CHAPTER-1
1.1 IntroductionBangladesh have to keep place with
the change in global business. Now banks have to compete in market place both
with the local institutions as well as with the foreign institutions.
1.2 Background of the study
This practical orientation is also a positive development
in professional area. Recognizing the importance of practical experience,
Department of has introduced a three month practical exposure as a part of the
curriculum of Bachelor in Business Administration in Finance. In this state I
have worked to reflect my entire efforts at analyzing the experience of
practical orientation related to overall banking activities of the UBL
1.3 Rationale of the studyBangladesh .
When I am successfully complete this study, it can be used to identify the
performance of Uttara Bank Ltd. and also invent new technique, which can be
used to prevent a good loan to become a classified loan and these technique can
also be used in other banks to get the same benefit.
v
To analyze the bank’s overall performance.
v
To know the procedure of General banking and
also foreign exchange operation.
v
To know about the services provided by the bank.
v
To acquire the knowledge of practical operations
and the function of the Bank.
v
To gain an overall idea and know about the
financial position of the bank.
v
To find out the exiting problems of the bank
(Branch).
v
To recommend solutions to the existing
problem.
v
To show the trend of the key financial indicates
faced by the bank branch.
1.5 Scope of the
study
1.6 Methods of Data Collection
1.7 Sources of Data
Primary Sources of Data
Secondary Sources of Data
1.8 Limitation of
the Study
Time Limitation
Lack of Data
If anyone can wise than he can gather primary data to the
banks employees. But this data is not proper for writing a report. Secondary
data is also very rears. It is just only the annual report and the web site.
But in the web site the information is updated and is properly given.
Limitation of Scope
CHAPTER-2BANGLADESH
2.1 What is Bank?
A banker or bank is a financial institution
whose primary activity is to act as a payment agent for customers to borrow and
lend.
- conducting current accounts for his customers
- paying cheques drawn on him, and
- Collecting cheques for his customers.
In
most English common law jurisdictions there is a Bills of Exchange Act that
codifies the law in relation to negotiable instruments,
including cheques, and this Act contains a statutory
definition of the term banker: banker includes a body of persons,
whether incorporated or not, who carry on the business of banking' (Section 2,
Interpretation). Although this definition seems circular, it is actually
functional, because it ensures that the legal basis for bank transactions such
as cheques do not depend on how the bank is
organized or regulated.
- "banking business" means the business of
receiving money on current or deposit account, paying and collecting
cheques drawn by or paid in by customers, the making of advances to
customers, and includes such other business as the Authority may prescribe
for the purposes of this Act; (Banking Act (Singapore), Section 2,
Interpretation).
- "banking business" means the business of
either or both of the following:
- receiving from the general public money on current,
deposit, savings or other similar account repayable on demand or within
less than [3 months] ... or with a period of call or notice of less than
that period;
- paying or collecting cheques drawn by or paid in by
customers
Since
the advent of EFTPOS (Electronic Funds Transfer at Point Of
Sale), direct credit, direct debit and internet banking, the cheque has lost
its primacy in most banking systems as a payment instrument. This has lead
legal theorists to suggest that the cheque based definition should be broadened
to include financial institutions that conduct current accounts for customers
and enable customers to pay and be paid by third parties, even if they do not
pay and collect cheques.
1.1 Introduction
1.2 Background of the study
1.3 Rationale of the study
1.4 Objective of
the study
1.5 Scope of the
study
1.6 Methods of Data Collection
1.7 Sources of Data
1.8 Limitation of
the Study
2.2 Origin of the Bank
The
name bank derives from the Italian word banco
"desk/bench", used during the Renaissance by Florentines bankers, who used to make their
transactions above a desk covered by a green tablecloth. However, there are
traces of banking activity even in ancient times.
In
fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards
called macella on a long bench called a bancu, from which the
words banco and bank are derived. As a moneychanger, the merchant
at the bancu did not so much invest money as merely convert the foreign
currency into the only legal tender in Rome- that of the Imperial Mint.
2.3 Objectives of Bank
The broad
objectives of the Bank are:
a) To regulate the issue of the currency and the keeping of reserves;
b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value;
c) To preserve the par value of the Bangladesh Taka;
d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources for the national interest.
a) To regulate the issue of the currency and the keeping of reserves;
b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value;
c) To preserve the par value of the Bangladesh Taka;
d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources for the national interest.
2.4 Wider
commercial role
However the commercial
role of banks is wider than banking, and includes:
- issue
of banknotes (promissory notes
issued by a banker and payable to bearer on demand)
- processing
of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
- issuing
bank drafts and bank cheques
- accepting
money on term deposit
- lending
money by way of overdraft,
installment loan or otherwise
- providing
documentary and standby letters of credit,
guarantees, performance bonds,
securities underwriting commitments and other forms of off balance sheet
exposures
- safekeeping
of documents and other items in safe deposit boxes
- currency
exchange
2.5 Law of banking
Banking
law is based on a contractual analysis of the relationship between the bank
and the customer. The definition of bank is given above, and the
definition of customer is any person for whom the bank agrees to conduct an
account.
The
law implies rights and obligations into this relationship as follows:
- The bank account balance is the financial position
between the bank and the customer, when the account is in credit, the bank
owes the balance to the customer, when the account is overdrawn, and the
customer owes the balance to the bank.
- The bank engages to pay the customer's cheques up to
the amount standing to the credit of the customer's account, plus any
agreed overdraft limit.
- The bank may not pay from the customer's account
without a mandate from the customer, e.g. a cheque drawn by the customer.
- The bank engages to promptly collect the cheques
deposited to the customer's account as the customer's agent, and to credit
the proceeds to the customer's account.
- The bank has a right to combine the customer's
accounts, since each account is just an aspect of the same credit
relationship.
- The bank has a lien on cheques deposited to the
customer's account, to the extent that the customer is indebted to the
bank.
- The bank must not disclose the details of the
transactions going through the customer's account unless the customer
consents, there is a public duty to disclose, the bank's interests require
it, or under compulsion of law.
- The bank must not close a customer's account without
reasonable notice to the customer, because cheques are outstanding in the
ordinary course of business for several days.
These
implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force in the
jurisdiction may also modify the above terms and/or create new rights,
obligations or limitations relevant to the bank-customer relationship.
2.6 Types of banks
Banks'
activities can be divided into retail banking, dealing directly with
individuals and small businesses; business
banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth management
services to High Net Worth Individuals and families; and investment banking,
relating to activities on the financial markets. Most banks are profit-making,
private enterprises. However, some are owned by government, or are non-profits.
Central banks are normally government owned
banks, often charged with quasi-regulatory responsibilities, e.g. supervising
commercial banks, or controlling the cash interest rate. They generally provide liquidity
to the banking system and act as Lender of last resort
in event of a crisis.
2.7 Types of retail banks
National Bank of the Republic, Salt Lake City 1908
National Copper Bank, Salt Lake City 1911
- Commercial bank:
the term used for a normal bank to distinguish it from an investment bank.
After the Great Depression,
the U.S. Congress required that banks only engage in banking activities,
whereas investment banks were limited to capital market activities. Since the two no
longer have to be under separate ownership, some use the term
"commercial bank" to refer to a bank or a division of a bank
that mostly deals with deposits and loans from corporations or large
businesses.
- Community
Banks: locally operated financial institutions that empower
employees to make local decisions to serve their customers and the
partners
- Community
development banks: regulated banks that provide financial
services and credit to under-served markets or populations.
- Postal savings
banks: savings banks associated with national postal systems.
- Private Banks:
manage the assets of high net worth individuals.
- Offshore banks:
banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
- Savings bank: in
- Building societies
and Landes
banks: conduct retail banking.
- Ethical banks:
banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
- Islamic banks:
Banks that transact according to Islamic principle Types of
investment banks.
- Investment banks:
"underwrite" (guarantee the sale of)
stock and bond issues, trade for their own accounts, make markets, and
advise corporations on capital markets activities such as mergers
and acquisitions.
- Merchant banks
were traditionally banks which engaged in trade financing. The modern
definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital
firms, they tend not to invest in new companies.
2.8
List of the Banks in Bangladesh
Central Bank
Nationalized Commercial Banks
The
banking system of Bangladesh
is dominated by the 3 Nationalized Commercial Banks , which together controlled
more than 54% of deposits and operated 3088 branches (54% of the total) as of
December 31, 2010[1]. The nationalized
commercial banks are:
Private Commercial Banks
Private
Banks are the highest growth sector due to the dismal performances of
government banks (above). They tend to offer better service and products.
- AB
Bank Limited
- BRAC
Bank Limited
- Eastern Bank Limited
- Dutch Bangla Bank
Limited
- Dhaka Bank Limited
- Islami Bank Bangladesh Ltd
- Pubali
Bank Limited
- Uttara
Bank Limited
- IFIC Bank Limited
- National Bank
Limited
- The City Bank Limited
- United Commercial Bank Limited
- NCC
Bank Limited
- Prime Bank Limited
- SouthEast Bank Limited
- Al-Arafah Islami Bank Limited
- Social Investment Bank Limited
- Standard Bank Limited
- One
Bank Limited
- Exim
Bank Limited
- Mercantile Bank Limited
- Bangladesh Commerce Bank Limited
- Mutual Trust Bank Limited
- First Security Bank Limited
- The Premier Bank Limited
- Bank
Asia Limited
- Trust
Bank Limited
- Shahjalal Bank Limited
- Jamuna
Bank Limited
Foreign Banks
- Citigroup
- HSBC
- Standard
Chartered Bank
- Commercial
Bank of Ceylon
- State Bank of India
- Habib Bank
- National Bank
of Pakistan
- Woori Bank
- Bank Alfalah
- ICB
Islami Bank
Specialized Banks
Out of
the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan
Bank) were created to meet the credit needs of the agricultural sector while
the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin
Sangtha (BSRS) are for extending term loans to the industrial sector[1]. The Specialized banks
are:
- Grameen Bank
- Bangladesh Krishi Bank
- Bangladesh Shilpa Bank
- Rajshahi Krishi Unnayan Bank
- Bangladesh Shilpa Rin Sangstha
- Basic
Bank Ltd (Bank of Small Industries and Commerce)
- Bangladesh Somobay Bank Limited(Cooperative
Bank)
- The Dhaka Mercantile Co-operative Bank Limited (DMCBL)
CHAPTER-3
ORGANIZATIONAL PROFILE
3.1 Historical Background of UBL
Uttara Bank Ltd. has been a nationalized bank in the name
of Uttara Bank under the Bangladesh Bank (Nationalization) order 1972, formally
known as Eastern Banking Corporation Limited.
v
Uttara Bank ltd.
started functioning from 28.01.1965
v
Consequent upon the
amendment of Bangladesh Bank (Nationalization) order 1972
v
Uttara Bank ltd.
converted into Uttara Bank ltd. as a public limited company in the year 1983
and obtained business commencement certificate on 21.08.1983.
v
Uttara Bank ltd.
floated its shares in the year 1984.
v
Uttara Bank ltd. has
216 branches all over Bangladesh
v
The bank is listed in
the Dhaka Stock Exchange Ltd. and also in Chittagong Dhaka Stock Exchange Ltd.
v
It publicly quoted
company for trading of its shears.
v
The registered office
of the Bank is located in 47, Bir Uttom
Shahid Ashfaq-us-samad Road (90, Motijheel Commercial Area), P.O. Box No. 217 & 818 Dhaka-1000,
Bangladesh.
Uttara Bank is one of the largest and
oldest private-sector commercial bank in Bangladesh , with years of
experience. Adaptation of modern technology both in terms of equipment and
banking practice ensures efficient service to clients. 216 branches at home and 600 affiliates
worldwide create efficient networking and reach capability. Uttara is a bank
that serves both clients and country.
UBL is one of the largest private
banks in Bangladesh .
v
It operates through 216 fully computerized branches ensuring best
possible and fastest services to its valued clients.
v
The bank has more than 600 foreign correspondents worldwide.
v
Total number of employees nearly 4500.
v
The Board of Directors consists of 15 members.
v
The bank is headed by the Managing Director who is the Chief Executive
Officer.
The Head Office is located at
Bank’s own 18-storied building at Motijheel, the commercial center of the
capital, Dhaka .
3.2 UBL Networks
|
UBL
Networks
|
|
|
Corporate offices (corporate branch & Local office)
|
2
|
|
Regional office
|
13
|
|
World wide affiliates
|
600
|
|
Total Branches (including corporate branch & local
office)
|
216
|
|
Authorized Dealer Branches
|
38
|
|
Treasury & Dealing Room
|
1
|
|
Training Institute
|
1
|
|
Man power
|
4500
|
Figure : Recent survey shows that UBL
Networks in Bangladesh
3.3 Corporate Vision and Mission
Vision
To become a leading banking institution which play a
pivotal role in the development of the country.
i)
Continuous improvement
in our business policies.
ii)
Cost reduction
integration of the technology at all level.
Uttara Bank ltd. has 216 branches all over Bangladesh . Jatrabari
Branch is one of them. Like other branch it’s operate several department. They
are like
1.
General Banking
2.
Loan and Advance, And
3.
Foreign exchange
In this branch operation is mostly covered by the computer
system. By the use of computer here operate is like Clearing, E-mail, Money
Laundering, Clean Cash and all types of letter/ application and other related
works with computer.
Through there are a little bit work of foreign exchange,
but FDD, LC,SC,LSC,DD,MT,TT are doing here.
3.4 Corporate Governance
Corporate Governance is the
system by which business companies are directed and controlled. Since its
inception, Uttara Bank has actively and fully adhered to the principle of sound
corporate governance. Fairness, Transparency Accountability and Responsibility
are the minimum standard of acceptable corporate behavior today. Uttara Bank
Limited continues to ensure the compliance of corporate Governance as per
Securities and Exchange Commission rules and regulations. Corporate governance
establishes specific responsibility and ensures accountability.
3.5 Corporate Social Responsibility
The basic driver of CSR consists of values that have taken
place within businesses where they not only feel responsible for creation of
wealth but also for social and environmental well being. Uttara Bank Ltd. Considers socially
responsible activities as an important part of its culture, identity and
business practice. We have a deep commitment, loyalty and a high sense of
responsibility to our nation and its people. Uttara Bank Ltd. conforms to all
of the astringent regulations issued by the Government and the Bangladesh Bank.
As per of our corporate social responsibility, Bank contributes greatly to the
nourishment of the country’s all types of calamities, arts, culture and sports.
3.6 Branches
of Uttara Bank Ltd
3.6 Parformance of UBL
|
UTTARA
BANK LIMITED
|
||||||
|
CONSOLIDATED BALANCE SHEET
|
||||||
|
AS
AT 30 JUNE 2011
|
||||||
|
|
|
|
|
June,
2011(Taka)
|
|
December,2010(Taka)
|
|
PROPERTY
AND ASSETS
|
|
|
|
Taka
|
||
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
7,528,443,632
|
|
6,637,786,903
|
|
Cash
in Hand (including foreign currencies)
|
1,524,572,087
|
|
1,294,274,237
|
|||
|
Balance
with Bangladesh Bank and its
|
|
|
|
|||
|
agent
Bank(s) (including foreign currencies)
|
6,003,871,545
|
|
5,343,512,666
|
|||
|
Balance
with other Banks and
|
|
|
|
|||
|
financial
institutions
|
|
520,684,530
|
|
499,461,149
|
||
|
In
|
|
|
100,248,679
|
|
102,922,415
|
|
|
Outside
|
|
|
420,435,851
|
|
396,538,734
|
|
|
|
|
|
|
|
|
|
|
Money
at call and short notice
|
29,600,000
|
|
29,600,000
|
|||
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
21,984,245,923
|
|
18,591,127,858
|
|
|
Government
|
|
|
21,822,442,919
|
|
18,429,298,854
|
|
|
Others
|
|
|
|
161,803,004
|
|
161,829,004
|
|
|
|
|
|
|
..
|
|
|
Loans
and Advances:
|
|
52,187,776,449
|
|
48,672,687,127
|
||
|
Loans,
cash credits, over drafts etc.
|
47,366,590,925
|
|
44,372,359,512
|
|||
|
Bills
purchased and discounted
|
|
4,821,185,524
|
|
4,300,327,615
|
||
|
Fixed
assets including Premises
|
|
|
|
|||
|
Furniture
and Fixtures
|
|
2,801,849,094
|
|
2,798,141,777
|
||
|
Other
Assets
|
|
|
5,041,569,175
|
|
4,128,831,180
|
|
|
Non
Banking Assets
|
|
93,874,603
|
|
94,202,809
|
||
|
TOTAL
ASSETS
|
|
|
90,188,043,406
|
|
81,451,838,803
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND CAPITAL
|
|
|
|
|
||
|
Liabilities:
|
|
|
|
|
|
|
|
Borrowings
from other Banks,
|
|
|
|
|
||
|
Financial
Institutions and Agents
|
|
7,303,588,119
|
|
206,875,583
|
||
|
|
|
|
|
|
|
|
|
Deposits
and other accounts:
|
|
66,106,300,150
|
|
65,868,030,947
|
||
|
Current
and other accounts etc.
|
|
23,437,300,510
|
|
23,125,023,246
|
||
|
Bills
payable
|
|
|
1,488,560,763
|
|
1,692,242,882
|
|
|
Saving
bank deposits
|
|
|
23,797,981,512
|
|
23,794,594,646
|
|
|
Fixed
deposits
|
|
|
15,348,838,692
|
|
15,130,072,230
|
|
|
Other
deposits
|
|
|
2,033,618,673
|
|
2,126,097,943
|
|
|
Other
liabilities
|
|
|
7,809,150,316
|
|
6,766,086,457
|
|
|
TOTAL
LIABILITIES
|
|
|
81,219,038,585
|
|
72,840,992,987
|
|
|
|
|
|
|
|
|
|
|
CAPITAL/SHARE
HOLDERS' EQUITY
|
|
|
|
|||
|
Issued,
subscribed and paid up capital
|
2,875,173,120
|
|
2,395,977,600
|
|||
|
Statutory
reserve
|
|
|
2,370,837,039
|
|
2,370,837,039
|
|
|
Other
reserves
|
|
|
2,868,040,605
|
|
2,853,862,188
|
|
|
Surplus
in Profit and Loss account
|
854,948,057
|
|
990,162,989
|
|||
|
TOTAL
CAPITAL/ SHARE HOLDERS' EQUITY
|
8,968,998,821
|
|
8,610,839,816
|
|||
|
Non-controlling
interest
|
|
6,000
|
|
6,000
|
||
|
TOTAL
LIABILITIES AND SHARE HOLDERS' EQUITY
|
90,188,043,406
|
|
81,451,838,803
|
|||
|
|
|
|
|
|
|
|
|
OFF
BALANCE SHEET ITEMS
|
|
|
|
|
||
|
CONTINGENT
LIABILITIES
|
|
10,630,631,344
|
|
9,377,588,319
|
||
|
Acceptances
& endorsements
|
|
-
|
|
-
|
||
|
Letter
of guarantees
|
|
|
1,656,186,206
|
|
1,759,129,983
|
|
|
Irrevocable
letter of credit
|
|
6,108,880,138
|
|
5,279,474,336
|
||
|
Bills
for collection
|
|
|
-
|
|
-
|
|
|
Other
contingent liabilities
|
|
2,865,565,000
|
|
2,338,984,000
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
OTHER COMMITMENTS
|
|
|
|
-
|
||
|
|
|
|
|
|
|
|
|
TOTAL
OFF- BALANCE SHEET ITEMS
|
|
|
|
|||
|
INCLUDING
CONTINGENT LIABILITIES
|
10,630,631,344
|
|
9,377,588,319
|
|||
|
UTTARA BANK LIMITED
|
|||||
|
CONSOLIDATED PROFIT AND
LOSS ACCOUNT
|
|||||
|
FOR THE PERIOD FROM
JANUARY 01,2011 TO JUNE 30,2011
|
|||||
|
|
|
|
|
|
|
|
|
OPERATING
INCOME :
|
January to
|
January to
|
April-June
|
April-June
|
|
|
|
June 30,2011
|
June 30,2010
|
30'2011
|
30'2010
|
|
|
|
Taka
|
Taka
|
Taka
|
Taka
|
|
|
Interest
Income
|
3,121,674,120
|
2,262,236,967
|
1,633,735,040
|
1,184,953,649
|
|
|
Interest
paid on deposits, borrowings etc.
|
1,802,586,711
|
1,434,244,481
|
994,154,691
|
722,453,960
|
|
|
Net
Interest Income
|
1,319,087,409
|
827,992,486
|
639,580,349
|
462,499,689
|
|
|
Income
from Investment.
|
1,036,425,038
|
923,072,171
|
598,969,158
|
521,208,429
|
|
|
Commission,Exchange
and Brokerage
|
515,561,089
|
452,249,056
|
243,548,699
|
289,568,652
|
|
|
Other
Operating Income
|
378,491,169
|
578,046,179
|
310,921,618
|
183,135,970
|
|
|
Total
operating income
|
3,249,564,705
|
2,781,359,892
|
1,793,019,824
|
1,456,412,740
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
Salary
and allowances.
|
951,607,208
|
730,642,856
|
585,785,598
|
356,160,816
|
|
|
Rent,
taxes,insurance,electricity etc.
|
105,105,921
|
98,494,557
|
55,135,459
|
56,220,017
|
|
|
Legal
expenses
|
5,690,437
|
3,657,334
|
2,251,363
|
2,385,658
|
|
|
Postage,stamp,telecommunication
etc.
|
20,292,159
|
19,065,818
|
12,481,512
|
7,940,616
|
|
|
Stationery,printing,advertisements
etc.
|
46,569,101
|
36,698,590
|
23,186,175
|
18,485,251
|
|
|
Managing
Director's salary & allowances and fees
|
5,503,000
|
4,810,000
|
3,251,500
|
2,905,000
|
|
|
Directors'
fees
|
1,445,873
|
1,262,006
|
1,340,873
|
925,006
|
|
|
Auditors'
fees
|
-
|
-
|
-
|
-
|
|
|
Charges
on loan losses a/c.
|
86,643,022
|
-
|
86,643,022
|
-
|
|
|
Repair,
maintenance and depreciation
|
|
|
|
|
|
|
of
Bank's property
|
66,363,813
|
67,294,540
|
40,219,715
|
33,819,490
|
|
|
Other
expenses
|
207,168,063
|
178,008,204
|
88,068,269
|
138,960,644
|
|
|
Total
operating expenses
|
1,496,388,597
|
1,139,933,905
|
898,363,486
|
617,802,498
|
|
|
Profit
before provision
|
1,753,176,108
|
1,641,425,987
|
894,656,338
|
838,610,242
|
|
|
Provision
|
150,000,000
|
150,000,000
|
-
|
-
|
|
|
Provision
for loans & advances
|
150,000,000
|
150,000,000
|
-
|
-
|
|
|
Provision
for off balance sheet exposures
|
-
|
-
|
-
|
-
|
|
|
Provision
for outstanding unreconciled entries
|
-
|
-
|
-
|
-
|
|
|
Transfer
to benevolent fund
|
-
|
-
|
-
|
-
|
|
|
Profit
before tax
|
1,603,176,108
|
1,491,425,987
|
894,656,338
|
838,610,242
|
|
|
Provision
for Taxation
|
750,000,000
|
697,700,000
|
427,500,000
|
345,000,000
|
|
|
Current
tax
|
750,000,000
|
697,700,000
|
427,500,000
|
345,000,000
|
|
|
Deferred
tax
|
-
|
-
|
-
|
-
|
|
|
Profit
after taxation
|
853,176,108
|
793,725,987
|
467,156,338
|
493,610,242
|
|
|
Retained
earning brought forward
|
1,771,949
|
8,282,264
|
1,771,949
|
8,282,264
|
|
|
Profit
available for appropriation
|
854,948,057
|
802,008,251
|
468,928,287
|
501,892,506
|
|
|
Appropriations
|
-
|
-
|
-
|
-
|
|
|
Statutory
reserve
|
-
|
-
|
-
|
-
|
|
|
General
reserve
|
-
|
-
|
-
|
-
|
|
|
Retained
earnings
|
854,948,057
|
802,008,251
|
468,928,287
|
501,892,506
|
|
|
Earning
per share (EPS)
|
2.97
|
2.76
|
1.62
|
1.17
|
CHAPTER-4
GENERAL BANKING
4.1 General Banking
There are several types of departments perform in a bank.
General banking is one of the most important departments for banking sector.
General banking department is that department which is mostly exposed to the
minimum number of bank customers. It is the introductory department of the bank
to its customers. There are no businesses in the world who does not think about
profit. All business concern about profit through selling product or provide
services. A bank provides various type of financial service to its customers
for profit. Jatrabari branch of Uttara bank ltd. has all required of general
banking and all these section are run by manpower with their high quality
banking knowledge.
Under General Banking department the following sector are
included:
§
Account opening
department
§
Cash department
§
Clearing department
§
Collection department
§
Local remittance
department
§
Loan and advance.
In the following they are shortly describe:
4.2 Account Opening
Department
The relationship started with the customer and the bank by
opening the account. Initially all the accounts are opened with a deposit of
money by the customer. But in this day there are several types of rules and
regulation provided by the government for opening the account. This is only for
the terrorist (JMB) arise of our country that damages the total nation. Now if any one wanted to open his/ her
account then they must sign in the money laundering, they have to tell about
there money sources and face various types of question.
Function of the Department
The function of the department is to perform the following
main function:
§
Accepting Deposit
§
Opening of account
§
Cheque book issue
§
Transfer of account
§
Closing of account
Accepting Deposit
Deposits are life blood of a commercial bank. Without
deposit there are no accounts can be opened? In Jatrabari branch there are
various types of account are offered for the various customer. They are
different group. They are like
§
Demand deposit account
§
Time deposit account
§
Fixed deposit account
Demand Deposit Account
The amount in account are payable in demand so it is called
demand deposit account. The following accounts are under Demand deposit
accounts:-
§
Current account
§
Saving account
§
STD (Short notice term
deposit)
§
CC (Cash Collection)
Current Account
These types of account can be opened by both individual and
business concern. A current account holder can draw Cheque on his account for
any amount for any number of times in a day as the balance in his account
permits. When the amount is large than the account holder may be remind it a
few days ago. This account provides no interest. The minimum balance to be
maintained is Tk. 2000/-. No new account can be opened with a Cheque.
Savings Account
Individuals for savings purposes open this type of Account.
Current interest rate of these accounts is 4.50% per annum. A minimum balance
of Tk.1000 is required to be maintained in a SB account interest on CB account
is calculated and accrued monthly and credited to the account half yearly.
Interest calculation is made for each month on the basis of the lowest balance
at credit of an account in that month. A depositor can withdraw form his SB
account not more than twice a week up to an amount not exceeding 25% of the
balance in the account.
§ Any Bangladeshi National
residing home or abroad may open savings
account with UBL
§ This account may be opened in
single/joint name.
§ The account holder may nominate his nominee in
this account.
§ The nominee can get the balance
amount without submitting succession certificate after the death of account
holder.
Requirement for Opening of
the A/C
§ Account opening form as per format below. The
account opening form and signature card 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.
Special Notice Term Deposit (STD)
The deposit in this account is withdrawal on prior notice
varying from 7 to 29 days
and 30 days or more. The interest is paid on the balance of the account.
Current interest rate is 4.50% per annum.
§
Govt., Semi-Govt., Autonomous organization and an individual may open STD
Account with UBL.
§
UBL offers attractive/competitive rate of interest in STD Account.
7 days notice required to
withdraw big amount.
Opening Procedure
For opening such A/C, application in the prescribed from
along with a set of specimen signature duly verified by Bangladesh mission abroad or by a
reputable bank of any other person known to the bank, should be obtained by the
brandies. In case of persons, already maintain any F.C A/C or N.F.C.D. A/C with
them, reference to that F.C A/C will serve, the purpose of introduction, the
branch may verify the signature from the specimen signature and already
available with them. Only one such F.C A/C can be maintained and the balance in
the A/C should not exceed $ 30.000/- or equivalent pound sterling at any one
time. The A/C holder is also required to submit photocopies of passport, visa,
and work permit/contract. As this is a current account no Interest is paid to
the A/C holder.
Time Deposit Account:
The amount in this A/C is payable only after stipulated
time. The following a/c’s are under time deposit a/c: Fixed Deposits which are
repayable after the expiry of fixed period and negotiable.
Bearer certificate of deposits (BCD), which are repayable
after the expiry of fixed period but are negotiable. These are not renewable.
Non –resident foreign currency deposits are them deposits
maturing after 1 month, 3 months, 6 months and 1 year. This
a/c’s can be opened either in U.S dollar or pound sterling. No interest is paid
in case of premature encashment.
Fixed Deposit Account
These are deposit, which are made with the bank for a fixed
period specified in advance. The band need not maintain each reserve against
these deposits and therefore, bank gives high rate of interest on such
deposits. A FDR is issued to the depositor acknowledging receipt of the sum of
money mentioned therein. It also contains the rate of interest and the date on
which the deposit will fall due for payment.
4.3 Interest on
Deposits
|
Particulars
|
Rate Of Interest
|
|
Interest Rate on Deposits:
Savings
Deposits
Special
Notice Deposits (STD)
|
4.50%
4.50%
|
|
Fixed Deposits (Time Deposits)
3
months
6
months
1 year
2 years
and above
|
12.50%
12.50%
12.50%
12.50%
|
4.4 Opening of an Account
It includes two steps. They are
1.
Account opening
procedure.
2.
Classification of
customer.
Account Opening Procedure
Documents needed for each accounts separately:
(Current/ Saving accounts)
Current
Account
1. Limited Company
§
Certificate of
Incorporation.
§
Certificate of
Commencement of business.
§
Memorandum of
association.
§
Article of
association.
§
Power of attorney.
§
Resolution of the
Board of Directors authorizing opening of an account.
§
Societies/ Club/
Association.
§
Other than above
mentioned common documents resolution of who will operates the account
§
Must be noted.
2. Proprietorship
Firm
Name of the authorized persons, designation, specimen,
signature card, trade license, and passport / chairman certificate.
3.
Partnership Firm
§
Account must be opened
in the name of the firm.
§
The form should
describe the names and address of the entire partner.
§
Trade license from
City Corporation is needed.
§
Partnership deed.
§
Letter of authority is
achieving.
Account opening procedure
:
|
|
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|
|
|
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→
→ 
|
1. Account opening form duly filled up.
2.
Specimen signature
cards in duplicate.
3.
Certified copy of by laws, rules and regulations in case of
corporations and autonomous body are to be obtained.
4.
Certified copy of the
resolution-authorizing opening of an account.
5.
List of members of the
executive committee and list of directors are to be obtained
6.
Partnership deed, in
case of partnership.
7.
Certificate of
incorporation in case of both public and private limited companies.
8.
Memorandum / Articles
of Associations, Resolution of the Board of
Directors authorizing opening of the Account for limited companies
and corporation
4.5
Classification of Customer
It includes the following
things:
§ Individual (Personal)
§
Proprietorship (Sole trades)
§
Partnership firms
(Registered or unregistered)
§
Joint stock companies
(Private limited companies/ public ltd.)
§
Public sector
corporations
§
Municipalities/
Municipal/ corporations/ Local Bodies etc.
§
Clubs/ Societies/
Associations/ Schools/ Colleges/ Universities etc.
§
Executors/
Administrations
§ Trustees
§ Illiterate persons
§ Constituted attorney
§ Wage Earners.
4.6 Issue of Cheque
Book
According to
Section 60f Negotiable Instruments Act, 1881, a Cheque is “A Bill of Exchange drawn on a specified banker
and not expressed to be payable otherwise than on demand.” To facilitate
withdrawals and payments to third parties by the customer, UBL provides a
Cheque book to the customer Cheque book contains 10 leaves for savings account
while for current account is 25 or 50 or even100 leaves. A Cheque book issuing
register is maintained in this regard. This
register contains the Cheque book number, leaf number, issuing date. After
giving this entries to this register, information are send to the Computer
Department for taking necessary steps to pass the cheques during withdrawal.
The Cheque book also contains requisition slip-which is used by the customer to
obtain new Cheque book. When all the leaves are used, the customer submits this
slip to the bank. A senior official then issues a new Cheque book and
subsequent entries are given in the register and in computer.
If the Cheque
book is lost, the customer has to furnish a guarantee indemnifying by an
application to the bank. After fulfilling this, a new cheque book is issued.
Seldom customers are allowed to use loose cheques if the customer wants to draw
money without presenting previously issued cheque. A separate register is
maintained in this regard. But this is highly discouraged in UBL. In a few days
ago when the account holder will busy than he send a representative, the banker
issued cheque and provide a acknowledgement with the cheque book. When the
acknowledgement are return by the account holder by the signature than he can
draw the cheque. But now the rules and regulation by the government is so
heard, so the account holders have to come for issuing a new cheque book. A
fresh cheque can be issue by following ways.
Issuance of fresh cheque book
:
|
 |
|||
|
|||
4.7 Closing of
Account
The following circumstances are usually considered in case
of closing an account or justifying the stoppage of the operation of an
account:
Notices given by the customer himself or if the customer is
desirous to close the account.
1.
Death of the customer.
2.
Customer’s insanity
and insolvency.
4.8 Local Remittance
Department
UBL has its branches spread throughout the country and
therefore, it serves as best mediums for remittance of funds from one place to
another. This serves is available to both customers of the bank. The
department, which provides the facility, is known as local remittance
department.
Function of the Local Remittance Department
The
following are the main function performed by the credit department:
Issuing
& payment of demand draft.
All related correspondence with other branch
& Banks
§ Compliance of Audit & Inspection
§ Balance of D.D. payable & D.D. paid with advice
§ Attached to sanchaya patra and wage Earners development
Bonds.
§ Payment of Incoming TT.
§
Issuing, encashment of
pay order and maintenance of record and proof sheet.
§
Issuing and encashment
of all kind of sanchaya patra and wage earners development bond.
§
All related statement
& correspondences with Bangladesh Bank & other Bank.
§ Issuance of Local Drafts
§ Issuing and encashment of BCD
§ All related correspondences
§ Issuing of outgoing TT
§ Issuance of Local Drafts
§ Issuance of T.T. ICA . IBCA & IBDA
Transaction Types
1) Collection of Cheque
Up to Tk. 25,000 @ .15%, Minimum Tk. 10.
Above Tk. 25,000- 1, 00, 000, @ .15%, Minimum Tk. 50.
Above 1, 00,000-5, 00,000 @ .10%, Minimum Tk. 150.
Above 5, 00,000 @ .50% Minimum Tk. 600- Maximum 1,200
2)
Demand Draft ( D.D )
Local Draft is an instrument containing an order of the
Issuing branch upon another branch known as drawee branch, for payment of a
certain sum of money to the payee or to his order on demand by the beneficiary
presenting the draft itself.
|
 |
Receives
Money
DD Presented
Sends
4.9 Cash Department
Case department of different instruments is made in the
cash section. Procedure of cash payment against Cheque is discussed under
elaborately. Cash payment of Cheque includes few steps:
First of all the clients comes to the counter with the
check and give it to the officer in charge there. The officer checks whether
there are two signatures on the back of the Cheque and checks
his balance in the computer. After that the officer will
give it to the cash in charge. Than the cash in charge verifies the signature
from the signature card and permits the officer in computer to debit the
client’s account by giving posting. A posted seal with teller number is giving.
Then the Cheque is giving to the teller person and he after checking everything
asks the drawer to give another signature on the back of the cheque. If the
signature matches with the one giving previously then the teller will make
payment keeping the paying Cheque with him while writing the denomination on
the back of the Cheque. Cash paid seal is given on the cheque and make entry in
the payment register. Cash department
maintain 2 types of entry book. One is A book and another one is M book. A
Book’s limit is 1-2500000 taka. And M Book’s limit is 2500000-5000000 taka.
This system is followed both cheque receipt and payment.
There are
few things that wills be scrutinized and checked before making payments.
§ Name or the drawer
§ Account number
§ Specimen signature
§
The validity of the
Cheque and make it sure that is it not post dated or undated.
§ The amount in words and figures are same.
§ Cash balance calculation.
The calculation is done by the officer in charge of cash
section and then manager or authorized officer will check the balance and sign
in the cash balance book. The balance is maintained in the balance book.
Opening balance of current day in the closing balance of the previous day.
Total receiving of the current day is added with the opening balance and total
payment is deducted for calculating the closing balance or each balance
4.10 Clearing
Department
According to the article 37(2) of Bangladesh Bank Order,
1972, the banks, which are the number of the clearinghouse, are called as
scheduled Bank. The scheduled banks clear the cheque draw upon one another
through the clearing house. This is an arrangement by the central bank where
every day representative of the member banks gather in the clear the cheque.
Banks for credit of the procedure to the customer’s account accept Cheque and
other similar instruments. The bank receives such instrument during the day
from account holder. Many of these instruments are draw payable at other bank.
If these were to be present at the drawee banks to collect the procedure, it
would be necessary to employee many massagers for the purpose. Similarly, there
would be many cheque draw on this the messengers of other bank would present
bank and them at the counter. The whole process of collection and payment would
involve considerable labor, delay, risk and expenditure. All the labor, delay,
risk and expenditure are substantially reduce, by representative of all the
banks meeting at a specific time, for exchanging the instruments and arriving
at the net position regarding receipt or payment. The place where the banks
meet and settle their dues is called the clearing house.
Function of the Department
The
following are the main functions performed by the department:
1.
Pass outward
instruments to the clearing house.
2.
Pass inward
instruments to representative department.
3.
Return instruments in
case of dishonor.
4.
Prepare IBCA or IBDA
for the representative branch and HO.
5.
Accounting entries of
clearing department.
4.11 Collection
Department
Cheque, drafts etc. are drawn on bank located outside clearing
house are sent for collection. Principal branch collects its clients above
mentioned instruments from other branch of UBL and branches of other than UBL.
In case of out ward bills of collection customers account is credited after
finishing the collection processor and in case of inward bills customers
account is debited for this purpose.
CHAPTER-5
FOREIGN EXCHANGE OF UTTARA
BANK
5.1 Import Section:
This section provides services in import
business. At this point, we must know how an import transaction takes place and
what role a bank plays in this regard.
A
country with deficit production usually imports goods from a country with
surplus production of any specific item of product. And the importing country
gives permission to its business community to import goods from global market.
This import business is governed by the country’s import policies under the practice
of general business rules and regulations. These rules and regulations actually
ensure an open playing ground for all the importers, in a broader aspect, for
the whole business community. Usually, import business takes place in the form
of government, commercial and industrial import.
Now
an importer always intends to build up a business relation with the best-suited
suppliers for him for the goods he wants to procure from global market. Upon
selecting the right one sales agreement takes place between these two parties.
And in sales contract two parties come in agreement on the payment of the
transaction. As importer and exporter are from different global location, they
want to secure their
transaction. And at this point both parties rely on 3rd party
institution to secure the transaction and this institution is Bank. The
importer may make payment to the exporter in Advance i.e. in Advance TT or in
L/C form that is upon shipment of the goods. And generally L/C settles a cross
border transaction. Now the question is what is L/C and how it operates.
5.2 Letter of Credit
(L/C):
L/C is an irrevocable documentary credit, which is an
undertaking by the issuing bank on behalf of the applicant – generally
importer, to pay a certain sum of money to the beneficiary – generally
exporter, if certain terms and conditions are fulfilled as stated in the L/C.
5.3 L/C cycle:
Before going
for L/C, relationship develops between importer and exporter. When they agree
for a business then the import applies to bank for opening an L/C. Then after
fulfillment of all formalities and on submission of necessary document the
issuing bank issues the LC and sends it to the advising bank, through SWIFT,
Telex or mail. Advising bank then advises
the exporter about the LC and exporter then makes shipment of goods and submits
the shipping documents to negotiating bank. It should be mentioned here that
the advising bank and negotiating bank might be same or different. At this
stage the negotiating bank scrutinizes the entire document and if there is no
discrepancy then they send these shipping documents to the issuing bank and
claim to the reimbursement bank. Reimbursement bank reimburse by dent of
reimbursement authority given to them by issuing bank. The process closes with
the exporter realizing payment from the reimbursing bank.
So from the
above discussion we can identify the parties’ involved in an LC process as
follows:
§
Importer: Importer requests the opening bank
to open an L/C. He is also called applicant of the credit.
§
Exporter: L/C is established by favoring to
exporter.
§
Issuing Bank or LC opening Bank: It is the
bank which opens/issues L/C on behalf of the importer after importer file an LC
opening application.
§
Advising Bank: The bank through which the L/C
is advised to the exporter. It is a bank situated in the exporting county and
it may be a branch of the opening bank or a correspondent bank. It may also
assume the role of confirming and/or a
§
Correspondent bank. It may also assume the
role of confirming and /or negotiating bank depending upon the conditions of
the credit.
§
Negotiating Bank: The bank, which negotiates
the bill and pays the amount to the Beneficiary. It has to carefully scrutinize
the documentary credit before negotiation In order to see whether the documents
apparently are in order or not
§
Reimbursement Bank: The bank or to whom the bill will be
drawn. It is mentioned in the credit to make payments against stipulated
documents complying with the terms of the credit. It may or may not be the
issuing bank.
§
Confirming Bank: The bank that adds its
confirmation to the credit and it is done at request of the issuing bank. The
confirming bank may or may not be the advising bank.
5.4 L/C Types
General LC can
be divided into two broad heads:
 |
§
Revocable LC: In case of these types of LC, it
can be cancelled without prior discussion or consent of the
exporter/beneficiary.
§
Irrevocable LC: Here for any alteration of LC
the applicant must consult with beneficiary. Any change or cancellation here is
done unanimously rather by one party.
Required document for opening an LC:
§
The applicant must have a CD account with the
bank.
§
Formal LC opining application.
§
Must have the import Registration Certificate
(IRC), TIN and VAT certificate.
§
Credit Information Bureau (CIB) report of the
client.
§
Charge Documents such as DP note, GLCA, Letter
of hypothecation, Counter guarantee etc.
§
Duly filled up and signed LC application from,
IMP (Important Form), LACF (L/C authorization form)
§
Indent/ Proforma Invoice/ Contracts applicant *1
§
Credit Report of the supplier * 2
§
Insurance cover note with money receipt
§
Registration from CCI & E (Chief Controller
of Import & Export)
Proforma Invoice: Of the beneficiary company/
exporter do not have any agent in our country then they themselves send
quotation en their company pad. This is called proforma invoice.
Indent: If the beneficiary has agents in Bangladesh
then the agent send quotation on behalf of the company then it is called
indent.
Credit Report of Supplier: if pro forma
invoice is submitted with LC opening application then credit report is
mandatory is applied LC amount is TK 2 lac or above it. In case indent credit
report of supplier is mandatory if it is equal to taka 5 lac or above.
5.5
Amendment of L/C:
In some cases the importer and exporter both or any of then
may be unable to satisfy the requirements mentioned in LC within the stipulated
time. Then for alteration of actual terms and conditions amendment is required.
In a revocable LC it can be cone without any prior to the beneficiary. But in
an irrevocable LC it must be done with prior consent of beneficiary, confirming
bank and the importer.
A
Typical Example on Import L/C:
Mr. ‘X’ from Bangladesh China
Illustration:
Now
assume that we Uttara Bank Limited, is the Bank of Importer, i.e. we are the
L/C issuing Bank. So how we will extend our service to Mr. ‘X’, when the
request comes from him for opening an L/C. Here Mr. ‘X’ may be one of the
existing customers or a new one. Usually banks or financial institutions
provide trade services to the client’s familiar in terms of reference or
account relationship. But off course, we consider the special consequences. Now
we would illustrate the proceedings of ‘Uttara Bank’ regarding the opening of
the L/C in case of Mr. ‘X’ under the consequences of whether the client is
known or known.
In
case of new client: For the establishment of a new
banking relation with a new client, both the bank and the client must know the
details of each other. A very elementary process of knowing about a customer is
to open an account and serving him through the transactions of that very
account. Then upon receipt of any L/C request, the following steps are
initiated:
I.
Opening
a Current Account.
II.
L/C
opening form is duly filled up and submitted along with the following papers:
§
Import
registration certificate
§
Trade
license
§
Performance
Invoice
§
Tax
identification certificate
§
Vat
registration certificate
§
Association’s
membership certificate
§
L/C
and LCA form
§
IMP
form
The
submission of all these papers gets the proposal to the next step.
III.
The
bank would ask for CIB report. At this step a formatted CIB inquiry form is
dully filled and sent to Bangladesh Bank. The term ‘CIB’ refers to Credit
Information Bureau. This is the specialized department of Bangladesh bank
preserving all the data and credit status of all the customers of all Banks
related to ‘advance’. Here we must remember that without having CIB clearance
about the credit worthiness of our client, we are not supposed to issue L/C or
render any other credit facility to any of our clients. Upon receipt of a clean
report from CIB, we proceed to the next step.
IV.
Then
the Bank collects the supplier’s credit report to know the credit worthiness of
the supplier. Usually supplier’s credit report is asked for in case of indent
and if the total L/C value is more than BDT. 5, 00,000.00 and in case of
Performa Invoice of BDT. 2, 00,000.00, then more than SCR is required. Usually,
beneficiaries Bank provides this report or it may be furnished by any third
party institution Named D & B.
V.
Arrangement
of margin and settlement mode. Here we usually negotiate with client for L/C
margin and accordingly the client’s deposits the margin amount of money.
Another issue at this stage is to negotiate with the customer on the retirement
of the L/C, i.e. how the customer will reimburse the L/C amount due. The
customer may reimburse the payment in cash or this can be managed by any loan
facility to the favor of the client agreed by the bank. Usually the following
loan arrangement is made by the commercial banks to facilitate the import
trade.
§
LTR (Loan against Trust Received): This is a special type of loan arrangement by the
commercial banks to facilitate its clients to retire L/C and clean goods. Here
the client takes the loan by execution of trust receipt and make the payment on
maturity usually from sales proceeds of the imported goods. In this process the
goods remain under the possession of the client.
§
LIM (Loan against Imported Merchandise): In this process the possession as well as the ownership of
the goods belongs to the bank. The client cleans a portion of goods upon the
agreement with the bank, sales them and proceeds the payment to the bank for
the retirement of the goods and it continues. This process results to less risk
exposure for the bank as compared to LTR.
VI.
Upon the settlement of
the margin as well as the mode of retirement, the L/C moves to the next step,
i.e. the preparation and the submission of the proposal to the head office:
Based on all the information collected from the client, the import division
prepares a formal L/C proposal and send it to the Head office with all the
supporting documents. Usually a proposal contains the details of the applicant,
the nature & the strength of the business of the client, capital structure,
particulars of the proprietor or the directors etc. alongside the following
documents in particular:
§
CIB status.
§
Business relation with
the bank and the current liability position, if any.
§
Liabilities with other
banks or financial institutions.
§
Particulars of L/C,
i.e. purpose, quality, name of the item, value, country of origin, suppliers
credit report, port of shipment, L/C expiry date, landed cost, market price
etc..
§
Present working
capital structure
§
Particulars of
proposed credit facility.
§
Security collateral
and control over security.
§
Recommendation.
Now the proposal is supposed to be considered to be ready.
Then it must be duly signed and sealed by the respective authorized person of
the Branch and submitted for the approval of the Head office and the process
concurs with approved proposal gets beck to the branch with proper instruction.
VII.
Open the L/C and
transmit the L/C to the advising Bank or ad confirming bank (if ad confirmation
is required) to advice the seller and its bank regarding the issuance of this
L/C. At the same time the importer receives the copy of L/C. Usually this
transmission procedure takes place by SWIFT or TELEX or EMAIL format.
VIII.
Then upon receipt of
the L/C, the supplier, first, put his vow on all the terms and conditions and
if required, undertakes necessary steps to put in the amendments and upon satisfaction,
arrange for the necessary shipment as per the agreed conditions of the L/C.
IX.
Upon shipment of the
goods, the supplier prepares the L/C documents properly as mentioned in L/C and
asks his bank to negotiate the documents for payment. These documents are as
follows:
§
Shipping documents
like commercial invoice, bill of lading/AWB/TCR, packing list etc.
§
Bill of exchange,
§
PSI certificate,
§
Certificate of origin,
§
Suppliers compliance
certificate,
§
Other certificates as
per the L/C terms and conditions.
Then the supplier’s Bank, negotiate the documents to the ad
confirming Bank to proceed the payment. The ad-confirming bank makes the
payment of the document (off course, devoid off any discrepancy) to the
negotiating bank and sends the documents to the issuing bank for reimbursement.
In case of noninvolvement of any a confirming bank, the negotiating Bank
negotiates the documents to the issuing bank for further procedure. The issuing
bank must inquire off any discrepancy of the documents. Upon satisfaction, the
issuing Bank asks its client to make necessary payments and upon receipt of the
due amount, the issuing bank reimburse the proceeds to the ad confirming bank
as negotiating bank under the concurrent consequences. Here the significant
feature is that in case of right L/C, payment may be made by 100% cash or by
the arrangement of LTR or LIM. But in case of deferred L/C, acceptance is given
duly on maturity and payment is made accordingly.
X.
PAD (Payment against
Documents): At this step, the issuing bank makes payment to the negotiating
bank by creating a temporary loan A/C termed as ‘PAD’. When it collects payment
from the customer, PAD is washed out. Usually the bank is to wash out PAD
within 21 days of its opening. Generally, within 5 to 10 days of negotiation,
the client makes the payment and clear documents from the bank and goods from
warehouse storage. In case of any discrepancy, the bank asks his client whether
it is acceptable or not. The client may ask the supplier to come up with
necessary amendment or alternatives.
XI.
Upon the clearance of
goods, the client gives a copy of the bill of entry and reports Bangladesh Bank
regarding this L/C and closes this file. The bill of entry is mandatory for
closing the file.
5.6 Export Section:
This
section ensures the proper export proceeds to the exporter. Usually the
exporter may ask his importer or buyer to make payment by advance TT or L/C.
Generally proceeds come by L/C form. Now we would discuss the export activities
of a bank under a real life example.
Instance: Assume that Mr. ‘X’
is our client and his business is RMG manufacturing & export. Recently he
has received a buying order from one of his foreign buyer of USD 100000 and a
purchase agreement took place between those two. We would now illustrate our
role as a bank in this dealing.
Illustration: The total procedure
of this export can be sequentially discussed as follows,
1.
Let us assume that Mr.
‘X’ has agreed to accept the payment for export via L/C. Then he would ask his
buyer to open L/C for aforesaid amount. Then the buyer would request his bank
issue accordingly.
2.
The buyer’s bank will
open L/C upon the purchase agreement and send the L/C copy to advising bank to
advise our bank on this L/C.
3.
The advising bank will
advise on this L/C to our bank and also to us. We may also derive a copy of the
L/C directly from the buyer.
4.
Upon receipt of the
L/C, we will clarify each and every point of L/C and advise our client
regarding this L/C. Then our customer will go through the L/C and arrange for
necessary amendment.
5.
Upon receipt of L/C,
Mr. ‘X’ will initiate to start production and for that purpose, definitely he
would be in need of raw materials, accessories and other supplies that would
put him in necessity of working capital and here comes the bank to facilitate
the necessary finance. The bank allows the exporter to open BTB L/C by lien of
the master L/C and supply required cash to the supplier. By this BTB L/C, Mr.
‘X’ will purchase required supplies and will start production and on completion
of the production, will go for the shipment to the importer.
6.
Upon shipment of the
goods, Mr. ‘X’ will prepare all the L/C documents as per L/C and place all
these L/C documents to us to negotiate with the issuing bank for export
proceeds. Usually export L/C requires the following documents,
§
Forwarding letter by
the exporter.
§
Bill of exchange.
§
Shipping documents
(packing list, commercial invoice, weight list,
bill of lading/AWB)
§
Certificate of origin
from DCCI.
§
Shipment advice.
§
Beneficiary
certificate.
§
Export form duly
filled up.
§
Purchase agreement or
contract
7.
Then his bank will
check all the papers and send the documents to ad confirming bank and seek the
proceeds accordingly. Otherwise the documents would go directly to the issuing
bank for L/C proceeds. Then the ad confirming bank or the issuing bank will
check all the documents and if there is no discrepancy, it would clear the
payment. Otherwise the bank will negotiate with the client and undertake the
necessary arrangements for the rectification and then the proceeds will take
place.
8.
When exporter’s bank
receives the proceeds, it would be immediately adjusted to the BTB L/C payment
or other debit figure of this L/C and then credit the remaining amount to the
client’s account.
5.7 Back to back L/C:
This
is a special L/C arrangement. Usually the RMG sector of our economy avails this
facility. Upon receipt of any purchase order, a RMG starts production of that
specific consignment. For raw materials and other necessity of production
additional working capital is required. Then the exporter requests his bank to
issue an L/C to procure all those necessities from home or abroad. Then BTB L/C
is produced to the exporter in lien to the master L/C, received from the
importer. Then he procures those supplies by giving this L/C to the local or
foreign suppliers and go for the production. Then after production, shipment of
the goods gets the exporter the proceeds of the master L/C and the bank adjusts
the BTB L/C with that.
Usually back-to-back L/C is issued to be retired by the
proceeds of the master L/C that is in usance basis. But sometimes BTB L/C may
be cash L/C if the exporter enjoys EPS facility provided by Bangladesh Bank.
Usually bank permits to open BTB L/C amounting 75% of the master L/C invoice value
at maximum.
The issuing bank disburse the master L/C proceeds as
follows,
§
Collection commission
of master L/C 0.2% of the invoice value.
§
Acceptance commission
of BTB L/C 0.2% on L/C value.
§
Handling charge of BDT
1000
§
Postage charges for
BTB (maximum 2200).
§
BTB payment
adjustment.
§
Buying house
commission if any.
§
Exchange gain
§
Remaining amount is
credited to the customer account if any.
5.8 Bill purchase and
discounting:
This section basically deals with purchase of bills of
usually two types – local bills (such as BTB L/C) and foreign bills are
purchased or discounted. After shipment of goods exporter comes to the
bank with shipments papers, then all these documents, are sent to the opening
bank in prescribed form. If everything is in order then the opening bank send
us an acceptance, for acceptance verification the acceptance documents are sent
to the zonal office of the opening bank. If the exporter needs money
immediately then he can offer the bank to purchase the bills. Then proposal of
bill purchase goes to the zonal office is achieved then the bill may be
purchased up to 90 % of the value @ OD sight rate. Later we get the payment
from opening bank and can realize the total amount. By these bills purchased
bank can add to its income and can increase it.
CHAPTER-6
FINDINGS OF THE STUDY
6.1 SWOT Analysis of
Uttara Bank Ltd.
Strength
1. Uttara
Bank is one of the largest and oldest private-sector commercial bank in Bangladesh ,
2. They have over two hundred (216) branch for customer
service.
3. The bank has more than 600
foreign correspondents worldwide.
4. They have over 4500 employees’ for ensure best possible and fastest services to its valued
clients.
5. Uttara is a bank that serves both clients and country.
6. They have an 18-storied building at Motijheel of their
own.
7. Working environment of UBL is such wonderful.
Weakness
1. There
banking system is not fully automation system.
2. There
security (Security Camera) system has to improve.
3. There
MIS is not so strong.
4. The
absence of certain strengths may be viewed as a weakness.
5. They
working system is know also manual system.
Opportunities
1. The external environmental analysis may reveal certain
new opportunities for profit and growth.
2. They have a great
opportunity of leading banking institution and to play a pivotal role in the
development of the country though they have 216 branches.
Threats
1.
Compete with the huge number of competitors in
the market.
2.
Changes in the
external environmental also may present threats to the firm.
3.
Going with new
strategy would be risky.
6.2 Improvement of
Security
Now a day’s Uttara bank ltd. is one of the top performer
bank in our country. But the security system is very weak. Because they have no
security camera in the bank and of course the branch also which is very weak
sector of Uttara bank limited.
Improvement of their services
They have to improve their services. Now the entire bank of
our country provides such outstanding services like ATM/ On-line banking/
Credit Card/ Debit Card and many others types of services. BRAC bank provides
some extra services like ‘Campus account’ Uttara bank have to provide these
types of services to the customers.
Disguised Employment
In course of my brief Bank's career in UBL I found that a
good number of employees are not working hour. This work force should be
brought under utilization. The skill and experience of this section of
employers should be utilized properly in the development of the Bank.
6.3 Better
Recruitment
Uttara Bank Ltd. must pursue a strong and an effective
recruitment system so that the right persons are recruited in the right
position (job). Though the bank is expanding, it must focus on attracting,
getting and retaining qualified personnel’s for filling the vacant
positions.
Disguised Employment
In current situation it would be the major problem of
Uttara bank limited. The situation of too many heads but few heads must be
eliminated for the future of the bank. In order to enhance the productivity of
the work force at Uttara bank limited, the management must have to consider the
appropriate amount of work force required and must assess the productivity of
each employee. The employees who do not have many things to be done should be
relocated or provision should be given to them for voluntarily retirement.
6.4 Enhancement of
Remuneration
The most important lacking of UBL that have to be improving
immediately is Enhancement of remuneration. The current remuneration of Uttara
bank limited in very poor, unimpressive and not capable to attract quality
personnel to fill up its position. It have to be said that the foreign banks
pay double that of Uttara bank limited and other private banks also pay a
higher scale of remuneration than Uttara bank limited. It is the time the
management should consider revising the remuneration package in order to
attract the high quality human resource and of course to retain them in Uttara
bank limited.
In course of my brief Bank's career in UBL I found that a
good number of employees are not working hour. This work force should be
brought under utilization. The skill and experience of this section of
employers should be utilized properly in the development of the Bank.
CHAPTER-7
CONCLUSION &
RECOMMENDATION
7.1 Recommendations
People have no
way to get loans and advance for high financing, so the operation and way of
getting loans and advance need to be very sharpened. The ways can be
recommended as:
Skilled human
resource.
Proper raining
and technology minimized risk at the level.
Minimize risk at
the root level.
Smooth service
and less time consumption regarding advance. Avoid force loan as minimum as it
can.
It can be
recommended that if all the branches of Uttara Bank Limited maintain vivid
account manual for the account holder, it will be better for the bank.
A complaint book
for the employees, because each and every complaint from the customer has been
received and complaint from the employees overlooked.
Interpersonal
relationship needs to be built among the employees and superiors.
Improved
customer service and consequently get satisfactory operational result.
7.2 Conclusion
Banking sector is the chief financial intermediaries in a
country. It’s also true for Bangladesh .
Uttara bank limited is a very challenging institution. In the age of globalization
and free trade, the process and the system of running a bank is changing. UBL (Uttara
Bank Ltd.) is continuously managing itself with this changing environment. The
company strategies are clean and concise. The return is pretty good. If the
company performs this way, we can expect that in near future Uttara bank
limited may become one of the top performer in banking sector of our country.
They are also able to contribute to our economy in better way. The working
environment of the bank is impressive. It was also found that the bank (Branch)
is doing better in most of the sectors and their performance is better than
average. However during the year 2008
their investment is not sufficient. The investment during 2008 went down in
comparison to that of the previous years.
Finally it can be said that the bank is doing very good in the
competitive market and if it can continue to perform this way it can become a
leading banking institution which can play a pivotal role in the development of
the country.
CHAPTER-8
BIOGRAPHY
Reports:
Uttara bank Limited, Annual report
Internet
Books
International
financial Management (7th edition) Jeff Madura (2003)
Research
Methodology (16th edition) Brigham F. Eugene (2001)
Effective
Business Communication (International edition) Murphy, Herta A (2001)
Investment
analysis & Portfolio Management (6th edition) Reilly K. Frank
& Brown C.
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