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Internship Report on

‘‘Foreign Exchange Operations of United Commercial Bank

- A study at Uttara Branch’’

Submitted to the Department of Business Administration, Daffodil International

University as a partial requirement for BBA degree completion

Prepared By

Mariam Binta Khalil

ID: 141-11-752
BBA, 37th Batch
Major in Finance
Department of Business Administration
Daffodil International University
Internship Report on

‘‘Foreign Exchange Operations of United Commercial Bank

- A study at Uttara Branch’’

Supervised By

Ms. Tanzina Hossain

Associate Professor,
Faculty of Business & Economics,
Academic Director of Uttara Campus,
Daffodil International University

Prepared By

Mariam Binta Khalil

ID: 141-11-752
BBA (Finance)
Department of Business Administration
Daffodil International University

Date of Submission: May 11, 2017

Letter of Transmittal
May 11, 2017
Ms. Tanzina Hossain
Associate Professor
Faculty of Business & Economics
Daffodil International University

Subject: Submission of Internship Report on “Foreign Exchange Operations of United

Commercial Bank Limited – A study at Uttara Branch”.

Dear Madam,

With due respect, I would like to submit the report on “Foreign Exchange Operations of United
Commercial Bank Limited – A study at Uttara Branch” which is the topic of my internship
program. I would like to say that this report has been prepared by me and this is my pleasure to
place it before you.

I believe that this internship program has given me a vast opportunity to enrich both of my
knowledge and experience. I have made my best effort to fulfill the objectives of the report and
believe that it will meet your expectation.

While preparing this report, I have tried utmost to include all the relevant information and
analysis to make the report comprehensive as well as workable one.I, therefore, hope that you
will enjoy reviewing this report.

Thanks and regards,


Mariam Binta Khalil

ID: 141-11-752
BBA, 37th Batch
Department of Business Administration
Daffodil International University

I do, hereby, solemnly declare that the work presented in this report entitled as “Foreign
Exchange Operations of United Commercial Bank Limited – A study at Uttara Branch” is
prepared by me, Mariam Binta Khalil, ID: 141-11-752, is a partial accomplishment of the
requirement for the award of the degree Bachelor of Business Administration in Daffodil
International University.

The work, I have presented, does not breach any existing copyright and no portion of this report
is copied from any work done earlier for a degree or otherwise.

I believe this genuine and honest analysis will help you to have a positive viewpoint upon me. I
will be pleased to deliver you with added explanations or clarifications that you may feel
necessary in this regard. I will be thankful if you kindly approve this effort.

Yours sincerely,


Mariam Binta Khalil

ID: 141-11-752

BBA, 37th Batch

Department of Business Administration

Daffodil International University

Letter of Acceptance
This is to notify that the internship report on “Foreign Exchange Operations of United
Commercial Bank Limited – A study at Uttara Branch” is completed by Mariam Binta Khalil on
completion of BBA program, major in Finance from Daffodil International University. I certify

I. She has carried out the internship under my direct supervision and guidance and that the
manuscript of the report is scrutinized by me.

II. No part of the internship report has been submitted for any other degree, title or
recognition before.

III. The final composed copy of this report, which is being submitted to Daffodil
International University, is carefully checked by me for its material and language.


Ms.Tanzina Hossain

Associate Professor,

Faculty of Business & Economics,

Academic Director of Uttara Campus,

Daffodil International University

It gives me immense pleasure to thank a large number of individuals for their cordial co-
operation and encouragement who have contributed directly or indirectly in preparing this report.
Firstly, I would like to express my gratefulness to Almighty Allah who has enabled me to pursue
my study.

I convey my gratitude to my honorable supervisor, Ms.Tanzina Hossain, Associate Professor,

Daffodil International University, for her guidance and co-operation, which helped me
immensely to prepare this report.

I would like to also express my gratitude to MdMonir Hossain, Operation Manager, UCBLUttara
Branch, for giving me the opportunity and appointment and lastly certifying the internship
program that I have completed. Special thanks to Mohammad Shamsuddin Ahmed, First
Assistant Vice President, UCBL Uttara Branch, for employing me on the Foreign Exchange
department. Finally, my cordial gratitude to Aiman Jan Chowdhury, Executive Officer (Export),
Sazzad Hossain, Junior Officer (GB) and all the employees there who helped me last three
months to know about bank activities and gather information for my report. It is them who made
it easy for me to understand and encouraged me a lot during my internship program.

Table of Content

Particulars Page No

Title page 02
Letter of transmittal 03
Declaration 04
Letter of acceptance 05
Acknowledgements 06
Table of content 07-09
Abbreviations used 10
Executive summary 11

CHAPTER-1 12-16
1.0 Introduction 13
1.1 Origin of the report 13
1.2 Rationale of the report 14
1.3Objectives of the report 14
1.4Scope of the report 15
1.5 Methodology of the report 15
1.6 Limitations 16

CHAPTER-2 17-25
(Organizational Overview of UCBL)
2.1 Historic background 18
2.2 Mission, Vision and Core values 18

2.3 Strategies, Goals and Objectives 19-20
2.4 Organizational structure 21
2.5 Current position 22
2.6 Operations 22
2.7 Products and services 22-23
2.8 SWOT Analysis 24-25

CHAPTER-3 26-41
(Foreign Exchange Operations of UCBL)
3.1 Foreign Exchange 27
3.2 Functions of Foreign Exchange Department 27
3.3 Commonly used documents in Foreign Exchange 28
3.4 Import 29
3.4.1 Import procedure 29
3.4.2 Import mechanism 30-32
3.5 Export 33
3.5.1 Export procedure 33-34
3.5.2 Export mechanism 35-37
3.6 Back to back L/C 38
3.6.1 Back to back L/C mechanism 38
3.7 Foreign Exchange Remittance 39
3.7.1 Inward remittance 39
3.7.2 Outward remittance 40
3.7.3 Mechanism of remittance collection 40-41

CHAPTER-4 42-47
(Analysis of Foreign Exchange Performance of UCBL,
Uttara Branch)
4.0 Analysis of Foreign Exchange operations 43
4.1 Foreign Exchange performance of UCBL 43

4.1.1 Export and Import 44
4.1.2 Foreign Remittance 45
4.2 Foreign Exchange performance of Uttara Branch 45
4.2.1 Export and Import 45-46
4.2.2 Foreign Remittance 47
4.3 Overview 47

CHAPTER-5 48-51
(Findings, Recommendations
And Conclusion)
5.1 Findings 49
5.2 Recommendations 50
5.3 Conclusion 51

Bibliography 52

List of Tables & Figures

Particulars Page No

Figure: 2.1 21
Figure: 1 43
Table: 4.1 44
Figure: 2 44
Table: 4.2 45
Table: 4.3 46
Figure: 3 46
Table: 4.4 47

Abbreviations Used
The mostly used abbreviations in the report are as follows:

- UCBL: United Commercial Bank Limited.

- T.T: Telegraphic Transfer.

- DD: Demand Draft.

- PO: Pay Order

- LTR: Loan against Trust Receipt.

- LIM: Loan against Imported Merchandise.

- PAD: Payment against Document.

- CR: Confidential Report.

- IRC: Import Registration Certificate.

- ERC: Export Registration Certificate.

- TIN: Tax Identification Number.

- FBC: Foreign Bill Collection.

- LBC: Local Bill Collection.

- C&F: Cost & Freight.

- FBP: Foreign Bill Purchase.

- LBP: Local Bill Purchase.

- AD: - Authorized Dealer.

- MS.S: - Monthly Saving Scheme.

- FD: - Fixed Deposit.

- STD:-Short Term Deposit.

Executive Summary
Banking sector of Bangladesh is one of the major sectors, which contributes significantly to the
national economy. The sector comprises a number of banks in various categories.

United Commercial Bank is the oldest private commercial bank operating in Bangladesh. It has
over the years created one of the largest networks among all the other banks in Bangladesh.
Although a trendsetter in offering a various ranges of products in the market, the product offers
by United Commercial Bank are quickly imitated by competitors.

In this report, I tried to analyze the Foreign Exchange Operations of United Commercial Bank
Limited, Uttara Branch. Behind the success of the bank they efficiently analyze the foreign
exchange related processes and the risk and opportunities related to it and handle the process in
such a way that brings them the success.

In the first part of the report, I discussed about the background of the report as it is the
introductory part. In this part, I discussed about the objective of my report, its importance and
methods used to prepare it.

In the second part of the report, I gave a brief introduction of UCBL. I discussed about the
organization overview, mission and vision of the organization, goals and objectives, its
operations and performance of the bank at a glance etc.

In the third chapter, I tried to give a clear idea about the Foreign Exchange operations of UCBL.
I discussed the idea, procedure and mechanisms of foreign export, import and remittance.

In the fourth chapter, I gave an analysis of the performance of UCBL, Uttara Branch in foreign
trades. I tried to provide some data that I collected from the branch.

The fifth part consists of the findings that I observed in UCBL, Uttara Branch, during the period,
my recommendations to the branch based on the drawbacks and a brief conclusion on the overall
report. I performed this part on the basis of Foreign Exchange Department of Uttara Branch
rather than the other departments.

1.0 Introduction
Banking is the backbone of an economy. All sorts of economic and financial activities revolve
round the axis of the bank. As the industry produces goods and commodities, so does the bank
creates and controls money market and promotes formation of capital. From this point of view,
banking-a technical profession- can be termed as industry. Services to its customers are the
products of banking industry besides being a significant factor in promoting capital formation in
the country. As all economic and fiscal activities revolve round this important 'Industry', the role
of banking can hardly be over emphasized.
Generally a bank comprises of three departments- General Banking, Credit Department, and
Foreign Exchange Department. The department that is most important to a bank and to the
interest of the country is Foreign Exchange Department.
Foreign exchange is an important department of United Commercial Bank Limited, which deals
with import, export and foreign remittances. It bridges between importers and exporters. This
department is playing an important role in enhancing export earnings, which aids economic
growth and in turn it helps for the economic development. On the other hand, it also helps to
meet those goods and service, which are most demandable and not adequate in our country.
Foreign exchange operation is one of the significant functions of the bank. It plays a vital role in
overall economy of the country. Bank collects information from numerous sources relating to
cost and revenue from foreign exchange operation. Through export, import, and foreign
remittances Foreign Exchange department of the banks earns their profit. Banks is the
intermediary of all export, import, and remittance activities. Foreign Exchange Market allows
currencies to be exchanged to facilitate international trade and financial transactions. After
passing a lot of phases, present foreign exchange market has established and performing to
benefit all the parties incorporated here. There are basically three players in the foreign exchange
market of Bangladesh. Those are the Bangladesh Bank, authorized dealers, and customers. This
paper discussed regarding the related issues of foreign exchange performances and bank
profitability of United Commercial Bank Ltd.

1.1 Origin of the report
Any academic course of the study has a great value when it has practical application in the real
life.Internship implies the full application of the methods and procedures through rich acquired
knowledge of subject matter can be fruitfully applied in our daily life.

This report is originated as the course requirement of BBA Program, Faculty of Business and
Economics, Daffodil International University as practical orientation is integral part of BBA
Program requirement, I went to the United Commercial Bank Limited, Uttara Branch to take the
real life exposure of the activities of banking financial institutions from February 12, 2017 to
May 11, 2017. The case study is titled “Foreign Exchange operations of United Commercial
Bank Limited – A study at Uttara Branch” under the supervision of Tanzina Hossain, Assosiate
professor of Daffodil International University.

1.2 Rationale of the report

This report has been prepared on the basis of experience gathered during the period of
internship.This is also a proof of my internship completion and things I learned during the
period. As I was employed in the foreign exchange department of UCBL, Uttara Branch as an
intern, I carried out the report based on foreign exchange operations of the same branch. Through
this report making process, I became clear about the foreign exchange operations that I couldn’t
understand properly while working in the branch. On the other hand, the report will work as a
parameter of foreign exchange operations of Uttara Branch. I hope that my report will be a use
for the bank to understand their drawbacks of Uttara Branch and specifically the foreign
exchange business,or supposedly the whole bank. They can take my recommendations in their
concern and try to resolve the problems. Apart from the bank itself, other officials, institutions or
students can use my analysis and findings for any future study of the branch.

1.3 Objectives of the report

My objectives of making this report are as follows:

• To observe the major outline of Foreign Exchange Business.

• To analyze the export and import procedure maintained by United Commercial Bank

• To study the foreign remittance activities of United Commercial Bank Limited.

• To know about the various documents and procedures which are used in bankingservice
of International Trade.

• To identify the export and import operations in United Commercial Bank
Limited, Uttara Branch.

• To recommend solutions to the problems.faced by Uttara Branch in Foreign Exchange


1.4 Scope of the report

In this report, I included a brief introduction of UCBL which consists of its historic background,
goals, strategies, products and organogram. The main part of the body includes the foreign
exchange businesses and their mechanisms. As I just worked in and observed the operations of
Uttara Branch only, I couldn’t provide any analysis regarding other branches or the whole bank.
This report is limited with functions of Foreign Exchange Operation system and its management
rather than the whole branch operations. Most of the data used in the reporting of the report are
from secondary sources. All the data related to the reporting requirements are not available due
to confidential reservation practice for the benefit of the organization.

1.5 Methodology of the report

I have got all the relevant information from my working experience with UCBL, their Annual
report, various brochures, UCBL website and such. Some information is taken from some of my

Primary data

The primary data of this report is the information, which is gathered from UCBL while I worked
with them.

Face to face conversation with the respective officer of the branch.

Relevant File study as provided by the officers concerned.


Secondary data

Secondary Sources: Secondary data are collected in the following ways:

Annual Reports, General Reports of the UCBL.

Periodicals published by the Bangladesh Bank.

Different books, articles, internet sources etc. regarding Foreign Exchange operations.

Foreign Exchange manual of the bank.

1.6 Limitations of the report

During groundwork of this report some obstacles have come across, which can be termed as the
limitation of the project, these reasons did not allow this report to go in depth of issues hence
several parts of the report is not concentrated. Although the officials were so busy, they gave
wholehearted cooperation in the time of internship also in preparing this report. The limitations
that were faced:

Lack of records. Sufficient books, publications and figures were not available.

Limited access to necessary information preserved by the bank.

Load at the workplace was also a barrier to prepare this report.

Lack of intellectual thought and analytical ability to make it a perfect one.

Foreign Exchange Department process and procedures are quite complicated and huge
formalities are maintained.

If these limitations were not be there, the report would have been more useful.

2.1 Historic background
Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country
and also participated by the Government United Commercial Bank Limited started its operation
in mid-1983 and has since been able to establish the largest network of 158 branches as on
31.12.2016 among the first generation banks in the private sector.

With its firm commitment to the economic development of the country, the bank has already
made a distinct mark in the realm of private sector banking through personalized services,
innovative practices, dynamic approach and efficient management. The Bank, aiming to play a
leading role in the economic activities of the country, is firmly engaged in the development of
trade, commerce, and industry through a creative credit pricy.

2.2 Mission, Vision and Core values


“Our mission to offer financial solutions that create, manage and increase our clients’ wealth
while improving the quality of life in the communication we serve”

The mission statement of UCBL is developed by:

• Setting industry benchmarks of world class standard in delivering customer value through their
comprehensive product range, customer service and all our activities.

• Maintaining the highest ethical standards and a community responsibility worth of leading
corporate citizen.

• Anticipating business solutions require by all our customers everywhere and

innovativelysupplying them beyond expectation.

• Continuously improving productivity, and thereby enhancing shareholder value.

• Building an exciting team-based working environment that will attract, develop andretaining
employees of exceptional ability who help for the success of our bank.


To be the bank of first choice through maximizing value for their clients, shareholders,
employees and contributing to the national economy with social commitments.

Core Values

• Put their customers first. Emphasize on professional ethics.

• Maintain quality at all levels.

• Believe in being a responsible corporate citizen.

• Say what they believe in.

• Foster participative management.

2.3 Strategies, Goals and Objectives


United Commercial Bank Ltd. aims at excellence and is committed to explore a new horizon
ofbanking and providing a wide range of quality products and services to its clients. There are
some strategies that UCBL follows to make its operations smooth for making easier for

• Synchronized and steady growth of the bank.

• Utilize all available resources to develop various plans, policies and procedures in each of
the objective and goal areas.

• Implement plan policies and procedures

• Utilize a team of professional employees

• Search for a total customized solution of I.T for the purpose of full automation step.


• Develop a realistic deposit mobilization plan.

• Develop appropriate lending risk assessment system.

• Develop capital plan

• Develop a system to make a good advance

• Develop a recruitment, compensation, training and orientation plan.

• Developing a plan for offering better customer services.

• Develop appropriate management structure, systems, procedures and approaches.

• Develop scientific Management Information System to monitor bank’s activities.


United Commercial Bank Limited is a bank for common people including businessmen and
professionals. It intends to serve with quality at a price competitive to anyone in the financial
market. It would constantly keep on exploring the needs of the clients.

So the United Commercial Bank Limited shall also develop a youthful; and exuberant
management team-technologically sound and rich in experience. They would work hand with
zeal and enthusiasm to achieve the objectives of the bank in the new millennium.

• Build up a low cost fund base

• Make sound loan and investment

• Make capital adequacy recruitment at all the time

• Ensure 100% recovery of all advances

• Ensure a satisfied work force

• Focus on fee based income

• Adopt an appropriate management technology

• Install a scientific MIS to monitor bank activities.

2.4 Organizational structure

The Organizational Structure of UCBL comprises of four wings.

• The Board of Directors

• Executive Committee

• Audit committee

• Senior Management

The hierarchical organogram of UCBL is given below:

Figure: 2.1

2.5 Current position


During the year 2016 authorized capital of the bank remained unchanged at TK. 1500 million
and the paid up capital stood at around TK. 10541.30 million. On the other hand, the total
Deposits of the bank increased to TK. 24395.631 million and Shareholder’s Equity to TK.

Number of Branches:

UCBL always places utmost importance on the client service. With that view the bank continued
its personalized approaches in rendering improved and modernized services. Presently the
number of branches stands 158 covering almost all the important places of the country.


At the third quarter of 2016, total investment of the bank stood at TK.6180.36 million from
purchase of securities, purchase and sale of property, plant and equipment and sales of

Number of Shareholder:

Total no of outstanding shares as per the record of 2017 is 1054130.654 with Par value of TK.10,
market price of which is TK.21.3 at the end of 2016.

2.6 Operations
All policy formulation and subsequent execution are done in the Head office. It comprises of
nine major divisions namely Credit division, International Division, Central Account Division,
Human Resource Division, Information Technology Division, Training Division, Research and
Development Division, Audit and Compliance Division. Besides these main divisions there are
twenty branches all over the country to look after the Bank’s day to day operation.

2.7 Products and services

• UCB Money Maximizer

• UCB Multi-Millionaire

• UCB Earning Plus

• UCB DPS Plus

• Western Union Money Transfer

• SMS. Banking Service

• Online Service

• Credit/Debit Card

• One Stop Service

• Time Deposit Scheme

• Monthly Savings Scheme

• Deposit Insurance Scheme

• NFCD (Non-resident Foreign Currency Deposit)

• RFCD (Resident Foreign Currency Deposit)

• Inward and Outward Remittance

• Export and Import Finance

• Working Capital Finance

• Loan Syndication

•Underwriting and bridge financing

• Locker service

• Travelers check

•Inward and outward remittance

2.8 SWOT Analysis

SWOT analysis is a simple framework for generating strategic alternatives from a situation
analysis. The complete elaboration of SWOT analysis is following-

S= Strength.

W= Weakness.

O= Opportunities.

T= Threat.

After monitoring closely and working proactively in the Foreign Exchange Department of United
Commercial Bank Ltd, Uttara Branch the following Strength, Weakness, Threat, and Weakness
has been found-


• The Bank has well reputation in the market.

• Has good relation with Importers and Exporters.

• Sound Import and Export operation.

• Executives working in the Foreign Exchange Division are highly qualified and
experienced. They are quite capable of handling large scale of export and import transactions and
making a profitable customer relationship with the clients.

• The Branch follows the Foreign Exchange rules and regulation very strictly.

• In export and import activities there are lots of provisions of making unethical and
unlawful transactions. But UCBL gives it utmost attention so that such unethical and unlawful
does not takes place. This image of UCBL is also a vast strength of the Bank.

• Recently UCBL has gone through an agreement with different exchange house to provide
quick and more authentic remittance service to its clients.


• In Foreign Exchange Division UCBL still uses lots of register for maintaining its foreign
exchange transactions. It is time consuming and there are lots of chances for making mistakes.

• There is no customer complain desk in the Bank’s branches. It is not only important part
of the foreign exchange activities but also for other two department of the Bank- General
Banking and Credit Department.

• Being a well reputed Bank, UCBL no longer wants to conduct smaller L/C request
coming from small parties and as a result they are neglecting a huge number of potential

• While dealing with government bank, the bank faces a problem because the website of
Bangladesh Bank is very slow which delays the process of reporting.


• As stated earlier that UCBL is one of popular bank in Bangladesh. Both exporters and
importers have their faith on this Bank.

• The percentage of classified loans is below 2% which is far better than international

• UCBL can extend its Foreign Trades to other categories as they have scope.


• Any reduction in RMG export will affect the foreign exchange department of the bank as
our export depends on RMG sector mostly.

• Government continuous pressure to reduce interest rate.

• Frequent fluctuation of domestic currency worth against US Dollar.

• Political crisis and decaying country image as exporter.

• Rapid increase of private sector Bank in number and size.

3.1 Foreign Exchange
Foreign trade can be easily defined as a business activity, which transcends national boundaries.
These may be between parties or government ones. Trades among nations are a common
occurrence and normally benefit both the exporter and importer. In many countries, international
trade accounts for more than 20% of their national incomes.

As more than one currency are involved in foreign trade, it gives rise to exchange of currencies
which is known as foreign exchange. The term “Foreign Exchange” has three principal meanings
Firstly it is a term used referring to the currencies of the other countries in terms of any single
one currency. To a Bangladeshi, Dollar, Pound sterling etc. are foreign currencies and as such
foreign exchange. Secondly, the term also commonly refer to some interments used in
international trade, such as bill of exchange, Drafts, Travel check and other means of
international remittance thirdly, the terms foreign exchange is also quite often referred to the
balance in foreign currencies held by a country.

In terms of section 2(d) of the foreign exchange regulations 1947, as adopted in Bangladesh,
Foreign Exchange means foreign currency and includes any instrument drawn, accepted made or
issued under clause (13) of article 16 of the Bangladesh Bank order, 1972, all the deposits,
credits and balances payable in any foreign currency and draft check, letter of credit and bill of
exchange expressed or drawn in Bangladesh currency but payable in any foreign country.

In exercise of the power conferred by section 3 of the foreign exchange regulation, 1947,
Bangladesh Bank issues license to schedule bank to deal with exchange. These banks are known
as Authorized Dealers. Licensees are also issued by Bangladesh Bank to persons or firms to
exchange foreign currency instruments such as T.C, currency notes and coins. They are known
as Authorized money changers.

3.2 Functions of Foreign Exchange Department


 Pre-shipment advances.
 Purchase of foreign bills.

 Negotiating of foreign bills.
 Export guarantees.
 Advising/Confirming letters – letter of credit.
 Advance for deferred payments exports.
 Advance against bills for collection.


 Opening of letter of credit (L/C)

 Advance bills.
 Bills for collection.
 Import loan and guarantees.


 Issue of DD, MT, TT etc.

 Payment of DD, MT, TT etc.
 Issue and enhancement of travelers check.
 Sale and enhancement of foreign currency notes.
 Non-resident accounts.

3.3 Commonly used documents in Foreign Exchange

 Documentary Letter of Credit.
 Bill of exchange.
 Bill of Lading.
 Commercial Invoice.
 Certificate of origin of goods.
 Inspection certificate.
 Packing List.
 Insurance Policy.
 Proforma Invoice / Indent.

 Master receipt.
 GSP Certificate.

3.4 Import
Importation is foreign goods and services purchased by customer, firms and Governments in
Bangladesh. An importer must have import registration certificate (IRC) given by chief
controller of import and exports (CCI & E) to import anything from other country. To obtain
import registration certificate (IRC) the following certificates are required:

 Trade License.
 Income Tax clearance certificate.
 Nationality certificate.
 Banks solvency certificate.
 Asset certificate.
 Registration partnership deed (if any).
 Memorandum and Article of association.
 Certificate of incorporation (if any)
 Rent receipt of the business premises.

3.4.1 Import procedure

UCB offers post import finance to the importers in the form of Loan against Imported
Merchandise (LIM), Loan against Trust Receipt (LTR), and Payment against Documents (PAD).

To import through United Commercial Bank Limited (UCBL), a customer/client requires

 Bank Account.
 Import registration certificate.
 Tax paying identification number.
 Proforma Invoice/Indent.
 Membership Certificate.

 L/C application form duly attested.
 One set of IMP Form.
 Insurance Cover Note with money receipt.
 Others.

3.4.2 Import mechanism

Letter of Credits can be opened with any of the Branch authorized to deal in foreign exchange.
Bank issuing L/Cs has to perform the following functions that are to be done in the different

i. Applicant’s approach to the bank

The applicant of Letter of Credit must be a known customer to the bank. He has to approach the
bank to open a Letter of Credit for import of goods through an application in the letterhead pad.

ii. Application for letter of credit limit

Before opening Letter of Credit, importer applies for Letter of Credit limit. To have an import
Letter of Credit limit, an importer submits an application to the import division of United
Commercial Bank furnishing the following information –

• Particulars of account maintained with the bank

• Nature of business

• Required amount of limit

• Payment terms and conditions

• Goods to be imported

• Security offered

• Repayment schedule

A credit officer scrutinizes this application and accordingly prepares a credit limit proposal
(CLP) and forwards it to the Head Office Credit Committee (HOCC). The committee, if
satisfied, sanctions the limit and returns it to the branch. Thus the importer is entitled to an
approved credit limit. Once a party succeeds in opening an L/C through United Commercial
Bank Ltd, generally it requires no fresh credit limit on subsequent occasions; however, further
approval of the Head Office is required only if it proposes to increase its credit limit.

iii. Taking necessary documents from the applicant

A bank takes the following documents with the application from the applicant while opening a
Letter of Credit:

• Application for Letter of Credit duly signed by the importer

• Letter of Credit Authorization Form (L/CAF)

• Import Permit Form (IMP)

• Valid Import Registration Certificate (IRC)

• Indent or Pro-forma Invoice

• Valid Membership Certificate

• Documents evidencing payment of fee for current year for Import Registration Certificate

• Declaration by the importer that he has paid income tax and submitted returns to the
Income tax authority for the last three years

• Insurance Cover Note and Stamped Tax Insurance Policy

iv. Lodgment

After the scrutiny, the following steps are taken to process for lodgment of import documents
received from the negotiating bank. Lodgment means retirement of funds. Usually payment is

made within seven days after the documents have been received. If the payment is deferred, the
negotiating bank may claim interest for making delay. However, after receiving the documents,
the Branch authority collects the documents by contacting the importer. Lodgment Constitutes
the Followings:

• Conversion of foreign currency amount of the bill and the charges of the foreign bank
into Taka is done separately by applying Bills Collection (B.C.) selling rate ruling on the date of
lodgment. If the forward exchange was booked, the booked rate is applied. Payment against
Documents (PAD) is made by debiting PAD account and crediting Head Office account. Full
particulars of the documents are entered in the prescribed PAD register allotting a consecutive
serial number.

• Documents are endorsed under seal and signature.

• “Inter-Brach credit advice” (IBCA) is sent to the Head Office along with a prescribed
statement to provide them credit for the payment from their overseas account through United
Commercial Bank Limited General Account.

• Head Office (International Division) in receipt of the IBCA and the statement will
respond the entry by debit to branch account (through United Commercial Bank Limited General
Account) and contra credit to NOSTRO Account of the negotiating bank abroad. To arrange
necessary fund for payment, a requisition is sent to the International Department.

• As the T.T & O.D rates are paid to the ID, the differences between these two rates remain
as exchange gain for the Branch.

• As soon as the above formalities are completed the importers are served with PAD bill
intimations for retirement of concerned import document. A letter of intimation (P.A.D.
intimation) regarding receipt of the documents should be sent to the applicant with a request to
take delivery of the documents on settlement of all dues against it and mentioning the maturity
date of P.A.D.

• The Import mechanism is completed with the lodgment because most of the import
operates by the United Commercial Bank Ltd. is cash letter of credit.

3.5 Export
Practically by the term Export we mean out carrying of anything from one country to another. As
banker we define export as sending of visible things outside the country for sale. Export Trade
plays a vital note in the development process of an economy. With the caring we meet out import
bills. Export Finance of UCB is of three types:

Pre-shipment Financing

This facility is offered to an exporter by way of packing credit to enable him to finance purchase
or import of raw materials, processing and packing of the goods meant for exports.

Post-shipment Financing

Post-shipment Credit is offered to an exporter to finance export sales receivables after the date of
shipment of goods till the date of realization of export proceeds.

Advances against accepted bills for collection

This offering is in the form of a loan provided to the exporter to bridge the working capital gap
that exists before the export proceeds are realized. Once the export proceeds are realized the loan
is liquidated.

3.5.1 Export procedure

Like importer the exporters are also required to get them registered before entering into export
trade. Export registration certificate (ERC) given by CCI & E is required for this purpose. The
required documents to obtain ERC are also same as IRC.

When a bank (Authorized dealer) receives a L/C (cable or original) it ascertains the correctness
of the test number and the authorized signature. Then the bank sends the original copy of the L/C
to the beneficiary.

The exporter presents the relative documents to the negotiating bank after the shipment of the
goods. The L/C issuing bank undertakes to honor is obligation only if the beneficiary fulfills the
conditions stipulated in the L/C, may namely, the submission of stipulated documents with in the
stipulated time. Even a slide deviation of the documents from these specified in the L/C may
give an excuse to the negating bank. So, the negotiating bank must be careful, promote,
systematic and bias-free while scrutinizing the tender documents after careful and through
examination of the documents, the banker has to list out the discrepancies which may be
classified as major or minor, irremovable or removable. The removable discrepancies can be
corrected by the tendered or future losses, which may arise due to non-repatriation of proceeds.

The following types of discrepancies may be noted while the negotiating bank examines the

 L/C expired.
 Late shipment.
 Amount drawn in excess of the L/C.
 Bill of exchange not properly drawn.
 Descriptions of goods differ.
 Bill of Lading or Airway Bill state.
 Bill of Lading classed.
 Insurance Cover Note as per terms L/C.
 Insurance Cover obtained after the Bill of Lading or Airway Bill date.
 Enough number of copies not submitted as required by L/C.
 Negotiation under L/C restricted.
 Packing List and certificate of analysis not as per the L/C.
 Documents not properly endorsed in favor of the bank.
 Full shipment not effective and part shipment prohibited.
 Gross Weight and Net Weight shown in different documents differ.
 Same of the documents required by L/C not submitted and
 Documents inadequately stamped.

Documents with major discrepancies, which could not be negotiated, should be sent on
collection basis with the permission of the exporter.

3.5.2 Export mechanism

The Export and Importer trade in our country are regulated by imports and exports (control) Act,
1950. Under the Export Policy of Bangladesh the exporter has to get the valid Export
Registration Certificate (ERC) from chief controller of Import & Export (CCI & E). The ERC is
required to renew every year. The ERC number is to be incorporated on EXP Forms and other
papers connected with exports.

Registration of Exporters

For obtaining ERC indenting Bangladeshi exporters are required to apply to the Controller / Joint
Controller / Deputy Controller / Assistant Controller of Imports and Exports, Dhaka / Chittagong
/ Khulna / Mymensing / Sylhet / Comilla / Barishal / Bogra / Rongpur / Dinajpur in the
prescribed Form along with the following documents:

1. Nationality and assets certificate.

2. Memorandum and Articles of Association and certificate of Incorporation in case of
limited company.
3. Bank certificate.
4. Income tax certificate.
5. Trade license etc.

Securing the order

After getting the ERC (Export Registration Certificate) the exporter may proceed to secure the
export order. He/she can do this by containing the buyers directly or through agent. In this
purpose exporter can get help from:

 Liaison Office.

 Buyer’s local agent.
 Export Promotion organization.
 Bangladesh mission abroad.
 Chamber of Commerce (Local & Foreign)
 Trade fair etc.

Signing the contract

After communicating with buyer exporter has to get contracted (writing or oral) for exporting
exportable item(s) from Bangladesh detailing commodity, quantity, price, shipment, insurance
and marks, inspection, arbitration etc.

Receiving the letter of credit

After getting contract for sale, exporter should ask the buyer for letter of credit clearly stating
terms and conditions of export and payment.

The following are the main points to be looked into for receiving (collecting export proceeds by
means of documentary credit:

 The terms of the L/C are in conformity with those of the contract;
 The L/C is an irrevocable one, preferable confirmed by the advising bank;
 The L/C allows sufficient time for shipment and negotiation;
 Terms and conditions should be stated in contract clearly in case of other modes of
 Cash in advance;
 Open A/C;
 Collection basis (documentary / clean).

Procuring the materials

After making the deal and on the L/C opened in his favor, the next step for the exporter is to set
about the task of procuring or manufacturing the contracted materials/merchandise.

Presentation of export documents for negotiation

After shipment, exporter submits the following documents to UCBL for Negotiation.

 Beneficiary’s declaration about the shipment of goods as per Letter of Credit /Contract
 Bill of Exchange or Draft
 Bill of Lading
 Certificate of origin
 Consular Invoice
 Freight Certificates in case of FOB contract
 G.S.P. certificate (if required)
 Inspection Certificate
 Insurance Policy/Certificate arranged to cover transit risk
 Invoice
 Packing List
 Photo – Sanitary Certificate.
 Quality (Control) Certificate

Examination of document

Banks deal with documents only, not with commodity. As the negotiating bank is giving the
value before repatriation of the export proceeds it is advisable to scrutinize and examine each
and every document with great care whether any discrepancy is observed in the documents. The
bankers are to ascertain that the documents are strictly as per the terms of Letter of Credit. Bank
officers assigned for examining the export documents may use a checklist for their convenience.
After examining the document; the bank sends them to the importer’s bank through DHL. Here
the export procedure is completed.

3.6 Back to back L/C
There is another area of export. In readymade garments sector the exporter has to import the raw
materials for completing the order. In that case the exporter may seek financing facility from the
bank. In this situation the bank finance the exporter by opening back to back L/C against the
Export L/C. There are four types of Back-to-Back L/Cs. These are:

 Back to Back Local (Within Bangladesh)

 Back to Back EPZ
 Back to Back EDF
 Back to Back Foreign

3.6.1Back to back L/C mechanism

i. Application for Opening Back to Back L/C

At first the exporter applies for opening BTB L/C against the Export L/C. He has to write an
application to the Branch Manager stating the amount of the L/C along with a L/C form and Pro-
forma Invoice.

ii. BTB L/C Issue

The authorized officer issues the L/C if the document is OK and sends the L/C to the bank of the

iii. Bill sent by the beneficiary’s bank for acceptance

When the exporter gets an L/C he sends his goods to the importer and the bill for the export
sends to the importer bank. If there is no discrepancy in the document then the opening bank give
acceptance and fix the due date of payment according to the tenor.

iv. Payment made by the Importer

In case of back to back as 60-90-120-180 days of maturity period, deferred payment is made.
Payment is given after realizing export proceeds from the L/C issuing bank.

3.7 Foreign Exchange Remittance
Remittance means sending of fund. The word remittance we understand sending/ transferring of
fund through a bank from one place to another place which may be within the country or
between two countries, one in abroad is called Foreign Remittance.

“Foreign Remittance” means purchase and sale of freely convertible foreign currencies as
admissible “Foreign Exchange Regulations Act-1947” and “Guidelines for Foreign Exchange
Transaction – VOL. 1&2 of the country. Purchase of foreign currencies constitutes inward
foreign remittance and sale of foreign currencies constitutes out ward foreign remittance.

So we see that there are two types of Foreign Remittance:

1. Foreign inward remittance.

2. Foreign outward remittance.

3.7.1 Inward remittance

The remittances which are received from abroad are called inward remittance.

Purpose of inward remittance

 Family maintenance
 Indenting commission
 Donation
 Gift
 Foreign investment
 Export proceeds
 Others

Mode of inward remittance

 Telegraphic Transfer (TT)

 Mail transfer (MT)
 Foreign Demand Draft (FDD)

 Payment order (PO)
 Travelers check (TC)
 Foreign Currency Notes

3.7.2 Outward remittance

Remittances which are made from our country to abroad is called outward remittance.

Mode of outward remittance

 Foreign Telegraphic Transfer (FTT)

 Foreign Mail Transfer (FMT)
 Foreign Demand Draft (FDD)
 Travelers Check (TC)
 Foreign Currency Notes.

3.7.3 Mechanism of remittance collection

United Commercial Bank Ltd. follows three ways for collecting remittance. These are: exchange
houses with which bank has agreement, direct telephonic transfer and the exchange house with
which bank has no agreement.

i. Exchange House with which UCBL has agreement

In this way the remittance can come for anyone. He can be an A/C holder can be not. If the
receiver is an A/C holder the remittance directly deposited to his account. If he is not an A/C
holder then the procedure is different. The sender’s bank will give a pin code that the sender has
to inform the receiver. The receiver than tell the pin code, his name and other information to the
authorized officer. The officer will check and if everything is alright, the officer will give the
cash to the receiver. The following are the name of some of the Exchange Houses that UCBL has
agreement with:

 LARI Exchange Co.
 CITY INTL Exchange Co.
 Mustafa-Sultan Exchange Co.
 Western Union
 Ria Money Transfer.

ii. Telephonic Transfer

The bank provides this service only to its A/C holders. When the remittances come it is directly
deposited to receiver’s account.

iii. Exchange house having no agreement with UCBL

This is another way that the bank follows. This service is also limited to its A/C holders. If a
remittance is sent through an exchange house having no agreement with UCBL, it comes to the
bank that has an agreement with the exchange house. After getting the remittance, the bank
issues a pay order in favor of UCBL. Then UCBL collects the cash through clearing house and
deposits it to receiver’s account.

This is the administration of foreign exchange business. In this process the foreign exchange
department accomplishes its responsibilities.

iv. Submission of Return to Bangladesh Bank:

The Authorized Dealer (AD) must maintain adequate and proper records of all Foreign Exchange
transactions including transaction on non-resident taka A/C. in their books and furnish such
particulars in the prescribed form of Return to Bangladesh Bank. The purpose of submission of
return to the Bangladesh Bank is to keep systematic and proper records of all dealing in foreign
exchange transaction. Every single transaction that Bank does has to be reported on Bangladesh
Bank Website. Other than that, there are yearly, quarterly, monthly, weekly statements which is
submitted to Bangladesh Bank.

4.0 Analysis of Foreign Exchange operations
A businessman goes to a bank in foreign trade for mainly receiving the opportunity of pre and
post shipment financing. United Commercial Bank Ltd provides both kind of financing in export
and import. A graph is provided below to show sector wise loan of UCBL. In import sector,
9453 million taka loan has been given that contributes almost 6.36% of the total loan. Besides In
export sector, 5074 million taka loan has been given that contributes almost 3.41 % of the total

Sector-wise loan (amount in BDT million)

Figure: 1

4.1 Foreign Exchange performance of UCBL

United Commercial Bank Limited has embarked on extensive foreign exchange business with a
view to facilitating international trade transactions of the country.

The export and import condition of UCBL for the previous three years shows that both export
and import business are increasing in a satisfactory way. It is because of increasing the value of $
against taka and increasing number of branches.

4.1.1 Export and Import
Performance of UCBL for last three years are shown in the below table:

Foreign Exchange 2014 2015 2016

(Amount in million (Amount in million (Amount in million
Export 1630.59 1852.87 2131.77
Import 1941.03 2119.72 2435.59
Total 3571.62 3972.59 4567.36

Table: 4.1

Here, we can see that the Foreign Business of UCBL is always in an upward trend which is
positive sign of the banks performance. Total Foreign business of UCBL has increased more
than 30% within two years, from $3571.62million in 2014 to $4567.36 million in 2016.

Export and Import amounts are illustrated in the below bar chart:

Chart Title

2119.72 2131.77
2000 1852.87



2014 2015 2016

Export Import

Figure: 2 (Amount in million USD)

In the above chart, the increasing trend of both export and import transactions of UCBL can be
seen. However, it can also be seen that amounts of Foreign Imports are always higher than
Foreign Export in a year.

4.1.2 Foreign Remittance

Remittance is a big factor to develop a country’s economy.Earning from Foreign Remittance of
UCBL is another growing foreign exchange business. The table contains the total foreign
remittance through the whole bank during three consecutive fiscal years which shows an increase
in Remittance performance.

Earning from Foreign Remittance:

FY 2013-14 2014-15 2015-16

Amount (in million 107.88 148.30 168.02

Table: 4.2

4.2 Foreign Exchange performance of Uttara Branch

UCBL, Uttara Branch is doing well in their Foreign Exchange business. The amounts of Total
exports and imports are analyzed and found out that Export amount was always greater than
Import amount in a year until 2016. The scenario is reversed in 2016 where Import amount
exceeds the Export amount. However, the total amount of foreign trades are increasing on a
yearly basis which is undoubtedly a good sign for UCBL Foreign exchange business.

4.2.1 Export and Import

The Foreign Exchange business of UCBL Uttara Branch is shown in the given table below:

Foreign Exchange 2014 2015 2016
(Amount in million (Amount in million (Amount in
USD) USD) millionUSD)
Export 90.18 102.73 119.63
Import 87.76 75.77 126.12
Total 177.94 178.50 245.75

Table: 4.3

In the table above, we can see the increasing trend of Export and Import in UCBL Uttara Branch.
Export was comparatively greater than Import. Though the trend reversed in 2016 where more
Export transactions were done than Import.

Export and Import amounts of three consecutive years of the branch are shown in the below bar

100 90.17 87.75

80 75.77




2014 2015 2016

Export Import

Figure: 3 (Amount in million USD)

4.2.2 Foreign Remittance
The Foreign Remittance earnings from export amounts of Uttara Branch for three consecutive
years till 2016 and amount of 2017 till now are given below:

Year 2014 2015 2016 2017

Amount (in 3.689 2.846 2.433 .233 (till

million USD) present)

Table: 4.4

From the above table, it can be observed that earning from foreign remittance of Uttara Branch is
decreasing every year. Some of the reasons of this decrease includes better performances of other
banks in foreign business, customer attraction is diversifying with different rates and offers,
increase in number of branches of UCBL etc.

4.3 Overview
From the above analysis, we see that UCB Uttara Branch is doing well in Export and Import
business. Its greatest earning in Foreign Business is from Foreign Import. However, performance
of Foreign Remittance is decreasing andthe reason behind decreasing foreign remittance is some
of the private banks perform better than UCBL because they are signing contract with different
foreign exchange house and the flow of foreign remittance will also be low because of economic
situation is not so god in foreign countries, like America. The branch should take necessary steps
to attract potential customers to do remittance transactions with them and increase their services.

And Conclusion

5.1 Findings
In recent years, the foreign exchange business of United Commercial Bank Ltd. is increasing at a
faster rate. Now a days UCBL rendering a stable support to the national Foreign Exchange
Business. In spite of that while observing and analyzing the operations, I have found some
positive and some negative sides of UCBL, Uttara branch. The findings are as follows:

Positive Findings

1. UCBL is one of the oldest private commercial banks. Therefore, people know them
and trust them.
2. UCBL Uttara Branch, specifically the Foreign Exchange Department has some loyal
customers who do their transactions with UCBL in a regular basis.
3. Foreign transactions with UCBL Uttara Branch is increasing at a great pace.
4. Behavior of the branch employers and employees is really good, which is a good
thing for attracting clients and for creating a great work environment as well.
5. There is adequate number and installation of modern technology and good
communication system.

Negative Findings

1. There is no queueor serial system in the branch. So, there is always chaos in the
departments. Even in the Foreign Exchange Department too when clients increase.
2. Insufficient knowledge of senior employees in foreign exchange department about
uses of advanced modern technologies.As a result, many modern technologies are
incorporated but not being utilized properly.
3. The filing systems are still hard or manual in the foreign exchange department which
creates a mess often while finding a previous file and sometimes errors are created
while writing files.
4. A greater number of charges are implied in foreign transactions than many other
banks in Bangladesh.

5. As import has increased than export in 2016, poor Balance of payment is created in
Uttara Branch.
6. The Foreign Exchange department takes more time to process L/Cs.
7. Biasness in the L/C procedure exists among the officers. They process files on
personal relationship priority basis.
8. UCBL was ranked as the second among the private commercial banks in 2015.
However, it was dropped to the sixth position in 2016 which is a matter of great
concern. Reputation of the foreign exchange department is also related with the
bank’s reputation indeed.

5.2 Recommendations
Through conducting this study, I have acquired some practical knowledge about export-import
business in UCBL and other relevant matters. Now I would like to provide some
recommendations on the basis of the negative findings. As per earnest observation some
suggestions for improvement of the situation are given below:

1. UCBL should improvise a banking queue system in all branches. They can use digital
serial numbering and calling system as it’s applied to many offices and banks
throughout the world.
2. Proper training should be provided to the employees regarding the use of advanced
technology and for any new technology incorporated to ensure the best uses of them.
3. Filing should be done online, as soft versions are easier to find and edit, along with
the hard versions. Maintaining a database for all documentations will keep the files
safe and easier to get when needed and reduce hardcopy messes.
4. Charges applied in foreign transactions should be matched and similar with other
banks’ foreign exchange departments.
5. UCBL should offer attractive incentive packages for exporters like offering less
charge to attract more exporters and accordingly it will diminish the balance of
payment gap of UCBL.
6. UCBL should speed up its L/C processing to lower the time so that it can compete
with other banks.
7. The officers should be neutral to all clients. It will help them to build more strong
relation with clients.
8. UCBL should try to match with other leading banks, and this can be done by
increasing advertisement, making more profitable investments, cutting transaction
charges etc. so that they can be able to offer more rates for deposits and increase the
total amount of deposits. Accordingly, they should find the passive reasons for the
drop down and try to solve them.

5.3 Conclusion
Proper financial system of a country can contribute towards the development of that country’s
economy. In our country Bangladesh, banks have a leading power to its financial system. For this
reason, the banks should have a potential role to make our financial system. In this arena, private
commercial banks are playing a vital role in the development of our economy. But Govt. and
Bangladesh Bank play a crucial role to the private commercial banks through imposition of
deposit restriction, lending role and other banking operations.
As an organization, United Commercial Bank Limited has earned the reputation of top listed
banks operating in Bangladesh. The organization is much more structured compared to any other
listed bank operating in Bangladesh. It is relentless in pursuit of business innovation and
improvement. It has a reputation as a leader in financing manufacturing sector.
At present there is no such organization in the world that is free from problem and challenges.
Every concern has to strive and struggle a lot to be more profitable and to go more competitive
edge. It is continuing to make efforts to refine its products and operations to make them more
compatible. New deposit schemes have been introduced and an action plan to maintain revenue
growth in future. As the business and economic conditions remain uncertain, UCB continues to
develop new products like it has been doing in past.
United Commercial Bank Limited (UCBL) plays a vital role in financing in import and exports
of the country. Without Bank's co-operation, it is not possible to run any business or production
activity in this age. Exports and import need finance in various stages of their activities. Export
and import financing are letter of credit (L/C), payment against documents (PAD), loan against
imported merchandise (LIM) etc. All these facilities are provided by UCBL. For this purpose
Banks consider the borrower's business standing, integrity, liability with the bank term and
And finally the problems which I observed during my internship like- there is no queue or serial
system in the branch, insufficient knowledge of senior employees, manual filing system and so
on which can be reduced by following my recommendations. Thus we expect United
Commercial Bank Limited to hold its prospect in future and contribute to the socio-economic


Reports and Documents

1. Annual Report 2014, 2015 & 2016 of United Commercial Bank Limited;

2. “Banks and Banking” Published by Bangladesh Bank statistics Department.


1. Madura, Jeef (2006) “International Financial Management”, 13th edition. Published by

2. Rose, P. S., & Hudgins, S. C. (2008). Bank management & financial services. Boston: