Report on UTTARA Bank Limited
Historical Background of Uttara Bank limited: ♣Uttara Bank limited Had been a nationalized bank under the Bangladesh Bank nationalized order 1972 formally known as Eastern Banking Corporation limited. ♣The Bank started functioning on end from 28.01.1965. ♣The Uttara Bank was converted into Uttara Bank limited as a public limited company in 1983. June 30th. ♣ Uttara Bank limited was incorporated as a banking company on 29.06.1983. ♣The bank floated its share in the year 1984. ♣It has 629 foreign representatives all over the world. ♣In the initial stage its authorized capital was 20 cores paid up capital were 10 cores and Government bought 50 lac shares. ♣The bank current capitals are given below. ♣Authorized capital: 2, 00,000 Ordinary shares of TK 100 each. =200,000,000 ♣Issued capital: 100,000 ordinary shares of TK 100 each for cash =100,000,000 ♣subscribed and paid up capital. 9, 98,324 ordinary shares TK 100 each =99.832, 400
♦SOURCE –ANNUL REPORT OF UBL 2005. (Page-26)
*Paid up capital as per share holders category.
Classification of share *Government of The peoples Republic Bangladesh *Bank and financial institution *General public Total
31-12-2005 No. of Percentage shares 20 0.002%
Amount 2,000
31-12-2004 No. of Percentage shares 175 0.02%
Amount 17,5000
69,955
7.007%
69,95.50 0%
54,445
5.45%
54,44,500
9,28,349
92.991%
9,43,704
94.53%
9,28,324
100.00%
9,98,34,9 00 9,983240 0
9,98,324
100.00%
9,43,70,4 00 9,98,32,4 00
♦SOURCE –ANNUL REPORT OF UBL
2005.
♣Uttara Bank limited undertakes all types of banking transactions to support the development of trade and commerce in the country. The bank gave special emphasis on Export-import, trade finance, SME finance, house repairing and others consumers’ assistance sectors. ♣To prove client services in respect of international trade it has established wide correspondents banking relationship with local and foreign banks covering major trade and financial centers of the world. ♣Uttara Bank limited is a banking company with its head office. 90, Motijheel commercial area Dhaka-1000/ Bangladesh. PABX: 9551162, FAX: 02-7168367, cable banker Email: uttara@citecho.net, ublmis@citechco.net. Web site:-www.uttarabank-bd.com Vision: ♣To become a leading Banking institution and to play a pivotal role in the development of the country. Banks Mission. *Continuous improvement in our Business policies. *Cost reduction integrations of technology at all level. UBL corporate culture: *Employees of UBL share contain common values which help to create a UBL culture. *The client comes first. *Search for professional excellence.
*Quick decision making. *Flexibility and prompt response. *A sense of professional ethics. Bank’s Efforts are focused: ♣On delivery of quality services in all crease of banking activities with the aim to add increased value to share holders’ investment and offer highest possible benefits to their customers. Bank’s strategies: *To rise up capital up to TK. 300 million by 206. *To strive for customer satisfaction through quality control and delivery of timely services. *To review and update polices, procedures and practices to enhance the ability to extend better services to customers. Corporate Governance: *The organizational structure and corporate governance of Uttara bank limited reflect the determination. To establish, sustain and increase it strength for a strong base as a customer oriented bank with a transparent management.
BORD OF DIRECTORS *The board of directors consists of 15 members. *The board of directors is the supreme body of the bank.
BORAD OF DIRECTORS
Azharul Islam(Chairman) Md. Asaduzzaman(Vice chairman)
.
Director Md. Mahfuzus Subhan Sawar boudius salam Abu hossain siddque
Abul barq alvi Faruque Alamgir M.S. Kamal Prof. Miraza Mazharul Islam Prof. Sharif.Md.shahjahan Syed A.N.M Wahed Mustafizur Rahman Shah Hibibul Islam Managing Director Shamsuddin Ahmed Secretary Md. Fazlur Rahman Executive Committee ♣All routine matters beyond the delegated power of management are decided upon by or routed through the executive committee, subject to ratification by the board of directors. EXECUTIVE COMMITTEE Azharul Islam (Chairman)
Md. Asaduzzaman (Vice chairman) Md. Mahfuzus subhan (Directors) Sarwar Boudius Salam Abu Hossain Siddique Shah Habibul Haque Shamsuddin Ahmed (M.D) Md. Fazlur Rahman (Secretary) M. Moniruzzaman khan, Barrister-at-law
Audit committee: ♣In line with the guide lines of Bangladesh bank a two member audit committee of board of director. Has been formed to assists the board in matters related to audit and internal control system of the bank.
AUDIT COMMITTEE
M.M. Rahman and CO, Chartered Accounts B. Alam and CO, Chartered Accounts Deposit: *At the close of 2005 total deposits stood at TK. 36891.9 million against TK. 34615.2 million in the previous year. Average deposit per Branch stood at 18.66 percent against at TK. 174.8 million in the previous year.
loan and Advances: *Total loans and Advances of the bank stood at TK. 21851.5 million during the year as compared to TK against 18601.0 million during the previous year revision am increase by 17.47% Average loan per Branch stood at TK 110.4 million. *The bank disbursed loan of TK 109.8 million in this sectors in 2005 under three special project names 1. Uttaran small Business loan scheme. 2. Uttaran Consumer loan scheme. 3. Uttaran House repairing loan scheme. DEPOSIT AND ADVANCE 40000
35000
TAKA IN MILLION
30000
25000
20000
15000
10000
5000
0 2001
2002
2003
2004
DEPOST
2005
ADVANCE
♣SOURCE- ANNUAL REPORT 2005 OF UBL.
PERPORMANCE OF UTTARA BANK LIMITED ♣Share capital: ♣In 2005 the authorized capital of Uttara bank limited was Tk.200 million and paid up capital was Tk.99.8 million. The total number of share holders was 5.351. The Government held total 69.975 shares worth Tk6, 997.500 and remaining 5,346 private share holders held total 928,349 shares worth Tk92, 83, 4900. ♣Reserve fund: ♣The reserve fund of bank increased by-7.46% to Tk, 1765.2 million during the year as against Tk, 1642.6 million.
♣Capital Adequacy: ♣At the end of the year 2005, the actual capital of the bank stood at Tk, 2,004.1 million against required capital of Tk, 1,811.1 million. Which show ill surplus capital of Tk, 193.0 million.
TAKA IN MILLION
CAPITAL AND RESERVE (TAKA IN MILLION) 2000 1500 1000 500 0 2001
2002
2003
2004
2005
AUTHORISED CAPITAL PAID-UP-CAPITAL RESERVE FUND& OTHERS RESERVES
♣SOURCE- ANNUAL REPORT 2005 OF UBL.
Sectors wise position of loans and Advances as on 31-12-2005. Private
Total
*Agriculture 1. Productive 2.Fertilizer
16.4
16.4
*Industrial term lending
2,982.7
2,982.7
*Working capital: 1. Jute industry 2. Other working capital *Export: 1. Jute and jute goods 2. Other goods and commodities *Trade and commercial lending: 1. Jute trading 2. Commercial *Special programmer: 1. Small and cottage industry 2. Personal loan scheme 3. Consumer credit scheme *Urban Housing
637.7 837.4
637.7 837.4
137.7 1,151.1
137.7 1,151.1
25.8 8,359.7
25.8 8,455.8
252.0 15.9 1675.2
252.0 15.9 1675.2
880.5
1,046.3
*Officers and staff House building loan
295.8
295.8
*Others
4,321.7
4,321.7
21,589.6
21,851.5
Sectors of loans and Advances
Total
Source: Annual Report 2005.
Public/Nationalized
96.1
165.8
261.9
SECTOR WISE ADVANCE (%)
COMMERCIAL LENDING 39% HOUSING 6%
AGRICULTURE 1% INDUSTRIAL LENDING 13%
SPECIAL PROGRAME 9% WORKING CAPITAL 6%
EXPORT 6% OTHERS 20%
INVESTMENT: ♣Head wise position of Banks invested fund at the end of year 2005 was given belowHeads of investment Treasury Bills and Bonds Debenture (in purchase price) prize Ordinary shares: Eastern Bank limited 34.5 Karmasangsthan Bank 10.0 I C B (Approved) 07.9 4. CDBL 5. Other companies Total
Taka in million 9,674.6 311.0 10.0
01.0 13.1
66.5 10,062.1
Risk Management: ♣Bangladesh Bank has defined five core risks in the management of bank and has provide necessary guide lines for prevention there of. These five core risk are: Credit risk management: ♣The loan application assessment process starts at branch level by relationship manager through zonal office and end at credit risk management unit of local office. Asset. Liability management: ♣Assets liability executive committee sits at least one in a month to review the economic and money market status risk as a whole.
Foreign Exchange risk management: ♣The task of reconciliation of all transactions initiated by treasury department entrusted to a back office and all foreign exchange transactions are evaluated at market price. Prevention of money laundering: ♣Manual for prevention of money laundering has been established as per Bangladesh bank guideline and all types of steps have been taken to prevent the acts of money laundering. Internal control and compliance: ♣under takes periodical and special audit of the branches and departments at head office for review of the operation and compliance of statutory requirement. Import and Export Business: ♣Export Business handled by the bank during the year 2005 amounted to TK, 18,191.8 million as against TK, 19,133.1 million of the preceding year. On the other hand import business stood at TK, 23,092.4 million as compared to the volume of TK, 24080 million in 2004. Foreign remittance: ♣The volume of foreign remittance in the year 2005 stood at TK, 27,276.0 million as compared to TK, 19,710.2 million in preceding year registering on in crease of 38.39 percent.
FOREIGN TRADE
TAKA IN MILLION
35000 30000 25000 20000 15000 10000 5000 0 YEAR 2001 YEAR 2002 YEAR 2003 YEAR 2004 YEAR 2005 FOREIGN REMITANCE
EXPORT
IMPORT
♣SOURCE- ANNUAL REPORT 2005 OF UBL Distribution of profit: ♣The board of director places its proposal for making following provision and appropriation of pre tax profit for the year 2005.
Profit and loss appropriation A/C -05 Pre-tax profit (in clouding retained )
Amount (in TK,) -
Amount in Taka. TK,
Provision for taxation
TK, 640,000,000.00
783,3,68,419.00
General reserve fund
TK, 20,000,000.00
Proposed bonus share
TK, 99,832,400.00
Proposed cash dividend
TK, 19,966,480.00
Retained earning
TK, 779,798,880.00 TK, 35,69,539.00
Amount
Pre Tax & Post Tax Profit 1000 800 600 400 200 0 YEAR YEAR YEAR YEAR YEAR 2001 2002 2003 2004 2005 POST TAX
Year
PRE TAX
♣SOURCE- ANNUAL REPORT 2005 OF UBL Dividend: ♣ The board of directors of uttara bank limited recommends 20% cash dividend and 100% stock dividends (one bonus share for one share) for the year ended december-05 subject to approval of the 23rd, Annual general meeting.
•
Modernization of the branches: -
♣At present (31-04-2007) the bank has 202 branches all over the country through which it carries all its banking activities. All the branches of the bank are operating under computer system by using the banks own software in day to day banking. Moreover eleven separate Email services are running at head office and the bank has brought 62 branches under internet system and 26 branches under swift for ensuring fruitful service to transient letter of credit,
fund and message with low cost bank has introduced his own website address is www.uttarabank-bd.com.
VIHICLES: ♣The total number of the vehicles of the bank in the year 2005 was 103 as against 102 in the year-04 vehicles are generally use for providing transport, facilities of the executives and to carry cash from feeding branches to other branches and vice versa. The total expenditure in this sector in 2005 was TK, 28.3 million as against TK, 25.6 million in the year 2004. BANK OWN PREMISES: ♣A magnificent 18 stored banks own building located at the hub of Motijheel commercial area within the metro pliton city. Different department of head office and corporate branch have been functioning in the same building covering 10 floors. Reaming eight floors have been rented different insurance company and commercial enterprise. ⇛Local office: -Eastern plaza branch, hotel Ishaka branch, dar-us-salam road branch. ⇛Lease financing unit eastern tower building. ⇛Zonal office: -Khulna, shaheb bazaar branch in Rajshahi. PRODUCT AND SERVICES: ♣The bank has an array of tailor mode financial products and services, special deposit products are fixed deposit receipt for 3 month, 6 month 12 month and above 2 years scheme special loan product are consumer credit scheme personal loan scheme for salaried officials small enterprises marriage scheme education scheme e t c.
TRAINING AND HUMAN RESOURCES: ♣The training institute of the bank situated at awlad hossain market. Tejgaon, Dhaka nicely decorated and equipped with the in strumpets for a qualitative change in human resources of the bank. Besides a number of executives and officers were sent to various training in situation in clouding (BIBM) and aboard for higher training. As on 31-12-2005 the total manpower of the bank in different grades was as under Executives (asstt. General manager &
90
2.76
above )
19,95
Officers
5,24
61.10%
Asstt. Officers
6,56
16.05%
Other Total
%
20.09% 100.00%
3,265 ♣SOURCE- ANNUAL REPORT 2005 OF UBL
HUMAN RESOURCES (%)
EXECUTIVES 3%
OFFICERS 61.10%
ASSTT. OFFICERS 16.05%
OTHERS 20%
AUDIT AND INSPECTION: ♣Experienced officials regularly audit and inspect the activities of the bank through out the year 2005 during the year 2005 Bangladesh bank audit and inspection team undertook audit and inspection works in our 24 branches in clouding lease financing unit and during the some year banks own internal audit teams completed their audit and inspection work of the 198 branches and also at different departments of head office. AUDIT COMMITTEE OF THE BORD OF DIRECTORS:♣The board of directors set the goal and reviews the performance of the bank on a regular basis. There is a audit committee comprises three members of the board of directors during the year the audit committee held six meetings. In these meetings the audit committee review the inspection report of different branches of the bank conducted by the banks internal inspection team from time to time and examined the financial statement of the bank. •
BOARD MEETING :♣In order to take decision and formulate policies with regard to different banking affairs twenty seven meeting of the board of directors and fifty one meetings of the board of the executive committee where held during the year 2005.
Highlights on the overall activities of the bank for the year, 2005 and 2004.
Particulars
2005 Taka 99,832,400 2,004,050,376 192,973,376 42,062,201,299 36,891,910,320 21,851,539,700 8,538,820,824
Paid-up-capital Total capital Capital surplus Total Assets Total Deposits Total Loans & Advances Total Contingent liabilities & other commitments
2004 Taka 99,832,400 1,740,685,078 187,806,078 39,700,932,623 34,615,240,208 18,601,012,262 7,883,579,500
Credit Deposit Ratio (%) 59.23% Ratio of classified loans & advances to total 16.15% loans & advances (%) Profit after tax & provision 142,590,008 Amount of classified loans during the current 1,080,500,000 year Provision kept against classified loans & 853,751,185 advances Provision surplus 126,736,185 Cost of Fund (%) 4.14% Interest earning Asset 32,723,645,096 Interest non-earning Assets 32,723,645,096 Return on Investment (ROI) % 9,338,556,203 Return on Assets (ROI) % 8.77% Income from Investment 0.34%882,318,102 Earning per share (Taka) 142.83 Net income per share (Taka) 142.83 Price Earning Ratio (Time) 19.68 ♣SOURCE- ANNUAL REPORT 2005 OF UBL.
53.74% 22.14% 100,556,205 882,100,000 954,218,525 33,432,475 4.4% 32,344,967,516 7,355,965,107 7.17% 0.25% 917,782,570 100.73
FIVE YEARS BANK POSITION AT A GALANCE. Sl. No. 01. 02. 03. 04. 05. 06. 07. 08.
Particulars
2005 2003
2002
200.0
200.0
200.0
99.8
99.8
99.8
1642.6
1597.0
1451.9
0
1742.4
1696.8
1551.7
1811.1
1552.9
1533.5
1575.9
2004.0 36891.9
1740.7
1684.3
1727.5
34615.2
31476.6
29153.9
Authorized Capital Paid-up Capital Reserve fund other reserves Shareholders’ equity Required capital
2001 2004
200.0
200.0
99.8
99.8
1765.2
1204.9
186 5 .
1304.7 1778.7
Actual capital Deposit Advance (Gross)
1493.8 28429.9 24187.0
09. 10. 11.
Advance-deposit ratio Investment
12.
Guarantee Business Export Business
13.
Import Business
14.
Foreign remittance Gross Income
21851.5 0.59: 1
18601.0
18786.3
22938.3
0.54:1
0.60:1
0.78:1
10062.1
12794.0
9883.9
6739.4
3691.5 2065.6 1781.4
17. 18.
Pre-tax profit
19.
Post-tax profit
20.
Fixed assets
21.
Total assets
22.
Required provision Provision for bad & doubtful debts Book value per share (NAV) Income per share Income from equity (%) Income from assets (%) Number of shareholders Number of branches Number of employs Human resources development
27276.0
2650.4
27. 28. 29. 30. 31.
24080.0
26204.9
27094.4
19710.2
14030.2
8552.2
3820.9
3821.4
3918.3
2611.2
2707.4
2606.5
1209.7
1114.0
1311.8 857.9
683.1
624.7
502.0 506.7
100.6
197.1
249.5 693.3
776.2
26.
21036.5
1582.9
142.6
25.
20728.9
2236.2
782.6
24.
19133.1
3819.1
1614.6
23.
1834.9
6315.9 4265.0
Gross expenditure Gross profit
1890.4
29633.1 23092.4
16.
1768.1
19387.2 18191.8
15.
0.85:1
782.8
776.1
711.8 35912.9
42062.2 727.0
39700.9
36671.0
36973.4 305.1
920.8
1187.7
3679.4 2870.2
853.8
954.2
1187.7
3680.1
1868.16
1743.61
1687.17
142.83
100.73
197.41
1730.44 24 9.89 16.08%
38.84%
7.65%
5.78%
11.62% 0.67%
1.41%
0.34%
0.25%
0.51%
5351
5631
6120
5684
198
198
1306.90 5 07.63
5549 198 198
198 3159
3265
3382
3209
3200
761
846
1086
509
534
32.
Market value per share 2811.00
522.00 2373.75
649.00
486.75
♣SOURCE- ANNUAL REPORT 2005 OF UBL. SMALL BUSINESS ENTERPRISE ♦small enterprise means an entity, ideally not a public limited company. Does not employ more than 30 persons (if it is a service concern) and 20 persons (if it is a trading concern) 60 persons (if it is a manufacturing concern) and also fulfill the following criteria:♦A service concern with total assets at cost excluding land and building from TK, 50000 to TK, 30 lac. ♦ A trading concern with total assets at cost excluding land and building from TK, 50000 to Tk.50 lac. ♦ A manufacturing concern with total assets at cost excluding land and building from TK, 50000 to TK, 1 core. POLICY GUIDE LINES FOR SMALL BUSINESS ENTERPRISE ♦Assess the entrepreneur s character for integrity and willingness to repay. ♦only land when the entrepreneur has capacity and ability to repay. ♦only extend credit if branch can sufficiently understand and manage the risk. ♦ Use common sense and past experience in conjunction with through evaluation and credit analysis. ♦do not base decisions solely on customer s reputation, accepted practice, other lenders risk assessment or the recommendations of others officers. ♦ be proactive in identifying, managing, and communicating credit risk
♣ SOURCE- PRODUCT PROGRAM GUIDELINES OF BAGLADESH BANK. •
General banking does the basic works of the bank. General banking is also known as retail banking. In UTTARA BANK LIMITED principle branch the following section are under general banking department for the proper functioning and customer services.
GENERAL BANKING
⇛ ACCOUNT OPENING SECTION.
⇛REMITANCE SECTION.
⇛CHEQUE CLEARING SECTION.
⇛ CASH SECTION.
⇛SHORT COLLECTION
⇛DESPATCH SECTION.
♣Bank Account is a system how bank credit and debit the account of depositors. ⇛How bank do transaction with there client through the specific A/C is called bank account (Hudson). ⇛The account number which bank kept reserve for the specific client is called bank account,
Methods: ⇛At first the client will collect the application form the bank officers. ⇛Second he/she will fill up the application form and specie men card.
⇛third he/she will adjust the documents with the application form such as two copies of photograph, memorandum, articles, identify certificate etc. ⇛ After fill up the accounts form he/she will submit it in bank account section. ⇛Then the client will deposit his/her initial amount. ⇛ After deposit his / her initial amount then the bank will provide him/ her specific number, cheque book, and pass book. ACCOUNT OPENING PROCEDURE OF UBL WITH A FLOW CHART. Applicant fills up the application form
An account holder needs individual introduction
The authorized officers scrutinize the introduction and examine the documents submitted
Cash deposit is a must for opening an account with this bank. After depositing Cash, one cheque book is issued
Account is opened
SAVING ACCOUNT:⇛When a client able to open an account with a little amount of money and can deposit their little amount of money regularly in this account is known as saving account. ⇛The main objectives of this account are to inspire /encourage people for deposit save. ⇛This account is suitable for a service holder/ student / house wife/ and fixed earner. ⇛According to Uttara banks interest rules saving account holder will get 6.5% interest on his / her deposit after every six month period.
⇛In this account the client can with drawl his / her deposit amount two times within a week. If he needs more then he will inform the bank before seven days. ⇛At present UBL total numbers of saving account holders of banga bandhu avenue branch are 2840. ⇛After open this account every client will get a cheque book of ten pages. REQUIREMENTS:⇛Two copies of recent passport size photograph of account opener including nominees one duly attested. ⇛Identify certificate of account openers issued by – ⇛local ward commissioner certificate. ⇛ Chairman Certificate. ⇛Voter ID card. ⇛Passport photocopy. ⇛An existing account holder of that branch will introduce the new account opener that’s means introducer will be required. ⇛The client will also submit his / her monthly transaction profile. ⇛The minimum amount of that account is tk 1000. .
♣SOURCE:- GENERAL BANKING DEPARTMENT OF UBL. CURRENT ACCOUNT:
⇛A current account is a running account with amount being paid into and drawn out of the account continuously. ⇛The main objective of this account is to help such kinds of clients who want to do daily transaction. ⇛ This account is suitable for a trader/ industrialist/ promoter/ and contractor. ⇛ This account can be individual or joint account. ⇛Uttara bank do not pay any interest for this account. So the client of current account does not get any kinds of interest from this account.
⇛There are 2418 current account holder at banga bandhu avenue branch of uttara bank limited.
TYPES OF CURRENT ACCOUNT ▼
▼
GENERAL CURRENT
SHORT TERM DEPOSIT
▼ Individual/joint Proprietorship firm
Partnership firm
Limited company ▼ Public limited company
Private limited company
REQUIREMENTS FOR ALL TYPES OF CURRENT ACCOUNTS OF UBL. ♣Individual/joint a current account :⇛two copies of recent passport size photograph are require for each account opener including nominees one duly attested. ♦Identity certificate issued by:⇛local ward commissioner /chairman
⇛Voter ID card. ⇛pass port photocopy. ♣Proprietorship:⇛two copies of recent passport size photograph are require for each account opener including nominees one duly attested. ⇛Identity certificate issued by:⇛local ward commissioner /chairman ⇛Voter ID card. ⇛Pass port photocopy. ⇛Certified copy of valid trade license. ♣Partnership firm:⇛two copies of recent passport size photograph are require for each account opener including nominees one duly attested.
♦Identity certificate issued by:⇛local ward commissioner /chairman ⇛Voter ID card. ⇛Pass port photocopy. ⇛ Valid trade license. ⇛ Partnership deed duly signed by all partners. ⇛Partnership account agreement.
♣SOURCE:- GENERAL BANKING DEPARTMENT OF UBL. ♣Limited company:⇛Two copies of recent passport size photograph are require for each account opener including nominees one duly attested. ⇛Identity certificate issued by:⇛Local ward commissioner /chairman ⇛Voter ID card.
⇛pass port photocopy. ⇛Memorandum and articles of association. ⇛ Certificate of incorporation. ⇛certificate of commencement of business in case of public limited company ⇛Resolution of board of directors for opening and operation of the account ⇛List of directors with their father and mother name. SHORT TERM DEPOSIT ACCOUNT:⇛In this account client deposit his/her amount of deposit for a certain time and the client promise that he would not withdraw his deposit before the certain time. ⇛But if the client with draw his deposit before certain time the bank will not give him any kind of interest on his deposit amount. ⇛If he withdraw his deposit through a short notice before 7/15/30days then he will get 5.5% interest on his deposit amount. ⇛there are 31st STD account holder now available in UBL at banga bandhu avenue branch. ⇛Normally intellectual business people operate such kinds of account. ⇛In this account client will receive interest annual base.
♣SOURCE:- GENERAL BANKING DEPARTMENT LOAN ACCOUNT:⇛When a bank do not disburse a client sanction able amount of loan in cash. But the bank disburse the loan through a loan account is called bank loan account. ⇛The client can with draw his expected amount of loan from the loan account. ⇛The client will give interest for total sanction able loan. Banks Over Draft (OD):⇛According to prior agreement a current account holder can with draw more than his /her deposit amount. ⇛This types of loan sanction only for personal goodwill and faithful clients. ⇛This account is suitable for a trader/industrialist.
⇛ Personal security/purchase documents, also accepted for some cases.
Cash Credit Account:⇛When a bank sanction a loan for its client through specific current account is known as cash credit account (cc-a/c). ⇛When a client take loan from the bank against mortgage (i.e.-land, building,) it’s called cash credit account. ⇛Cash credit account is valid for just one year .after one year client can renew the cc-a/c ⇛Then the bank deposit the sanction able amount at lone current account. ⇛The loaned can with draw his expected amount from the sanction able amount. ⇛The client will give interest for this amount which he has with draw from the cash credit account. ⇛ Bank sanction cash credit against personal security / purchase documents and FDR.
♣SOURCE:- GENERAL BANKING DEPARTMENT OF UBL. Sundry deposit:⇛If any kinds of difference of client account number/name/amount then the bank deposit it in bank sundry account. ⇛After that client can transfer his/her amount through an application. Suspense account:⇛For banks daily expense advance amount of money are deposit here. ⇛Then the banks staff can with draw their expected amount for daily expense. Fixed Deposit Receipt Account (FDR):⇛In this account client will deposit his amount for once for a specific time. ⇛In this account no need any kinds of introducers. ⇛in this account client will get interest after every 3/6/12/24 months respectively. ⇛if the client with draw his/her amount before the certain times UBL do not pay him any kind of interest.
⇛In this account the client will deposit his amount for once & withdraw his deposit also once. TIMES OF FIXED DEPOSIT RECEIPT For three months For six months For twelve months/one year For twenty four months/2 years Above two years
RATE OF INTEREST 8.25% 8.5% 9.00% 9.25% 9.5%
♣SOURCE:- GENERAL BANKING DEPARTMEN EXCISE DUTY ⇛From every types of account government deduct a charge per year on the basis of the remaining balance of the account. rate of excise duty amount
current-ac
saving-a/c
fdr-a/c
others
100011lac 10000110lac 10000011core 10000001 -5core 50000001 -above
47
198
28
4
rate of excise duty 120
85
167
59
26
250
40
14
07
11
550
1
2
nil
5
2500
nil
nil
nil
nil
5000
♣SOURCE:- GENERAL BANKING DEPARTMENT OF UBL. ACCOUNT CLOSING:⇛Account holder can willingly close his/her bank account .but he will follow the account closing method of uttara bank limited that’s are given below:⇛At first he will submit an account closing application form to the bank. ⇛ He will also submit the bank cheque book/pass book/and deposit slip. ⇛After that ubl will cut a service charge TK, 100.
♦Bank can also close the client account for the following reasons:⇛If the client died.
⇛If the client lunatic and ⇛Bankrupted. Remittance
♣The remittance department is concerned for the flow of money to different spots and the exchange of different convertible units of money like pay order, drafts, T.C. etc. Activities The things done in the remittance department can be listed in the following points⇛Issuing TC. ⇛Refunding or give the changes of TC. ⇛Changing the foreign currency to Taka. ⇛Selling the foreign currency. ⇛Receiving the application form for sanchay patra and sending them for issuing. ⇛Delivering the issued sanchay patra to the customer. ⇛Receiving the interest coupons and the matured sanchay patra and sending them for encashment. ⇛Receiving the application form and issuing pay order, demand draft and telegraphic transfer (local & foreign). ⇛Receiving the application form for fund transfer. ⇛Issuing Bangladesh Bank Check. ⇛Receiving the stop check application and stopping them. ⇛Receiving checks, drafts and dividend slips for clearing, collection and transfer. ⇛Mailing the returned checks to the customers. ⇛Delivering the PRC (Proceed Realization Certificate). ⇛Filing the different documents. . ♣SOURCE:- REMITANCE SECTION OF UBL AT B.B.A (BRANCH).
Payment Order: ⇛A payment order is an instrument to remit fund within a clearing zone. The PO can only be cashed through the branch that has issued the instrument. Issuing of PO: ⇛The procedures for issuing a PO are as follows: ⇛Deposit money by the customer along with application form. ⇛Give necessary entry in the Bills Payable (PO) registers where payee’s name, date, PO No. etc., is mentioned. ⇛Prepared the instruments. ⇛After scrutinized and approved the instrument by authority; it is delivered to the customer. ⇛Signature of the customer is taken on the counterpart. Commission for Issuance of Pay Order Product
Commission (Taka)
P.O
Up to TK, 1000 Above TK, 1000
TK,10/TK, 25/-
P.O
Above TK, 100000
TK, 50/-
P.O
Above TK, 500000
TK, 100/-
♣SOURCE:- REMITANCE SECTION OF UBL AT B.B.A (BRANCH). Demand Draft: ⇛A Demand Draft (DD) is also called the ‘Bankers Draft’. It is an instrument issued by a particular branch, drawn on another branch of the same bank, instructing to pay a certain amount of money. DD is very much popular instrument for remitting money from one corner of a country to another. “A bankers draft payable to order on demand drawn by or behalf of bank up on itself. whether payable at the head office or other office of the bank” (MR.H.P SHELDON). Procedures for issuing a DD: ⇛ Deposit money with DD application form filled in. ⇛Necessary entries are given to register name DD OUT-concern (drawn on) branch. ⇛Issuing of the ‘Account payee only’ crossed instrument. ⇛DD normally use outside of clearing house.
Commission for Issuance of Demand Draft Product
Charges (Taka/US$) Inland
D.D
Minimum TK, 25/- plus Postage/Cable/Telex charges. Above TK, 25000.per thousand TK,1 will be added.
Outward @0.15% (minimum US$ 5, maximum US$ 12)
♣SOURCE:- REMITANCE SECTION OF UBL AT B.B.A (BRANCH). Telegraphic Transfer: ⇛Sometimes the remitter of the funds requires the money to be available to the payee immediately. In that case, the banker is requested to remit the funds telegraphically. Such type of remittance is called Telegraphic Transfer (TT). Procedure for the Outgoing TT: ⇛Deposit of money by the customer along with application form. ⇛In receipt of money a cost memo is given to the customer containing TT serial No. which is informed to the awaiting party in the paying branch by the customer. ⇛After collection of money from the client branch remittance officers give a message to the responding branch that included with ⇛Account number of responding branch. ⇛Amount of money. ⇛Name of the drawee. ⇛Confident test number. ⇛The telex department confirms transmission of the message. Procedure for the Incoming TT ⇛ After receiving the telex, it is authenticated by tested. ⇛ TT serial number is verified the TT In-Concern branch registers.
Charges for Issuance of Telegraphic Transfer Product
Charges (Taka/US$)
Inland(TT)
Outward(FTT)
Amount @0.10%= Telephone bill=40/Exchange fee=50/Vat 15%=
@0.15% (minimum US$ 5, maximum US$ 20) plus other charges
♣SOURCE:- REMITANCE SECTION OF UBL AT B.B.A (BRANCH). MAIL Transfer: ⇛Mail transfer is an order issued in the form of a letter for a payment of money sent by mail. The purchasers pays cash while buying but beneficiary at foreign center gets payment on arrival of the mail advice. Procedure for the Outgoing MT: ⇛Deposit of money by the customer along with application form. ⇛In receipt of money a cost memo is given to the customer containing MT serial No. which is informed to the awaiting party in the paying branch by the customer. ⇛After collection of money from the client branch remittance officers give a message to the responding branch that included with ⇛Account number of responding branch. ⇛Amount of money. ⇛Name of the drawee. ⇛Confident test number. Procedure for the Incoming MT ⇛ After receiving the mail, it is authenticated by tested. ⇛ MT serial number is verified the MT In-Concern branch registers.
Charges for Issuance of mail Transfer Product
Charges (Taka/US$) Inland(TT)
Outward(FTT)
Amount @0.10%=
@0.15%
(minimum
Telephone bill=40/-
maximum
US$
Exchange fee=50/-
charges
20)
US$ plus
5, other
Vat 15%=
♣SOURCE:- REMITANCE SECTION OF UBL AT B.B.A (BRANCH).
Traveler’s Checks ⇛Uttara Bank Limited International Traveler’s Checks in various determinations in both US Dollars and GB Pounds.
CASH DEPARTMENT ⇛The UBL BANGA BANDHU AVENUE branch has a very efficient cash section. Cash is received and disbursed here. This section has one payment and one-receipt tellers. FUNCTIONS OF CASH DEPARTMENT
♦Cash payment upon the receipt of the instrument for payment, the cash officer observes the following things: ⇛The date of the cheque,
⇛.Signature of the account holder, ⇛.Name of the Branch,
⇛.Whether the cheque is crossed or not, ⇛whether the amount in word and the amount in figure correspond or Not. ⇛Whether there is sufficient balance or not, and
⇛whether there is any legal obstruction or not. If all the particulars are in order, the cash officer makes payment to the customer.
♣SOURCE:- GENERAL BANKING SECTION OF UBL AT B.B.A (BRANCH). BOOKS MAINTAINED BY THIS DEPARTMENT ⇛Cash register: This book keeps account of cash in vault in the ban ⇛.Cash receipt register: Cash received in the whole day is recorded here. ⇛Cash payment register: Cash payment made in a day is recorded here.
⇛Rough vault register: All rough calculations of cash receipts and payments are recorded in vault register. ⇛Cash balance book: Cash balance by counting the notes and coins is finally recorded here. Balance here is compared with vault register. If no discrepancy is found, then everything is thought to be right. Otherwise this indicates error. ⇛In book (I). And (v). As above, notes and currency are recorded by mentioning their denominations and number of each denomination. The set of these books is maintained separately for both local and foreign currency. CHEQUE CLEARING
⇛This department receives cheque from its depositors for the purpose of collection by a deposit slip over the counter crediting their account. Clearing of cheque is done through the clearing house in Bangladesh Bank. TYPES OF CHEQUE FOR CLEARING A receiving officer receives deposit through 4 kinds of cheques: ⇛ Inward clearing cheque. ⇛ Outward clearing cheque. ⇛ .Inward bills for collection. ⇛ Outward bills for collection. INWARD CLEARING CHEQUE ⇛It refers to the instruments drawn on UBL.received from other banks through the clearing house. The following procedures are followed for collection: “Received” seal is stamped on the cheque Crossing of the cheques is done
“Payee’s A/C Credited” endorsement
Entries are given in the Outward Clearing Register
“Clearing” Seal is given
Cheques are sorted bank wise and entries are given to the computer (NIKASH) Entries are given to the “Clearing House register”
♣SOURCE:- CLEARING SECTION OF UBL AT B.B.A (BRANCH).
OUTWARD CLEARING CHEQUE
⇛It refers to the instruments drawn on the banks received by the UBL. They are of three kinds: ⇛Cheque drawn on another branch if UBL Bank Ltd. this is called outward bills for collection (OBC). ⇛Cheque drawn on another bank, which is situated outside the clearinghouse. This is called outward bill for collection Flow chart for OBC received from another Branch: The cheques are directly sent to the respective branch
OBC received along with instrument
Customer A/Cs are credited for the amount of the cheque
Entry passed in the (IBC) register
IBCA sent to the branch
Cash Receipt:⇛The second function of this department is to receive cash. Depositors deposit money in the account through this section by deposit slip. This section also receives cash for issuing bank draft, telex transfer etc. In the second case, the following chart will show the process. Cheque sent to the clearinghouse
Drawee bank House the cheque
The account of cheque depositor is credited
INCASE OF TWO PROCEDURE EXIST ⇛At first, UBL maintains the instrument of IBCA received from other branches. All clearing cheques are not received on the counter. Some cheques are received from other banks.
Cheque sent to the clearinghouse
Drawee bank House the cheque
The account of cheque depositor is credited
Secondly, if there is no branch of UBL then we directly send the cheque to the Drawee bank and request them to send the proceeds by TT, DD or by any other means. INWARD BILLS FOR COLLECTION (IBC) All clearing cheques are not received at the counter. Some cheques are received from other sources for collection. These cheques are received: ⇛.From another branch of UBL Bank Ltd., the cheques are settled by sending IBCA, i.e. by doing the following: Depositors A/C................................................ Dr. UBL General A/C (sending Branch).............. Cr. ⇛From another bank outside the clearing-house. The cheques are settled debiting depositors account and sending DD, TT and the like. These cheques are called IBC. For settlement of this kind of cheques, UBL sends IBCA if cheques are sent by our branch and sends DD.TT if sent by another bank.
♣SOURCE:- CLEARING SECTION OF UBL AT B.B.A (BRANCH). OUTWARD BILL FOR COLLECTION: When BANGA BANDHU Branch sends cheques to other branches of UBL, procedures for outward bills for collection: Depositing the cheque along with depositslip Crossing of the cheques is done indicating Principal Branch as collecting bank Endorsement
“payee’s
A/C
will
be
credited on realization” is given in the outward clearing register. Entries are given in the Outward Clearing Register UBL Bank general account (sending branch) ---------- Dr. Depositor’s account ----------------------------------------- Cr.
♣SOURCE:- CLEARING SECTION OF UBL AT B.B.A (BRANCH).
SHORT COLLECTION:-
♦ This is a method how UBL collect their inter bank cheque. Such as Uttara bank banga bandhu avenue to ramna brach. SCHEDULING:-
♦ Daily transactions are including that scheduling. ⇛What type of documents we prepare for others branch is called originating and it will be credited in daily scheduling. ⇛what we receive and respond from others branch is called responding. in this case originating branch will be debit. DESPATCHED:This is a system how ubl sent and received documents from out side. it can be two types. DESPATCH
LOCAL
FOREIGN
♣SOURCE:- GENERAL BANKING DEPARTMENT OF UBL AT B.B.A (BRANCH). Findings of General Banking: In general banking department they follow traditional system. They entire general banking system is not fully computerized. The service of remittance section is not as prompt as customers demand because of their un computerized system. The bank provides only some traditional limited services to its clients. As a result the bank is falling behind in competition. Most of the clients face introducer problem to open an account. If a person who is new of the city wants to open an account, it is a problem for him /her to arrange an introducer of SB or CD account holder. They are not using data base networking in information technology (it) department. So they have to transfer data from branch to branch and branch to head office by using transferable desk. Such as -floppy.
Although the profit earning condition is satisfactorily, the customer service conditions of the Branch is customer oriented but not high or top class. The Accounts opening procedure is not easier to the customers, such as the names of introductory, no separate desk for this. Every officer does not have computers for all where it is mandatory for all of them. LOAN AND ADVANCE DEPARTMENT:-
♌Banking business consists of borrowing and lending. Banks act as intermediaries between surplus and deficit economic units. Thus a banker is a dealer in money and credit. Banks accept deposit from large number of customers and then lend a major portion of the accumulated money to those who wish to borrow. In this process banks secure reasonable return to the savers, make funds available to the borrowers at a cost and earn a profit after covering the cost of funds. Banks, besides their role of intermediation between savers and borrowers and providing an effective payment mechanism, has been allowed to diversify into many new areas of better paying business activities.
TYPES OF LAONS AND ADVANCES OF UBL
TERM LOANS
SMALLBUSINESS ENERPRISE. (UPTO 5YEARS)
HOUSE REPAIRING LOAN. (ABOVE 5 YEARS)
CONTINUOUS LOANS
CASH CREDIT
DEMAND LOAN
OVER DRAFTS
CASH CREDIT HYPHOHICATI ON
TEMPORARY OVER DRAFT (TOD)
CASH CREDIT PLEDGE
CLEAN OVER DRAFT (COD)
SECURED OVER DRAFT (SOD)
Since the time was limited so I learned basic functions of that department these function of loans & advance are mansion below such a – prepare a loan proposal for a client/ examine require documents before disburse a loan/ monthly installment recover properly.
PROPOSAL FOR A LOAN OF UBL SANCTION
Request for Credit from the client to a Scrutinizing the documents Analyzing the information . Preparing the proposal The proposal goes to the Board of Directors through other necessary steps Sanctioning of the credit Informing the client, Loan Disbursement, Supervision and Monitoring
♣♣ SOURCE- PRODUCT PROGRAM GUIDELINES OF BAGLADESH BANK. REQUIRE DOCUMENTS OF UBL BEFORE DISBURSEMENT OF A LOAN ♦Loan application form duly signed by the customer. ♦Acceptance of the terms and conditions sanction advice. ♦trade license. ♦partnership deed duly certified as a true copy (in case of partnership firm). ♦In case of limited company:⇛ Copy of memorandum & articles of association of the company ⇛ Copy board of resolution of the company
⇛ Copy of last audited financial statement up to last 3 years. ⇛ Personal guarantee of all directors. ♦demand promissory note. ♦letter of hypothecation of stocks and goods. ♦letter of hypothecation books debts and receivable. ♦charge on fixed assets. ♦personal letter of guarantee. Product program guidelines (for service/trading/& manufacturing concern enterprise).
parameters
service concern
trading concern
customer segment
doctors, legal advisors, teachers & other persons engaged in other services for expansion and smooth running of professional activities.
persons who have involved in trading business.
nationality age limit-minimum age (years)/maximum age (years) nature of loan
bangladesh 21 years to 55 years.
bangladeshi 21 years to 55 years
i) to help the genuine business having entrepreneurship, sincerity, honesty, to run their business smoothly bangladeshi 21 years to 55 years
term loan
minimum income (yearly) to avail minimum amount of loan loan size (munimum/maximum) security/collatearal
tk, 3,00,000.00
Term loan, cc (hypo), cc (pladge), lc, ltr, lim, overdraft. tk.300, 000. 00
term loan, cc (hypo), cc (pladge), lc, ltr, lim, overdraft. tk.300,000.00
purpose
legal documents interest rate maximum term of loan repayment method disbursement mode disbursement percondition debt equity ratio (der%)
verification of personal details& quotation substantial income
tk, 1,00 lac to tk, 5,00 lac i) hypothecation of goods, ii) personal guarantee, iii) collateral in the form of fdr/registerrd mortgage of property as per existing ses guideliner 13.50% (subject to change by management) 5 years monthly instalment cash/payment order formalities as per ses guidelines maximum 70% : 30%, minimum 50% : 50% as per ses guidelines from the concerned authority/records of the parties
to improve the banking habit of self employed persons of the society.
manufacturing concern. persons who have involved in manufacturing business
tk.1 lac- tk.50 lac tk.1 lac- tk.50 lac hypothecation of goods / personal guarantee/fdr.
hypothecation of goods / personal guarantee/fdr.
as per existing sme guidelines. 13.50%
as per existing ses guidelines. 13.50%
1 month to 5 years monthly installment. cash/ payment order. formalities as per sme guidelines. maximum 70%:30%: minimum 50%:50%. as per smes guidelines from the concern authority.
1 month to 5 years monthly installment. cash/ payment order. formalities as per sme guidelines. maximum 70%:30%: minimum 50%:50%. as per smes guidelines from the concern authority.
REQUIEMENTS FOR A HOUSE REPAIRMENT LOAN OF UBL ♦ Single party department note/double party department note with delivery letter-F-17. ♦ Registered mortgage of landed property along with registered irrevocable general power of attorney empowering the bank to sell the property. ♦ Guarantee bond from the guarantor on TK, 150 non judicial stamps as per banks format separately for each guarantor. ♦ Letter of acceptance of the terms and conditions of the loan. ♦ Memorandum of deposit of title deed to be drafted by panel lawyer/legal adviser. ♦ Original title deed w3ith chain if documents up to date rent receipt municipal tax receipt parch mutation approved plan etc
♦ Letter of under taking to pay monthly installments in banks prescribed form. ♦ Letter of authority to debit borrowers account for interest incidental charge etc. ♦ Non encumbrance certificate from the sub register office. ♦ Valuation certificate both market value and forced sale value assess by BM/and ZH after physical verification by them personally. ♦ Post dated cheques for all installments to be deposited in advance. ♦ Lawyer clearance certificate on the title of the property. CASH CREDIT ♦A bank how much money pay its clients against certain amount of security through a specific number of current account is known as cash credit. ♦At first granted amount of Money deposit in clients current account. ♦Then the client can withdraw his expected amount of money through a cheque ♦He will pay interest on that amount of money how much money he will withdraw from his specific current account. ♦Client can repay his loan with a small number of amount respectively. ♦ Cash credit is suitable for a businessmen / traders/& industrialist. ♣♣SOURCE:- HIGHER SECONDARY BANKING AND BIMA. Page-67
SECURITY OF CASH CREDIT
CASH CREDIT HYPOTHECATION:“Hypothecation is a pledge to secure an to secure an obligation
with
our
delivery
of
title
or
possession
“(DICTONARY
OF
BANKING&FINANCE). ♦Hypothecation is a charge created on property or goods for the amount of debt”
(a
banking expert) . ♦ According to MR . HEART– “A charge against the property for an amount of debt where neither ownership nor possession is passed to the creditor”. CASH CREDIT PLEDGE “The bailment of goods as security as security for payment of a debt or performance of a promise is called pledge”.
♦pledge is a transference of property to creditor as a security for a debt.”( dictionary of banking & finance) . ♣♣source-FUNDAMENTAL OF HIGHER BANKING (BY DR. A.R. KHAN).
THE FORMALITIES FOR OPENING CASH CREDIT ♦The intending cash credit holder should the following documents and being fulfill property: ♦Stock report, Rent receipt.
♦Letter of arrangement
♦Trade license
♦DP (Demand Promissory) note
♦Up to date income tax clearing
♦Letter of guarantee
certificate
♦Letter lien
♦Charge documents
♦Limit sanction advice
♦Letter of continuity
♦Non-encumbrance certificate
Observing the documents the bank authority prepares a CC proposal from that contains the following information: ♦Nature of Business ♦Banking with UBL. ♦Transaction with CD account by the client ♦Allied deposit with SB/STD account ♦Number of adjustment (S) (applicable only for renewal of CC) ♦Recycling: it is the ratio of total credit summation to the limit. If the ratio is Higher it is better from banker’s point of view. ♦Turn over in the account Based on the above-mentioned information the dealing officer of the loans and advances department prepares recommendation about the prospect of granting the CC loan to the client. ♣♣SOURCE:- FROM ADVANCE DEPARTMENT OF UBL AT (B.B.AVENUE BRANCH).
OVERDRAFTS ♦The overdraft is always allowed on a current A/C operated upon by Cheques. The customer may be allowed a certain limit up to which he can be made any number of times within the limit and prescribed product basis. Overdrafts are of three kinds: 1. Temporary over drafts (TOD). 2. Clean over draft (COD). 3. Secured over draft (SODSS)
TEMPORARY OVER DRAFT ♦TOD is allowed to honor an important cheque of a valued client without any prior arrangement. As this facility is allowed for a very short period, it is called Temporary Overdraft. CLEAN OVER DRAFT ♦Sometimes Overdrafts are allowed with no other security except the personal security of the borrowers. These types of overdrafts are called clean overdrafts. SECURED OVER DRAFT(SOD) ♦When Overdrafts are allowed against securities they are called secured Overdrafts. SOD is generally allowed against securities of fixed & term deposits, shares / debentures, Insurance policy, real estate. Etc.
VIEW POINTS OF CREDIT ANALYSIS
CAMPARI
5C’S
♦C= CHARACTER ♦A= AMOUNT ♦M= MEANS ♦P= PURPOSE ♦A= ACCOUNTABILITY ♦R= RISK
♦CHARACTER ♦CAPACITY ♦CAPITAL ♦COLLATORAL ♦CONDITION
CREDIT ANALYSIS
PARSAR ♦P= PURPOSE ♦A= AMOUNT ♦R= REASON ♦S= SOURCE OF REPAYMENT ♦A= ABILITY R= RISK
5R’S ♦RESPONSIBILTY ♦RELAIABILTY ♦RESFECTIBILITY ♦RESOURCE ♦REPAYMENT
FINDINGS OF LOANS AND ADVANCES DEPARTMENT Loans are only for some specific sector not for every sectors. A person can get loans against his/ her proper documents and security. So some time requirements of a loan disbursement are very difficult to collect. Most of the customers said loans and advance department takes a long time to process a loan because the process of sanctioning loan is done manually. CIB report is not readily available from Bangladesh bank. Since the works are done mostly manually, the loan section takes long time to process loans.
FOREIGN EXCHANGE DEPARTMENT OF UBL AT BANGA BANDHU AVENUE BRANCH.
♦Foreign Exchange means the rate of exchange at which one currency is exchanged against another. ♣“Foreign exchange means foreign currency and includes all deposits, credits and balance payable in foreign currency as well as Draft, Traveler’s cheques, Letter of credit, Bills of exchange drawn in local currency but payable in foreign currency”. ♣ Foreign Exchange Regulation Act. 47, Sec 2 (d). ♣Foreign Exchange means foreign currency and includes any instrument drawn, accepted, made or issued under clause 13 of section 16 of the Bangladesh Bank order, 1972 all deposits, and credits and balances, Travelers cheques Letters of credit and bills of exchange, expressed or drawn in Bangladesh currency but payable in any foreign currency. ♣A Banking Expert.
♣”It is the means & methods by which rights to wealth expressed interns of the currency of one country are converted onto rights to wealth interns of the currency of another counter”. ♣Prof. H.E. Evitt.
♣“System or process of converting one national currency into another and of transferring money from one country into another”.
-♣ Dr. Paul Einzig Objectives of foreign exchange:
♣To solve the transaction problem which arise from export and import trade ♣To help our manpower for increase our foreign remittance fund. ♣To receive foreign donation and loan . ♣to provide loan and donation to other country. ♣to attract foreign investment. ♣Source- Fundamentals of Banking (BY DR.A.R KHAN). DAILY FUNCTIONS OF THIS DEPARTMENT ♣ Issuance of TC, cash, dollar, pound ♣Issuance of FDD,FTT, & purchasing payment of the same. ♣Passport Endorsement. ♣Encashment certificate . ♣F/C account opening and filling. ♣Maintenance of ledger of cash dollar , FC deposit account & TC. ♣Preparation of all related statement , voucher& posting. ♣Preparation of weekly, monthly, yearly statement.
RATE OF EXCHANGE:“The rate of exchange is the ratio at which domestic currency can be exchanged against foreign currency”(GUSTAV CASSEL). “♣A foreign exchange rate is measured typically as the number of units of a given currency that exchange for a unit of some other currency” (prof. R.M.STERN). “♣ Foreign exchange rate is the price relationship between the currencies of two countries”(Dictionary of banking& finance) . “♣the rate of exchange is the price of currency expressed in term of other currencies. The rate at which an exchange dealer would buy or sell foreign exchange in term of domestic currency is known as the rate of exchange” (A Banking Expert). “♣The foreign exchange rate is the price which is paid in domestic currency for a unit of foreign currency.”(A Banking Expert).
♣Source- Fundamentals of Banking (BY DR.A.R KHAN). Page-59
TYPES OF EXCHANGE RATE
MARKET RATE OF MARKET RATE OF EXCHANGE EXCHANGE
BUYINGRATE RATE BUYING
GOVERNMENT.RATE O GOVERNMENT.RATE O XCHANGE XCHANGE
SELLING RATE SELLING RATE SPOT RATE SPOT RATE
FORWARD RATE
CROSS RATE
DEMAND RATE
TIME BASED RATE
SWAOP
♣Source- Fundamentals of Banking (BY DR.A.R KHAN).
♣BUYING RATE:
⇛ The rate at which commercial bank buy foreign currency is called buying rate. .⇛Authorized dealers apply this rate at the time purchasing or negotiation of export document payment. ⇛This rate is also called bid quote.
♣ SELLING RATE:⇛The rate at which the commercial bank sell the foreign currency is known as selling rate. ⇛Authorized dealers apply this rate at the time of lodgment of import documents. ⇛This rate is also known as ask quote.
♣ SPOT RATE:⇛Spot rate is the rate to buy currency for immediate delivery. ⇛A spot rate requires almost immediate delivery of foreign exchange. ⇛It is quoted for transaction where the foreign currency bought or sold is to be received or delivered immediately.
♣FORWARD RATE:⇛Forward rates are the rate to buy currency at some agreed upon date in future. ⇛A forward rates require delivery of foreign exchange at some future date. ⇛When a rate will be applied in future date is called forward rate
♣CROSS RATE:⇛The rate of exchange quoted expressing the quotation for any two currencies in term of a third. ♣SWAP:⇛A SWAP rate is the simultaneous exchange of one foreign currency for another. IMPORT ♣Import means purchase of goods or services form abroad. Normally consumers, firms and Government organization import foreign goods or services to meet their various necessities.
So, in brief, we can say that import is the flow of goods and services purchased by economic agent staying in the country from economic agent staying abroad. IMPORT PROCEDURE FOLLOWED BY UBL ♣As an authorized dealer Uttara Bank Limited, Principal Branch is always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import section, which is under foreign exchange department of the branch, is assigned to perform this job. And to serve its clients demand to import goods it always maintains required formalities that are collectively termed as the import procedure. ▶At first, the importer must obtain Import Registration Certificate (IRC) from the CCI&E submitting the following papers: 1. 2. 3. 4.
Up to date trade license. Nationality and Asset Certificate Income Tax Certificate In case of company, Memorandum & Articles of Association and Certificate of Incorporation. 5. Bank Solvency Certificate etc. 6. Required amount of registration fee ▶Then the importer has to contact with the seller outside the country to obtain the preformed invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes this communication. Other sources are: 1. Trade fair. 2. Chamber of Commerce. 3. Foreign missions in Bangladesh. 4. Journals etc. ▶When the importer detailing the terms and conditions of the import. ▶) After making the purchase contract, importer settles the means of payment with the seller, an import procedure differs with means of payment. The possible means are cash in advance, open account, collection method and documentary letter of credit. In most cases, the documentary letter of credit in our country makes import payment. Purchase contract contains which payment procedure has to be applied.
Open Account: Exporter ships the goods and sends transport receipt to the import. Importer will take delivery of the goods and makes payment by foreign DD, MT, or TT at some specified date. Collection Method: Collection methods are either clean collection or documentary collection. Again, documentary collection may be Document against Payment (D/P) or Document against Acceptance (D/A). The collection procedure is that the exporter ships the goods and draws a draft/bill on the buyer. The exporter submits the draft/bill (Only or with documents) to the remitting bank sends the draft/bill (With or without documents) and a collection instruction letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank notifies the importer upon receipt of the draft. The title of goods is released to the importer upon full payment or acceptance of the draft/bill. Letter of credit: Letter of credit is the well-accepted and most commonly used means of payment. It is an undertaking for payment by the issuing bank to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit. ⇛On behalf of the importer if the bank undertakes to make payment to the foreign bank is known as documentary credit or letter of credit. ⇛Letter of credit is an instrument issued by a bank to a customer placing at the letters disposal such agreed sums in foreign currency as stipulated. An importer is a country requests his bank to open a credit in foreign currency in favor of his exporter at a bank in the letters country. The letter of credit is issued against payment of amount by the importer or against satisfactory security. The L/C authorizes the exporter to draw a draft under is terms and sell to a specified bank in his country. He has to hand over to the bank, will the bill of exchange, shipping documents and such other papers as may be agree upon between the exporter and the importer. The exporter is assured of his payment because of the credit while the importer is protected because documents in respect of export of goods have to be delivered by the exporter to the paying bank before the payment is made. TYPES OF LETTER OF CREDIT
⇛ Letter of credit are classified in to various types according to the method of settlement employed. All credits must be indicate in major categories. All of the letter of credit UBL exercise basically two types- revocable & irrevocable letter of credit. ♣Revocable letter of credit
♣Negotiable
♣Irrevocable letter of credit
♣Red close credit
♣Sight payment credit
♣Revolving credit
♣Deferred payment credit
♣stand by credit
♣Acceptance credit
♣ transferable credit
REVOCABLE L/C:⇛If any letter of credit can be change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit. ⇛A letter of credit can be canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the documents have been honored by the issuing bank or its correspondent. Thus a revocable credit does not usually provide adequate security for the beneficiary. IRREVOCABLE L/C:⇛If any letter of credit can not be changed without the consent of the importer and exporter is known as irrevocable letter of credit. ⇛Irrevocable credit constitutions a form under taking by the issuing bank to make payment .if there fore gives the beneficiary a high degree of assurance that he will paid to his goods or services provide he complies with terms of the credit PARTIES TO A LETTER OF CREDIT:⇛A letter of credit is issued by a bank at the request of an importer on favor of an exporter from whom he has contracted to purchase some commodity or goods. The importer the exporter and the issuing bank parties to the letter of credit. There is how ever one or more
than one bank that is involved in various capacities and at various stages to pay an important role in the total operation of the credit. 1. The opening bank. 2 The advising bank 3. The buyer and the beneficiary. 4. The paying bank. 5. The negotiable bank. 6. The confirming bank.
♦CONTENTS OF THE LETTER OF CREDIT ⇛ Banks normally issued letter of credit (L/C) on forms which clearly indicate the banks name and extent of the banks obligation under the credit. The contents of the L/C of different banks may be different. In general L/C contains the following information: ∙Name of the buyer: Who is also known as the accounted since it is for his account that the credit has been opened? ∙Name of the seller: Who is also known as the beneficiary of the credit? ∙Moment of the credit: which should be the value of the merchandise plus any shipping charges intent to be paid under the credit? ∙Trade terms: Such as F.O.B and CIF
∙Tenor of the draft which is specified the latest date documents upon the requirements of the buyer. ∙Expiration date: Which is specified the latest date documents many is presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over the time of shipment. ∙Documents required: Which will normally include commercial invoice consular or customers invoice, insurance policies as certificates if the source is to be effected by the beneficiary and original bills of lading. ∙General description of the merchandise: Which briefly and in a general manner duly describes the merchandise covered by a letter of credit?
♦PROCEDURE OF OPENING L/C ⇛The importer after receiving the preformed invoice from the exporter, by applying for the issue of a documentary credit, the importer request his bank to make a promise of payment to the supplier. The applicant must therefore have adequate funds in the bank account or a credit line sufficient to cover the require ⇛ Banks deal in documents and not in goods. Once the bank has issued the credits its obligation to pay is conditional on the presentation of the stipulated documents with in the
prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered goods on redder reissues as contracted. The importer submits the following documents before opening of the L/C:
♦Tax Identification Number (TIN) ♦Valid Trade License. ♦Import Registration Certificate (IRC) The bank wills supple the following documents before opening of the L/C: ♦LCA form.
♦Application and Agreement form. ♦IMP form ♦Necessary charge documents for documentation. The above documents / papers must be completed duly signed and filled in by the party according to the instruction of the banker. DOCUMENTARY LETTER OF CREDIT (Import / Export Documentation) Documentary letter of credit is such kinds of commercial letter which a bank issue on behalf of foreign seller (exporter) according to the direction of the (Importers) purchasers. The documents shown under are known as export documents form the importers side. These are: • • • • • • • •
Bill of exchange Bill of lading Airway bill / Railway receipt: Commercial invoice Insurance policy Certificate of origin Packing list Bill of entry:
The exporter submits the following papers/documents to the negotiating bank: I. II. III. IV. V. VI. VII. VIII. IX.
Bill of exchange/Draft. Bill of lading. Airway bill / Railway receipt. Commercial invoice. Insurance policy. Certificate of origin. Packing list. Weightment & measurement list. Other etc.
The negotiating bank after received the above documents / papers then this bank scrutiny the documents. The negotiating bank sends the original shipping documents to the L/C opening bank and keeping the second copy w3ith the negotiating bank.
♦PAMENT AGAINST DOCUMENTS (PAD) ▶Bank deal in documents and not in goods, if the shipping document against the L/C is in order then the L/C opening bank must have to payment to the foreign bank within 3 days or 72 hours according as Uniform customs and practice for documentary credit (UCPDC) 500 of revision of ICC. If the shipping documents have any discrepancy, then the L/C opening bank informed to the negotiating bank within 7 days. Otherwise, the shipping documents have not discrepancy. If the importer have not adequate founds in the bank account then the bank payment to the foreign bank against the shipping documents
♦EXPORT ACTS:▶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 export from Bangladesh is subject to export trade control exercised by the Ministry of Commerce through Chief Controller of Imports (CCI & E). No exporter is allowed to export any commodity permissible fro export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every 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: ▶Obtaining export LC: To get export LC form exporter issued by the importer.
▶Submission of export documents: Exporter has to submit all necessary documents to the collecting bank after shipping of goods. ▶Checking of export documents: After getting the document banker used to check the documents as per LC terms,
▶Negotiation of export documents: If the bank accepts the documents 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. ▶Reporting of proceeds: This is the period when the issuing bank has realized the payment, ▶Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective department of BB by mentioning latest payment,
♦BACK-TO-BACK L/C It is simply used 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 back-to-back L/C back-to-back L/C is commonly known as buying L/C on the contrary, master export L/C is know as selling L/C ▶Documents required for Opening back-to-back L/C I. II. III. IV. V. VI.
Master L/C Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC) L/C Application and LCAF duly filled in and signed Performa Invoice or Indent Insurance Cover Note with money receipt IMP Form duly signed
♦CHECKLIST OF EXPORTS L/C Following defective points are usually found in the master L/C so the bank officials so much carefully check these points. These are: Name of the advising bank Name of Transferring bank Forms of Doc. Credit: ▶Name of issuing bank
▶Documentary credit no. And issuing date ▶Date of shipment
▶Expiry date and place Application / for order of / on account Beneficiary shipment / Transshipment Amount Availability of credit Partial shipment / Transshipment Payment condition / draft sight Category Description ▶Item
▶Total Quantity
▶Unit price B/L clause Reimbursement clause UCPDC clause Net FOB value
Findings of Foreign Exchange: Foreign Exchange Section of the Branch is running well in profit. It should improve its service more better ways. The Branch is operating export / Import business both local and foreign . Foreign Exchange Department could provide better service through computerization of all its operations. There is in sufficient sophisticated technological support in foreign exchange department .As a result exchange process
CONCLUSION: ⇛ From very much practical experience, I have reached a concrete conclusion on Uttara Bank Limited in a very confident way .I believe that my realization will be harmony with most of the banking thinkers. Though three months time was not enough for me to achieve my objectives of internship, I have achieved maximum objectives of general banking and basic objectives from loan &Advance and foreign exchange department such as from general banking now I can do – account opening/ closing/ clearing/ remittance/cash functions etc properly. From foreign exchange department now I can do – process of foreign exchange remittance inward & outward/ process of export& import and process of a letter of credit From loans & advance department I can do – prepare a loan proposal for a client/examine the requirement before disburse a loan & how can recover monthly installment. Though UBL’s performance regarding General Banking, Loan and advances & Foreign exchange functions are good enough in compare to the other banks in the country, there is an immense scope for improvement is this particular work area. For this, more study should be conducted to identify the problems in general banking in UBL and steps should be taken to overcome those obstacles. Finally I want to say that UBL authority should take necessary action after define the problem of general banking for better customer services and others department functions also concern properly for height success of Uttara Bank Limited.
RECOMMENDATIONS There are some recommendations for UBL from my point of view are mention below. In order to increase the efficiency of customer services. This recommendation may be concern able. Data base networking is the most modern technology to transfer data from branch to branch and branch to head office and vice versa. so the bank should develop their information technology department for better (IT) system. The branch is not well furnished so authority should try to change some of that branch furniture. The security system also of that branch is not so good because there is no security camera. The customer is always in confused about the specific department because there is no name plat even in second officer’s desk. Personal relationship should be build with big customer /depositors. The cash receive section should be totally separated from the cash paying section. The branch manager, officer, and executives who achieved target in all respect may be rewarded. The employee of the different branches should be trained continuously. Since the bank is a financial institution the UBL should recruit more persons from business study background. Cash counter employee should be more smart and active because they have direct relation with customers.