managing Directors Md. Abdul Halim

Abdul Matin Abu Ahmed

Executive General ManagersMd. Fazlur Rahman

Salim Nazrul Hoque ChowdhuryMd. Kamal Uddin

Md. Ali Newaz KhanSabera Aktari Jamal

GENERAL MANAGERS

Md. Abdur Rashid Sayed Shaikhul ImamMd. Namul Haq Md. MobinuzzamanSribash Chandra Sarker Qazi Shanaz BugumMd.Abdul Hamid Md. Abdul MazidA.K.M. Idris Ali Faquir Abdul AwalKazi Md. Monzur Hossain Md. Mosharaf HossainNarayan Chandra Basak Mohammed Rabiul Hossain

DEPUTY GENERAL MANAGERSForrokh Ahmed Md.Abdus SatterAbdul Bashir Ahmed Iftekhar Zaman


Sheikh Sadeque Ahmed Mohammad AliSulzar Ahmed Rowshanara HafizGulzar Hossain Pramanik Jalal Uddin Ahmed Abdul Hannan Matubbar Ashutosh Kumar PaulAlamgir Hossain Howlader Md. WazhiullahUttam Kumar Bhuiyan A.H.M.YaheyaMd. Ashraful Huq Md. Mofizul Islam Md. Shamsul Alam Bhuiyan Gulshan Ara BegumSarder Ruhul Amin Ranjit Kumar DuttaNirmal Chandra Paul Md. Rafiquddin AamedAshoke Kumar Sikder Md.Aminuddin BhuiyanMd. Ashraf –uz- Zaman Haradhan Chandra RouthMd. Abdul Quddus Hassan MahmudBegum Khairun Nahar Maksudul Hasan Md. Abdul Razzaque Md. Osman Gani A.K.M. Shahidul Alam Md. Siddiqur RahmanKazi Rezwanul Kabir Md. Reaz HasanMd. Golam Mostafa

Risk Management:


The risk management within the bank always calls for careful and responsible handling of the

risks. Commercial banks are exposed to various risks. The management of Uttara bank limited is

fully cognizance to the importance of various risks involved in the banking business. Risk

management is one of the critical factors in banking. Bangladesh bank has identified 05(five)

core risks of management of the bank and has provided necessary guidelines for prevention there

from. The five core risks are:

Credit risk management.

Asset liability management.

Foreign exchange risk management.

Prevention of money laundering.

Internal control and compliance.

Effective risk management is indispensable fro smooth commercial operation in all spheres of

business. So Uttara bank limited has implemented the following risk management system

prepared in line with guidelines go Bangladesh bank to prevent relevant risks.

Credit risk management:

Credit risk is defined as the risk that arises from the uncertainties of counterparty’s ability to

meet its obligations to the bank as they become due. Our endeavor in identifying, measuring,

monitoring and controlling credit risk fro each borrower and also at the portfolio level are

working as the guiding principles of credit risk management. Uttara bank limited always

acknowledges effective risk management as the key to steady and stable growth for the bank.

The bank own lending policy has been introduced in the bank in line with the directives received

from the Bangladesh bank and the government. The branches are the business unit of the banking

system. The loan application assessment process starts at branch level by the relationship

manager (RM) through zonal office and ends at credit committee with its recommendations.

Mentionable that credit approval authority has been delegated to the individual executives.

Proposal beyond their delegation is submitted to the executive committee and the top

management.

Asset liability management:


Asset liability management (ALM) is an integral is an integral part of Bank Management. It is

essential to have a structure and systematic process for managing the balance sheet. Efficient

Management of both on and off balance sheet activities of the bank by maintaining required

liquidity position leads to higher profit keeping the soundness of the bank intact. The Asset

liability Management Committee (ALCOM) holds meetings regularly to discuss both the

opportunities and threats to the Bank balance sheet & Liquidity. As per Bangladesh Bank

guidelines the bank formed Asset Liquidity Committee with combination of following members:

Managing Director & CEO

Additional Managing Director

Deputy Managing Director

Head of treasury

Head of ICT (Information & communication Technology)

Head of marketing Division

Head of Central Accounts Division

ALCO members sit at least once in a month to review mainly the aspects of economic and

money market status risks as a whole, liquidity risks related with Balance sheet, transfer pricing

risks, risks related to interest rate on deposits and advances and various important aspects

including monetary policy of Bangladesh Bank. The ALCO is also entrusted with the

responsibility of ensuring sufficient liquidity at all times to meet its obligations when these

become due without compromising the earning potential of the funds.

Foreign exchange risk management:

Foreign exchange risk is the exposure of an institution to the potential impact of movements in

foreign exchange rate. Managing foreign exchange risk is a fundamental component in the safe

and sound management of all institutions that have exposures in foreign currencies.

Foreign exchange risk arises form adverse movement of exchange rate when the bank has

position in foreign currencies which may affect the profit of the bank. The introduction of market

based exchange rate of Taka has resulted in both trading opportunities and associated foreign

exchange volatility risk. Foreign exchange risks are the potential change in earning arising due to

change in foreign currency prices. Hence the enhanced needs for management control system.

The front office of the banks Treasury Department continues to determine foreign exchange rate


& tries to reduce the associated risk while the back office settles all foreign exchange

transactions and reconciliation. As a result treasury activities of the bank are being operated

smoothly and efficiently.

Prevention of money laundering:

Money laundering risk can be defined as the violation of regulations and being negligent in the

prevention of money laundering. In order to prevent and control illegal hundi, unauthorized

transfer of money abroad and money laundering, the bank has taken various steps. The bank

continued its anti money laundering campaign through training programmed. The regulatory

requirements are complied with and the KYC (Know Your Customer) and TP (Transaction

Profile) are followed for opening new accounts for prevention of money laundering. Manual for

prevention of money laundering has been established as per Bangladesh Bank guidelines and the

Bank has taken all types of steps to prevent acts of money laundering. For mitigating the risks

the bank has a designated chief compliance officer at branches who independently review the

transactions of the accounts to verify suspicious transactions.

Internal control and compliance:

The bank stresses on both the design and operation effectiveness of its internal control system to

protect the bank from possible loss that may arise from either intentional / unintentional errors or

from fraudulent activities. The bank has taken various steps for ensuring internal control and

compliance as per directives and guidelines of Bangladesh Bank for managing core risk in

banking with a view to conducting banking business more effectively and efficiently.

Management through Internal Control and Division undertakes periodical and special audit of the

branches and departments at Head Office for review of the operation.

Product & service:


The bank not only the traditional banking products and services but also some tailor made products in liabilities and assets monthly savings scheme and double benefit scheme etc. for deposit mobilization in one hand and consumer credit scheme, lease finance, person loan, Uttara house repairing and renovation scheme and SME financing in another hand, besides, the bank has also some electro-banking products based on information technology of which Q- cash UBL ATM Debit card is worth mentioning for providing 24 hours services to customers.

Special loan scheme

Consumer credit UBL started Uttara Consumers Credit Scheme from 1996. UBL offers

opportunity of financial assistance for-

● Motorcycle/car-New or re-conditioned.

● Refrigerator/Deep Freeze.

● Television/VCR/VCP/VCD

● Radio/Two-in-one/Three-in-one

● Air-Conditioner/Water cooler/Water Pump

● Washing Machine.

● Personal Computer/UPS/Printer/Typewriter

● Sewing Machine.

● House hold furniture- Wooden & Steel.

● Cellular Telephone.

● Fax

● Photocopier.

● Electric Fan-Ceiling/Pedestal/Table.

● Bi-Cycle

● Dish Antenna.


● Baby Taxi, Tempo/Microbus/ (For self employed persons)

● Kitchen articles such as Oven, Micro-oven, Toaster, Blender, Pressure Cooker etc.

Special Features:

● No collateral security is required.

● Simple rate of interest.

● Quick sanction.

● Maximum Loan amount Tk. 3, 00,000/-

● 5% incentive on total interest charged

Required Documents:

● Documents related to applicant’s job to prove himself.

● Two copies passport size photographs.

● Photograph of nominee (if any) duly attested by the account holder.

Personal loan

Personal Loan Scheme for Salaried officers-

● Emergency expenses for own marriage of a service-holder or his dependents.

● Emergency expenses of urgent surgical operation/medical treatment.

● Emergency educational expenses of the children for admission/purchase of books,

examination fees etc.

Special Features:


● Any permanent salaried employee aged between 20 to 55 years is eligible to get loan.

● No collateral security is required.

● Maximum Amount of loan Tk. 1, 00,000.

Required Documents:

● Documents related to applicant’s job to prove himself.

● Two copies passport size photographs.

● Photograph of nominee (if any) duly attested by the account holder.

Deposit scheme

Savings account:

Any Bangladeshi Notional residing home or abroad may open savings account

with UBL

The account may be opened insingle/jointname.

The account holderamy nominate his nominee in this account.

The nominee can get the balance amount without submitting succession certificate

after the death of account holder.

Things to concentrate:

* Minimum amount to be kept in account:

* Cheque-book facility at negligible cost.

* Opportunity to apply for safe deposit locker facility

* Collect foreign remittance in both T.C & Taka draft.

* Transfer of fund from one branch to another by

* Demand Draft

* Mail transfer


* Telegraphic Transfer

* Transfer of fund on standing instruction arrangement

* Collection of cheques trough clearing house.

* Issuance of Payment Order/Call Deposit.

Things to be carried on & special guidelines to open SB Account

Account opening form delivered by UBL

The account opening form and signature card are to be filled in and duly signed.

Two copies passport size photographs of the account holder.

Photograph of nominee (if any) duly attested by the account holder.

Photocopy of the 1st 7 pages of the passport for non-resident Bangladeshi national.

Signature in the account opening form/card must be same with the signature of

the passport.

De4tails have been discussed in chapter three.

Short term deposit account:

Government, semi government, autonomous organizations and an individual may open STD

Account with UBL. The Bank offers attractive & competitive rate of interest in STD Account.

But, 7 days notice is required to withdraw large amount from the STD Account.

Fixed deposit receipt account:


● Any Bangladeshi national residing home or abroad may open FDR with UBL.

● FDR may be opened single/joint name for a period of 3, 6, 12, 24 and 36 months.

● UBL offers attractive/competitive rate of interest in FDR.

● Details have been discussed in chapter three.

Double benefit deposit scheme:

a) Any adult Bangladeshi National will be eligible to open this account.

b) Minimum Tk. 1, 00,000/- (Taka One Lac only) and multiples thereof will be accepted as

deposit under this scheme.

c) The period shall be of 7 (seven) years term.

d) Deposit may be encashed before its maturity and no interest will be paid if encashed

before 1(one) year of deposit.

e) Interest will be paid at saving rate if encashed after 1(one) year.

f) Advance will be allowed up to 80% of the deposit after completion of

g) Full amount including interest will be paid on maturity.

h) Govt. Tax, Surcharge, Source Tax, Levy, Govt. Excise duty will be recovered from the

depositor’s A/C.

i) Account holder can appoint a nominee against the account.

j) Bank reserves the right to close the account at any time and make amendment/alteration

of the terms & conditions of the scheme without assigning any reason.

* Monthly deposit scheme

a) Any adult Bangladeshi National will be eligible to open this account


b) The period of the scheme will be 5 (five) years and 10(ten) years term.

c) Monthly installment will be Tk. 500/-, 1000/-, 2000/-, 3000/-, 5000/- & 10,000/-

d) Monthly installment to be deposited within 10th day of the month. After due date a

penalty of Tk. 50/- will be realized from the A/C holder. If the holder fails of deposit 3

(three) consecutive monthly installments, the account will be automatically closed.

e) No Cheque book will be issued against the account.

f) Deposit may been cashed before maturity. But no interest will be paid if encashed before

1(one) year of deposit.

g) Interest will be paid at Savings rate if encashed after 1(one) year of deposit.

h) Advance will be allowed upto 80% of the deposit after completion of one year.

i) Full amount including interest will be paid on maturity.

j) Govt. tax, Surcharge, Source Tax, Levy, Govt. Excise duty will be recovered from the

depositor’s A/C.

k) Account holder can appoint a nominee against the account.

l) Bank reserves the right to close the account at any time and make amendment /alteration

of the terms & conditions of the scheme without assigning any reason.

International Banking

* Opening account:

i. Foreign Currency Account

* For private individual/firm/organization-

● Any person/firm/organization who earns foreign currency can open Foreign Currency

Account with UBL.


● Payments in foreign currency may be made freely abroad from this account and local

payment in BDT may also be made from this account.

● Bank pay interest provided the accounts are maintained in the form of term deposit for

minimum period of 90 days.

● The account opening form and signature card are to be filled in and duly signed.

● Two copies passport size photographs of the account holder duly attested by remitter’s

Bank/Embassies

● Photo copes of the first 7 pages of the passport duly attested by the remitters

bank/exchange

* For Bangladeshi Nationals working and earning abroad-

● No initial deposit is required.

● A/C holder may nominate his nominee to operate the account.

● The account holder can freely transfer entire amount in foreign currency anywhere he

chooses or can convert into Bangladesh Taka currency.

● Funds from this account may also be issued to the account holder up to his entitlement for

the purpose of his foreign travels in usual manner.

● The account opening form and signature card to be filled in and duly signed.

● Two copies passport size photographs of the account holder are required to carry.

● Copies of employer’s certificate/work permit are also required.

● One copy of the passport sizephotogr4aph of the nominee if any to be attested by the

account holder.


● Photocopies of the first 7 pages of the passport of the account holder to be carried.

ii. NFCD Account:

● Allnon-resident Bangladesh nationals and persons of Bangladesh origin including those

having dual nationality ordinarily residing abroad may open this account with any

‘Authorized Dealer (AD)’ branches of Uttara Bank Ltd.

● The NFCD account may be opened in single/joint name for a period of 1, 3,6,12 months.

● This account may be maintained as long as account holder desires.

● On maturity the account holder can encase it in local currency or can transfer the amount

including accrued interest anywhere he likes.

● Initial deposit US$ 1000 or GBP 500 sterling or equivalent currency.

● The account offers attractive interest Payable in foreign and tax free.

● The account with accrued interest canbe renewed either of the instruction of the account

holder or be renewed automatically if there is no instruction otherwise.

● No interest is given on premature encashment.


● Two copies passport size photographs of the account holder to be carried.

● Photocopies of the first 7 pages of the passport duly attestd by the remitters

bank/exchange companies having drawing arrangement with UBL or by Bangladesh

mission

iii. RFCD Account:


● Persons ordinarily resident in Bangladesh may open and maintain

RFCD account with foreign exchange brought in at the time of his return from travel

abroad.

● Any amount brought in with declaration to customs authorities in the form FMJ and up to

US$ 5000 brought in without any declaration can be deposited in this account.

● Balance in this account can be freely transferred abroad.

● Funds from this account may also be issued to the account holder for the purpose of his

foreign travels in the usual manner.

● Interest in foreign currency is paid in this account if the deposits are for a term of not

less that one month and the balance is not less than US$ 1000 or GBP 500 or its

equivalent.


● Two copies of passport size photograph of the account holder are the must.

● Photocopies of the passport and the relevant pages showing evidences of traveling abroad

are compulsory.

Bank operational area


Uttara Bank operation has achieved the confidence of its customers with sound fundamentals in

respect of deposit accumulation, loans and advances, import and export business, remittance

business and profitability. As a result the bank has been able to earn remarkable profit in

business. Overall performance of Uttara Bank limited has been improved for maintaining

effective and constructive principles of Bangladesh Bank. Uttara bank operation in different area,

which are given below by a figure:


Bank Operational Area

General Banking

Foreign Remittance

Loan & Advance

Foreign Exchange

International Banking

Branches of Uttara Bank Limited According To Division

Uttara Bank Limited is one of the largest and oldest private commercial Bank of Bangladesh. The Bank formally known as the Eastern Banking Corporation Limited which started journey on & from 28/ 1/ 1965. From that period of time, it has been expanding its operation with years of experience to serve the clients as well as the country. Now with 211 branches it has created a strong network in Bangladesh. Besides, to create a strong connection with the globe 600 affiliates are active to support the Bank. Now I provide branches of Uttara bank according to division, which are given below:


Total Asset Position

Total assts positions of the Uttara Bank limited increased more during the year 2009. In 2009

total assts stood at Tk. 71,946.0 million as compared to the volume of Tk. 58,444.3 million in

2008. Now I provide a figure of total assts of the Uttara Bank five years at glance, which is given

below:

Total Assets Position

0.0010,000.00

20,000.0030,000.00

40,000.0050,000.00

60,000.0070,000.00

80,000.00

2005 2006 2007 2008 2009

Total Assets Position


Capital & Reserve

The authorized capital of the bank increased from Tk. 1600.00 million Tk. 3200.00 million

during the year 2009. The paid up capital of the bank has been increased to Tk. 1597.4 million

from Tk. 798.7 million due to declaration to 100 percent bonus share in 2009. The total number

of shares was 15,973,184. The government of the peoples Republic of Bangladesh, eighteen

banks and fifty two financial institutions held total 676,397 shares worth Tk. 67639,700.00 and

remaining 42,499 private Shareholders held total 15,296,787 shares worth Tk. 1,529,678,700.00.

The equity of shareholders of the bank at the end of the year 2009 stood Tk.6, 206.9 million and

in 2008 stood Tk. 3688.8 million.

RESURVE FUND:The Reserve Funds increased to Tk.4, 609.6 million during the year by registering 59.49 percent

increase over last year Tk.2, 890.2. Now I provide a figure for better understanding which is

exhibited below:

0

1000

2000

3000

4000

5000

2005 2006 2007 2008 2009

Capital & Reserve ( Taka in Million)

Authorised Capital Paid-up-Capital Rrserve Fund & Others Reserve


At a Glance Profitability Position of UBL

Uttara bank profit stood Tk. 1083.6 million as compared to Tk. 940 million of previous year.

That means Uttara bank profitable position in 2009 is more than 2008, that are very much

effective for the Uttara bank and this profit is increased day by day from 2005 to present that is a

good sign for the bank. Now we provide 2005 to 2009 post tax profit and pre tax profit basis on

table and figure also, which are exhibited below:

2005 2006 2007 2008 2009Post tax Profit 850 900 400 1083.6 1075Pre tax Profit 100 200 1100 2100 2250

Profit (Taka in Million)

0

500

1000

1500

2000

2500

2005 2006 2007 2008 2009

Post tax Profit Pre tax Profit


Now I also provide profit position of five years at glance and if we see the figure then we can

easily understand that profit positions are increase day by day. So I provide line chart for better

understand of the five years gross profit position of Uttara Bank Limited.

GrossProfit

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

2005 2006 2007 2008 2009

GrossProfit


Shareholder equity position

Net result of the Liquidity Statement represents the "Shareholders'Equity" of the Bank:

LIABILITIES AND CAPITAL / SHARE HOLDERS' EQUITY

Liabilities

Borrowings from other Banks,

Financial Institutions and Agents 10 225,086,084 2,899,505,333

Deposits and other accounts 11 50,816,975,020 43,586,356,057

Current and other accounts etc. 15,570,321,322 12,372,373,980

Bills payable 1,605,516,899 1,643,287,611

Saving bank deposits 19,547,765,743 17,876,529,810

Fixed deposits 12,164,269,906 10,417,183,199

Bearer certificate of deposit - 50,000

Other deposits 1,929,101,150 1,276,931,457

Other liabilities 12 3,713,428,714 3,920,914,181

TOTAL LIABILITIES 54,755,489,818 50,406,775,571

CAPITAL/SHARE HOLDERS' EQUITY

Issued, subscribed and paid up capital 13.2 798,659,200 399,329,600

Issuance of bonus shares - 399,329,600

Statutory reserve 14 1,550,837,039 550,837,039

Other reserves 15 1,337,631,167 1,100,864,198

Retained earnings 16 1,714,894 3,196,722

TOTAL CAPITAL/ SHARE HOLDERS' EQUITY 3,688,842,300 2,453,557,159

TOTAL LIABILITIES AND CAPITAL/SHARE HOLDERS' EQUITY 58,444,332,118 52,860,332,730

CONTINGENT LIABILITIES 17.0 8,806,887,103 8,830,513,784

Acceptances & endorsements - -

Letter of guarantees 17.1 1,826,856,510 1,474,352,134

Irrevocable letter of credit 17.2 4,517,171,591 5,382,511,516

Bills for collection 17.3 3,156,536 3,140,634

Other contingent liabilities 17.4 2,459,702,466 1,970,509,500


http://www.uttarabank-bd.com/HTML/17.html












OTHER COMMITMENTS - -

Documentary credits and short term - -

trade related transactions - -

Forward assets purchased and forward - -

deposits placed - -

Undrawn note issuance and revolving - -

underwriting facilities - -

Undrawn formal standby facilities, - -

credit lines and other commitments - -

Liabilities against forward purchase & sale - -

Litigation filed by the Bank - -

TOTAL OTHER COMMITMENTS - -

TOTAL OFF- BALANCE SHEET ITEMS

INCLUDING CONTINGENT LIABILITIES 8,806,887,103 8,830,513,784

Accompanying notes 1 to 44 form an integral part of these financial statements.

Now I provide five years shareholders equity position of UBL and here clearly seen that the

equity are dramatically increased from 2005 to 2009. Now I provide a line chart of five years

shareholders equity position of UBL, which are given below:


Sharehoders Equity

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

2005 2006 2007 2008 2009

Sharehoders Equity

About the department I workedUttara bank limited had been a nationalized bank in the name of Uttara bank Limited under the

Bangladesh bank (nationalized) order 1972, formerly known as the Eastern banking Corporation

Limited which has started function on and from 28.1.1965. Consequent upon the amendment of

Bangladesh bank (nationalized) order 1972; the Uttara bank was converted into Uttara Bank

Limited as a public Limited company in the year 1983. The Uttara Bank Limited was

incorporated as a banking company on 29.6.1983 and obtained business commencement

certificate on 21.8.1983. The bank floated its shares in the year 1984. It has 211 branches all over

Bangladesh through which it carries out all its banking activities. One of the Branch name is

Jatrabari Branch where I accomplished my three months Internship period. In here actually I

worked in T.T, M.T, Foreign remittance & scheduling.

First of all, I worked on T.T (Telegraphic transfer), M.T (mail transfer) department. This

department basically helps its clients to transact money within the country as early as possible

where their branch is exists. For doing this service bank take a fixed charge from the clients.

Therefore, client s has to fill up a T.T form. After fill up this form officer send this massage

through phone call according to the address given by clients. Now I provide details of T.T which

are given below:


Telegraphic Transfer (TT):

UBL provides the opportunity to transfer money through TT within few minutes in any parts of

BD where it has the branch. It also receives TT massage from HO ID to remit foreign currency

via. To remit money from branch to branch within BD, customers need to fill up the request form

mentioning the following:

● Date & amount of BDT to be remitted with exchange or commission & telephone charge.

Exchange is BDT 25 for 1 to25,000 taka

Above BDT 25,000, one Taka per thousand

Telephone charge is BDT 35 per TT

● Account name & account number of the favoring Party

● responding branch name

● Details of the applicant enclosing-

Full name & detailed/Contact address

Phone number & applicants signature

After that required amount of cash needs to be deposited in the cash counter with 15% vat on it.

Getting the complete request form the authorized officer takes the real tasks to remit money in

the mentioned favoring branch & following things are done-

● Find out the ultimate TT number from TT payable register

● TT numbers enclosed in the request form

● Proper authorization from few departments

● Phone call to the responding branch

● Identify both branch through secret identification name & number

● Secret test number is matched in both branch & Phone call is done

● Query from responding branch if the test does matches

● Giving entry in the TT payable register

Accounting practice for TT in the originating branch:


To record such payment by originating branch, request slip acts as credit voucher as because

that money is received against this request slip. To realize 15% vat, another credit voucher is

used in the originating branch.

GRAPH

The mentioned credit voucher of TT is enclosed with the credit voucher for Vat A/C so, journal

of such financial transaction will be.

● Cash A/C--------------------------------------Dr.

TT A/C-----------------------------------------Cr.

Vat A/C-----------------------------------------Cr.

Accounting practice of TT in the Responding branch:

After getting the TT message from the Ho ID, in case of foreign TT, a debit voucher is prepared

quickly. Suppose, Mr. A.T.M. Nayaz Murshed bearing SB account no 12356 has an account in

the Tongi branch of UBL. His father sent BDT 100,000 from Dubai through ALFARDAN (Al

Fardan Exchange, Dubai) to his account in the UBL. Now after getting the TT message with an

advice no 13113458, the official of tongi branch will do the following accounting:

● UBL General A/C HO ID A/C-----------------------------Dr. 100,000

SB 12356, A.T.M. Neyaz Murshed A/C--------------------------Cr. 100,000

Instead of the above accounting, UBL do the same but indifferent shown below;


Voucher No.1

GRAPH

Voucher No.2

GRAPH

After preparing the above two vouchers, these are enclosed with the TT originating message.

Sometimes customers wait for collecting money of TT & the officials try to prepare all the

documents quickly. Now the three documents are sent to another table to give the entry in the

transfer scroll. For clear understanding, a sample of transfer scroll is mentioned;

● Transfer scroll:

Dr. Cr.

Scroll No. Description BDT Scroll Description BDT

85 SB 12356 100,000 97 UBL

General

A/C HO ID

100,000

Now the scroll number is written in the debit & credit vouchers. At the same time ‘TRANSFER’

seal is required in the vouchers like the previous example. When all these are done properly, the


vouchers are sent to the computer to do the adjustment & to deposit in the party account. Lastly,

cash is paid against Cheque.

To pay against Cheque, entry in the book of responding branch is:

SB 12356 A.T.M Nayaz Murshed A/C ------------Dr. 100000

Cash A/C---------------------------------------Cr. 100000

Responding Advice for TT:

With the voucher used in the responding branch, responding advices also used for further

procedure. Responding Advice of TT Transaction containing 3 (Three) copies have the following

parts that must be filled up correctly by the authorized officer that includes:

Originating Branch Name

Originating TT Transaction No. of 8 (Eight ) Digit

Originating Branch Code

Responding Branch Name

Branch Code

Transaction Code

TT Number

Original Date

Name of payee

Amount in figure & words

Signature of the Manager & authorized Officer

Three copies of responding advice are normally filled up through using the carbon paper & three

copies are sent to different branch & departments mentioned below;

The Originating copy is to be mailed with responding schedule F-89 (Revised) to

head office-reconciliation department.

Duplicate copy is to be mailed to originating branch as confirming of payment of

mentioned TT.

The Triplicate copy is to be retained by the branch has official record.

Hard copy of TT from originating branch:


Hard copies of TT are received from the originating branch within few days & after getting the

hard copy, the responding branches adjust it in the TT payable register. To that adjustment, red

pen is used to cross the hard copy after checking the TT advice number, amount of money,

account name & account number who received money etc. But if the hard copy is not received

from the originating branch, the responding branch sends a letter to the originating branch like

the following;

Graph

Mail Transfer (MT):M.T is as like as T.T, but here have some difference because M.T form and its sending technique

are difference. Its name is mail transfer but actually it sends by the phone and M.T form written

is very easy than T.T. because here eliminating most of rules and regulation than T.T form. Now

I provide a M.T hard copy form for better understanding, which is given below:

Graph

Remittance Department of UBL


UBL has the outstanding performance to provided remittance service. With all of the Middle

East countries, it also provides money to the responding parities from Malaysia, Brunei,

Indonesia, South Korea, Australia, Canada, Spain, Maldives, Germany, Japan, Singapore, United

States of America, United Kingdom, Greece, Cyprus, Italy, France, south Africa & all countries

of Africa, North America, South America and all of the countries of the world within the shortest

possible time. The most commonbanking corporations & exchange companies who work as

intermediaries to transfer money are BFEC, AN EXP, WSIC, DALIL, KWTASIA, HAMDAN,

KSIC, OEXKT, H.EX, AEC, ALFARDAN, SLNIC, CTY, ANB, ALMOUDI, ALRAJHI,

ALRAJHIC etc.. It takes only several hours to deposit the remittance in the account of clients as

per request.

UBL provides money also to them, who don’t have any account in any branch of the bank

against remittance from the organization like Money gram, Express Money, Wall street etc. In

this case, clients can withdraw money just after receiving remittance message in any working

day of bank. To get the cash taka, National ID card with photograph is required. But if these are

not available, clients can withdraw money showing the Cheque book maintained by them in any

other bank. But bank will very the address & other information enclosed in the remittance

message.

Money Gram (MGRM) Money Transfer:

UBL has the agreement of MGRM system. Through this system the customers who have not any

account in the bank can also collect money from any branch of UBL in Bangladesh. The

computer generated system allows the bank to pay the money within the earliest possible time to

provide better service for the clients. This system has the ability to remove any corruption as

bank provides the money only getting a secret reference number. If the reference number

matches with the original message sent from the HO ID (Head Office International Division),

money is paid to the clients. Once the message is printed in any branch, such computer generated

system will not show the message elsewhere in any branch of BD.

On the other hand. UBL takes the attested copy of National ID card or passport or any other

valid ID card against payment & customers are to fill up the MGRM form correctly. Clients can

take the money in cash or can deposit the amount in the account number of the bank. But, to do

that the account holder needs to write an application mentioning all of his/her account


information to the manager of that branch. The manager checks the application and allows

depositing the money of MGRM to the applied account number. Now, to deposit the money to

the applied account numbers, following accounting procedure are followed;

● Preparing the debit & credit vouchers

● Keeping the proper entries in the transfer scroll

● Making proper transfer seal with date in the vouchers.

● Providing all authorized signature

● And finally, updating such transfer in the computer.

Scheduling WorkScheduling work is totally doing by the computer. Here daily Foreign remittance, T.T, M.T,

which are doing as hard copy but these hard copy keep in the computer basis on soft copy. But

keep this document very safely; because this soft copy goes to the Head office, if any short

mistake occurred then it will be hampered of daily work until it doing correctly.

Chapter: 03


Foreign Exchange Trading

Foreign Exchange Operation

One of the large businesses carried out by the commercial bank is foreign trading. The trade

among various countries falls for close link between the parties dealing in trade. The situation

calls for expertise in the field foreign exchange operations. The bank, which provides such

operation, is refereed to as rending international banking operation. Mainly transactions with

overseas countries are respects of Import, Export and foreign remittance come under the preview

of foreign exchange transaction. International trade demands a flow of goods from seller to buyer

and payment from buyer to seller. In this case the bank plays a vital role to bridge between the

buyer and seller.

About Foreign Trade In Bangladesh

Foreign Trade in Bangladesh is still dominated by imports resulting in adverse balance of trade.

Export has registered a significant volume of growth over the past years and the export import

gap is reducing every years. In early seventies the export of Bangladesh was dominated by jute

items only. In fact 90% of the export earnings at that time were from Jute section and the rest

10% from Leather and Tea sector. The situation however started changing with the introduction


of non – traditional items like shrimps, fish, readymade garments, finished leather, newsprint,

handicrafts etc.

Authorized Dealers (AD) And Money Changers

As per section 2 of Foreign Exchange Regulation Act 1947, AD means a person, for the time

being authorized under section 3 to deal in Foreign Exchange, in other word AD means a bank,

authorized by Bangladesh Bank to deal in Foreign Exchange under the

Foreign Exchange Regulation Act 1947. There are some persons or firms, authorized by

Bangladesh Bank to deal with limited scope, are called Authorized Money Changers.

Functions of Authorized Dealers:

Authorized Dealer can handle all kinds of foreign exchange transaction as per Foreign Exchange

Regulation Act 1947 under the instruction of Bangladesh Bank. The functions of an AD Bank

are:

Exchange of Foreign Currencies.

To make arrangement with foreign correspondent.

Buying and selling foreign currencies

Handling of Inward and Outward remittance.

Opening of L/C and settlement of payment.

Investment in foreign trade

Opening and maintenance of accounts with foreign banks under intimation of

Bangladesh Bank.

Export Documents handling.

Major Section In Uttara Bank

Foreign exchange is the means and methods by which rights to wealth in a country’s currency

are converted into rights to wealth in another country’s currency. In banks when we talk of

foreign exchange, we refer to the general mechanism by which a bank converts currency of one

country into that of another. Foreign exchange Department (FED) is the international department


Bangladesh Bank issues license to scheduled banks to deal with foreign exchange’s these bank

card known as Authorized Dealers. If the branch is authorized dealer in countries. So UTTARA

Bank Ltd, Principal branch is an authorized dealer.

There are three kind so foreign exchange transactions:

A) Import

B) Export

C) Remittance.

First of I give you general idea of above three kinds of foreign exchange transaction then we go

details about the foreign transaction, which are exhibited below with figure:

Import Business:

In 2009 import business stood at Tk. 29,129.3 million as compared to the volume of Tk. 31,146.9

million in 2008.

Export Business:

Export business of the bank increased a little bit during the year 2009. Export business handled

by the bank during the year 2009 amounted to Tk. 15,096.9 million as against Tk. million of the

preceding year.

Foreign Remittance

Extensive use of the technology along with large delivery has significantly fostered the growth of

UBL remittance business. Uttara bank limited has seen a successful year in 2009 in terms of

expansion to extend special importance on through its foreign correspondent and exchange

houses. The bank has been continuing to extend special importance on foreign remittances from

the last couple of years. This bank has drawing arrangement with the banks and exchange

companies of the different important countries of the world. In the mean time the bank has been

able to draw confidence of the Bangladeshi expatriates by easy and quick delivery of their hard-

earned foreign remittance to the beneficiaries at home. The volume of foreign remittance in the

year 2009 stood at Tk, 635.3 million as compared to TK. 36,073.2 million in the preceding year

registering an increase of 23.74 percent. In order to keep pace with the time a scheme namely

“Express Payment Scheme” has been introduced for inward remittance by using modern


technology. Under this scheme a payee having his account with any branch of Uttara Bank

Limited gets the proceeds of remittance sent from any part of the world within 2(Two) hoarse. In

the event of his account being maintained with other banks the proceeds are placed into payee’s

account within next working day in the Metropolitan Cities and Division Head Quarters and

within only 3 working days at other places of the country. Moreover, in order to ensure speedy

and improved service, the bank has also introduced “Instant Cash Scheme” for payment of

foreign remittance in cash to the customers who have no accounts with the bank on submission

of photo ID as identity. Under the scheme the bank will make payment of the proceeds in cash if

the Bangladeshi expatriates send their money furnishing the passport /card holders name and

number of the passport /card and for this the payees need not have any account in the bank.

Besides there is a scheme named ‘Instant Draft’ which is printed in computer under prior

arrangement of remittance companies, remitted y the same and received here through website is

delivered by the International Division of the bank to the beneficiaries at their home address for

payment of money equivalent to foreign currency. Besides, expatriates can remit their money

with low cost, allegiance and instantly to home country with its more than 700 correspondent

bank worldwide under Swift system.

0

10000

20000

30000

40000

50000

2005 2006 2007 2008 2009

Foreign Trade (Taka in Million)

Foreign Remittance Export Import

Now I give details about foreign exchange transaction of Import, Export and Foreign remittance

of the Uttara Bank limited, which exhibited below one after another in a chronological manner:


Import Section

The total import handled by the bank in 2009 was Tk. 29,129.3 million compared to Tk. 31,146.9

million in the preceding year registering a rise Tk. 8119.87 million being 36.59 percent. A

sizeable L/C’s were also opened by the bank in the year under review. The import items included

industrial raw materials, machinery, consumer goods, fabrics, accessories etc. Now I give five

years import business position of UBL, which are given below:

Import Business

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

2005 2006 2007 2008 2009

Import Business

To import, a person should be competent to be and importer. According to Import and Export

Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration

(IRC) to the importer. In an international business environment, buyers and sellers are generally

unknown to each other. So seller of goods always seeks security for the payment of his exported

goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the


buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer

and exporter is given a legal shape by the banker by Letter of Credit.

Import Registration Certificate (IRC)

The first thing one need to carry one business of import is called Import Registration Certificate.

But registration is not required for import goods, which do not involved remittance of foreign

exchange like medicine; reading materials etc. can be importe4d without registration by the users

within monetary limit. Documents to be required for Import Registration Certificate are as

follows-

Income Registration Certificate

Nationality Certificate

Certificate from Chambers of Commerce and Industry Registered Trade

Association

Bank Solvency Certificate

Copy of Trade License

Requisite fees

Function of Import Section

The Form IMP contains the followings-

Name and address of the Authorized dealers.

Amount of remittance to be permitted (i.e./C amount)

LCA form no. Date and value in Taka.


Description of goods.

Invoice value in foreign currency, (i.e./C amount)

Country of origin.

Port of shipment.

Name of steamer/Airline

Port of importation.

Indenter’s name and address.

Indenter’s registration number with CCI & E and Bangladesh Bank.

Full name and address of the applicant

Letter of Credit

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the

instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking

that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain

conditions mentioned in the letter gave been complied with.

Parties to the L/C

Importer Who applies for L/C

Issuing Bank It is the bank which opens/issues a L/C on behalf of the

importer.

Confirming Bank It is the bank, which adds its confirmation to the credit and

it, is done at the request of issuing bank. Confirming bank

may or may not be advising bank

Advising or Notifying

Bank

It is the bank through which the L/C is advised to the

exporters. This bank is actually situated in exporter’s

country. It may also assume the role of confirming and /or

negotiating bank depending upon the condition of the credit.

Negotiating Bank It is the bank, which negotiates the bill and pays the amount


of the beneficiary- The advising bank and the negotiating

bank may or may not be the same. Sometimes it can also

be confirming bank.

Accepting Bank It is the bank on which the bill will be drawn (as per

condition of the credit). Usually it is the issuing bank

Reimbursing Bank It is the bank, which would reimburse the negotiating bank

after getting payment-instructions from issuing bank.

MECHANISM OF L/C OPERATION

GRAPH

STEPS FOR IMPORT L/COPERATION

Step 1- Registration with CCI&E

For engaging in international trade, even trader must be first registered with the

Chief Controller of Import and Export.

By paying specified registration fees to the CCI&E the trader will get IRC/ERC

(Import/Export Registration Certificate), to open L/C with bank, this IRC is must.

Step 2 Determination terms of credit

The terms of the letter of credit are depending upon the contract between the

importer and exporter. The terms of the credit specify the amount of credit, name


and address of the beneficiary and opener, tenor of the bill of exchange-period

and mode of shipment and of destination, nature of credit, expiry date name and

number of sets of shipping documents etc.

Step 3- Proposal for Opening of L/C

To have an import LC limit an importer submits an application to department to

UTTARA Bank Ltd. The proposal contains the following particulars:

Full particulars of the bank account

Nature of business

Required amount of limit

Payment terms and conditions

Goods to be imported

Officered security

Repayment schedule

Step 4- Application by importer to the banker to open letter of credit

For opening L/C the importer is required to fill up a prescribed application form

provided by the banker along with the following documents:

1. L/C Application form 7. Authority to debit account

2. Filled up LCA form 8. Filled up amendment request form

3. Demand Promissory Note 9. IMP form

4. pro-forma invoice 10. Insurance cover note and money

receipt

5. Tax Identification number 11. Membership certificate


6. Import registration certificate 12. Rate fluctuation undertaking

Step 5- Opening of L/C by the bank for the opener:

Taking filled up application form from the importer.

Collects credit report of exporter from exporter’s country through his foreign

correspondence there.

Opening bank then issues credit by air mail/TELEX/SWIFT followed by L/C

advice as asked by the opener through his foreign correspondent or branch has the

case may be, at the place of beneficiary. The advising bank advises the L/C to the

beneficiary on his own form where it is addressed to him or merely hand over the

original L/C to the beneficiary if it is so addressed.

Step 6- Shipment of goods and lodgment of documents by exporter:

Then exporter shops the goods to the destination of the imported country and sends the

documents to the L/C opening bank through his negotiating bank. Generally the following

documents are sent to the Opening banker with L/C:

1. Bill of Exchange 6. Packing list

2. Bill of Lading 7. Advice Details of Shipment

3. Commercial Invoice 8. Pre-shipment Inspection Certificate

4. Certificate of origin 9. Vessel Particular

5. A certificate stating that each packet

contains the description of goods over the

packet.

10. Shipment Certificate


Step 7-Lodgmentof Documents by opening Bank from the negotiating bank:

After receiving the documents, the opening bankers scrutinize the documents. If any discrepancy

found, it informs the importer. If importer accepts the fault, then opening bankers call importer

retiring the document. At this time any thing can happen. These are indicated in the following:

* Discrepancy found but the importer accepts- No problem occurs in lodgment.

Discrepancy found and importer not agreed to accept- In this case, importer

protest and send back all the documents to the exporter and request his to make in the

specified manner. Here banker is not bound to pay because the documents send by

exporter is not in accordance with the terms of L/C.

Everything is O.K. but importer fails to clear goods from the port and

request bank to clear- In this case banks clear the goods and takes delivery of the same

by paying customs duty and sales tax etc. So, this expenditure is debited to the importer’s

account and in banking it is called LIM.

Step 8- Retirement

The importer receives the intimation and gives necessary instruction to the bank for retirement of

he import bills or for the disposal of the shipping document to clear the imported goods from the

customs authority. The importer may instruct the bank to retire the documents by debiting his

account with the bank or may ask for LTR (Loan against Trust Receipt).

ACCOUNTING PROCEDURE IN CASE OF L/C OPENING

When the officer thinks fit the application to open a L/C, giving the following entries-creates the

following charges-

Particulars Debit/ Credit Charges in taka

Customers A/C Debit


L/C Margin A/C Credit

Commission A/c on L/C Credit 50%

VAT Credit 15% on commission

SWIFT charge Credit 3000/=

Datamax Credit 1000/=

Stamp Credit 150/=

Postage Credit 350/=

DHL/ Courier Credit 1500/=

AMENDMENT OF L/C

After opening of L/C some times alteration to the original terms and conditions become

necessary. These amendments involve changes in:

a. Unit pricing

b. Documentary requirements

c. Extension of validity of the L/C

Such documents can be affected only if all the concerned parties agree i.e. the beneficiary, the

importer, the issuing bank and the advising bank.

For any amendment the importer must request the issuing bank in writing duly supported by

revised indent/ Performa invoice. The issuing bank then advises the required amendment to the

advising bank. L/C amendment commission including postage is charged to the clients A/C.

♦ Loan against Trust Receipts (LTR)

● Advance against a Trust receipts obtained from the customers are allowed to only

first class tested parties when the document covering an import shipment or other

goods pledged to the Bank as security are given


● Without payment. However, for such advances prior permission/sanction from

Head Office must be obtained.

● The customer holds the goods or their sale-proceeds in trust for the Bank till such

time, the loan allowed against the Trust Receipts is fully paid off.

● The Trust Receipt is a document that creates the Banker’s Hen on the goods and

practically amounts to hypothecation of the proceeds of sale in discharge of the

lien.

♦ Loan against Imported Merchandise (LIM)

Advance (Loan) against the security of merchandise imported through the Bank may be

allowed either on pledge or hypothecation, of goods, retaining margin prescribed or their landed

Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank.

Bank shall also obtain a letter of undertaking and indemnity from the parties before getting the

goods cleared through LIM account.

PAYMENT PROCEDURE OF IMPORT DOCUMERNTS:

This is the most sensitive task of the Import Department the officials have to be very much

careful while making payment. This task constitutes the following:

Data of Payment

Usually payment is made within seven days after the documents have been received. If the

payment is become deferred, the negotiating bank may claim interest for making delay.

Preparing Sale Memo


A sale memo Is made at B.C rate to the customer. As the T.T. & O.D rate is paid to the Id, the

difference between these two rates is exchange trading. Finally, an Inter Branch Exchange

Trading Credit Advice is sent to ID.

Requisition for the Foreign Currency

For arranging necessary fund for payment a requisition is sent to the International Department

Transmission of Message

Message is transmitted to the correspondent bank ensuring that payment is being made.

4.5.1 Letter Of Credit (L/C) Or Documentary Credit

4.5.1.1 Definition

A Letter of Credit (L/C) can be defined as “An arrangement where in a bank guarantees on

behalf of his customers to make payment to the beneficiary upon presentation of documents

specified in the credit”. L/C can be defined as a Credit contact whereby the buyers bank is

committed (on behalf of buyer) to placeman agreed amount of money at the sellers disposal

under some agreed conditions.

4.5.1.2 Parties Involved in L/C

There are number of parties involved in a letter of credit, such as:

Importer/Buyer

Opening/ Issuing Bank

Exporter/Seller/Beneficiary

Advising bank/Notifying Bank

Confirming Bank

Negotiation Bank


Paying/Reimbursing Bank.

Opener/Buyer/Importer

The person who opens the L/C is known as opener/buyer/importer of the L/C. The buyer and

seller conclude a sales contract providing for payment by documentary credit.

Opening Bank

The bank issuing the L/C in favor of exporter is known as opening bank. The opening bank L/C

on request of importer according to the application of the importer.

Advising Bank

The bank through L/C is advised. L/C will be sent to the beneficiary through their agent

(corresponded bank) abroad. The duty of the advising bank is to authenticate the message so that

the seller can act on it without any fear of forgery etc.

Beneficiary

Seller and exporter in whose favor the L/C are opened. The beneficiary is normally the seller of

goods who receive payment under documentary credit if he has complied with term and

conditions there of.

Negotiating Bank

The bank that is authorized to handle (purchase) the documents under L/C in the exporting

country is known as negotiating bank. L/C will stipulate either a notified bank to negotiating in

the seller’s country (unrestricted L/C).

Reimbursing Bank

The bank that is (by the L/C issuing bank) to effect reimbursement is known as reimbursing

bank. Reimbursing bank is authorized to honor the reimbursement claims in settlement of

negotiation/acceptance/payments lodged with it by the paying/negotiation/accepting bank.

Confirming Bank

A confirming bank is one which adds the guarantee to the open by another bank, thereby

undertaking the responsibility of paying/negotiation/ acceptance under the credit in addition to

that of the issuing bank. A confirming bank normally does so requested by the issuing bank.


Types of L/C

Revocable/Irrevocable L/C.

Confirmed/Unconfirmed L/C.

Back to back L/C.

Acceptance L/C.

Red clause L/C.

Green clause L/C.

The Uttara Bank basically deals with Irrevocable L/C, which cannot be amended or cancelled by

the issuing bank at any moment and without prior notice to the beneficiary. It also deals back to

back L/C, which is the Letter of Credit, provided by the bank to bank exporter to the importer to

the importer the raw materials from abroad in order to produce the exportable commodity for the

importer.

Procedures for opening L/C

Application for opening L/C

An importer who is desirous to import goods from country will apply issuing bank for opening a

L/C. The importer will provide an application mentioning the following aspects:

Full particulars of application’s bank accounts.

Types of business.

Historical background.

Amount of required L/C limit.

Terms of payments.

Name of importers goods.

Repayments schedule and source of fund.

Documents Required For Opening L/C

An importer or L/C opener has to submit the following documents:

Application form (provided by the bank)

Import registration certificate

Tex identification number (TIN) Certificate.


Performa Invoice

Pour set of IMP form

Insurance cover note

VAT registration number

Letter of Credit authorization form

Necessary charges Document duly stamped & signed.

Examination for opening L/C

Application must be carefully checked by the concern officer considering the facts mentioning

bellow:

The term and condition of L/C applications are consistence with exchange control and

import trade regulation UCPDC – 600

Illegibility of imported goods.

The L/C must be opened in favor of importer.

That is signed by the importer and agreed with the terms and conditions.

Indenting registration number.

Goods are not of Israel and vassals to be used are not of Israel.

Insurance cover note with date of shipment.

Where IRC is up to date or not.

Whether IMP form is dully filled up and signed.

The imported goods are marketable.

After scrutinizing all these legal aspects necessary entry is given to the margin register

and charges, commission and margin is realized.

Shipment Date

Delivery clause

Documents required at the time of Payment

The documents shown this category are known as export documents from the exporter’s side and

import documents from importers side. These are:

Performa Invoice/Purchase-Sell Agreement

Bill of Exchange/Drafts

Bill of Landing

Commercial invoice/Invoice


Consular Invoice

Marine Insurance Policy

Certificate of origin

Packing list or mills specification

Inspection Certificate/Survey Report

Certificate of segment and measurement

Bill of entry

Certificate invoice

Proforma Invoice (P/I)

At the negotiating stage of a deal the buyer may require the seller the quota the goods showing

their detailed particulars of order to enable him examine the competitive position.

It is offer by the seller to sell the goods and is exactly similar to customary invoice except that it

is marked ‘Proforma’.

Sometimes it server the purpose of indent when there is no indenting agent as middle man in

between the seller and buyer and L/C is opened in the basic of ‘proforma invoice’. It may

however be noted that proforma invoice is accepted while opening L/C only special

circumstances and allowed under import policy.

Bill of exchange

The bill of exchange is particular instrument through which payment is effected in trade deals

both internal and international.

The payment for the goods is received by the seller through the medium of a bill of exchange

(commonly called or bill) drown on the buyer for the amount depending on the contract. It is a

negotiable instrument. Negotiable instrument act.1881 (section -5) defines the bill of exchange as

“an instrument in writing containing an unconditional order”. Signed by the mark, directing a


certain person to pay a certain sum of money only to, or to the order of a certain person, or to

the instruments.

Parties involved in a bill of exchange are normally three: drawer, drawer and payee. But in case

the B/E is endorsed the number of parties may be five drawers, payee, endorser and endorsee.

In respect of tenor of payment B/E are of two types:

Demand / Sight bill payable on demand or at sight or on presentation

Time / Usance bill payable at a determinable future tin

In respect of type of documents, B/E are

Clean Bill where is no other document.

Documentary Bill which is accompanied by stipulated documents.

Bill of Lading (B/L)

It is a document issued by the shipping company or its agent acknowledging the goods

mentioned therein on board the carrying vessel in apparent good order and condition unless

otherwise indicated therein, for shipment to the consignee on terms and conditions as agreed

upon as to their carriage.

A bill of lading is a document of title to goods entitling the holder to receive the goods as

beneficiary or endorsee and it is with the help of this document on receipt from the exporter that

the importer takes possession of the goods from the carrying vessel at the port of destination.

Commercial Invoice/Invoice

It is the seller’s bill for the merchandise. It contains a description of the goods the price per unit

at a particular location, total value of the goods packing specifications teems of sale letter of

credit, bill of lading number, etc.

There is no standard form for a commercial invoice. Each exporter designs his own commercial

invoice forms. The invoice is made out by the seller under his signature in the name of the buyer

and must be submitted in a of at least 3 copies. Its main purpose is to cheek whether the

appropriate goods have been shipped and also that their unit price, total value, making on the

package etc. are consistent with those given in other documents.


Marine Insurance Policy

In the international trade marine insurance policy is a must to cover the risk of loss on

consignments while they are on seas. The marine insurance is the responsibility of the buyers

(consignee) under FAS, FOB and C F R contracts and the seller (consignor/shipper) under CIF

contract. The policy must be of the type as specified in the relative contract/credit. The policy

must would be for the value of CIF price plus 10(ten) percent of over the expenses and that is

required to be obtained in the same currency as that of the credit unless otherwise specified in the

credit and dated not later than the date of shipment with claims being payable at the destination.

It must be properly stamped. Like a bill of lading a bill of lading it must be negotiable and be

endorsed where it is payable to order.

Certificate of Origin (C/O)

This is a certificate issue by a recognized authority exporting country of origin of the goods. It is

usually by the chambers of commerce. Sometimes it is certified by local or Trade Representative

of the importing country as per terms of the credit.

Packing List (P/L) / Mills Specifications

The exporters must prepare an accurate packing list showing item by item, the contents of the

consignment to enable the receiver of the shipment to check ht contents of the goods, number

and makes of the packages, quantity, per package net weigh, gross weigh, measurement etc.

Inspection Certificate/Survey Report

Inspection certificate by an established inspection authority is needed under some contracts or by

some countries.

Certificate of Wightman and Measurement

Issued by recognized authorities (like chamber of commerce and industry) in exporting certifying

correct segment and measurement of the goods exported.

Bill of Entry

A bill of entry is a document which contains the particulars of the imported goods as well as the

amount customs duty payable.


Certificated Invoice

Is an invoice bearing a signed statement by someone in the importer’s country who has inspected

the goods founds that the goods are in accordance with the specific contract of the proforma and

the goods are of a specific country of origin.

L/C Amendment

L/C to be amendment before its expiry date only, dispatch or transmission of the amendment is

not sufficient is not to become the amendment effective. Beneficiary’s acceptance of the

amendment becomes effective upon his express communication accepting such Nominated

Bank. Shipment date and expiry date of the L/Cs may be amended if relevant LCA, permit

remains valid up to that period. L/C amount may be decreased with consent of the beneficiary.

Numbering amendments may be done but it is not mandatory.

Payment Against Documents (PAD):

PAD is associated with import and import financing. The importers are to open letter of credit

thorough any bank for importing goods. Most of the banks are to extend credit to the importers if

not prohibited by Bangladesh Bank for buying required foreign

Exchange. This loan on receipt of shipping documents from the negotiating bank is transferred

and lodged to MIB/PAD. PAD procedure is started by the issuing bank after getting all the

documents from the exporter as evidence of exporting goods. Document requited for PAD is

mentioned below:

Original (Non-Negotiable) bill of lading

Commercial invoice

Certificate of insurance

Bill of Exchange

Pre-shipment inspection certificate

Packing list

Clean report of finings (CRF).


Scrutinizing documents is very important for the issuing bank. As after examining all the

documents the issuing bank will make payment to the negotiating bank. So any mistake in the

examination process may cast issuing bank.

Loan Against Trust Receipt (LTR)

There may be situation where storage collateral in an independently controlled field warehouse is

impractical. An improper may require the goods for further processing or for displaying the

merchandise in order to make the final sale. In such cases a financial institution that has a great

degree of trust in the importer may be willing to release the negotiable Bill of Lading and

thereby also the goods to the importer against the signing of trust receipt. After the importer has

made his/her final sale and received the proceeds, he/her can pay the financial institutional that

he/she receive as advance.

Loan Against Imported Merchandise (LIM)

In many cases a bank had to clear the goods imported under L/C at the request of the borrower

when the imported does not come forward to retire the documents in spite of repeated reminders

bank has on forced circumstances to clear the imported consignment on arrival of the same to

avoid heavy demurrage at the port which adds to the burden of commitment.

Security, Lodgment And Retirement Of Import Letter Of Credit

Security of Documents:

The L/C opening bank being received the documents from the negotiating bank will scrutinize

the documents with the respective L/C terms and conditions:

Whether the documents negotiated within the period.

Whether bill of exchange presented term and condition of L/C.

Whether draft amount should be equal or less then the L/C amount.

Whether negotiable commission realized by the negotiable banks as per L/C.

Whether the B/L is clean i.e. there is clause like, some cartons are broken or any other

clause.

Whether there is signature of shipping authority.


Whether the date of B/L is within the date of shipment as per L/C.

Whether the port of shipment and port of destination are similar as per L/C.

Whether the foreign prepaid.

Whether the title if B/L being to L/C opening bank.

Whether the full sets of B/L dispatched by negotiable bank as per L/C.

Whether the full particulars of goods have been incorporated in commercial invoices.

Whether IRC, LAC no. Bangladesh Bank registration no. etc have been incorporated in

commercial invoices.

Whether commercial invoice is signed by the beneficiary.

Whether insurance policy has been taken from a reputed insurance company as per L/C.

Whether the date of insurance policy is after the date of bill of lading.

Whether the bill of lading is stale.

Whether on notification is mentioned on bill if lading.

Whether all the documents presented as per L/C.

Lodgment

If import documents found in order, it to be made entry in the bill register and necessary voucher

to be passed, putting bill number on the documents, these processes is called Lodgment of the

bill. The word lodgment means temporary stay. Since the documents, stay at this stage for a

temporary period ie up to retirement of the documents, the process is called Lodgments. Bank

must lodge the documents immediately after receipt of the same, not exceeding 7 banking

Lodgment:

Bill register: Bank will entry the documents in the bill register. Bill register must include

date Lodgment, Bill No, Bill of Exchange No, Amount Name of the Negotiating Bank,

B/L No and date merchandise retirement date and other particulars.

Application of rate: Foreign currency would be converted at B.C. rate ruling on the date

of Lodgment.

Exchange Control From: IMP and TM from must be filled in and singed by the importer

at the time of Lodgment.

Endorsement of LCAF: LCA from must be endorsed showing utilized so shipment.


Nothing no the File: Utilized-amount showing bill no to me noted on the printed format

of L/C file.

Export

The bank handled export business worth Tk. 18617.43 million in the year under report. In 2007

total export business handled by the bank was Tk. 13990.33 million. Thus there was an increase

of Tk. 4627.10 million in export business handled by the bank, being 33.07 percent over the

preceding year. The major export item was Readymade Garments. Here the last 5 years export

business of UBL is presented by a graph:


Export Business

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

2005 2006 2007 2008 2009

Export Business

Understanding

The goods and services sold by Bangladesh to foreign households, businessmen and Government

are called export. The export trade of the country is regulated by the Imports and Exports

(control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before

and after shipment of goods. The exports from Bangladesh are subject to export trade control

exercised by the Ministry of Commerce through Chief Controller of Imports and Exports (CC &

E). No exporter is allowed to export any commodity permissible for export from Bangladesh

unless he is registered with CC & E and holds valid Export Registration Certificate (ERC). The

ERC is required to be renewed ever year. The ERC number is to be incorporated on EXP forms

and other documents connected with exports. The formalities and procedure are enumerated as

follows:

1. Obtaining exports LC: To get export LC form exporter issued by the importer.

2. Submission of export documents: Exporter has to submit all necessary documents

to the collecting bank after shipping of goods


3. Checking of export documents: After getting the documents banker used to check

the documents as per LC terms

4. Negotiation of export documents: If the bank accepts the document and pays the

value draft to the exporter and forward the document to issuing bank that is called a

negotiating bank. If the bank does buy the LC then the bank normally acts as

collecting bank.

5. Realization of proceeds: This is the periods when the issuing bank has realized the

payment.

6. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank

is to report to respective department of Bangladesh bank by mentioning latest

payment.

7. Issue to proceeds realization certificate (PRC): Bank has to issue proceeds

realization certificate of export LC to the supplier/exporter for getting cash assistance

Export Operation

Bangladesh exports a large quantity of goods and services to foreign households. Ready made

Textile garments (both knitted and woven), Jute, Jute made products, frozen shrimps, tea are the

main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the

largest sector that exports the lion share of the country’s export; Bangladesh Exports most of its

readymade garments products to U.S.A and European Community (EC) countries, Bangladesh

exports about 40% of its ready made garments products to U.S.A Most of the exporters who


export through UTTARA BANK LTD. Are readymade garment exporters. They one export

L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign

importers.

Export L/C operation is just reverse of the import L/C operation for exporting goods by the local

exporter, bank may act as advising banks and collecting bank (negotiable bank) for the

exporter.

As an advising bank

It receives documents from the foreign importer and hands it over to the exporter; sometimes it

adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it

assumes the responsibility to make payment to the exporter.

As Negotiating Bank

It negotiates the bills and other shipping documents in favor of the exporter. That is, it collects

the proceeds of the export-bill from the drawer and credits the exporter’s account for the same.

Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the

importers country. Sometimes the bank purchases the bills at discount and waits till maturity of

the bill. When the bill matures, bank presents it to the drawer to encase it.

In our country export and import operation of bank is very much related with one another

because of use of bank to bank and maturity of payment for back-to-back L/C is set in such that

it can be paid out of export proceeds.

BACK-TO-BACK L/C

It is simply issued to the clients against an import L/C. Back-to-Back mechanism involves two

separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of


master export L/C Bank issues bank to Back L/C. Back-to-Back L/C is commonly known as

Buying L/C. On the country, Master export L/C is known as selling L/C.

FEATIRES OF BACK-TO-BACK L/C

An important L/C to procure goods / raw materials for further processing.

It is opened based on Export L/C,

It is a kind of export finance.

Export L/C is at sight but back to back L/C is at usage.

No margin is required to open Back-to-Back L/C

Application is registered with CCI&E.

Applicant has bonded warehouse license.

L/C value shall not exceed the admissible percentage of net FOB value of relative Master

L/C.

Usage period will be up to 180 days.

The important L/C is opened for 75% of the value of export L/C.

Here L/C issued against the lien of export L/C.

Arrangements are such that export L/C matures first then out of this export profit import

L/C is paid out.

Documents Required For Opening a Back-to-Back L/C

In UTTARA BANK Ltd. Principle branch, following papers/ documents are required for opening

a back-to-back L/C-

1. Master L/C

2. Valid important registration certificate (IRC) and export registration certification (ERC).

3. L/C Application and LCAF duly filled in and signed


4. Proforma invoice or indent

5. Insurance cover note with money receipt

6. IMP form duly signed

In addition to the above documents, the following are also required to export oriented

garment while requesting for opening a Back-to-Back L/C-

1. Textile permission

2. Valid bonded warehouse license

3. Quota allocation letter issued by the export promotion Bureau (EPB) in favor of the

applicant for quota items.

Check List of Export L/C

Following defective pints are usually found in the master L/C. So, these points are so much

carefully checked by the bank officials. These are;

1. Name of the Advising Bank.

2. Name of Transferring Bank

3. Form of Doc. Credit:

Name of issuing bank

Documentary credit no. And issuing data

Data of shipment

Expiry data and place

4. Applicant / for order of/ On Account

5. Beneficiary/ Favoring

6. Amount

7. Availability of Credit


8. Partial shipment / Transshipment

9. Category.

10. Description of goods:

a) Item

b) Total Qty

c) Unit price

11. B/L Clause

12. Reimbursement clause.

13. UCPDC Clause

14. Net FOB value.

Payment of back to back L/C:

In case back to back as 60-90-120-180 days of maturity period, deferred payment is made,

Payment is given after realizing export proceeds from the L/C issuing bank.

L/C under EOF:

Export development Fund is created by Bangladesh bank to give encourage to the

Exporter in Bangladesh.

Generally Back-to-Back L/C is stance L/C that is here bill of exchange is payable after

some maturity date say 90 or 120 days the date of acceptance/ negotiation. But some

foreign seller may required sight payment. Here import L/C matures first. In the case


Bangladesh Bank gives the fund to the bank to pay the price of imported goods in favor

of the local purchaser of raw materials. When exporter proceeds come, first Bangladesh

bank loan to the importer is adjusted and reaming part goes to the importer of raw

materials.

Negotiation of Export Documents:

The most common method of financing exporters is negotiation of documents under L/C. It is a

post-shipment credit. Here the bank acts as a negotiating bank. After the shipment of the goods,

the exporter submits the relative documents to the branch for negotiation. The documents are to

submit within the period mentioned in the L/C. after approval of negotiation of the bill the full

particulars of the documents are branch with a forwarding letter. The branch claim

reimbursement from the issuing bank or from the reimbursing bank, giving clear instructions to

credit the proceeds of the bill to the UTTARA Bank Ltd, head office NOSTRO A/C maintained

with the named correspondent bank abroad under telex intimation to the principal branch and

head office (International Division).

Negotiation stands for payment of value to the export against “the documents stipulated in the

LAC. If documents are in order, UTTARA Bank purchases (negotiations) the same on the basis

of banker-customer relationship. This is known as Foreign Documents Bill purchase (FDBP).

If the bank is not satisfied with the documents submitted to UTTARA Bank gives the exporter

reasonable time to remove the discrepancies or sends the documents to L/C opening bank for

collection. This is known as foreign documents bill for collection (FDBC) entered into the

foreign, bill purchased (F.B.P) register. The documents are sent to the L/C opening.


Presentation of export documents for negotiation/Purchase

After shipment exporter submits the following documents to UTTARA Bank for

negotiation.

Bill of exchange

Bill of lading

Invoice

Insurance

Certificate of Origin

Inspection certificate

Consular Invoice

Packing List

Quality Control Certificate

G.S.P. certificate.

Foreign Documentary Bills For Collection (FDBC)

UTTRARA Bank forwards the documents for collection due to the following reasons,

If the documents have discrepancies.

If the exporter is a new client.

FDBC signifies that the export will receive payment only when the issuing bank gives payment

UTTARA Bank make regular follow-up with the L/C opening bank in case of any delay in

getting payment.

Settlement of Local Bills


1. The settlement of local bills is done in the following ways-

2. The customer submits the L/C to UTTARA bank along with the documents ton negotiate

3. UTTARA Bank official scrutinizes the documents to ensure the conformity / in the terms

and conditions.

4. The documents are then forwarded to the L/C opening bank.

5. Payment is given to the customer on either by collection basis or by purchasing the

document.

Mode of payment of export bill under L/C:

As per UCPDC 500, 1993 revision there are four types of credit. These are as follows:

Sight Payment Credit: In a sight payment credit the bank pays the stipulated sum immediately

against the exporter’s presentation of the documents.

Deferred payment Credit: In deferred payment, the bank agrees to pay on a specified future

date or event, after presentation of the export documents. No bill of exchanges is involved.

Payment is given to the party at the rate of D. A 60-90-120-180 as the case may be. But the head

office is paid at T.T clean rate. The difference between the two rates us the exchange trading for

the branch.

Acceptance credit: In acceptance credit, the exporter presents a bill of exchange payment to him

and drawn at the agreed tenor (that is, on a specified future date or event on the bank that is to

accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can

then represent it for payment on maturity. Alternatively he can discount it in order to obtain

immediate payment.

Negotiation Credit: In negotiation credit, the export has to present a bill of exchange payable to

him in addition to other documents that the bank negotiates.


A Performance Report Of Foreign Exchange Department Of Uttara Bank Limited, Jatrabari Branch

Month wise Import Position of 2009:

Uttara Bank LimitedJatrabari Branch

Month Wise Import Position of 2009 (Figure in Lac Tk.)

Month L/C open USDAverage Monthly

Exchange RateBDT

January 32 7.5 75.78 568.35

February 28 6.41 34.14 218.83

March 29 5.70 37.04 211.12

April 45 7.27 132.78 960.5

May 43 7.11 131.13 932.33

June 58 6.52 365.24 2379.8

July 49 8.01 200.17 1602.56

August 45 7.907 189.07 1494.97

September 37 6.16 111.66 687.82

October 36 6.74 137.4 926.07

November 39 7.057 120.57 850.892

December 60 7.05 315.00 2220.75

Total 501 85.434 1849.98 13053.992

Source: Foreign Exchange Department of Uttara Bank Ltd Jatrabari Branch. As per 31st December 2009.


Month wise Import Position of 2009


Month Wise Export Position of 2009(Figure in Lac Tk.)

MonthDocumentDelivered

USDAverage Monthly

Exchange RateBDT

January 39 6.317 175.52 1108.75February 45 7.12 222.59 1584.84March 38 6.05 126.55 765.62April 48 7.3 249.28 1820.98May 51 6.523 259.45 1692.39June 59 7.03 301.32 2118.27July 50 6.83 254.28 1736.73August 63 8.656 329.44 583.313September 73 9.748 492.17 4797.67October 43 6.12 138.33 846.57November 69 11.35 456.84 5185.134December 53 7.23 303.73 2195.97Total 631 90.2749 3309.5 24436.237Source: Foreign Exchange Department of Uttara Bank Ltd. Jatrabari Branch. As per 31st December

2009.

Import Export Position Of Uttara Bank Limited, Jatrabari Branch In Graphical Format


Import Export Position through the Year

Exchange Rate Variation for Foreign Trade

Average Exchange Rate Variation for Foreign Trade:


Average Exchange Rate Variation for Foreign TradeFor the year 2009

Figure in LacMonth Import Export

January 75.78 175.52February 34.14 222.59March 37.4 126.55April 132.78 249.28May 131.13 259.45June 365.24 301.32July 200.17 254.28August 189.07 329.44September 111.66 492.17October 137.4 138.33November 120.57 456.84December 315 303.73Source: Foreign Exchange Department of Uttara Bank Ltd Jatrabari Branch. As per 1 December 2009.

Exchange Rate Variation for Foreign Trade in Graphical Format:


Period: January’09 – November’09

Foreign Remittance

This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a

bank must provide some service to the clients regarding foreign exchange and this department

provides these services.

The basic function of this department are outward and inward remittance of foreign exchange

from one country to another country. In the process of providing this remittance service, it sells

and buys foreign currency. In conversion of one currency into another takes place an agreed rate

of exchange, which the banker quotes, one for buying and another for selling. In such transitions

the foreign currencies are like am other commodities offered for sales and purchase, the cost

(convention value) being paid by the buyer in home currency, the legal tender.

Remittance Procedures of Foreign Currency

There are two type of remittance

Outward Remittance

Inward Remittance


Outward Remittance

On March 24, 1994 Bangladesh Taka was declared convertible for current account international

transaction. As a result remittance becomes more liberalized. Outward remittance include sale of

foreign currency by T.T., M.T., Draft, and T.C or in cash for private, official and commercial

purpose.

Inward Remittance

The term inward remittances include not purchase of Foreign Currency by T. T., M. T. and Draft

etc. but also purchase of bills purchase of T. C. Utmost care should be taken while purchasing

currency. Notes T. C., D. D., & similar instrument for protection the Bank from probable loss as

well as safety of the Bank officials concerned.

Working of this department

1. Issuance of TC, cash dollar/ pound

2. Issuance of FDD, FTT & purchasing, payment of the same.

3. Passport endorsement.

4. Encasement certificate-

5. F/C Account opening & filling.

6. Opening of export FC retention quota A/C & maintain.

7. Maintenance of ledger of cash dollar, FC deposits A/C & TC.

8. Maintain FBC register & follow up FBC.

9. Opening of student file & maintain.

10. Preparation of all related statement, Voucher & posting.

11. Preparation of weekly, Monthly, Yearly Statement for Bangladesh bank return timely.

12. Attending all related correspondence to other bank or institutions.

The remittance process involves the following four modes:


(1)CashRemittanceDollar/ Pound

Sell

Purchase

Bank sells Dollar/ Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank. Publication of Convertibility of taka for Currency Transitions in Bangladesh.

Bank can purchase dollar from resident and non-resident Bangladesh and Foreigner. Most dollars purchased come form realization of Export Bill of Exchange

(2)

Traveler’s Cheque

Issue of TC

Buying of TC

TC is useful to traveler abroad. Customer can encase the TC in abroad the drawee bank. TC is alternative to holding cash and it provides better security than holding cash in hand.

If any unused leaf of TC is surrendered bank buys it from the customer. All payment is made in local.Currency. Banks generally buy only those TC

(3)

Telex Transfer

Outward of TT

It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.

It also makes payment according to telegraphic message of its incoming foreign

correspondence bank from the corresponding NOSTRO Account.


(4)

Foreign Demand

Draft

Bank issue Demand Draft in favor of any other according to,

instruction of purchaser. The payee can collect it for the drawer

bank in which the issuing bank of demand draft holds its

NOSTRO Account bank also makes payment on DD drawn on

this by its foreign correspondence bank through the VOSTRO

Account.

In these processes of remittance, bank must have to make profit as a business Institution. Profit

is made in two ways:

1. Commission charged.

2. Difference in the buying and selling rate.

Foreign Remittance

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

2005 2006 2007 2008 2009

Foreign Remittance

Total Foreign Exchange of UBL of last five years


Miscellaneous Services by this Department

Student File: Student who is desirous to study abroad can open file in the Bank. By opening

this file, bank assures the remittance of funds in abroad for study.

F.C Accounts: Foreign currency accounts opened in the names of Bangladeshi nationals or

persons of Bangladeshi origin working or self – employed abroad can now are maintained as

long as the account holders desires.

RFCD: Stands for resident foreign currency accounts. Person’s ordinary resident in Bangladesh

may maintain foreign currency accounts with foreign exchange brought in at abroad. Balance of

such accounts is freely remittable abroad.

Formalities for opening Foreign Currency (FC) Account:

The AD may without prior approval of the Bangladesh Bank open Foreign Currency (FC)

account in the name of:

1. Bangladesh national residing abroad.

2. Foreign nationals residing abroad/in Bangladesh and also foreign firms.

3. Registered abroad and operating in Bangladesh and abstract foreign missions and their

expatriate employees.

4. Resident of Bangladesh nationals working with the foreign / international organization

operating in Bangladesh provided their salary in paid in foreign currency.

Foreign exchange earned through business doves or service rendered in Bangladesh cannot be

put into these accounts.


No payment in foreign currency (FC) may be made to any resident in Bangladesh out of the

foreign currency (FC) account.

All citizens of Bangladesh and other persons are residing to Bangladesh who became the owner

of any foreign currency (FC).

Papers required:

o Application duly billed in and signed.

o Photography (two copies).

o Passport photocopy.

o Work permit from board investment. (in case of foreign nationals)

Risk in Foreign Exchange Business

Foreign exchange business involves the following risks:

Risk of non-delivery of goods: May not be delivered to the buyer due to some mishaps frauds

or any other reason.

Risk of receiving sub-standard goods: Till the time the goods are received under a shipment

none can be sure of the quality of the goods involved.

Risk of nonpayment: Buyer may fail to honor his commitments.

Risk of frauds in goods: Contracted to buy cement but got sand. The above risks trade common

to inland trade as also the foreign trade. There are some risk which are peculiar to foreign

exchange business.

Exchange risk: Exchange of currencies can cause loss to some parties- seller or buyer due to the

inherent risk of exchange rate fluctuation.


Failure of foreign banks: It may be possible that the foreign bank may not be able to pay the

equivalent due to bank failures.

Sudden change in policies: This is referred to as political risk. Exchange control regulation,

import export policies and trade regulation are change overnight which will put the parties in

difficulties.

Chapter: 4Assessment of Internship


4.1 Learning through my task

I have learned many things while working on General Banking & Loan & Advance department. Some of them are stated below:

4.1.1 General Banking

General banking activities are divided into several parts—Customer service, cash, clearing and locker services.General banking does following activities:

Opening an account Closing account Cheque received Cash received Cash paid Pay order Demand draft Telegraphic Transfer Send clearing to Bangladesh Bank Clean cash, etc

4.1.2 Loan and Advance Department:

Loan & advance department is one of the main sources to earn profit of Uttara Bank Limited. In 2008 Uttara Bank Ltd. Registered a steady growth in the credit portfolio posting a growth of 30.42 percent. Total loan and advances of the bank stood at Tk. 37,141.3 million during the year. Uttara Bank Limited provided Loans & Advances on the following sectors:

01. Sector wise Loan & Advancesa. Agricultureb. Industrial Lending (Term)c. Industrial lending (Working capital)d. Commercial Lendinge. Special Programf. Housingg. Lease Financing


02. Special loan schemea. Personal loan schemeb. Uttara Housing Building repairing and renovation schemec. Consumer Credit Scheme (Uttara)d. Small Business Loan Scheme

Chapter: 5Analysis & Findings


5.1 Analysis

SWOT Analysis:

Strength:

Own Website

Skilled employees

Available branches

Huge Number of account Holder

Available product & services

Competitive price

Wide operational area

Own internet server

Own Website

Good co-operation among the employees

Traditional Bank. As a result earned public faith

Weakness:

Lack of employees

No online service

Less ATM Booth

Very poor Website

The bank is performing in the bottom line compared to its competitors

The employees of the bank lack of skills & excellence because of recruiting system’s

instability & lack of transparency

The bank is heavily depended on deposit scheme for doing business


The IT infrastructure is not so good

Unable to provide Cheque book &share’s clearing Cheque within customers desired

time

Foreign remittance inflow & outflow are very poor

The software that the bank is using is very unsophisticated & hampers operations

very often.

Opportunity:

Start of good ATM service can changed it’s image

Start of online banking service can also changed it’s image

Have to increase no of employees

Use of latest technology

Well trained up employees

Developing the recruiting system

Integrating software

Developing website

Threats:

Existing strong competitor

Internal control system of the bank is not quite satisfactory

The Bank is only focusing on some common analysis of its financial statements like

price earning ratio, advance deposit ratio, return on assets, return on equity etc.

The bank normally target the lower segment of the market &those who are not used to

sophisticated banking service because of illiteracy

UBL has not yet provided modern and advanced banking service all over the country.

Findings & analysis


UBL has not yet provided modern and advanced banking service all over the country.

While competitors are expanding their operation with a wide range of technology, UBL is

providing the banking service on a traditional basis. Even the bank has not yet introduced

the online banking services. Customers are not getting the opportunity of using ATM to

deposit & withdraw money. As a result, the services like 24 hours banking stands out of

reach.

Internal control system of the bank is not quit satisfactory. The employees of one

department frequently work or are called to work in another department. Even,

sometimes they are seen to change their tables to work in other tables. But they are not

actually responsible to do the task of others. Consequently, they blame another employee

when any problem exists. Besides, fourth class employees are seen to prepare some

vouchers of charges account for entertainment, stationary items, conveyance etc. for

which they were sent outside. As a result, it is obvious to create fraud and error.

Completeness of daily records is sometimes dependent on the willingness of the

employees.

Employee behavior with the customer sometimes reaches out of acceptance. In every

week, it is obvious that some customers are raising their voice loudly for

misunderstanding with some employees or such event occurs because of making delay to

provide services.

The bank is only focusing on some common analysis of its financial statement like price

earning ratio, advance deposit ratio, return on assets, return on equity etc. But, making

strategies focusing on some few analyses is not enough in the present market place. The

bank is operating in Bangladesh for about 45 years since its origin. So, it had the

opportunity to establish its image as a star.

HR practice of the bank allows recruiting some of the employees who are not sometimes

fit for the organization. Employees are not properly trained to speak in formal language

& hence some of them forget that they are in the office while speaking. Some employees

in each of the branches are employed in the accounting department but they have not the

background of accounting. As a result, their basic knowledge is not that much strong in

the relevant areas though they can solve all of their problems because of training.


The study of UTTARA Bank Ltd foreign exchange activities has revealed the following about

the bank-

The bank is performing in the bottom-line compared to its competitors

They haven’t developed any ATM & online services which is the main reason for

customers dissatisfactions to the bank

Foreign remittance inflows & outflows are very poor compared to other selected banks

The bank has a biasness in HRD which unwelcome female workforce in the bank

The employees of the bank lack of skills & excellence because of recruiting systems

instability & lack of transparency

The software that the bank is using is very unsophisticated & hampers operations very

often

The bank normally target the lower segment of the market & those who are not used to

sophisticated banking service because of illiteracy

The bank is heavily depended on deposit schemes for doing business

The IT infrastructure is not satisfactory, they don’t have a usable website

In foreign exchange department it is required to communicate with foreign banks

frequently and quickly. To make the process easy modem communication media for

example e-mail, Fax and win fax, Internet etc. should be used more frequently. But the

bank doesn’t have mass use of his medium of communication.

In some cases the number of employee engaged in rendering specific services is

insufficient.

Employees are exposed to customer excessively which is an obstacle in systematic and

prompt service.


Chapter: 6Recommendation

&Conclusion

6.1 Recommendation

In accordance with my practical experience & knowledge gained from working in Loan &

Advances and Foreign Exchange activities, I would like to recommend the followings:


UBL should develop the modern & advanced banking all over the country that can

impress its clients. If the Bank cannot implement the modern banking system, it would

not be possible for the bank to make competition with other banks in the most

competitive marketplace.

Customers want the facilities of online banking. But the bank has not yet introduced the

online banking & that’s why the service ought to be introduced as early as possible.

Behaviors with the client’s made by the employees are not enough to satisfy the clients &

hence the bank should increase the customer’s satisfaction level with smiling face. The

employees ought to be careful that if the customers are behaved well, they will come

again to take services.

Accounting procedure if the bank is based on traditional system though accounting

software has been introduced in all of the branches. It takes time to write & to prepare

different vouchers & to give entry in different registers by hand. So, bank should develop

the accounting process from the manual to computerize in all aspects. Bank should also

focus on more analysis of its financial statements.

Customers want to get the money of their clearing cheques quickly. But if the bank

makes delay of several days, it will create a bad impression against the bank. So, clearing

cheques ought to be sent to the local office to collection in proper time without making

any delay.

If an employee of one department works in another department frequently, internal

control system of the bank will be hampered. So, segregation of duties & responsibilities

in all departments should be properly ensured in all aspects.

Website of UBL is not that much rich to know about different value added services &

hence the site should be enriched & updated time to time. UBL should make decision

considering that it can work as an advertisement tools for the Bank.

UBL should take care of its head office to make people impressed at the first sight. If the

outlook of the bank cannot be changed, customer will recognize it as a backward bank.

Human Resource is the life of any organization. The success of any organization depends

on its employees. But, if the employees are not that much qualified, success will no

longer exist. Keeping the thought in mind, UBL should reform the HR policy & recruit

new young qualified HR personals.


6.2 Conclusion

UBL is a traditional banking & financial services organization operating in Bangladesh for about

45 years since origin. The total number of correspondents & agents of the Bank was 686 as on


31.12.2009 which was increased by 38 over that of the previous year. At the same time the bank

is handling foreign remittance business through 55 exchange houses & operating local operation

through 207 branches. I had the opportunity to work for this bank during my internship program.

I was placed at different departments of UBL at Jatrabari branch, Jatrabari. During this time I got

the chance to observe the overall activities of a branch commencing from account opening to

account closing. I also got the scope to act together with high officials and was informed about

their prospects & customers; I understand that there is the existence of customer dissatisfaction

in some cases. The bank is developing its Foreign Exchange activities, Risk management, Loan

& Advance & accounting system day by day with changing industry situation but the rate of

change of such speed needs to be increased. The bank has the opportunity to develop a

leadership position in the industry but new significant strategy ought to be made.

Finally, I would like to say that this internship at UBL has developed my practical knowledge of

Business Administration & made my BBA education more realistic. I got the scope to apply

various tools & concepts in this report that I learned in my education of last four years. The

concepts & tools used in this report were not only from accounting & finance related courses but

also from Management, Marketing, Human resources & other curses. I desire all the best for the

Uttara Bank Limited.

Bibliography

Books:

Saunders, Anthony, Cornett, Marcia Millon. , (Eds.) Financial Institutions Management. Singapore: McGraw-Hill, PP.138-153, 323- 341


Ross, Stephen A., Westerfield, Randolph W., Jeffe, Jeffrey, (Eds) Corporate Finance, New Delhi: Tata McGraw-Hill Publishing Company Limited, 2004, PP. 26-31.

Report and Magazines: Uttara Bank Limited. Annual Report (2009). General Banking Manual- Uttara Bank Limited. Marketing Management by Bangladesh Bank.

Website: http://www.uttarabank-bd.com/ http://www.google.com http://www.wikipedia.com


http://www.wikipedia.com/

http://www.google.com/

http://www.uttarabank-bd.com/