CHAPTER 01

INTRODUCTION

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 1.1 Introduction

It is very important to have a practical application of the knowledge acquired from any
academic course of the study. Because only a lot of theoretical knowledge will become
fruitless if is not applied in the practical life. So I need proper application of my knowledge to
get some benefit from my theoretical knowledge to make it more fruitful. Such an application
can be possible through internship.

The internship program exercise a significant importance as it enables a student to familiar

with the practical business activities. The student work closing with the people of an
organization and learn about the function of that organization. These programs enable a
student to develop his/her analytical skills and scholastic aptitude.

A commercial bank or business bank is a type of financial institution and intermediary. It is a

bank that provides transactional, savings and money market accounts and that accepts
deposits. Commercial banks are the deposits of individuals and business. The goal of modern
banking system is to provide us with the primary contributors to the economy of the country.
It is also profit making institutions that holds the best solution through consultation, design,
superior hardware and software and ongoing professional support training.

To keep pace with this situation, we need banking knowledge for future career. If we want to
build our career in banking area, only theoretical knowledge would not help us. As internship
program is established to gather practical knowledge regarding various sector of economy, I
chose to get practical knowledge regarding banking sector and I select Uttara Bank as my
organization to work.

The duration of my program was 3months and during this period, I have learned many things.
I observed that there is a great difference between theoretical knowledge and practical
knowledge. I learned many terms, functions and nature of banking activities. I also get
practical knowledge regarding organizational environment.

1.2 Objective of the Study

The objective of the study may be viewed as:

 Broad Objective
 Specific Objective

2
  Broad Objective:
The general objective of this report is to complete the internship program and submit a report
on “Accounting Tools & Techniques of General Banking Activities of Uttara Bank
Limited”.

 Specific Objective:
The report is prepared with the following specific objectives:

 To analyze the Bank’s overall performance.

 To know the procedure of General Banking operation.
 To have an exposed on the banking environment of Bangladesh.
 To point out the tools of other tasks adopted by Uttara Bank Limited.
 To provide some suggestions and recommendations to improve their
performances of marking.
 To gain knowledge about the company and its current functions.
 To gain knowledge about different jobs functions of banks.

1.3 Scope of the Study

This internship is a part of the BBA program that provides practical job experience to
students. I started my internship placed at Local Office (Motijheel, Dhaka) of Uttara Bank
Limited as an intern for three months duration. This internship program provides me
practical experience & knowledge in several areas. During the first few weeks of my intern
period, I was able to get to the working environment of Uttara Bank Limited. I tried with all
my best to observe the overall banking operations and day-to-day transactions & functions of
the branch. However, it is hardly able to become familiarized with the total operation of the
bank completely within a short period. Here this report contains a brief discussion on
“Accounting Tools & Techniques of General Banking Activities of Uttara Bank
Limited” Where I tried my level best to acquire as much as practical knowledge and
experience.

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 1.4 Rational of the Study

Theoretical knowledge gets its perfection with practical application. As the student of BBA,
we have to gather practical knowledge and skills to meet the future competition. Without
practical exposure, theory can never be fruitful. Recognizing the importance of practical
experience, three months internship is one of the most important parts of four years BBA
Program. As practical orientation is an integral part of BBA program
requirement. Internship program of IBAIS University is a partial requirement for the
graduation of BBA students. For the completion of this internship program I had been placed
in a bank named “Uttara Bank Limited, Local Office, as an internee. This report covered
the “Accounting Tools & Techniques of General Banking Activities of the bank”.

1.5 Methodology of the Study

Research methodology is a way to systematically solve the study problem. This study is
analytical research and some extent descriptive type.

For the purpose of my study both the primary and the secondary information is used for
analyses.

1.5.1 Primary Sources

 Face to face conversation with the respective officers of the banks.

 Practical experience gained by visiting different desks during internship period.
 Taking initial lectures from senior officers.
 Consulting with the supervisor.
 Close observation of the tasks

1.5.2 Secondary Sources

 Annual report of the Uttara Bank Limited.

 Different publications of the Uttara Bank Limited.
 Theoretical books relating banking sector.
 Different types of newspaper.
 Internet (Website of Uttara Bank).
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 1.6 Limitation of the Study

Banking sector is a vast field. It is so vast that it is very tough to cover the basic of banking
within three months. There is a certain boundary to cover this study. Like any other articles
and theories this study is not free from limitations. I have tried my level best to overcome
these limitations through hard and sincere devotion to the assigned duty and extensive study.
Some of these constraints are listed below:

 The internship period of only three months is insufficient to prepare a report on such a
latest issue.
 The bank personnel and officials were very busy with their professional activities. It
was little bit difficult for them to help within their high schedule.
 Every organization has their own confidential structure that is not revealed to others.
While collecting data i.e. interviewing the employees, they did not disclose much
information for the sake of the confidentiality of the organization.
 Information both in the official sites & in general sites were not regularly updated.
Therefore, in some cases I had to work with old information.
 For my limited practical knowledge and experience, this report may not cover all
areas and may have unintentional errors and omissions.

5
CHAPTER 02
ORGANIZATIONAL PROFILE

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 2.1 History of Bank in Bangladesh

Bank system was practiced in Indian subcontinent by the Indian subcontinent merchants;
Goldsmith Moneylenders were the primary bankers. During the mughal period banking and
credit business was enchanted rapidly.

In 1700 AD “Hindustan bank” was established as the first joint stock bank. In 1784 “Bengal
bank” and in 1786 “general bank of India “were launched. Then both the banks absolved
respectively in 1793 and 1832.

During the early period of nineteenth century the three banks “Bank of Bombay”, “Bank of
Madras” and “Bank of Bengal” merged to “Imperial bank of India”.

In 1947 after the separation of Bengal, bank business faced a severe disaster as non-Muslim
bankers migrated to India. In order to rebuild the bank business State bank of Pakistan was
established as a central bank of Pakistan in 1948.

In 1971 Bangladesh became independent. After liberation ‘Bangladesh bank’ was automated
with the assets and liabilities of former “State bank of Pakistan”.

The rate of growth and development of banking sector in the country was extremely slow
until 1983 when the government allowed to establish private banks and started
denationalization process. Initially, the Uttara Bank in the same year and thereafter, the
Pubali Bank, and the Rupali Bank in 1986.There were no domestic private commercial banks
in Bangladesh until 1982 when the Arab- Bangladesh Banks (AB Bank) commenced private
commercial banking in the country. Five more commercial banks came up in 1983 and
initiated a moderate growth in banking financial institutions.

The banking system is composed of four state-owned commercial banks, five specialized
development banks, thirty private commercial Banks and nine foreign commercial banks.

2.2 Overview of Uttara Bank Limited

Uttara Bank Ltd. is one of the largest and oldest private-sector commercial banks in
Bangladesh, with year of experience. Adaption of modern technology both in terms of
equipment and banking practice ensures efficient service to clients, 223 branches at home and
600 affiliates worldwide create efficient networking and reach capability. Uttara bank
Limited is a bank that serves both clients and country.

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 Uttara Bank Limited was established in 1965 under the name “Eastern Banking
Corporation Limited” with the specific objective of accelerating trade and investment
in the economically depressed eastern wing of the than Pakistan.
 After liberation of Bangladesh the Bank underwent a major change namely, it was
nationalized in March, 1972 and given the name “Uttara Bank”.
 The Bank again in 1983 was denationalized and made a commercial bank in the
private sector under the name “Uttara Bank Limited”.
 The Bank was incorporated as a banking company on June 29, 1983 and obtained
business commencement certificate on August 21, 1983.
 The Bank floated shares in the year 1984.
 UBL is one of the largest private banks in Bangladesh.
 It operates through 223 fully computerized branches ensuring best possible and fastest
services to its valued clients.
 The bank has more than 600 foreign correspondents worldwide.
 Total number of employees nearly 3,780.
 The Board of Directors consists of 15 members.
 The bank is headed by the Managing Director who is the Chief Executive Officer.
 The Head Office is located at Bank’s own 18-storied building at Motijheel, the
commercial center of the capital, Dhaka.

2.3 Uttara Bank Limited at a Glance

UBL Networks
Corporate Offices ( Corporate Branch & Local Office )
2
Regional Office
12
Worldwide Affiliates
600
Total Branches ( Including Corporate Branch & Local Office )
223
Authorized Dealer Branches
38
Treasury & Dealing Room
1
Training Institute
1
Man Power
3730

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 Company Profile
Name of the Organization Uttara Bank Limited

Year of Establishment 1964 Eastern Banking Corporation then After

1971 Uttara Bank Limited
Authorized Capital Tk.3200.00 Million

Paid in capital Tk.1597.00 Million

Face value Per Share Tk.100

Number of Director 13

Number of Branch 223

Managing Director Shamsuddin Ahmed

Contract Address 90, Motijheel commercial area, Dhaka-1000

Phone 8802-9551162

Fax 8802-7168376

SWIFT UTBLBDDH

E-Mail uttara@citecho.net

Web www.uttarabank-bd.com

Cable Bankers

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 2.4 Mission of UBL

We shall be the forefront of national economic development by:

 Maintaining the maximum ethical standards community accountability praiseworthy

of a leading corporate citizen.
 Continuously improving profitability, productivity and thereby enhancing shareholder
value.
 Creating and maintaining a set of hard working and efficient employees.
 To extend financial assistance to poorer section of the people.
 To achieve balance growth & equitable development.

2.4 Vision of UBL

We shall be the forefront of national economic development by:

 To be leading commercial bank in the country and contribute maximum of the welfare
for the people of the country.
 Prime objective is to deliver a quality that demonstrates a true reflection of its vision
 Excellence in banking.
 To provide quality service to the customer.
 To set high standard of integrity.
 Bring total satisfaction to its clients, sponsors and employees.

2.4 Goal of UBL

We shall be the forefront of national economic development by:

 Short-term Goal: Increase financial services day by day. Earn satisfactory profit by
giving services to the customer.
 Long-term Goal: Maximize the wealth of shareholders and want to be a leading bank
in the Banking sector of Bangladesh.

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 2.4 Objectives of UBL

The objective of Uttara Bank Limited is specific and targeted to its vision and to position
itself in the mindset of the people as a bank with a difference. The objective of Uttara bank
Limited is as follows:

 To Building a strong customer focus and relationship based on integrity, superior

service.
 To creating an honest, open and enabling environment.
 To ensure growth and development of the bank.
 To use resources of the bank efficiently.
 To get more deposits.
 To participate in development of the country.
 Paying special attention to the areas, which are under developed.
 To develop SME’S, foreign remittance, foreign trade.
 To increase industrialization in the country.
 To provide employment opportunities.
 To make people more of mind to have saving habits.
 To increase the services (backed by technology) by efficient employees.
 To increase deposit mobilization.
 For smooth functioning of foreign trade, establish large foreign network.
 To expand the more credit facilities for the customers.
 To maintain a good position in the competitive banking sectors in Bangladesh.

2.4 Strategies of UBL

 To strive for customer’s best satisfaction & earn their confidence.

 To identify customers needs & monitor their perception towards meeting those
requirements.
 To manage & operate the Bank in the most effective manner.
 To review & updates policies, procedures & practices to enhance the ability.
 To promote organizational efficiency by communicating company plans, polices &
procedure openly to the employees in a timely fashion.
 To train & develop all employees & provide them adequate resources.
 To cultivate a congenial working environment.
 To diversify portfolio both the retail & wholesale markets.

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 2.9 Regional Offices of UBL

U Dhaka Central Zone U Dhaka North Zone U Dhaka South Zone

U Narayanganj Zone U Mymensing Zone U Chittagong Zone

U Sylhet Zone U Bogra Zone U Rajshahi Zone

U Khulna Zone U Barishal Zone U Comilla Zone

Figure: Zonal Offices of UBL

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2.10 Branches all over in Bangladesh

Figure: Graphical UBL Countrywide Branches

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 2.11 Board of Directors of UBL

SL. Name Designation

No.
1. Mr. Azharul Islam Chairman

2. Mr. Iftekharul Islam Vice Chairman

3. Mr. Syed A.N.M Wahed Director

4. Engr. Tofazzal Hossain Director

5. Mr. Asif Rahman Director

6. Mr. Faruque Alamgir Director

7. Mr. MD. Arif Rahman Director

8. Dr.Md.Rezaul Karim Mazumder Director

9. Mr. M. Tajul Islam Director

10. Prof. Dr. Abu Hossain Siddique Director

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

12. Md. Abul Barq Alvi Director

13. Dr. Md. Nazmul Karim Chowdhury Director

14. Mr. Shaikh Abdul Aziz Managing Director& CEO

2.12 Hierarchy Position of UBL

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Figure: Organizational Structure of Uttara Bank Limited

2.13 Different Wings of UBL

15
 Name of the Division Affiliated Departments

Human Resources Division Personnel Department

  Disciplinary Department

  Test Key Department

  Research & Planning Department

  Risk Management Department

 
Central Accounts Division Accounts Department

  Reconciliation Department
 
Credit Division Approval Department

  Admin. & Monitoring Department

  Lease Finance Department

  Recovery Department
 
Internal Control & Compliance Audit & Inspection Department

Division Monitoring Department

  Compliance Department
 
Banking Control & Common Anti-Money Laundering Department

Services Division Branches Operation Department

  Business Promotion Department
  Public Relations Department

 
Board & Share Division Board Department

  Share Department
 
International Division Correspondence Banking Department

16
  Remittance Department

  Trade Services Department

 
Treasury Division Front Office (Dealing Room)

  Back Office

  Asset & Liability Management Department

 
Establishment Division General Services Department

  Transport Department

  Stationery & Records Department

  Engineering Department
 
Information & Communication MIS Department

Technology (lCT) Division Development & Support Department

  Card Department
 
Corporate Banking Division Credit Marketing Department

  Credit Business Development Department

2.14 Technologies, Products & Services of UBL

UBL’s products and services are regularly upgraded and realigned to fulfill customer
expectation. Their delivery standards are constantly monitored and improved to assure the
highest satisfaction. Their people are routinely up skilled and empowered to be able to
effectively responding to customer needs. The bank specially emphasizes on the service base
on technologies. Because the life became very fast and people want take service within sort
time. The consumer-banking sector of the Bank deals with number of tasks related to various
services. Transaction account, savings schemes or loan facilities also provide a rare blend of

17
conveniences and unparalleled secure quality services. The products that are recently being
offered by the bank are as follows:

 General Banking Services:

Uttara Bank Limited provides all general banking services to its customers through 223 fully
computerized branches all over Bangladesh. It presents Savings account and Current account
for deposit and withdrawal of money as and when required. In addition it provides other
banking services of transfer of money through Pay order, Demand draft etc. As a result of
adapting the modern technology it’s able to deliver quickest and most accurate services to the
clients.

 Deposit Schemes:

In addition to normal banking services Uttara Bank entertains special depositors with
enhanced interest rates. Special deposit schemes available with UBL are Fixed Deposit
Receipt account, Double Benefit Deposit scheme and Monthly Deposit scheme.
Any Bangladeshi staying at home or abroad may have a FDR account at Uttara Bank. The
duration of a FDR may be 3, 6, 12, 24 and 36 months. Interest rate is quite attractive which
varies with duration.
Double Benefit Deposit Scheme doubles your deposit just in 8.5 years. Minimum deposit
required for the program is BDT 100,000.
Monthly Deposit Scheme is another unique opportunity for limited income people to save
money for future. This scheme is of two options, 5 years and 10 years of duration. Another
selection to be made is for monthly installment. You have 5 alternatives here, starting from
BDT 500 through 10,000. Lucrative interest rate is offered here.
These deposit schemes are targeted to definite groups of people and in the mean time all these
schemes have successfully hit their targets. Every day new clients are getting in for a deposit
scheme in Uttara Bank limited.

In addition to the above, Uttara Bank has introduced another deposit scheme, named Special
Notice Deposit. Government, semi Government organizations and individuals are entitled to
open this scheme in UBL. A 7 days’ notice is required to withdraw money from this account.
This scheme offers a handsome interest as well.

 International Banking:

Any individual, firm or organization earning foreign exchange may open a foreign currency
account with Uttara Bank. Account holder is allowed to make payments abroad in foreign

18
currency and local payment in BDT. Account is also entitled to get interest under some
conditions.
Uttara Bank maintains its accounts with a good number of reputed banks in Europe, America,
Australia and Far eastern countries. This is to settle any trading issue or help remittance
payment for expatriate Bangladeshis.

 Loan and Credit Schemes:

Uttara Bank distributes loans in different schemes. It provides Consumer credits, Personal
loans, Building repair loans and small business loans.
UBL started Uttara Consumer Credit scheme in 1996. This scheme provides financial
assistance to people for purchasing Motor Bike, Motor car, Refrigerator, Air cooler, Personal
computer and many more consumer goods.
Personal loan is available for salaried officers to meet their emergency needs like marriage of
self or dependent, medical expenses of self or dependent or educational expenses. This
program doesn’t ask for a security even.
Building repair loan is sanctioned for those having buildings of their own. With reasonable
interest rate UBL provides this loan to a deserving candidate.
People doing small businesses often suffer from inadequacy of fund. They have almost no
source of finance. UBL comes forward with sufficient fund for them.

 Other Products and Services:

This bank up date itself everyday with modern world and provides modern banking services
like online banking, Automated teller machine and card to its clients. Uttara Bank offers
locker service for its clients and all major branches are ready with lockers at reasonable
charge. Bank also provides several of service and promises to upgrade their products and
services for clients.

2.15 Recent Performance of UBL

Uttara Bank Ltd. closed the year 2014 recording significant growth in every sector despite
various types of economic crises. Improvement in deposit, loans & advance, compliance on
corporate Governance, success in foreign trade business and effective risk management have
placed the bank in a sound footing during the year under report. The bank made satisfactory
in all area of business operation in 2014.

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 2.15.1 Share Capital

The authorized capital of the Bank was Tk. 6,000 million as on 31.12.2014. The paid up
capital of the Bank has been increased to Tk. 4000.8 million from Tk. 3,637 million due to
declaration of 10 percent bonus share of the year 2013. The total equity of shareholders of the
Bank at the end of the year 2014 stood at Tk. 12,179.9 million.

Taka in Million

12,179.90
10,679.40
9,796.90
9,634.00

2011 2012 2013 2014

Figure: Share Capital

2.15.2 Reserve Fund

The reserve fund of the bank increased to Tk. 1136.8 million during the year by registering
16.14 percent increases over last year’s Tk. 7042.3 million.

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 2.15.3 Deposit

The Bank deposit at Tk.114,158.7 million as of December, 2014 compared to Tk.111,300.1

million in 2013, thus recording 2.57% growth, Competitive interest rates, attractive deposit
products, deposit mobilization efforts of the Bank and confidence reposed by the customer in
the Bank contributed to the notable growth in deposit.

Deposit & Advance (Taka in Million)

120,000.00

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

0.00
2011 2012 2013 2014

Figure: Deposit& Advance

2.15.4 Investment

The total investment portfolio of the Bank stood at Tk.437.81crore in December 31, 2014 as
compared to previous year recording a decline by 22.60 percent.

The Uttara Bank Limited is primary dealer of Government securities. The Bank as a primary
dealer is purchase the unsold Bond/ bill which are put to auction in order to keep
underwriting commitment. As a result the investment in Bond and Treasury bill increased.

21
Besides one of the investment activities of the Bank was maintenance of statutory Liquidity
Reserve which mainly comprise Government Treasury Bond and Treasury bill of different
terms, National prize Bond, Government Approved Debenture and ICB shares. The Bank
invested total Tk.42,787.9 million in Government securities in 2014.

2.15.5 Investment in Treasury Bonds and Others Securities

Utilization of surplus fund was a major function of treasury department. Due decline of
surplus fund against previous year the entire investment of the Bank stood at Tk.
42,787.9million at the close of the year 2014. Mentionable that Bank has been able to
increase loans and advance in small business as well as different sector by reducing
investment. One of the investment function of the Bank was maintenance of “Statutory
Liquidity reserve” which generally compromise of Govt. Treasury Bills and Bonds (HTM) of
various tenures, National Prize Bonds and Govt. approved Debenture. The shares of Govt.
securities were amounted to Tk.42,787.9 million in total investment which was 45,749.5
million in the previous year.

Head wise position of Bank’s invested Fund at the end of the Year 2014 is given below:

Head of Investment (Taka in million)

Treasury bills and bonds 42,336.7
Approved Debenture (in purchase price) 10.0
Share & Debenture of ICB sponsored 6.7
companies
Prize bond 13.2
Shares of companies:

1. Eastern Bank Ltd. 104.0

2. Karmasangsthan Bank 10.0
3. ICB (Approved) 199.4
4. CDBL 1.6
5. Other companies 106.3 421.3
Total 42,787.9

2.16 Assets

As of 31st December 2014 total asset of the Bank stood at Tk. 140,810.3 million with an
increase of 6.36 percent as against 2013. The increase of asset was mainly driven by
significant growth of customer’s deposits which were used for funding in loans & advances
& holding of securities. The increase in asset is determined by investments & loans &
advances.

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 Taka in Million

140,810.30
132,385.50
123,790.60
97,417.90

2011 2012 2013 2014

Figure: Assets

2.16.1 Cash

Cash in hand stood at Tk. 2,371 million in 2014 as against tk. 2,685.9 million of the previous
year.

2.16.2 Investment

Uttara Bank Limited is a primary dealer of government securities. The Bank as a primary
dealer is to purchase the bond/bill which is put to auction in order to keep underwriting
commitment.

As a result bond & Treasury bill increased. Government approve ICB share. The bank invests
total Tk. 42,787.9 million in 2014 as compared to Tk. 45,749.5 million of the previous year.

23
 Investment (Taka in Million)

2011
2014 15% 2011
28% 2012
2013
2014
2012
27%

2013
30%

Figure: Investment

2.16.3 Loan and Advance

Uttara Bank Limited 2014 steady growth in the credit portfolio position of 14.45 percent. Tk.
74,198.9 million during the year 2014 as compared to tk. 64,829.8 million of previous year.
Average loan per branch stood at tk. 332.7 million.

2.16.4 Liabilities

Total liabilities of the Bank stood at Tk. 128,630.4 million as of 31 December 2014
registering a growth of 5.69 percent over the last year. This was mainly due to increase in
customers’ deposits.

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 2.16.5 Other Liabilities

During the year 2014 other liabilities of the Bank increased to tk. 12,403.4 million from Tk.
10,350.2 million of 2013.

Taka in Million
12,403.40
10,665.70

10,350.20
8,402.20

2011 2012 2013 2014

Figure: Other Liabilities

2.16.6 Total Share Holders’ Equity

Shareholders’ equity of common size balance sheet of Uttara Bank ltd. shows 10,679.4
million and 12,179.9 million in the year 2013 and 2014 respectively basing on total liabilities
and shareholders’ equity in each year. Shareholder equity includes Share capital, Share
premium account, reserve and surplus, and revolution surplus. The Bank has increased their
shareholder’s equity; it’s a better side for the organization.

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 12179.9
10679.4
9796.9
9634

2011 2012 2013 2014

Figure: Total Share Holders’ Equity

2.16.7 Net Interest Income

The net interest income of the Bank under review stood at tk. 2,152.6 million as against Tk.
939.9 million of the previous year.

2.16.8 Total Operating Expense

In the year 2014 total operating expense stood at Tk. 4,081.2 million as against Tk. 3,788.5
million which was previous year.

26
 2.16.9 Net Profit before Tax

Net profit of the bank before tax stood at Tk. 2,902.8 million as against Tk. 2,680.4 million of
the previous year.

2.16.10 Net Profit after Tax

Net profit of the bank after tax stood at Tk. 1,389.4 million in 2014 as against Tk. 1,310.4
million of the previous year thus records a growth of 6.03 percent.

Pre-Tax & Post-Tax Profit (Taka in Million)

3,500.00
3,000.30
2,902.80
3,000.00
2,680.40
2,536.40
2,500.00

2,000.00
1,650.30
1,500.00 1,310.40 1,389.40
1,236.40

1,000.00

500.00

0.00
2011 2012 2013 2014

Pre-Tax Column1

Figure: Pre-Tax &Post-Tax Profit

2.16.11 Provision for Tax

Provision for tax for the year was Tk.1.513.4 million compared to Tk. 1,370 million of
previous year. According to Bangladesh accounting standards (BAS) 12 current tax of Bank
has been calculated.

27
 2.17 Corporate Governance

In recent times, corporate governance has been considered most essential aspect of efficient
management of the company fairness, transparency accountability and responsibility are the
minimum standard of acceptable corporate behavior today. Uttara Bank Limited continues to
ensure the compliance of corporate governance as per Securities and Exchange Commission
rules and regulation. Corporate governance establishes specific responsibility and ensures
accountability. A report regarding corporate governance has been shown in the annual report.

2.18 Corporate Social Responsibility

Uttara Bank Ltd. embraces a culture of continuous involvement to fulfill our corporate social
responsibility. We have a deep commitment, loyalty and a high sense of responsibility to our
nation and its people. Uttara Bank Ltd. Conforms to all of the astringent regulations issued by
the government and the Bangladesh Bank. As per of our corporate social responsibility, Bank
contributes greatly to the nourishment of the country’s all types of calamities, arts, culture
and sports. As part of its strong commitment to upholding corporate social responsibility,
Bank donated Tk. 23.4 million to chief advisers relief fund to the massively distressed people
who were affected by flood & devastating cyclone ‘Sidor’ in 2014.

2.19 Consolidated Balance Sheet of UBL

Property and Assets

2014 2013
Particulars (Taka) (Taka)
PROPERTY AND ASSETS

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Cash 10,701403,843 8,775,080,704

Cash in Hand (including foreign  currencies) 2,371,010,602 2,685,850,825

Balance with Bangladesh Bank and its agents Bank(s) 8,330,393,241 6,089,233,879
(including foreign currencies)
Balance with other Banks and financial institutions: 1,012,268,602 1,419,777,400

In Bangladesh 54,762,804 523,349,441

Outside Bangladesh 957,505,798 896,427,959

Money at call and short notice 460,000,000 600,000,000

Investment: 42,787,914,497 45,749,476,371

Government 42,359,906,191 44,638,631,012

Others 428,008,306 1,110,845,359

Loans and Advances: 74,198,912,815 64,829,765,851

Loans, cash credit, over draft etc. 71,312,996,622 61,181,473,090

Bills purchased and discount 2,885,916,193 3,648,292,761

Fixed assets including land, building furniture and 3,351,964,701 3,204,271,407

fixtures
Other Assets 7,963,268,899 7,456,268,224

Non Banking Assets 71,276,237 75,399,854

Total Assets 140,547,009,594 132,110,043,811

Liabilities and Capital Liabilities

2014 2013
Particulars (Taka) (Taka)
LIABILITIES AND CAPITAL
Liabilities:

Borrowings from other Banks, Financial Institutions 2,068,330,312 55,856,997

and Agents
Deposits and other accounts: 113,836,737,696 110,989,817,867

29
Current and other accounts etc. 43,951,345,758 41,986,398,330

Bills payable 2,417,499,268 1,799,303,242

Saving bank deposits 28,464,319,302 24,984,705,080

Fixed deposits 36,849,717,017 40,484,068,695

Other deposits 2,153,856,351 1,735,342,520

Other liabilities 12,425,360,489 10,363,225,564

Total Liabilities 128,330,428,497 121,408,900,428

Capital/Share Holders' Equity:

Paid up capital 4,000,803,370 3,637,093,980

Statutory reserve 4,030,837,039 3,680,837,039

Other reserves 3,087,257,251 2,390,506,675

Surplus in profit and loss account 1,097,645,237 992,668,383

Total equity attributable to equity holders 12,216,542,897 10,701,106,077

Non controlling interest 38,200 37,306

Total Liabilities and Share Holders' Equity 140,547,009,594 132,110,043,811

2.20 Consolidated Profit and Loss Account of UBL

2014 2013
Particulars (Taka) (Taka)
OPERATING INCOME:
Interest Income 9,439,769,828 9,261,110,722
Interest paid on deposits, borrowings etc. 7,260,076,507 2,200,521,205
Net Interest Income 2,179,693,321 958,677,233
Income from Investment 4,378,147,115 4,447,142,890
Commission, Exchange and Brokerage 786,774,740 879,974,481

30
Other Operating Income 573,722,170 655,211,100
Total operating income 7,918,337,346 6,941,005,704
OPERATING EXPENSES:
Salary and allowances 2,729,167,778 2,563,440,679
Rent, taxes, insurance, electricity etc. 386,371,886 310,673,620
Legal expenses 16,724,222 13,932,373
Postage, stamp, telecommunication etc. 107,921,574 80,443,934
Stationery, printing, advertisements etc. 108,892,992 96,207,426
Managing Director's salary & allowances and fees 12,833,680 11,760,420
Directors' fees  2,094,000 1,602,000
Auditors' fees 520,000 530,000
Repair, maintenance and depreciation of Bank’s 294,928,538 194,695,240
property
Other expenses 422,803,588 517,794,222
Total operating expenses  4,082,258,258 3,791,079,914
Profit before provision 3,836,079,088 3,149,925,790
Provision  910,000,000 455,000,000
Provision for loans & advances & off balance sheet 904,748,000 450,000,000
exposures
Provision for Other 252,000 -
Transfer to benevolent fund 5,000,000 5,000,000
Profit before tax  2,926,079,088 2,694,925,790
Provision for Taxation 1,521,827,852 1,375,458,317
Current tax 1,521,827,852 1,289,549,014
Deferred tax  - 85,909,303
Profit after taxation 1,404,251,236 1,319,467,473
Retained earning brought forward 43,394,895 1,714,894
Profit available for appropriation 350,000,000 350,000,000
Statutory reserve 350,000,000 350,000,000
General reserve - -
Retained surplus 1,097,645,237 992,668,383
Earning per share (EPS) 3.51     3.30

2.21 Consolidated Cash Flow Statement of UBL

2014 2013
Particulars (Taka) (Taka)
A. Cash flows from operating activities:
Interest receipt in cash 13,777,286,483 13,661,534,694
Interest payment (7,260,076,507) (8,302,433,489)
Dividend receipts 79,748,918 5 3,887,579
Fees, commission & exchange receipt in cash 786,774,740 879,974,481

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Recoveries of loans previously written off 47,135,388 174,299,018
Cash payments to employees (2,742,001,458) (2,575,201,099)
Cash payment to suppliers (154,192,740) (115,955,631)
Income tax paid (1,290,315,022) (1,167,447,323)
Receipts from other operating activities 526,586,782 480,912,082
Payments for other operating activities (953,064,452) (945,148,944)
Cash generated from operating activities before 2,817,882,132 2,144,421,368
changes in operating assets & liabilities
Increase/decrease in operating assets & liabilities (3,048,406,617) 2,078,502,975
Statutory deposits -
-
Purchase/sale of trading securities 295,033,826 (1,513,383,831)
Loans & advances to other banks 140,000,000 (400,000,000)
Loans & advances to customers (other than banks) (9,369,146,964) (3,501,202,358)
Other assets (2,163,651,918) 2,022,873,973
Deposits from other banks/borrowings 178,590,765 (233,793,029)
Deposits from customers (other than banks) 2,668,329,064 17,448,417,509
Other liabilities on account of customers 5,555,919 5,555,919
Other liabilities 5,196,882,691 (11,749,965,208)
Net cash received / (used) from operating activities (230,524,485) 4,222,924,343

B. Cash flows from investing activities:

Proceeds from sale/payments for purchase of securities 2,666,528,048 (2,237,859,744)
Purchase of property, plants & equipment’s (372,864,446) (511,195,031)
Sale of property, plants & equipment’s 1,235,314 620,492
Net cash received / (used) in investing activities 2,294,898,916 (2,748,434,283)

C. Cash flows from financing activities:

Receipts from issue of loan capital & debt securities -
-
Payment for redemptions of loan capital & debt - -
securities
Receipts from issue of ordinary share - -
Dividend paid (545,564,090) (495,967,363)
Net cash received / (used) from financing activities (545,564,090) (495,967,363)

D. Net increase/(decrease) in cash & cash 1,518,810,341 978,522,697

equivalents (A+B+C)
E. Effects of exchange rate changes on cash & cash - -

32
equivalents
F. Opening cash & cash equivalents 10,194,862,104 9,216,339,407
G. Closing cash & cash equivalents (D+E+F) 11,713,672,445 10,194,862,104

Cash & cash equivalents at end of the year:

Cash in hand (including foreign currencies) 2,371,010,602 2,685,850,825
Balance with Bangladesh bank & its agent banks 8,330,393,241 6,089,233,879
(including foreign currencies)
Balance with other banks & financial institutions 1,012,268,602 1,419,777,400
11,713,672,445 10,194,862,104

2.22 Highlights of Uttara Bank Limited

THREE YEARS AT A GLANCE

(Amount in Million-where applicable)

Sl. No Particulars 2014 2013 2012
Income Statement
1 Gross Income 15,181.1 15,245.1 13,674.3
2 Gross Expenditure 11,368.3 12,109.7 10,412.9
3 Gross Profit 3,812.8 3,135.4 3,261.4

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 4 Pre-tax Profit 2,902.8 2,680.4 2,536.4
5 Post-tax Profit 1,389.4 1,310.4 1,236.4
Balance Sheet
6 Authorized Capital 6,000 6,000 6,000
7 Paid-up-Capital 4,000.8 3,637.1 3,306.4
8 Reserve Fund & Other Reserves 8,179.1 7,042.3 6,490.5
9 Shareholders’ Equity 12,179.9 10,679.4 9,796.9
10 Deposit 114,158.7 111,300.1 93,658.6
11 Advances (Gross) 74,198.9 64,829.8 61,328.6
12 Investment 42,787.9 45,749.5 41,998.2
13 Guarantee Business 2,394.2 2,566.9 1,878.6
14 Export Business 13,447.3 14,306.8 14,192.9
15 Import Business 45,870.9 40,336.8 35,418.6
16 Foreign Remittance 52,030.2 44,301.3 43,585.6
17 Fixed Assets 3,352 3,204.3 2,843.4
18 Total Assets 140,810.3 132,385.5 123,790.6
19 Classified Loans & Advance 5,875.7 5,209.5 5,161.9
20 Total Off Balance Sheet Exposures 25,358.2 18,775.9 12,005.3
BIS Capital Measures
21 Required Provision 9,616.7 8,195.2 7,518.7
22 Actual Capital 11,493.3 10,203.8 9,300.6
Credit Quality
23 Required Provision 1,530.8 1,357.7 1,740.9
24 Provision Maintained 1,542 1,419.5 1,803.5
25 Required Prov. Against off Balance 253.6 187.8 120
Sheet Exposures
26 Provision Maintained 254 188 120.1

Share Information
27 Earning Per Share (Face value tk.10) 3.47 3.28 3.40
28 Market Value Per Share (tk.10) 25.90 31.10 38.10
29 Price Earning Ratio (Time) 7.46 9.48 11.21
30 Book Value Per Share (NAV) 30.44 29.36 29.63
Operating Performance Ratio
31 Advance Deposit Ratio 0.65:1 0.58:1 0.65:1
32 Total Advance/Classified Advance 7.92% 8.04% 8.42%
(%)
33 Total Advance/Classified Advance 5.48% 5.85% 4.32%
(net) (%)
34 Income from Equity (%) 11.41% 12.27% 12.62%
35 Income from Assets (%) 0.99% 0.99% 1.00%

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 Other Information
36 Number of Shareholders 76,389 82,081 74,336
37 Number of Branches 223 220 215
38 Number of Employees 3,730 3,769 3,560
39 Human Resource Development 4,421 1,958 1,855

2.23 SWOT Analysis of UBL

The Bank’s strength and competitive capabilities can be shown by the SWOT analysis. The
SWOT analysis is a tool for auditing an organization and its environment. It is grounded in
the basic principle that strategy–making efforts must aim at producing good fit between a
company resources capability and its internal situation. It is the first stage of planning and
helps marketers to focus on key issues. SWOT stands for strengths, weaknesses,
opportunities and threats. Strengths and weaknesses are internal factors. Opportunities and
threats are external factors. The SWOT analysis heading provide a good framework for
reviewing strategy, position and direction of a company or business proposition or any other
idea.

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S=Strengths (Positive + Internal)
W= Weaknesses (Negative+ Internal)
O= Opportunities (Positive + External)
T= Threats (Negative+ External)

SWOT analysis of Uttara Bank Limited is given below:

2.23.1 Strengths

 UBL has already established a favorable reputation in the banking industry of the
country. It is one the leading private sector commercial banks in Bangladesh. The
bank has already shown a tremendous growth in the profits and deposit sector.
 UBL has provided its banking service with a top leadership and management position.
 UBL has already achieved a high growth rate accompanied by an impressive profit
growth rate in 2001. The number of deposit and the loans advances are also increasing
rapidly.
 UBL has an interactive corporate culture. The working environment is very friendly,
interactive and informal. And, there are no hidden barriers or boundaries culture
provides as a great motivation factor among the employees.
 UBL has the reputation of being the provider of good quality services to its potential
customers.
 Uttara Bank Ltd. Trained young and energetic human resources that the can be highly
expert in banking sector.
 Uttara Bank Ltd. has nationwide branch network that customers feel vary free to be an
account holder.
 Uttara Bank Ltd. has good image that is very trust worthy to the corporate level as
well the general customers.

 Uttara Bank Ltd. provides better and quick service quality by the expert and they can
be goods solutions to their customers.
 Uttara Bank Ltd. branches are well decorated and furnished that the employees can
move easily from one department to another department.

2.23.2 Weaknesses

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 The main important thing is that the bank has no clear mission statement and strategic
plan. The bank doesn’t have any long-term strategies of whether it wants to focus on
retail banking or become a corporate bank. The path of the future should be
determined now with a strong feasible strategic plan.
 The bank failed to provide a strong quality-recruitment policy in the lower and some
mid level position. As a result the Services of the bank seem to be decreased in the
present days.
 Uttara Bank Ltd. has existence of trade union that can raise ones voice can be problem
to the other.
 Some of the job in UBL has no growth or advancement path. So lack of motivation
exists in persons filling those positions. This is a weakness of UBL that it is having a
group of unsatisfied employees.
 In terms of promotional sector, UBL has to more emphasize on that they have to
follow aggressive marketing campaign.
 The default risk of all terms loans have to be minimized in order to sustain in the
financial market. UBL has to remain vigilant about this problem so that proactive
strategies are taken to minimize this problem if not eliminate.

2.23.3 Opportunities

 In order to reduce the business risk, UBL has to expand their business portfolio. The
management can consider options of starting merchant banking or diversify into
leasing and insurance sector.
 The activity in the secondary financial market has direct impact on the primary
financial market. Banks operate in the primary financial market. Investment in the
secondary market governs the national economic activity. Activity in the national
economy controls the business of the bank.

 Opportunity in retail banking lies in the fact that country’s increased population is
middle class. Different types of retail lending products have great appeal to this class.
Different types of retail lending products have a very large and easily pregnable
market.
 A large number of private banks coming into the market in the recent time. In this
competitive environment UBL must expand its product line to enhance its sustainable
competitive advantage. In that product line, they can introduce credit card and debit
card system for their potential customer.
 As its branches are situated all over the country, it is a comparative advantage to bring
all the branches under computer network.
 Now inflow of foreign remittance is increasing so it will very favorable for Uttara
Bank Ltd.

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 Uttara Bank Ltd. has comparatively low cost fund then new bank that can be very
helpful for the customers.
 Uttara Bank Ltd. taking advantage of emerging new technologies in Banking,
especially online Banking, ATM etc. it will be a successive method to get fame.

2.23.4 Threats

 Central bank (Bangladesh bank) is always supervising the local and foreign banks in
Bangladesh and sometimes it is hampering the normal operation of private bank.
 Through the innovation working is in continuous process, but the other rival banks are
copying it within the short time.
 The world in advancing toward technology very fast. Though UBL taken effort to join
the stream, it is not possible to complete the mission due to the poor technological
infrastructure of our country.
 The contemporary banks of UBL like National Bank, Dutch Bangla Bank, Prime
Bank are its major rivals.
 They are carrying our aggressive campaign to attract lucrative corporate client as well
as big time depositor.
 Local competitors can also capture a huge market share by offering similar products
and services provided by the bank.

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 CHAPTER 03
INTERNSHIP POSITION & DUTIES

3.1 Position of Internship Activities

The name of the organization where I have done my internship was Uttara Bank Limited. My
job was at Local Office of the bank which is situated at 129, Motijheel C/A (Now, 50 Bir
Uttam Shahid Asfaqus Samad Sarak) Dhaka-1000.

39
 3.2 Working Hours

I worked there as like a permanent employee. Everyone is supposed to be in the office within
9.45 AM. I have to maintain the time line. But bank dealing their customers at 10 AM. To 4
PM. But all of the employees worked in office till 6 PM and I also worked in office till 6 PM.
Moreover I also had given the extra time one/two hours in the office after office scheduled
time.

3.3 Job Description

As part of the Internship program of Bachelor of Business Administration course

requirement, I got the opportunity to join Uttara Bank Limited for the period of 3 months
starting from October 26, 2015 to January 25, 2016. During internship, one needs to obey the
rules and regulation of the organization, do the daily schedule activities, and any other the
jobs assigned by the supervisor. During the internship program, from October 26, 2015 to
January 25, 2016, I worked in the General Banking. I was placed in the account opening
section. I was responsible for opening all type of account of the customer. It was a great
experience for me because I achieved a lot of practical and professional knowledge. The
office environment is very pretty and friendly. All employees are very responsive and caring.
They always helped me to learn extensively. Employees were doing their job as a team. They
help each other in every situation. They accepted me cordially and treated me as their team
member. In the account opening section at first customer used to come for creating account/s
then I tried to discover the purpose of the account of the customer. If the customer were
confident enough about the account type then only I proceeded further otherwise I suggested
them the type of account that suited them the most and the photocopy of the documents (like:
Passport sized photograph, National ID card of account holder & Nomine, TIN Certificate,
Trade license etc) they were needed to submit to the bank. Upon submission, I verified all the

relevant documents and necessary information. Further, I used to take signature of the
applicant opening form and get verified by the relationship manager. Then I entered that
information into the Bank’s online system. Then, the customer used to get the account
number and they had to deposit minimum amount in that account number. In this way
different accounts were created by me and future transactions were carried out in those
accounts. With this responsibility I also used to write debit/credit vouchers, pay order, deposit
slips, cheques etc. All in all, it was a great time when I was doing my internship in UBL. It
was a great official environment. Really, I achieved fruitful knowledge from this bank and
the employees. I think this experience will make my future career path more suitable and
easy.

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 3.3.1 Account Section

I had to work on account section of Uttara Branch. I had to collect necessary documents from
the customers those who came to open account of Uttara Branch. Documents like TIN
certificates, Trade license, National ID Card, Photo of Holder and nominees etc.

3.3.2 Account Opening

My first work in UBL started with accounting opening. This is the first task of a banker to
learn how to open an account. The relationship started with the customer and the bank by
opening the account. Initially all the accounts are opened with a deposit of money by the
customer. But in this day there are several types of rules and regulation provided by the
government for opening the account.

3.3.3 Update Customer’s Information

My prime job at Uttar Branch was to update customer’s information. Customers who opened
their bank account before 2005, they need to update their information and also photo,
address, transaction profile, National ID no. etc. and I had to collect all information from the
customers.

3.3.4 Fill up Debit Card Forms

I had to collect debit card requisition from the customers and filled up necessary papers. After
filled up debit card form I had to send the papers to the card division of head branch.

41
 3.3.5 Account Closing

I had to close all types of bank account when the customers want or over the maturity the
account.

3.3.6 Cheque Book Issue

I have also worked on issuing a cheque book. I needed to maintain a cheque book issuing
register. This register contains the cheque book number, leaf number, issuing date. After
giving this entries to this register, information are send to the computer department for taking
necessary steps to pass the cheques during withdrawal. The cheque book also contains
requisition slip-which is used by the customer to obtain new cheque book. When all the
leaves are used, the customer submits this slip to the bank. A senior official then issues a new
cheque book and subsequent entries are given in the register and in computer.

3.3.7 Other Activities

I also perform other activities that are related to my work. These activities directly help me to
perform an effective internship. These activities are:

 I have seen many accounts that are done previously to make my works more correct.
 I also discuss with my supervisor in several when I face any problem.
 I also visited this organization when I was free.
 I have also seen the annual report of this organization for clearing my concepts
towards this organization.

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 CHAPTER 04
GENERAL BANKING

4.1 General Banking of Local Office

General banking department is most important department in banking activities because cash
transactions are made; clearing, remittance and accounting activities are done here. By that
the funds are mobilizing. At Local Office (Motijheel, Dhaka) of UBL, total 76 employees

43
are involved and one EGM (Assistant General Manager) whose name is MD. Riaz Hossain is
supervising all activities.

Following are the departments that involve in general banking at Local Office:

 Account Opening Section

 Local Remittance Section
 Cash Section
 Deposit Section
 Clearing and Bills Section
 Accounts Section
 Mail Receive & Dispatch Section
 Loan and Advance Section
 Foreign Exchange Section

4.1.1 Account Opening Section

Account opening section begins the relationship between client and Bank. By that the
customers enters in to the banking activities and do their work accordingly. It is the
foundation of banker customer relationship. This section is very much important section of
any bank because, the customers will deposit their money in to the bank, then the bank can
invest those in to various sector. By that not only the bank but also the national economy will
be benefited.

 Account Opening Procedure:

The Procedures that the Bank follows to open an Account:

 Fill up the specific type of form (Savings\Current\Std etc.) that the bank has given to
the customer.
 The form should fill up by the applicant himself / herself.

 Two copies of passport size photographs have to give to the Bank. Incase of
partnership account, all partners photograph have to submit.
 Documentation procedures must be fulfilled by the applicants.
 Applicant must sign specimen signature sheet that provided by bank.
 Introducer is mediatory to open any account.
 Introducer’s signature and accounts number will verify by authorized officer.
 Authorized Officer will accept the application.

44
  Minimum balance has to deposit to the bank by applicant (only cash is accepted).
 Authorized officer will give entry to the register and open the account.
 After that the officer will give cheque book to the account holder.
 KYC (knowledge about your customer) should maintain.

The account should be properly introduced by any one of the following:

 An existing Current Account holder of the Bank.

 Officials of the Bank not below the rank of an Assistant officer.
 A respectable person of the locality well known to the Manager/Sub-Manager of the
branch concerned.

 Documentation for Opening an account:

 Individual/Join Account:

 Introduction of the account.

 Two photographs of the signatories duly attested by the introducer.
 Joint Declaration Form (For joint a/c only).
 Employee’s Certificate (in case of service holder).

 Partnership Account:

 Introduction of the account.

 Two photographs of the signatories duly attested by the introducer.
 Partnership letter duly signed by all partners.
 Partnership Deed, certified by Notary public.
 Registration (If any).
 Updated Trade license.

 Closing an account:
A customer may close his/her account any time by submitting an application to the branch.
The fee for closing of an account is Tk.50.

The closing of an account may happen in following ways:

45
  If the customer want to close the account.
 If the account did not transected for a long time.
 If the banks find any fraud about the customer.
 If the central bank wants to close any one’s account.

4.1.2 Local Remittance Section

The major function of commercial Banks is mobilization of fund. Other than this, bank
provides supplementary services to its clients. Clients need to remit money from one place to
another for their business or other purposes. Banks fulfill this need of customers by means of
remittance service.

Money can be remitted domestically or internationally, which known as local remittance and
foreign remittance.

There are four ways of transferring fund domestically. The modes of transferring funds are:

 Pay-Order (PO)
 Demand Draft (DD)
 Telegraphic Transfer (TT)
 Mail Transfer (MT)

 Pay-Order (PO):

 Pay Order gives the payee the right to claim payment from the issuing bank.
 Payment is made by the Issuing branch only.
 Pay order generally used in the clearing house area.
 Commission is charged by the issuing branch.
 The deposit may be cheque or cash.

 Demand Draft (DD):

 Demand Draft is an order of issuing branch on another branch of the same bank to pay
specified sum of money to payee on demand.
 Payment is made by ordered branch.
 DD is generally used in the outside of clearing house area.

46
  Before payment the branch confirmed with sent advice and checks the test code.
 Commission is charged.

 Telegraphic Transfer (TT):

 By TT issuing one branch request to another branch to pay specified amount of

money to the specified payee through telephone.
 Payment is made by the ordered branch.
 Generally used anywhere of the country.
 Payment process: Confirm Issuing branch, confirm Payee account, confirmed amount,
make payment, and receive advice
 Commission and telephone bills are charged.

 Mail Transfer (MT):

 By MT issuing one branch request to another branch to pay specified amount of
money to specified payee though Mail.
 Others activities are as like as TT.

4.1.3 Cash Section

Cash section is an important section where cash transactions are made. Cash sections
demonstrate liquidity strength of a bank. It is also sensitive as it deals with liquid money.
Maximum concentration is given while working on this section. Tense situation prevails if
there is any imbalance in the cash account.

There are various systems maintain by cash officer that is under:

 Cash Receive
 Cash Payment

47
  Cash Receive:
When clients deposit cash in the bank, the bank officer should follow the following common
precaution:

 Check and count the received cash.

 Make sure that the amount in word and number in the deposit slip is same.
 Both the deposit slip is in order.
 Check the account title and the number.
 Receive seal in the slip is a must.
 Write the domination of the currency at the back of the pay in slip or credit voucher
and affix stamp in the slip/voucher.
 Enter particulars of in slip/credit voucher in the receiving cash officer book.
 At least, send the pay in slip/voucher to the deposit department or to the respective
department.
 Deposit slip must be signed by the respective officer.
 Carbon copy of the deposit slip must be handover to the client with proper seal and
signature.

 Cash Payment:
Cheque, demand drafts, pay orders, pay slips and debit cash vouchers etc. are received from
various departments for payment of cash to customers/payees. Prior payment of, cash it is the
officer's duty to make sure that the cheque/or the instrument has been genuinely passed. The
following common precaution is thoroughly practiced before honoring a cheque.

 The branch name in the cheque.

 The date in the cheque is very crucial. Cheque is normally valid for six months and
pre-dated cheques are asked to present after the date given.
 Tk. in words and figure of the cheque is same.
 Balance in the account is available.
 The specimen card signature and signature in the cheque should match.
 Signature of recipient is obtained on the reverse of cheque.
 In case, where a prior arrangement has been made with the bank, a client may
overdraw against a cheque.

 Books Maintained by Cash Department:

 Vault Register: This is the book where amount of cash available in the branch is
maintained. That is, the amount in the vault register book.

 Cash Receive Register: This register keeps record of all incoming cash.

48
  Cash Payment Register: Similar to the cash register book, this books keeps tracks of
all outgoing cash, that is all payments.

 Cash Position Register: This is the book where cash balance is recorded by counting
the notes and coins that are physically available. The balance in this book is compare
with the vault register, which should be the same. In case there is an error, then the
figures would not match but if no discrepancy is found then anything is to be worried
about.

 Other Registers:

 Money Remittance Register

 Prize Bond Register
 Stamp in hand Register

4.1.4 Deposit Section

The term deposit of money means, to preserve money. After the consumption people want to
save some money for future uncertainty. So they deposit it to the bank. On the other hand
bank is a service organization that helps people to deposit their money for future. Bank’s
main motive is to mobilize the money and gain profit. Banks give loan to other people, they
invest it and give interest to the bank, by that the bank earns profit. By mobilizing that sum of
money, not only the individuals but also the economy is benefited.

There are four basic types of deposit are mainly offered by UBL:

 Savings Bank (SB) Account

 Current Deposit (CD) Account
 Fixed Deposit Receipt (FDR) Account
 Short Term Deposit(STD) Account

 Savings Bank (SB) Account:

To open a SB account, following rules are maintained by the bank:

49
  Any person who is adult and mentally sound can open and maintain a SB (Savings
Bank a/c) with the head of single or multiple users. The guardian of the minor child
can open the SB a/c with the favor of them.
 Any Club, association or any organization can open a SB a/c by providing the article
of association of their organization.
 Any illiterate person can also open a SB a/c in the bank. But such account holder must
be present at the time of withdrawing money from their bank a/c.
 There should be proper identification by any account holder who has the a/c in the
same branch and his account number and account name should be properly filled up
in the SB opening form with his/her valid signature that is used to run the bank
account.
 More than one account in any branch is not permitted. But the guardian or the parents
of minor child can open more SB a/c for their children in the bank.
 For each and every account, a separate account number will be given that must be
used for depositing, withdrawing or other banking activities when required.
 An account holder can deposit money in his/her SB a/c more than one time as he/she
wants.
 Minimum deposit of 1000 (One Thousand) taka is the must to open a SB a/c. Bank
can close any SB a/c if the balance drops to less than 1000 taka.
 A client can withdraw and deposit money only through specific cheque book and
deposit issued by the bank only.

SB account has the following properties:

 Opening Amount/ Initial Deposit: Tk. 1,000/-

 Service Charge (yearly): Nil
 Minimum Balance Requirement: Tk. 1000/-
 Closing charge: Tk. 350/-
 Interest rate: 4.50%
 One cannot withdraw money more than two times in a week
 The withdrawing amount is not to exceed 25% of the total balance.
 If customer withdraws money more than twice a week than no interest is given to
customers on his account.

 Current Deposit (CD) Account:

A current account is an account, which is generally opened by business people for their
convenience. A current account is a running and active account, which may be operated upon

50
any number of times during a working day. There is no restriction on the number & amount
withdrawals from current a/c. It does not earn any interest.

To open a current account, following rules are maintained by UBL:

 Any adults and mentally sound person can open the current account in the single or
multiple forms.
 Any client cannot open more than one current account of his/her own in any branch.
 There is no obligation to deposit and to withdraw money from the current account.
 To open a current account initial deposit of taka 2000 (Two Thousand Taka) is
compulsory. If the current balance of any current account falls below 2000 taka, bank
can claim 100 (One hundred) taka as incidental charge in the month of June and
December.
 The amount of 100 (One hundred) taka will be deducted from the bank account as
account running cost at the time of closing any bank account.
 Bank can close the account and take any necessary steps without any notice if any
account is proven unsatisfactory to the bank.
 It is to be clearly mentioned, if the account is run by more than one person, the nature
to run the account or the applicability of single or multiple signatures.
 Bank can take the responsibility to collect the money of payee a/c cheque, draft,
dividend warrant etc. To deposit all of the cheque, draft, pay order, all are to be
crossed signed.
 To withdraw money from the bank account the account holder can only use the
cheque only issued by the same branch of the account.
 If the cheque is refused for the low balance of the account, bank can charge 25
(twenty five) taka as penalty.
 The account holder must provide the sample signature to the bank and it must be used
in each document issued to the bank.
 To open a bank a/c, two copies of passport size photograph is the must be need.
 Current account holder cannot be identified by the SB a/c holder or any employee of
the bank.
 All mentioned rules and regulation can be changed or modified any time.

Current Deposit (CD) Account has the following properties:

 Opening Amount/ Initial Deposit: Tk. 2,000/-

 Service Charge (yearly): Nil
 Minimum Balance Requirement: Tk. 2,000/-

 Fixed Deposit Receipt (FDR) Account:

In this category are included the deposit with the bank for a fixed period which is specified at
the time of making the deposit. Such deposits are therefore called fixed deposits or term
51
deposits. A fixed deposit is repayable on the expiry of a specified period, chosen by the
depositor to suit his purpose and to enable him to get back money us and when he needs it.
The fixed deposit may be made for 3 months, 6 months, 1 year, 2 year or 3 year. As the date
of repayment of fixed deposit is determined in advance, the banker needs not keep more cash
reserves against it and can utilize such amount more profitably. The banker therefore offers
higher rate of interest on such deposits. Fixed deposit has grown in importance and popularity
in our country during recent years. When a matured FDR is withdrawn, the principle amount
along with the interest amount (deducting 15% tax from the total but for TIN 10% tax from
total) is paid to the client.

The rate of interest and terms of the Fixed Deposit Receipt are given below:

Term 3 months 6 months 1 years & above

Interest Rate 7.50 7.75 8.00

 Short Term Deposit (STD) Account:

It is a deposit account open by customer where customer deposited money for short period.
Customer can draw money after giving short notice; this account holder enjoys the same
facilities of CD account including receiving interest on his deposited money. Interest rate of
STD is less than the interest rate of SB account.

STD account has the following properties:

 Opening Amount/ Initial Deposit: Tk. 2,000/-

 Service Charge (yearly): Nil
 Minimum Balance Requirement: Tk. 2,000/-
 Interest rate: 8.00%

As per the closing entries-2014 of Uttara Bank Limited:

52
 Particulars Amount(TK)
Current and other accounts etc. 43,951,345,758

Saving bank deposits 28,464,319,302

Fixed deposits 36,849,717,017

Other deposits 2,153,856,351

Total 111,419,238,428 Table:

Total Deposits
of UBL

4.1.5 Clearing & Bills Section

The amount of Cheques, Pay Order (P.O), and Demand Draft (D.D) Collection from other
banks on behalf of its customer is a basic function of a Clearing Department.

 Types of Clearing:

Clearing is mainly divided by two ways:

1. Outward Clearing
2. Inward Clearing

1. Outward Clearing:
53
This is the opposite flow of the Inward cheque clearance. When UBL's cheque sends to other
person of other Bank, that Bank will do the same thing to claim money from Uttara Bank Ltd.
With the same procedure like Inward clearing of that Bank. At the time of Outward Cheque
for clearing, the things must have to be checked: The Clearing Seal, The Endorsement Seal,
and The Branch Seal.

 Cost of clearing the collection cost normally varies with the distance and UBL does
not take any charge for collection within Dhaka City within the district. But when
anyone issue check of UBL without having enough sufficient money in the account,
the clearing dept. will cut TK.25 fine for this.

 L.B.C: The word LBC means Local Bills for Collection. It is applied on transaction
between inter branch. Issuing cheque/DD from one branch to another branch of the
same bank. Suppose Moulovibazar Branch issued a cheque to Local Office. After
received the cheque the Local Office will give a seal of crossing, LBC seal and
Endorsement seal on that cheque and will issue forwarding on Moulovibazar Branch.

 I.B.C: IBC means Inward Bills for Collection. It is the reverse of LBC. In this case
Moulovibazar Branch will receive cheque and give a Seal of Crossing, LBC seal and
Endorsement seal on the cheque and send it to Local Office with an advice.

2. Inward Clearing:
Whenever any branch of Uttara Bank Ltd. receives a cheque of other Bank to collect money,
then the branch sends the cheque to its Head Office. The Head Office arranges the cheques
separately by the name of different bank and then it send to the respective bank for clearance
by the clearinghouse. Those cheques of different Bank to collect money for the ordered
person are called Inward Cheque for clearing. Then these cheques go for entry in to the
Inward Registry Book and Database of Clearing Department.

Bangladesh Bank conducts this job of clearing house name Clearing House. This is done
twice a day- First house and Return house. First house is to deliver cheques and collect
cheques from other banks. Return house is to return the honored cheques. The practice among
the bank is to give only the name of those cheques, which were not honored.

As soon as the principal branch gets the clearance it sends an Inter Branch Transaction
Advice (IBTA) to the branch, who has sent the cheque for collection. Receiving the IBTA is
considered as clearance for the payment to the party.

 Clearing House:

54
Clearing House is a place in the Central Bank where different banks come to settle their
interrelated liabilities.

 Clearing House System:

The mechanism of working at a Clearing House in general is as follows:

 Every Rank of the locality, which is a member of the clearinghouse, prepares Bank-
wish list of cheque after receive from customers and drawn of different Banks of the
locality.
 An officer, in charge of clearinghouse, goes to clearinghouse in the morning with the
cheques and their list. He delivers the cheques to the officials of the respective banks.
Similarly, he also receives the cheques drawn on his Bank from the officials of the
other banks.
 The official of each bank computerizes the final balance, payable or receivable by his
Bank alter taking into account the various amount of receipt and payment.
 The official return of their respective Bank to meet again in the afternoon to return
any dishonored instruments to the officials of the respective Bank.
 The final statement is effective by the supervisor of the clearinghouse by debiting or
crediting, as the case may be, the accounts of the respective Banks as maintained with
the clearinghouse.

4.1.6 Accounts Section

Accounts department is very important department of general banking. There are many
transactions are made in every day in bank. Here the transactions are recording properly. If
there is any fault made then the accounts section may check it and do action against it. To
avoid these mishaps, the bank provides accounts department; whose function is to check the
mistakes in passing vouchers or wrong entries or fraud or forgery. If any discrepancy
regarding transaction arises the department report to concerned department.

The accounts section of UBL does following works:

 Packing of the correct vouchers according to the debit voucher and the credit voucher.
 Recording the transactions in the cashbook.

 Recording the transactions in general and subsidiary ledger.

55
  Preparing the daily position of the branch comprising of deposit and cash.
 Preparing the daily Statement of Affairs showing all the assets and liability of the
branch as per General Ledger and Subsidiary Ledger separately.
 Making payment of all the expenses of the branch.
 Recording inters branch fund transfer and providing accounting treatment in this
regard.
 Preparing the monthly salary statements for the employees.
 Preparing the weekly position for the branch which is sent to the Head Office to
maintain Cash Reserve Requirement (C.R.R).
 Make charges for different types of duties.
 Preparing the budget for the branch by fixing the target regarding profit and deposit so
as to take necessary steps to generate and mobilize deposit.
 Checking of Transaction List.
 Recording of the vouchers in the Voucher Register.

4.1.7 Mail Receive & Dispatch Section

Banking is the business of correspondence. Lot of mail comes to the bank and dispatch from
the branch daily. Lot of my document causes much loss for bank. That is why bank has to
record all Mail received and dispatched through the bank.

 Mail Receiving:

All mail comes to the bank recorded in this desk. For this reason a register book maintained
called inward mail register. A number is given on receiving mail and records particulars of
document in the register book.

 Mail Dispatching:
Before dispatching mail from the bank, Bank must record in outward mail register. A number
is given on the mail. Destinations, date of dispatch are recorded in that register book.

4.1.8 Loans & Advance Section

56
The loans and advances of the bank grew impressively during the year 2014 with a growth of
14.45% total loans and advances of Bank stood at Tk.74,198.9 million during the year as
compared to Tk.64,829.8 million of the previous year. Average loan per branch stood at
Tk.332.7 million. Separation of responsibility among risk management, leading decision and
monitoring function is now being implemented more smoothly by the bank with a view to
improving the quality and soundness of loan portfolio. The bank has rendered diversified and
well-structured advance portfolio due to emphasis on maintaining the quality of assets. Bank
has participated in the syndicate business financing in the year 2014. Major sectors where the
bank has extended the business are mainly imports and exports, commercial enterprises, steel
Re-rolling Mills, readymade garments, textiles, edible oil and cement factory etc. on the other
hand Bank continues to extended commercial loan to the enthusiastic youths and small
entrepreneur for various sectors through the different branch on priority basis during the year.
For this purpose bank is disbursing loan in dairy and poultry to obliterate the poverty and to
create employment opportunities for the destitute. The bank disbursed loan of Tk.391.8
million.

In this sector in the year 2014. To cater the urgent financing need of the service holder having
limited income an amount of Tk. 127 million was disbursed up to 31 December 2014 under
personal loan scheme. Beside the bank distribute loan to the tune of Tk. 829.5 million, Tk.
1701.5 million and Tk. 3486.4 million up to December 2009 under these special projects
named “Uttaran consumer loan scheme” , “Uttaran small business loan scheme” and “Uttaran
house repairing and renovation scheme” respectively.

 Types of Loans:

Following categories of loans are mainly offered by UBL:

 Agriculture
 Large and medium scale industries
 Export other commercial lending ( jute and fertilizer)
 Small and cottage industries
 Personal loan
 Others

There are some other loans also offered by UBL:

a) Housing loans; b) Residential; c) Commercials; d) Transport; e) Cold storage; f) Brick

field; g) Gold loans; h) Against work order; i) Against work (FDR) loan against
sanchaypatar; j) Loan against WEBD, ICB, unit certificate; k) Loans against life Insurance
policy; l) Other special program.

 Sector Wise Position of Loans & Advance as on 31.12.2014:

57
 (Taka in millions)

Sector of Loans and Advance Public/ Private Total

Nationalized
1. Agriculture :
 Crops - 1,154.5 1,154.5
 Fisheries - 207 207
 Others - 379 379
2. Industrial Leading (Term) :
 Large & medium - 774.6 774.6
 Small & cottage - 1,060.1 1,060.1
3. Industrial Leading (working capital):
 Large & medium - 1,202.7 1,202.1
 Small & cottage - 1,925.8 1,925.8

4. Commercial Lending:
 Export - 2,813.8 2,813.8
 Import - 8,387.7 8,387.7
 Internal trade 10.5 40,891.9 40,902.4
5. Special Programmed:
 Consumer credit scheme (Uttaran) - 135.5 135.5
 Personal loan scheme - 3.0 3.0
 Small business loan scheme - 139.9 139.9
 Uttaran house repairing and renovation
scheme - 3,542.2 3,542.2
6. Housing:
 General housing building loan - 259.8 259.8
 Staff housing building loan - 2,427 2,427
7. Leasing Financing - 391.8 391.8

8. Others - 5,606.2 5,606.2

9. Bills Disconnected and Purchased:

 In Bangladesh - 2,769.3 2,769.3
 Outside of Bangladesh - 116.6 116.6

Total : Loans & Advance 10.5 74,188.4 74,198.9

58
Figure: Sector wise Loans & Advances (%)

59
 4.2 Management of Local Office

The total staff of the Local Office (Motijheel, Dhaka) of UBL consists of 76 members.

SL. Designation Number of

No. Employees
01. Executive General Manager (EGM) 01

02. Deputy General Manager (DGM) 02

03. Assistant General Manager (AGM) 05

04. Senior Principal Officer (SPO) 13

05. Principal Officer (PO) 14

06. Senior Officer 16

07. Officer Grade 2 05

08. Assistant Officer 04

09. Cash Sorter 04

10. Messenger 07

11. Armed Guard 05

Total 76

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 CHAPTER-05
FOREIGN EXCHANGE ACTIVITIES
OF UTTARA BANK LIMITED

5.1 Definition of Foreign Exchange

61
Foreign exchange is the rate of exchange in the both country's currency. It a process of
converting one nation’s currency into another and transferring money from one country to
other countries. As more than one currency is 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, the term foreign exchange refers to the currencies of the other countries in terms of
any single one currency. Bangladeshi taka, dollar, pound sterling etc. are foreign currencies
and as such foreign exchange.

Secondly, the term also commonly refers to some instruments used in international trade,
such as bill of exchange, drafts, traveler’s cheques and other means of international
remittance.

Thirdly, the term foreign exchange is also quite often referred to the balance in foreign
currencies held by a country.

According to Mr. H. E. Evitt, Foreign Exchange is that section of economic science which
deals with the means and methods by which rights to wealth in one country's currency are
converted into rights to wealth in terms of another country's currency. It involves the
investigation of the methods by which the currency of one country is exchanged for that of
another country, the forms through which the exchanges may occur and the ratios or
equivalent values at which such exchanges are affected.

5.2 Principles of Foreign Exchange

The following principles are involved in foreign exchange:

 The entire system

 The media
 The monetary system

5.3 Foreign Trade & Foreign Exchange

62
Foreign trade refers to trade between the residents of two different countries. Each country
functions as a sovereign state with its set of regulations and currency. The difference in the
nation of the exporter and the importer presents certain peculiar problems in the conduct of
international trade and settlement of the transactions arising from there. Important among
such problems are:

 Different countries have different monetary units.

 Restrictions imposed by countries on import and export of goods.
 Restrictions imposed by nations on payment from and into their countries.
 Differences in legal practices in different countries.
 Foreign exchange means foreign currency and includes:- Foreign exchange means
foreign currency and includes:- All deposits, credits and balances payable in any
foreign currency and any drafts, traveler’s Cheques, letters of credit and bills of
exchange, expressed or drawn in Bangladeshi currency but payable in any foreign
currency.
 Any instrument payable, at the option of the drawer or holder thereof or any other
party thereto, either in Bangladeshi currency or in foreign currency or partly in one
and partly in the other.
 Thus, foreign exchange includes foreign currency; balances kept abroad and
instruments payable in foreign currency.

5.4 Functions of Foreign Exchange

The Bank acts as a media for the system of foreign exchange policy. For this reason, the
employee who is related with the Bank to foreign exchange, especially foreign business
should have knowledge of these following functions:

 Rate of exchange
 How the rate of exchange works
 Forward and spot rate
 Methods of quoting exchange rate
 Premium and discount
 Risk of exchange rate
 Causes of exchange rate
 Exchange control
 Convertibility
 Exchange position
 Intervention money

 Foreign exchange transaction

 Foreign exchange trading
 Export and import letter of credit

63
  Non-commercial letter of credit
 Financing of foreign trade
 Natures and functions of foreign exchange market
 Rules and Regulations used in foreign trade
 Exchange Arithmetic

5.5 Position of UBL in Foreign Exchange Business

Foreign exchange business is totally controlled by the Central Bank of Bangladesh

(Bangladesh Bank). Central Bank permits some specific branches to perform the foreign
trade. Those who have the authority to operate foreign trade business are known as AD
branch. UBL is an AD Bank. UBL operates foreign exchange trade through its branches. To
handle foreign exchange business effectively and efficiently, the Bank has developed a wide
network of correspondents throughout the world. The Bank has more than 600 foreign
correspondents worldwide.

UBL is equipped with all modern technologies & provides following international
Banking services:

 Plays a vital role in import, export and other foreign currency of the country through
more than 200 foreign correspondents worldwide.
 Renders fastest services to the exporter and importer through its SWIFT service.
Offers competitive price for importers and exporters.
 Provides support to the exporter and importer by extending working capital, pre-
shipment, post shipment facilities.
 Uploads its commitment in international payment.

UBL has got its independent treasury and dealing room equipped with Reuters Dealings
System and renders following facilities:

 Providing effective services to the clients.

 Buying and selling of daily exchange rate.
 Forwarding covers at competitive price.
 Dealing foreign currency with central Bank, commercial Bank and other potential
clients.
 Buying and selling third currency with all leading Banks worldwide.
 Covering exchange fluctuation risk by providing competitive premium.

5.6 Required Documents of Foreign Exchange Business

64
The most commonly used documents in Foreign Exchange Business are given below:

 Documentary credit or 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
 G.S.P certificate

5.7 Foreign Exchange Transactions in UBL

The transactions of UBL in foreign exchange involve outward and inward remittance of
foreign exchange from one country to another. UBL makes sales and purchases of equivalent
foreign currencies on spot or forward basis. The sale involves exchange of foreign currency
for home currency. The purchase involves exchange of home currency for foreign currency.
The conversion of foreign currency into home currency takes place at an agreed rate of
exchange which the Banker quotes, one for selling and another for buying, each one
separately for spot transactions and forward transactions.

There are three kinds of foreign exchange transaction:

 Import
 Export
 Foreign Remittance

 Import:
1. Opening of letter of credit
2. Advance bills
3. Bills for collection
4. Import loans and guarantees

 Export:
1. Pre-shipment advances

65
2. Purchase of foreign bills
3. Negotiations of foreign bills
4. Export guarantees
5. Advising/confirming letters – letters of credit
6. Advance for deferred payments exports
7. Advance against bills for collection

 Foreign Remittance:
1. Issue of F.D.D, T.T, P.O etc.
2. Payment of F.D.D, T.T, P.O etc
3. Issue and enhancement of traveler’s Cheques
4. Sale and enhancement of foreign currency notes
5. Non-resident accounts

Figure: Foreign Exchange Transactions

5.8 Import Section

66
Import is foreign goods and services purchased by consumers, firms & government in
Bangladesh. An importer must have import registration certificate (IRC) given by chief
controller of import and export (CCI & E) to import anything from other country.

To obtain IRC the following certificates are required:

1. Trade License
2. Income tax clearance certificate
3. Nationality certificate
4. Bank solvency certificate
5. Asset certificate
6. Registration partnership deed (if any)
7. Memorandum and Article of Association
8. Certificate of Incorporation (if any)
9. Rent receipt of the business premises

5.8.1 Import Procedure

To import, a customer of Uttara Bank Ltd. requires:

1. Bank account
2. Import registration certificate
3. Taxpaying identification number
4. Proforma invoice/indent
5. Membership certificate
6. L/C application form duly attested
7. Insurance cover note with money receipt

5.8.2 Import Mechanism

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

control Act 1950, the officer of chief controller of Import and Export provides the registration
(IRC) to the importer. After obtaining this, person has to secure a letter of credit authorization
(LCA) from Bangladesh Bank. And then the person becomes a qualified importer. He is the
person who requests or instructs the Bank to open an L/C. He is also called opener or
applicant of the credit.

5.8.3 Import’s Application for L/C Limit/Margin

67
To have an import L/C limit, an importer submits an application to the Bank furnishing
the following information-

1. Full particulars of Bank account

2. Nature of business
3. Required amount of limit
4. Payment terms and conditions
5. Goods to be imported
6. Official security
7. Repayment schedule

A credit officer scrutinizes this application and accordingly prepares a proposal (CLP) and
forwarded it to the head office credit committee (HOCC). The committee, if satisfied,
sanctions the limit and return back to the branch. Thus, the importer is entitled for the limit.

5.8.4 Opening of Letter of Credit by Uttara Bank

The applicant (importer) issues a L/C in favor of the beneficiary (exporter) by a Bank. The
Bank, which opens or issues L/C, is called L/C Opening Bank.

Opening of letter of credit means, at the request of issuing Bank, on receipt of the importer’s
L/C application supported by the firm contract (indent/proforma invoice) and insurance cover
note, the Bank scrutinizes the same thoroughly and fix-up a margin on the basis of Bank
customer relationship.

5.8.5 Procedure of Opening L/C

The importer after receiving the proforma 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. Obviously, the Bank will only agree to this request if it can rely on reimbursement
by the applicant. The bank accepts the credit against security because such an arrangement
would involve the bank in excessive risk outside its specialist field. The applicant must
therefore have adequate funds in the Bank account or a credit line sufficient to cover the
required amount.

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 within the
prescribed time limit.

68
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 will supply 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.

5.8.6 The Points are to be Checked by the Issuing Bank

before Opening a L/C

 L/C application properly stamped, signature verified and margin approved and
properly retained.
 Indent/proforma invoice signed by the importer and indenter/supplier.
 Ensuring that the relevant particulars of L/C application are corresponding with those
stipulated in indenter/proforma invoices.
 Validity of L/C entitlement of goods, amount etc. conforms to the L/C application.
 Conversion and rate of exchange currently applied.
 Charges like commission, F.C.C, postage, telex charge, if any recovered.
 Insurance cover note stipulates all information accordingly.
 Incorporation of instruction for negotiating Bank as per Bank’s existing arrangement.
 Reimbursement instructions for reimbursing Bank.
 If foreign Bank confirmation is required, necessary permission should be obtained and
accordingly advising Bank is advised as per Bank’s existing arrangement.
 If added information is required on account of the applicant charges should be
recovered from the applicant.
 Mentioning rate of interest clearly in the letter of credit in case of issuance of L/C.

5.8.7 Liability of Issuing Bank

69
As per article 9a of UCPDC 500, an irrevocable credit constitutes a definite undertaking of
the issuing Bank, provided that the stipulated documents comply with the terms and
conditions of the credit.

5.8.8 Advising of Letter of Credit

Advising L/C means forwarding of a documentary letter of credit which is received from the
issuing Bank to the beneficiary (exporter).

Before advising a L/C, the advising Bank must see the following:

 Signature of issuing Bank officials on the L/C and verified with the specimen
signature book of the said Bank when L/C is received by airmail.
 If the export L/C is intended to be an operative cable L/C, test code on the L/C
invariably be agreed and authenticated by two authorized officers.
 L/C scrutinized thoroughly complying with the requisites of concerned UCPDC
provisions.
 Entry made in the L/C advising register.
 L/C advised to the beneficiary (exporter) promptly and advising charges recovered.

5.8.9 Advising Bank’s Liability

Advising Bank’s liability is fixed up in Uniform Customs and Practice for Documentary
Credits (UCPDC), publication 500.

 Article 7(a):
A credit may be advised to a beneficiary through another Bank (the “advising Bank”) without
engagement on the part of the advising Bank, but that Bank, if it elects to advise the credit,
shall take reasonable care to check the apparent authenticity of the credit which it advises. If
the Bank elects not to advise the credit, it must so inform the issuing Bank without delay.

 Article 7(b):

70
If the advising Bank cannot establish such apparent authenticity it must inform, without
delay, the Bank from which the instructions have been received that it has been unable to
establish the authenticity of the credit and if it elects nonetheless to advise the credit it must
inform the beneficiary that it has not been able to establish the authenticity of the credit.

5.8.10 Adding Confirmation

Adding confirmation is done by the confirming Bank. Confirming Bank is a Bank which adds
its confirmation to the credit and it is done at the request of the issuing Bank. The confirming
Bank may or may not be the advising Bank. The advising Bank usually does not do it if there
is not a prior arrangement with the issuing Bank. By being involved as a confirming agent the
advising Bank undertakes to negotiate beneficiary’s bill without recourse to him.

 Issue L/C and request to add confirmation

 Review the L/C terms
 Provide reimbursement
 Drafts to be drawn on L/C opening
 Bank Availability of credit facilities
 Line allocation from the business and ownership units in the importer’s country
 Confirm and advise L/C

5.8.11 Amendments of Letter of Credit

After issuance and advising of a L/C, it may be felt necessary to delete, add or alter some of
the clauses of the credit. All these modifications are communicated to the beneficiary through
the same advising Bank of the credit. Such modifications to a credit are termed as amendment
to a letter of credit.

There may be some of the conditions in a credit are not acceptable by the beneficiary. In that
cases, beneficiary contacts with the applicant and requests applicant to approach his Banker
with a written request for amendment to the credit. The issuing Bank scrutinizes the proposal
for amendment and if the same is not in contradiction with the Exchange Control Regulation
and Bank’s interest, the Bank then proceed for amendment.

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5.8.12 The Tasks are to be done by the Issuing Bank before
Advising Amendments

 Written application from the applicant of the credit duly signed and verified by the
Bank is to be obtained.
 Application for amendment (in case of increase of value) supported by revised
indent/proforma invoice evidencing consent of the beneficiary is to be obtained.
 In case of extension of shipment period, it should ensure that relative LCA
invalid/invalidated/increased up to the period of proposed extension.
 Amendments on increase of credit amount and extension of shipment period both the
cases, amendment of insurance cover note also to be submitted.
 Proper recording and filling of amendment is to be maintained.
 Amendment charges (if on account of applicant) will be recovered and necessary
voucher is to be passed.

5.8.13 The Clauses of L/C that are generally Amended

 Increase/decrease value of L/C and increase/decrease of quality of goods.

 Extension of shipment/negotiated period.
 Terms of delivery i.e. FOR, CFR, CIF etc.
 Mode of shipment.
 Inspection clause.
 Name and address of the supplier.
 Name of the reimbursing Bank.
 Name of the shipping line etc.

5.8.14 Settlement of Letter of Credit

Settlement means fulfillment of issuing Bank in regard to affecting payment subject to

satisfying the credit terms. Settlement may be done under three separate arrangements as
stipulated in the credit.

72
 5.8.15 Settlement by Payment

Here the seller presents the documents to the nominated Bank and the Bank scrutinizes the
documents. If satisfied, the nominated Bank makes payment to the beneficiary and in case
this Bank is other than the issuing Bank, then sends the documents to the issuing Bank and
claim reimbursement as per arrangement.

5.8.16 Settlement by Acceptance

Under this arrangement, the seller submits the documents evidencing the shipment to the
accepting bank accompanied by draft down on the bank at specified tenor. After being
satisfied with the documents, the bank accepts documents and draft and if it is a bank other
than issuing Bank, then sends the documents to the issuing bank stating it has accepted the
draft and maturity of the reimbursement that will be obtained in the pre-agreed manner.

5.8.17 Settlement by Negotiation

This settlement procedure starts with the submission of documents by the seller to the
negotiating Bank. In a freely negotiable credit any bank can negotiate documents and if
negotiation is restricted by the issuing bank, only nominated bank can negotiate the
documents. After scrutinizing that the documents meet the credit requirement, the Bank may
negotiate the documents and give value to the beneficiary. The negotiating bank then sends
the documents to the issuing Bank. As usual, reimbursement will be obtained in the pre-
agreed manner. After realizing telex charge, service charge, interest and shipping documents
is then stamped with PAD number and entered in the PAD register. Bank then informs the
customer by calling on the Bank’s counter and requests for retirement of the shipping
documents. After passing the necessary vouchers, endorsements are made on the back of the
bill of exchange as “receipt payment” and the bill of lading is endorsed to the effect “please
deliver to the order of M/S…” by two authorized signatures. Then documents are delivered to
the importer.

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 5.8.18 Payment Procedure of the Import Documents

This is the most sensitive task of the Import Department. The officials have to be very much
careful while making payment. This tasks constitutes the following-

 Date of payment: Usually payment is made within 7 days after the documents have
been received.

 Preparing sale memo: A sale memo is made at BC rate to the customer. As the T.T
& OD rate are paid to the ID, the difference between these two rates is traded. Finally,
an Inter Branch Exchange Trading Credit Advice is sent to ID.

 Requisition of the foreign currency: For arranging necessary fund for payment, a
requisition is sent to the International Department.

 Transmission of telex: A telex is transmitted to the correspondent Bank ensuring that

payment is being made.

5.9 Export Section

Practically by the term export we mean carrying out of anything from one country to another.
From the Banker’s point of view- export means sending of visible things outside the country
for sale. Export trade plays a vital role in the development process of an economy. Although
export trade is always encouraged, anybody cannot export anything to anyplace. Like
importer, 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 be obtained ERC are almost same as IRC. When Uttara 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 negotiation Bank after the
shipment of the goods. The L/C issuing Bank undertakes to honor the obligations only if the
beneficiary fulfills the conditions stipulated in the L/C. Even a slight deviation of the
documents from these specified conditions in the L/C may give an excuse to the negotiating
Bank. So the negotiating Bank must be careful, promote, systematic and bias-free while
scrutinizing the tender documents after careful 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-interpretation of proceeds.

74
The following types of discrepancies may be noted while the negotiating Bank examines
the documents:

 Expired L/C
 Late shipment
 Amount drawn in excess of the L/C
 Bill of Exchange not properly drawn
 Descriptions of the goods varied
 Bill of landing classified
 Insurance cover not as per terms of L/C
 Insurance cover obtained after the Bill of lading or Air 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 L/C
 Documents not properly endorsed
 Ineffective full shipment and part shipment prohibited
 Gross weight and net weight shown in different documents varied
 Some documents required by L/C not submitted
 Documents inadequately stamped
 Document with major discrepancies, which could not be negotiated, should be sent on
collection basis with the permission of the exporter.

5.9.1 Export Procedure

The import and export trade in our country are regulated by Import and Export (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.

5.9.2 Registration of Exporters

For obtaining ERC indenting, Bangladeshi exporters are required to apply to the Controller/
Joint Controller/Deputy Controller/ Assistant Controller of Import & Export in the prescribed
from along with following documents:

 Nationality and Assets Certificate

 Memorandum and Articles of Association and Certificate of Incorporation in case of
Limited Company

75
  Bank Certificate
 Income Tax Certificate
 Trade License etc.

5.9.3 Securing the Order

After getting the ERC the exporter may proceed to secure the export order. He can do this by
contacting with 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.

5.9.4 Signing the Contract

After communicating with buyer, the exporter has to make a contract with the buyer (through
written or oral communication) for exporting exportable item (s) from Bangladesh detailing
commodity, quantity, price, shipment, insurance and marks, inspection, arbitration etc. After
getting contract for sale, the exporter should ask the buyer for opening letter of credit clearly
stating terms and conditions of export and payment.

The followings 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 payment:

 Cash in advance
 Open an account
 Collection basis (documentary / clean);(Here the regulatory framework is URC – 525,
ICC UBL publication)

76
 5.9.5 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 merchandise.

5.9.6 Shipment of Goods

After that the export should take the preparation for export arrangement for delivery goods as
per L/C and INCO-terms, prepare and submit shipping documents for payment/negotiation in
due time:

 EXP form
 ERC (valid)
 L/C copy
 Customs duty certificate
 Shipping instruction
 Transport documents
 Invoice
 Other documents
 Bill of exchange (if required)
 Certificate of origin
 Inspection Certificate
 Quality Control Certificate
 G.S.P Certificate
 Photo-sanitary Certificate

5.9.7 Final Step

After those, exporter submits all these documents along with a letter of indemnity to Uttara
Bank Ltd. for negotiation. An officer scrutinizes all the documents. If the document is a clean
one, Uttara Bank Ltd. purchases the documents on the basis of Banker-Customer relationship.
This is known as Foreign Documentary Bill Purchases (FDBP).

77
 5.9.8 Foreign Documentary Bills for Collection

Uttara Bank Ltd. forwards the documents for collection due to the following reasons:

 If the documents have discrepancies

 If the exporter is a new client
 If the Banker is in doubt after passing the above vouchers, an inter branch exchange
trading debit advice is sent for debiting the NOSTRO account. Uttara Bank Ltd. has
NOSTRO account with its reimbursing Bank (American Express Bank in New York).
An FDBC register is maintained, where first entry is given when the documents are
forwarded to the issuing Bank for collection and the second one is done after
realization of the proceeds.

5.9.9 Export Bill Security Sheet

Scrutinizes the export bill on the following points:

 General:
 Late shipment
 Late presentation
 Expired L/C
 Overdrawn L/C
 Partial shipment or shipment beyond L/C terms

 Bill of Exchange:
 Amount of bill has varied with Invoice
 Amount of bill has not drawn on L/C issuing Bank
 Amount of bill has not signed by the beneficiary
 Tenor or B/E is not identical with L/C
 Full set of documents have not submitted
 Invoice has not issued by the beneficiary
 Invoice has not signed by the beneficiary
 Invoice has not made out by the name of the applicant
 Description, price, quantity, sales terms of the goods are not correspond to the credit
 Not marked one fold as original
 Shipping marks have varied with B/L & Packing list

78
  Packing List:
 Gross weight, net weight & measurement, number of cartoons/packages are varied
with B/L, have not marked one fold as original and have not signed by the
beneficiary.
 Shipping marks have varied with B/L

 Bill of Lading/Airway Bill:

 Full set of bill has not submitted

 B/L has not drawn or endorsed
 “Shipping on Board”, “Freight prepaid” or “Freight collect” etc. notations have not
marked on the B/L
 B/L have not indicated the name and capacity of the party i.e. carrier or master
 Shipping on board notation have not showed name of pre-carriage vessel/intended
vessel
 Shipping on board notation is have not showed port of loading and vessel
 Short from B/L
 Charter party B/L
 Description of goods in B/L have not agreed with that of invoice, B/E & P/L
 Alteration in B/L has not authenticated
 Loaded on deck
 B/L bearing clauses or notations have expressly declared defective condition of the
goods and /or the packages

 Others:
 Non-negotiable documents have not forwarded to buyers
 Inadequate number of invoice, packing list & others has submitted
 Short shipment certificate has not submitted

5.9.10 Settlement of Local Bill

The settlement of local bill is done in the following ways:

 The customer submits the L/C to the Uttara Bank Ltd. along with the documents to
negotiate.
 Uttara Bank ltd. officials scrutinize the documents to ensure the conformity with the
terms and conditions.
 The documents are then forwarded to the L/C opening Bank.

79
  The L/C issuing Bank gives the acceptance and forwards an acceptance letter.
 Payment is given to the customer on either by collection basis or by purchasing the
documents.
 A LBPD register is maintained to record the acceptance of the issuing Bank. Until the
acceptance is obtained, the record is kept in a collection register.

5.9.11 Mode of Payment of Export Bills Under L/C

The most common methods of payment under a L/C are as follows:

 Sight Payment Credit:

In a sight payment credit, the Bank pays the stipulated sum immediately against the
exporter’s presentation of the documents.

 Negotiation Credit:
In negotiation credit, the exporter has to present a bill of exchange payable to him in addition
to other documents that the Bank negotiated.

 Deferred payment credit:

In deferred payment, the Bank agrees to pay on a specified future date or event, after
presentation of the export documents. No bill of exchange is involved. In Uttara Bank Ltd.
(UBL), payment is given to the party at the date of D.A 60-90-120-180 as the case may be.
But the Head Office is paid at T.T clean rate. The difference between the two rates is the
exchange trading for the branch.

 Acceptance credit:
In acceptance credit, the exporter presents a bill of exchange payable to himself and drawn at
the agreed tenor (that is, on a specified future date event) on the Bank that accepts it. The
Bank signs it’s acceptance on the bill and returns it to the exporter. The exporter can then
represent it for payment on maturity. Alternatively, he can discount it in order to obtain
immediate payment.

80
  Advising L/C:
When exporter transmits L/C to the Bank for advising then Bank sends an advising letter to
the beneficiary depicting that L/C has been issued.

 Test Key Arrangement:

Test Key Arrangement is a secret code maintained by the Banks for the authentication for
their massage. It is a systematic procedure by which attest number is given to authenticate the
same test number by maintaining that same procedure. UBL has test key arrangements with
so many Banks for the authentication of L/C messages and for making payment.

5.9.12 Back to Back Letter of Credit

A back to back letter of credit is a new credit. It is different from the original credit based on
which the Bank undertakes the risk under the back to back credit. In this case, the Bank’s
main surety/security is original credit. The original credit (selling credit) and the back to back
credit (buying credit) are separate instruments, independent of each other and in no way
legally connected, although they both from part of the same business operation. The supplier
(beneficiary of the back to back credit) ships goods to the importer or supplies goods to the
exporter and presents documents to the Bank as is specified in the credit. It is intended that
the exporter would substitute his own documents for negotiation under the original credit; his
liability under the back to back credit would-be adjusted out of these proceeds. The exporter
L/C is marked lien and no margin is taken.

In UBL paper/documents are required to submit for opening of back to back L/C:

 Master L/C
 Valid Import Registration Certificate (IRC) & Export Registration Certificate (ERC)
 L/C application & LCA form duly filled in and signed
 Performa invoice and Indent
 Insurance cover note with money receipt
 IMP form duly signed

In addition to the above the following papers/documents are also required for export
oriented garment industries while requesting for opening of back to back letter of
credit:

 Textile permission
 Valid Boded Warehouse License

81
  Quota allocation letter issued by Export Promotion Bureau (EPB) in favor of the
applicant in case of quota items
 In case the factory premises is a rented one, letter of disclaimer duly executed by the
owner of the house/premises to be submitted

5.9.13 Defective Points or Clauses in the appear L/C

 Issuing Bank is not reputed

 Advising credit by the advising Bank without authentication
 Port of destination is absent
 Inspection clause
 Nomination of specific shipping or nomination of specified vessel by subsequent
amendment
 B/L blank endorse to be endorsed to buyer or to third party
 No subsequent reimbursing clause
 UCP clause not mentioned
 Shipment/presentation period is not sufficient
 Original document to be sent to buyer or nominated agent
 L/C is expired in the country of the issuing Bank
 Negotiation is restricted

5.9.14 Payment of Back to Back Letter of Credit

In case back to back as 60-90-120-180 days of maturity period, deferred payment is made.
Payment is given after realizing export proceeds from the L/C issuing Bank. It may happen that
the credit in favor of the seller is not transferable or although transferable, cannot meet
commercial requirement by transfer in accordance with article 46 (UCP) conditions. The seller
himself, however, is unable to supply the goods and needs to purchase them from, and make
payable to, another supplier. In this case, it may sometime be possible to use either a back to back
credit or a counter credit. Both these concepts involved the issue if a second credit by the seller in
favor of his supplier. According to the back to back concept, the seller as the beneficiary of the
credit offers it as security to the advising Bank for the issuance of the second credit. As
application for this second credit, the seller is responsible for reimbursing the Bank for payment
made under it, regardless of whether or not he himself is paid under the first credit. There is,
however, no compulsion for the Bank to issue the second credit, and in fact, many Banks will not
do so.

82
 5.10 Foreign Remittance Section

Remittance is the act of transmitting money, bills and others as in satisfaction of a demand, or
in discharge of an obligation. UBL is authorized dealer to deal in foreign exchange business.
As an authorized dealer, a Bank must provide some services to the clients regarding foreign
exchange and this department provides these services.

The basic function of this department are outward and inward remittance of foreign exchange
from one country to another country. In this process of providing this remittance service, it
sells and buys foreign currency. The conversion of one currency into another takes place an
agreed rate of exchange which the Banker quotes, one for buying and another for selling. In
such transactions the foreign currencies are like other commodities offered for sales and
purchase, the cost (convention value) being paid by the buyer in home currency, the legal
tender.

5.10.1 Remittance Procedures of Foreign Currency

There are two types of remittance. These are:

1. Inward Remittance
2. Outward Remittance

1. Inward Remittance:
Inward remittance covers purchase of foreign currency in the form of foreign Telegraphic
Transfer (T.T), Demand Draft (DD) and Bills & Travelers Cheque, Export Bill etc. sent from
abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported
to Exchange Control Department of Bangladesh Bank from Letter of Credit (L/C). These are
the formal channel of receiving inward remittance. A local Bank also receives indenting
commission of local firm also comes under purview of inward remittance.

 Mode of Inward Remittance:

 Draft
 Telegraphic Transfer (TT)
 Bills and Travel’s Cheque
 Export proceed

83
 2. Outward Remittance:
Outward remittance covers sales of foreign currency by Authorized Dealer (AD) or formal
channel through issuing foreign telegraphic Transfer (T.T), Demand Drafts (D.D), Traveler’s
Cheque etc. as well as sell of foreign exchange under L/C and against Import Bills retired.
The demonstrated utmost caution to ensure that foreign currencies remitted or released by
them are used only for the purpose for which they are released. Most outward remittance is
approved by the authorized dealer on behalf of Bangladesh Bank.

 Mode of Outward Remittance

 Demand Draft (DD)
 Foreign Demand Draft (FDD)
 Telegraphic Transfer (TT)
 L/C

5.11 Performance of Export & Import Business of UBL

To look after the business and also to ensure prompt service to the export and import, officers
having exposure and expertise in foreign exchange business have been posted both at Head
office & authorized dealers branches. During the year performance of import business of the
bank was satisfactory. In 2014 import business stood at Tk. 45,870.9 million as compared to
the volume of Tk. 40,336.8 million of 2013. Export business handle by the bank during the
year 2014 amounted to Tk. 13,447.3 million as against Tk. 14,306 million of the preceding
year.

Table: Export Business of UBL (2011-2014):

Year Amount in Million

2011 15,588.50

2012 14,192.90

2013 14,306.00

2014 13,447.30

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 Table: Import Business of UBL (2011-2014):

Year Amount in Million

2011 33,037.60

2012 35,418.60

2013 40,336.80

2014 45,870.90

Export & Import ( Amount in Million)

50000
45870.9
45000
40336.8
40000
35418.6
35000 33037.6
30000
25000
20000
15588.5 14192.9 14306
15000 13447.3
10000
5000
1 2 3 4
0
2011 2012 2013 2014
Export & Import

Figure: Export & Import Business (2011-2014)

85
5.12 Performance of Foreign Remittance Business of UBL

Uttara Bank Ltd. has seen a successful year in 2014 in terms of expansion of its remittance
business with its foreign co-respondent and exchange house. Bank has been continuing to
extend special important on foreign remittance from the begging of its establishment, which
is still prevailing during the year. This Bank has drawing arrangement with the Bank and
exchange companies situated at the important countries of the world. In the meantime the
Bank has been able to draw confidences of Bangladeshi expatriates by easy and quick
delivery of their hard earns foreign remittance to the payees at home. The volume of foreign
remittance the year 2014 stood at 52,030.2 million as compare the volume of taka 44,301.3
million preceding year registering an increasing of 2.95%.

Table: Foreign Remittance Business of UBL (2011-2014):

Year Amount in Million

2011 37,848.70

2012 43,585.60

2013 44,301.30

2014 52,030.20

Foreign Remittance (Taka in Million)

60,000.00

52,030.20
50,000.00
43,585.60 44,301.30

40,000.00 37,848.70

30,000.00

20,000.00

10,000.00

0.00
2011 2012 2013 2014

86
 Figure: Foreign Remittance Business (2011-2014)

CHAPTER-06
AN ANALYSIS OF ACCOUNTING TOOLS
& TECHNIQUES OF UBL

87
 6.1 Horizontal Analysis

A company's financial statements for a single accounting period can reveal important
information about its performance and financial health. But comparing the financial
statements of more than one period can provide better context and help identify any changes
that may signal strengths or weaknesses. We can compare financial statements for more than
one period by using horizontal analysis. Horizontal analysis, also called "trend analysis," is
used to discover trends in the earnings, assets and liabilities of a company over the course of
several years. With horizontal analysis, we compare the amount changes and the percent
change of each item in a financial statement for two consecutive periods. A financial
statement showing horizontal analysis of two consecutive periods is called a comparative
financial statement.

6.1.1 Horizontal Analysis of Balance Sheet

In this horizontal analysis of Balance sheet, here all the particulars from the FY2013-FY2014
have shown by the amount, increase or decrease in the amount and also in the percentage. To
do so, I have assumed the FY2013 as a base year. For the purpose of calculation, here I have
shown all the data in million. The horizontal analysis of Balance Sheet is given bellow as a
table:

88
 Horizontal Analysis of Balance Sheet
Year (Taka in Million)
Increase or (Decrease)
Particulars 2014 2013 during 2014
Amount Percentage
(%)
PROPERTY AND ASSETS

Cash 10,701.40 8,775.08 1,926.3 21.9%

2
Balance with other banks and financial 1,012.27 1,419.78 (407.51) (28.7%)
institutions
Investment 42,787.91 45,749.48 (2,961.57) (6.5%)

Loans and Advances 74,198.91 64,829.76 9,369.1 14.5%

5
Fixed assets including land, building, 3,351.96 3204.27 147.6 4.6%
furniture and fixtures 9
Other Assets 7,963.27 7,456.27 50 6.8%
7
Total Assets 140,547.01 132,110.04 8436.9 6.4%
7
LIABILITIES AND CAPITAL

Deposits and other accounts 113,836.74 110,989.82 2,846.9 2.6%

2
Other liabilities 12,425.36 10,363.23 2,062.1 19.9%
3
Total Liabilities 128,330.43 121,408.90 6,921.5 5.7%
3
Total Share Holders’ Equity 12,216.54 10,701.11 1,515.43 14.2%

Total Liabilities and Share Holders' 140,547.01 132,110.04 8,436.9 6.4%

Equity 7

89
  Interpretation of Horizontal Analysis of Balance Sheet:
In above analysis, FY2013 is the base year and FY2014 is the comparison year. All items on
the balance sheet for the year 2014 have been compared with the items of balance sheet for
the year 2013.

The total cash of Uttara Bank Limited have increased by 21.9% in FY2014 as compared to
FY2013. While current liabilities (Deposits and other accounts) have increased only to the
extent of 2.6%. This indication of liquidity position of the bank is highly satisfactory.

The fixed assets including land, building, furniture and fixtures have increased by 4.6%
compared to FY2013. At the same time, total share holders’ equity (long-term liabilities,
capital and reserve) have considerably increased by 14.2%. It is observed that overall
financial position of Uttara Bank Limited concern is good.

6.1.2 Horizontal Analysis of Profit & Loss Account

In this horizontal analysis of Profit and Loss Account, here all the particulars from the
FY2013-FY2014 have shown by the amount, increase or decrease in the amount and also in
the percentage. To do so, I have assumed the FY2013 as a base year. For the purpose of
calculation, here I have shown all the data in million. The horizontal analysis of Profit and
Loss Account is given bellow as a table:

90
 Horizontal Analysis of Profit & Loss Account
Year (Taka in Million)

Particulars Increase or (Decrease)

2014 2013 during 2014
Amount Percentage
(%)
Net Interest Income 2,179.69 958.68 1,221.01 127.4%

Total Operating Income 7,918.34 6941.01 977.33 14.1%

Total Operating Expenses 4,082.26 3,791.08 291.18 7.7%

Profit Before Provision 3,836.08 3,149.93 686.15 21.8%

Profit Before Tax 2,926.08 2,694.93 231.15 8.6%

Profit After Tax 1,404.25 1,319.47 84.78 6.4%

Profit Available for Appropriation 1,447.65 1,342.67 104.98 7.8%

 Interpretation of Horizontal Analysis of Profit & Loss Account:

In above analysis, 2013 is the base year and 2014 is the comparison year. All items on the
Profit and Loss Account for the year 2014 have been compared with the items of Profit and
Loss Account for the year 2013.

From the above horizontal analysis of Profit and Loss Account, it is observed that the net
interest income has increased to the extent of 127.4%. The total operating income and its
percentage increased by 14.1%. Total operating expenses has been increased by 7.7%. Profit
before provision and profit before tax also have been increased by 21.8% and 8.6%
respectively. As a result, the rate of net profit (profit after tax) is also increased to the extent
of 6.4%. This indicates that the overall profitability concern of Uttara Bank Limited is good.

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 6.2 Vertical Analysis

Vertical analysis is a financial statement analysis technique in which each line item of a
financial statement, usually balance sheet and income statement is stated as percentage of the
base figure of the financial statement. Vertical analysis may also be performed on a cash flow
statement. The base figure is total assets in case of balance sheet, total revenue in case of
income statement and total net cash flow in case of a cash flow statement.

The most common use of vertical analysis is within a financial statement for a single time
period, so that one can see the relative proportions of account balances. Vertical analysis is
also useful for timeline analysis, to see relative changes in accounts over time, such as on a
comparative basis over a five-year period. For example, if the cost of goods sold has a history
of being 40% of sales in each of the past four years, then a new percentage of 48% would be
a cause for alarm.

6.2.1 Vertical Analysis of Balance Sheet

In this vertical analysis of Balance sheet, here all the particulars from the FY2013-FY2014
have shown by the amount and also percentage has shown of a base amount. To do so, I have
assumed the total assets as a base figure. For the purpose of calculation, here I have shown
all the data in million. The vertical analysis of Balance Sheet is given bellow as a table:

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 Vertical Analysis of Balance Sheet
Year (Taka in Million)
2014 2013
Particulars
Amount Percentage Amount Percentage
(%) (%)
PROPERTY AND ASSETS

Cash 10,701.40 7.6% 8,775.08 6.6%

Balance with other banks and financial 1,012.27 0.7% 1,419.78 1.07%
institutions
Investment 42,787.91 30.4% 45,749.48 34.6%

Loans and Advances 74,198.91 52.8% 64,829.76 49.1%

Fixed assets including land, building, 3,351.96 2.4% 3204.27 2.4%

furniture and fixtures
Other Assets 7,963.27 5.7% 7,456.27 5.6%

Total Assets 140,547.01 100% 132,110.04 100%

LIABILITIES AND CAPITAL

Deposits and other accounts 113,836.74 81% 110,989.82 84%

Other liabilities 12,425.36 8.8% 10,363.23 7.8%

Total Liabilities 128,330.43 91.3% 121,408.90 91.9%

Total Share Holders’ Equity 12,216.54 8.7% 10,701.11 8.1%

Total Liabilities and Share Holders' 140,547.01 100% 132,110.04 100%

Equity

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  Interpretation of Vertical Analysis of Balance Sheet:
Above analysis represent the vertical analysis of Uttara Bank Ltd.’s comparative balance
sheets. The base for the property and asset items is total assets. The base for the liability and
shareholders’ equity items is total liabilities and share holders' equity.

From the above analysis, we can see that cash increased to 7.6% of total assets in FY2014
from 6.6% in FY2013. Fixed assets (land, building, furniture and fixtures) of both the year
are same. While current liabilities (Deposits and other accounts) have decreased from 84% of
total liabilities and share holders' equity in FY2013 to 81% in FY2014. Total share holders’
equity has increased slightly from 8.1% to 8.7% of total liabilities and share holders' equity.
It is observed that overall financial position of Uttara Bank Limited concern is good.

6.2.2 Vertical Analysis of Profit & Loss Account

In this vertical analysis of profit and loss account, here all the particulars from the FY2013-
FY2014 have shown by the amount and also percentage has shown of a base amount. To do
so, I have assumed net interest income as a base figure. For the purpose of calculation, here
I have shown all the data in million. The vertical analysis of profit and loss account is given
bellow as a table:

94
 Vertical Analysis of Profit & Loss Account
Year (Taka in Million`)

Particulars 2014 2013

Amount Percentage Amount Percentage
(%) (%)
Net Interest Income 2,179.69 100% 958.68 100%

Total Operating Income 7,918.34 363.3% 6,941.01 724%

Total Operating Expenses 4,082.26 187.3% 3,791.08 395.4%

Profit Before Provision 3,836.08 176% 3,149.93 328.6%

Profit Before Tax 2,926.08 134.2% 2,694.93 281.1%

Profit After Tax 1,404.25 64.4% 1,319.47 137.6%

Profit Available for Appropriation 1,447.65 66.4% 1,342.67 140.1%

 Interpretation of Vertical Analysis of Profit & Loss Account:

Above analysis represent the vertical analysis of Uttara Bank Ltd.’s income statement. The
base item for profit and loss account is net interest income.

From the above vertical analysis of Profit and Loss Account, it is observed that the total
operating income as a percentage of net interest income declined 360.7% (724% vs. 363.3%)
and total operating expenses declined 208.1% (395.4% vs. 187.3%). Profit before provision
and profit before tax as a percentage of net interest income declined by 152.6% (328.6 vs.
176) and 146% (281.1% vs. 134.2) respectively. As a result, it is not surprising to see that net
profit (profit after tax) is also declined 73.2% (137.6% vs. 64.4%).

95
 6.3 Ratio Analysis

A tool used by individuals to conduct a quantitative analysis of information in a company’s

financial statements. Ratios are calculated from current year numbers and are then compared
to previous years, other companies, the Industry, or even the economy to judge the
performance of the company. The basic inputs to ratio analysis are the firm’s income
statement and balance sheet for the periods to be examined. Ratio analysis is predominately
used by proponents of fundamental analysis.

In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values
taken from an enterprise’s financial statements. There are many standard ratios used to try to
evaluate the overall financial condition of a corporation or other organization. Financial ratios
may be used by managers within a firm, by current and potential shareholders (owners) of a
firm, and by a firm’s creditors. Security analysts use financial ratios to compare the strengths
and weaknesses in various companies. If shares in a company are traded in a financial
market, the market price of the shares is used in certain financial ratios. In short, ratio
analysis is essentially concerened with the calculation of relationships which, after proper
identification and interpretation may provide information about the operations and state of
affairs of a business enterprise.The analysis is used to provide indicators of past performance
in terms of critical success factors of a business.This assistance in decision-making reduces
reliance on guesswork and intution and establishes a basis for sound judgement.

6.3.1 Current Ratio

One of the most general and frequently used of these liquidity ratios is the current ratio.
Organizations use current ratio to measure the firm’s ability to meet short-term obligations. It
shows the bank’s ability to cover its current liabilities with its current assets. The higher the
current ratio, the better the liquidity position of the firm. It is expressed as:

Current Ratio = Current Asset/Current Liabilities

Year 2010 2011 2012 2013 2014

Current 0.98 1.12 1.09 1.08 1.11
Ratio

Source: Annual Report of UBL

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  Graphical Presentation:

CURRENT RATIO

1.12
1.11
1.09
1.08

0.98

2010 2011 2012 2013 2014

Figure: Current Ratio

 Interpretation:
The current ratio of UBL was increasing from FY2010 (0.98) to FY2011 (1.12). But then it
decreased in FY2012 (1.09) and also in FY 2013 (1.08). But in FY2014 it slightly increases
which indicates that current ratio of UBL is in position because it maintains 1.11 Tk. current
assets against 1 Tk. current liabilities whereas normally banking industry maintains 1:1
current ratio. The highest current ratio was 1.12 in FY2011 the lowest current ratio was 0.98 in
FY2010.

6.3.2 Cost Income Ratio

It measures a particular Bank’s operating efficiency by measuring the percent of the total
operating income that the Bank spends to operate its daily activities. It is calculated as
follows:

Cost Income Ratio = Total operating Expenses/Total Operating Income

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 Year 2010 2011 2012 2013 2014

Cost 47.20% 51.68% 54.55% 54.62% 51.55%

Income
Ratio

Source: Annual Report of UBL

 Graphical Presentation:

COST INCOME RATIO

56.00%

54.55% 54.62%
54.00%

52.00% 51.68% 51.55%

50.00%

48.00%
47.20%
46.00%

44.00%

42.00%
2010 2011 2012 2013 2014

Figure: Cost Income Ratio

 Interpretation:
We know that this ratio measures the operating efficiency of the bank by measuring the
portion if the total operating costs relative to the total operating income of that bank and the
higher the ratio, the lower the operating efficiency. The cost income ratio of UBL increases
from FY2010 to FY2013 (47.20% to 54.62%) but it decrease in FY 2014 (51.68%). So it can be
said that the operating efficiency of Uttara Bank Ltd. is in good position that is they are able
to minimize their operating cost.

98
 6.3.3 Total Asset Turnover Ratio

The total asset turnover indicates the efficiency with which the firm is able to use all its assets
to generate sales. It is expressed as follows:

Total Asset Turnover = Operating Income/Total Assets

Year 2010 2011 2012 2013 2014

Total Asset 0.064 0.067 0.058 0.053 0.056

Turnover

Source: Annual Report of UBL

 Graphical Presentation:

Tot al A s s e t Tur nove r R ati o

0.07
0.06

0.06

0.06
0.05

2010 2011 2012 2013 2014

Figure: Total Asset Turnover Ratio

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  Interpretation:
The total asset turnover ratio of UBL is in declining trend from FY2010 to FY2013 which is
not good sign. But in FY 2014 it slightly increase which is good sign for UBL compared to
previous years.

6.3.4 Earnings Per Share

Earnings per share (EPS) are the company's profit allocated to each outstanding share of
common stock. EPS serves as an indicator of a company's value for a market. The price
Earning (P/E) ratio is calculated as follows:

Earnings per Share = Earnings available for common stock holder/No of shares
of common stock outstanding

Year 2010 2011 2012 2013 2014

Earnings 5.40 4.99 3.40 3.6 3.47
Per Share

Source: Annual Report of UBL

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  Graphical Presentation:

earnings PER SHARE (EPS)

5.4
4.99

3.4 3.47
3.28

2010 2011 2012 2013 2014

Figure: Earnings Per Share (EPS)

 Interpretation:
The graph shows that, earnings per share (EPS) ratio of UBL’s is continuously decreasing
from FY2010 (5.4 Tk.) to FY2013 (3.28 Tk.). Then it slightly increases in FY 2014 (3.47
Tk.). The highest EPS ratio in this period was 5.4 Tk. in FY2010 and EPS ratio was 3.28 in
FY2013.

101
 6.3.5 Price Earnings Ratio

The price or earning (P/E) ratio is commonly used to assess the owners’ appraisal of share
value. The P/E represents the amount investors are willing to pay for each dollar of the firm’s
earnings. The higher the P/E ratio, the greater the investor confidence in the firm’s future.
The price Earning (P/E) ratio is calculated as follows:

Price Earnings Ratio = Market price per share of stock/Earning per share

Year 2010 2011 2012 2013 2014

Price 30.76 15.59 11.21 9.48 7.46
Earning
Ratio

Source: Annual Report of UBL

 Graphical Presentation:

Price earnings ratio

30.76

15.59

11.21
9.48
7.46

2010 2011 2012 2013 2014

Figure: Price Earnings Ratio

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  Interpretation:
The graph shows that, price earnings ratio of UBL’s is continuously decreasing from FY2010
to FY2014. As a result, it is not surprising to see that UBL’s price earnings ratio is not in
good position. The highest price earnings ratio in this period was 30.76 times in FY2010 and
lowest price earnings ratio was 7.46 times in FY2013 & FY 2014.

6.3.6 Return on Assets (ROA)

The return on asset (ROA), which is often called the firm’s return on total assets, measures
the overall effectiveness of management in generating profits with its available assets. ROA
ratio is very important tools for measuring the profitability of a bank. The higher the ratio is
better for the bank. The return on assets (ROA) is calculated as follows:

Return on Asset (ROA) = Net Profit after tax (net income)/Total Asset

Year 2010 2011 2012 2013 2014

Return on 1.91% 1.69% 1.00% 0.99% 0.99%
Assets

Source: Annual Report of UBL

103
  Graphical Presentation:

R e t urn on A s s e t s
1.91%

1.69%

0.99%
1.00%

0.99%
2010 2011 2012 2013 2014

Figure: Return on Assets (ROA)

 Interpretation:
The graph shows that, The ROA ratio of UBL is in declining trend from FY2010 to FY2014
which is bed sign for a bank. The highest ROA ratio in this period was 1.91% in FY2010 and
lowest ROE ratio was 0.99% in FY2013 & FY 2014.

6.3.7 Return on Equity (ROE)

The return on equity measures the return earned on the owner’s (both preferred and common
stockholders’) investment. It is also very important tools for measuring the profitability of a
bank. Generally, greater ROE ratio is better for the bank. It is expressed as follows:

Return on Equity = Net Profit after tax (net income)/Shareholders equity

104
 Year 2010 2011 2012 2013 2014
Return on 18% 17% 13% 12% 11%
equity

Source: Annual Report of UBL

 Graphical Presentation:

R e t ur n on e quit y

0.18
0.17

0.13
0.12
0.11

2010 2011 2012 2013 2014

Figure: Return on Equity (ROE)

 Interpretation:
The ROE ratio of UBL is in declining trend from FY2010 to FY2014. The highest ROE ratio
in this period was 18% in FY2010 and lowest ROE ratio was 11% in FY2014.

105
 6.3.8 Net Profit Margin

The net profit margin measures the percentage of each sales dollar remaining after all
expenses, including taxes, have deducted. The higher the firm’s net profit margin is better.
The net profit margin is a commonly cited measure of the company’s success with respect to
earnings on sales. Net profit margin is calculated as follows:

Net Profit Margin = Net Profit after tax (net income)/Operating income

Year 2010 2011 2012 2013 2014

Net Profit 0.24 0.25 0.17 0.19 0.18
Margin

Source: Annual Report of UBL

 Graphical Presentation:

Net Profit Margin

0.25
0.24

0.19
0.18
0.17

2010 2011 2012 2013 2014

106
 Figure: Net Profit Margin

 Interpretation:
The net profit margin of UBL was slightly increasing from FY2010 (0.24) to FY2011 (0.25) but
then it decreasing in FY2012 (0.17). After then it slightly increases in FY2013 (0.19). But again
in FY2014 (0.18) it slightly decreases. So we can observe that net profit margin of UBL is
fluctuating. The highest net profit margin was 0.25 in FY2011 the lowest net profit margin was
0.17 in FY2012.

6.3.9 Debt Ratio

The debt ratio measures the preparation of total assets provided by the firm’s creditors. Debt
ratio is expressed as follows:

Debt ratio = Total Liabilities/Total Assets

Year 2010 2011 2012 2013 2014

Debt Ratio 89% 90% 92% 91.93% 91.35%

Source: Annual Report of UBL

107
  Graphical Presentation:

DEBT RATIO

92% 92%
91%

90%

89%

2010 2011 2012 2013 2014

Figure: Debt Ratio

 Interpretation:
This graph shows that, the debt ratio of Uttara Bank Ltd. was continuously increasing from
FY2010 (89%) to FY2012 (92%). But then it slightly decreased in FY2013 (91.93%) and also
in FY 2014 (91.35%). The highest debt ratio was 92% in FY2012 and lowest debt ratio was
89% in FY2010.

6.3.10 Equity Multiplier (EM)

Equity Multiplier (EM) is very important indicator of evaluating a company’s ability to use
its debt for financing its assets. EM ratio is also known as the financial leverage ratio. A

108
higher equity multiplier indicates higher financial leverage, which means the company is
relying more on debt to finance its assets. Equity multiplier ratio is calculated as follows:

Equity Multiplier (EM) = Total assets/Shareholder’s equity

Year 2010 2011 2012 2013 2014

Equity 9.46 10.11 12.64 12.40 11.56
Multiplier

Source: Annual Report of UBL

 Graphical Presentation:

Equi t y M ul ti pl i e r

12.64 12.4
11.56
10.11
9.46

2010 2011 2012 2013 2014

Figure: Equity Multiplier

 Interpretation:
This graph shows that, equity multiplier (EM) ratio of UBL is continuously increasing from
FY2010 (9.46) to FY2012 (12.64) which was bad sign for a bank. But then it slightly
decreased in FY2013 (12.4) and also in FY2014 (11.56). So, we observe that, now bank is

109
relying less on debt to finance its assets in recent years which is good sign for a bank. The
highest EM ratio was 12.64 in FY2012 and the lowest EM ratio was 9.46 in FY2010.

6.3.11 Time Interest Earned Ratio

The times interest earned ratio, sometimes called the interest coverage ratio, measures the
ability to meet contractual interest payment that means how much the company able to pay
interest from their income. Times interest earned ratio is expressed as follows:

Time Interest Earned Ratio =Earnings before interest and Taxes/Interest

Year 2010 2011 2012 2013 2014

Time 1.11 1.49 1.61 1.95 1.78
Interest
Earned
Ratio

Source: Annual Report of UBL

 Graphical Presentation:

110
 TIME INTEREST EARNED RATIO
2.5

2 1.95
1.78
1.61
1.49
1.5

1.11
1

0.5

0
2010 2011 2012 2013 2014

Figure: Time Interest Earned Ratio

 Interpretation:
UBL’s time interest ratio is not satisfactory because, they have only 1.78 tk. earning against 1
taka interest obligation which is not good. But overall time interest earned ratio on UBL’s is
highly satisfying. The highest overall time interest earned ratio was 1.95 in FY2013 and the
lowest overall time interest earned ratio was 1.11 in FY2010.
.

6.3.12 Investment to Deposit Ratio

Investment to Deposit Ratio shows the operating efficiency of a particular Bank in promoting
its investment product by measuring the percentage of the total deposit disbursed by the Bank
as long and advance or as investment. The ratio is calculated as follows:

Investment to Deposit Ratio=Total investment/Total Deposit

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 Year 2010 2011 2012 2013 2014
Investment 0.282 0.317 0.448 0.411 0.375
to Deposit
Ratio

Source: Annual Report of UBL

 Graphical Presentation:

Investment to deposit ratio

0.5
0.45
0.4
0.35
0.3
0.25
0.45
0.2 0.41
0.38
0.15 0.32
0.28
0.1
0.05
0
2010 2011 2012 2013 2014

Figure: Investment to Deposit Ratio

112
  Interpretation:
This graph shows that, the Investment to deposit ratio of Uttara Bank Ltd. was continuously
increasing from FY2010 (0.282) to FY2012 (0.448). But then it slightly decreased in FY2013
(0.411) and also in FY 2014 (0.375) which is not a good sign for UBL. Because Bank is not
properly utilizing their deposit. The highest Investment to deposit ratio 0.448 in FY2012 and
lowest Investment to deposit ratio was 0.282 in FY2010.

CHAPTER-07
FINDINGS, RECOMMENDATIONS
& CONCLUSION

113
 7.1 Findings

UBL is one of the potential banks in the banking sector. The Motijheel Local Office of UBL
is a large branch. It was a wonderful experience working at Uttara Bank Limited. The
employees of the bank were very helpful and nice to me. In spite it was not an easy job to
find so many things during the very short period of practical orientation program. Now, I
would like to present my observations and give, my opinion to improve the banking service
and make their customer more satisfied.

 Uttara Bank Ltd’s property and assets is increasing year by year.

 Uttara Bank Ltd’s loans and advances is also increasing trend.
 Uttara Bank Ltd’s performance may be termed satisfactory in respect of Deposit
mobilization and Profit earning in the year 2014. Due to Modern Banking the number
of Deposit are increasing rapidly.
 Uttara Bank Ltd’s total liabilities and share holder’s equity is increasing in the year 2014.
 From the current ratio analysis it has seen that UBL has not enough current assets to
pay their short term obligations because the current ratio is decreasing year by year.
 The operating efficiency of the Uttara Bank ltd is in good position because they are
able to minimize their operating cost which we have seen cost to income ratio.
 Although Uttara Bank Limited total asset turnover ratio has decreased in 2014 but
overall their total asset turnover is satisfactory.
 Return on Assets (ROA) of UBL is not superior because it decreased in recent years.

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 The P/E ratio of Uttara Bank Limited is not in good position because it is
continuously decreasing in recent years.
 Debt Ratio of Utara Bank Limited is in satisfactory range because it’s year by year
decreasing.
 Now, I would like to present my observations and give, my opinion to improve the
banking service and make their customer more satisfied.

115
 7.2 Recommendations

I had the practical exposure in Uttara Bank Limited for just three months, with my little
experience in the bank in comparison with vast and complex banking system; it is not so easy
to recommend some suggestions to enhance the performance level of the organization. I had
observed some shortcomings regarding operational and other aspects of their banking. On the
basis of my observation I would like to present the following recommendations:

 Renovation of Customer Service:

Uttara bank should make its service prompt so that people need not give more time in the
banking activities and fell easy to perform all respective activities. Moreover they have to
come up with new facilities and offer which will attract more client and help to ensure their
premium as well as loyal customer forever. Therefore they have to ensure:

1. The working process more faster with better computers and operating systems.
2. Trained, experienced, smart, knowledgeable as well as intellectual personnel to
provide fastest and the best services.
3. Individual attention can be given to customers in order to better understand the
customer’s needs and better satisfy them (Cheques, deposit slips are not written
properly by the customers so the employees have to do that).

116
 4. More Gifts, Discounts as well as differentiated interest rates on several loan and
deposit schemes for the Premium Customers.

 Ensure Proper Division of Labor and Man Power:

The human resource departments of Uttara bank have to ensure proper division of labor in
desk for handling the rash of customer in an efficient way. Therefore based on importance
and work load they have to ensure proper division of labor. Moreover by increasing the
numbers of personnel try to maintain the premium banking objective. Mainly the number of
human resources is needed in Front Desk and in clearing section which really insufficient for
giving services to huge number of customers.

 Ensure Proper Compilations & Maintenance of Files:

Ensuring proper customer service is a continuous process in banking business. Which is vital
for it success. The service starts from the first day of customer interaction with banker. To
know customer, maintain interaction, conducting banking activities and for the security
purposes the file maintenance of individual client is most important. If one single paper is
missing then it can create a big problem as well as hazard to both banker and their customer.
Therefore both management and all personnel should more conscious about the proper
compilations as well as decoration for keeping important files.

 Ensure Employee Satisfaction:

Management of the bank has to provide time to time recognition of their employee. Moreover
short probationary period and on time promotion motivated the employee to perform well in
their day to day activities. But the most important thing is the overall motivational activities
should be proceeding under fair judgment based on performance rather internal politics. In
addition through assurance of proper division of labor, incentive for over duty and mandatory
leave help to overcome huge working load and enjoy a sound as well as healthy life. Besides
good relationship amongst employee and sound working environment also help the employee
to be satisfied with their job.

 Ensure Proper Promotional Activities:

They must prepare an organized set of plan regarding the advertising and promotional
activities which should include billboards, internet advertising and sponsorship. The sales
team and officers should provide periodic training on interacting and dealing with different
classes of potential and existing customers.

 Ensure Effective Computer Literacy:

117
As the bank is now mostly depends on computer therefore to increase the computer skills of
employees, the bank should provide training. Though they have knowledge about computer
but it is not enough. So bank should provide training to their employees to make them
efficient in computer.

 Ensure of Proper Decoration and Expanded Office Area:

Motijheel Local Office authorization should have to be more conscious and innovative in
their interior decoration to attract client from all ages. As Motijheel Local Office area is the
business area so the rush of client is the common scenario of this. So the space should be
extended for conducting and performing sound banking activities, service as well.

 Ensure Internship Desk and Specific Task:

Uttara Bank Limited is renowned for the internship. So bank should provide the internship
desk and some specific task for gathering some real life experience which they can utilize in
their future job. Moreover small amount of remuneration should provide to internee for
realize their importance as well as motivate to perform the task properly.

7.3 Conclusion

As an organization the Uttara Bank Limited has earned the reputation of top banking
operation in Bangladesh. It is relentless in pursuit of business innovation and improvement. It
has a reputation as a partner of consumer growth. As a bank, Uttara Bank makes a strong
position through its various activities. Its number of clients/ amount of deposit and
investment money increases day by day. This bank already has shown impressive
performance in Foreign Exchange Business.

Uttara bank introduced a specialized banking service in Export Import business. With a bulk
of qualified and experienced human resource, Uttara Bank Limited can exploit any
opportunity in the banking sector. Since its establishment it is rendering its services with
qualified and knowledgeable staff. The environment of Uttara Bank Ltd is very modernized
and friendly. The staffs are specialized in their respective fields. Each of them works on their
own and there is supervision from the top. The motivation of the staff, we believe comes
from the very sense of responsibility. Each member is individually responsible for his or her
work.

Consumers are more or less satisfied with the present services of the bank. Management
should think to start new services and take different types of marketing strategy to get more
customers in this competition market of banking.

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Uttara Bank Ltd. is pioneer in introducing many new products and services in the banking
sector of the country. But it faces continuous challenge from the local private banks and
foreign banks, which mainly specialize in the consumer banking. As a result, it has to develop
new products and services to ease the competition on a continuous basis.

Local Office (Motijheel, Dhaka) is one of the biggest and most potential branches of Uttara
Bank. It has a large portfolio with huge assets to meet up its liabilities and the management of
this office is equipped with the expert bankers and managers in all level of management. So it
is not an easy job to find out the drawbacks of this branch.

From the learning and experience point of view I can say that I have really benefited from my
internship program at UBL. This three months internship program at UBL will definitely help
me to realize my future carrier in the job market. Performance analysis of a department of a
bank is not so sufficient to measure and express perfectly within this short time of my
internship period. But it is a great opportunity for me to get use to with the operational
environment of commercial banking of UBL. I have tried by soul to incorporate this
internship report with necessary relevant information.

APPENDIX
119
 Bibliography

 Reference Books:
 Read, E.W. and Gill, E. k. (2001) ―Commercial Banking, 14th Edition; Person
Education Inc., Singapore.
 Rose, Peter S. (1999), Commercial Bank Management, Sixth Edition, Irwin-McGraw-
Hill New York.
 Ivancevich, John M., and Steven J. Skinner ―Business for the 21st century. Boston:
Irwin, 2003.
 Hossain Ali (2004) “A Practical Guide for Banking” 1st Edition.
 Shekhar K.C. & Shekhar L. (2005-2006) Banking Theory and Practice 18th Edition,
Bikash Publication House PVT LTD (New Delhi).
 Theory and Practice of Banking (B-101), Bangladesh Institute of Bank Management,
Dhaka, 2000.
 Gordon, E. & Natarajan, K., Banking: Theory Law and practice, Himalaya Publishing
House, Mumbai, 1996.
 Research Methodology of C.R. Kothari.

120
 Rahman, S., & Bari, A., Credit management in Banks: Ratio Analysis (pp-67-75),
Reading Materials on Credit Management in Banks (B-104), Bangladesh Institute of
Bank Management, Dhaka.
 Chowdhury, L.R., A Text Book on Foreign Exchange: Documents used in foreign
trade, Fair Corporation, Dhaka.
 Andley, K.K & Mattoo, V.J., Foreign Exchange Principles and Practices, Sultan
Chand. & Sons, New Delhi, 1996.
 Uttara Bank Limited: Annual Report of Uttara Bank Limited.

 Web Addresses:
 http://www.uttarabank-bd.com
 http://dsebd.org/displayCompany.php?name=UTTARABANK
 https://en.wikipedia.org/wiki/Uttara_Bank
 http://bankinfobd.com/banks/45/Uttara_Bank
 http://www.bangladesh-bank.org
 http://bdloan.net/uttara-bank-ltd-job-circular-2014.html
 http://www.ehow.com/how_8401527_calculate-apply-horizontal-analysis.html
 http://www.ehow.com/how_5486381_do-vertical-analysis-balance-sheet.html
 http://www.investopedia.com/university/ratios/liquidity-measurement/
 http://www.readyratios.com/reference/profitability/
 http://www.google.com

 Other References:
 Daily Statement of UBL
 Monthly Reports
 Schedule Bank Statistics
 Statement of Affairs
 Foreign Exchange Manuals
 Guidelines for Foreign Exchange Transaction
 Practical participation of UBL
 Different Types of Forms of UBL

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