Customer Satisfaction of taking Loan from Uttara Bank

The main purpose of this report is to analysis Customer Satisfaction of taking Loan from Uttara Bank. Besides there are several types of objectives involve here for this report. They are to get a clear picture of Loan  procedure of General banking and loans and find out the bank’s efficiency in managing loans also find out the bank’s efficiency in providing customer services. Finally find out the exiting problems of the bank (Branch) and provide some suggestions and analyze the bank’s overall performance. 

 

OBJECTIVE OF THE STUDY

There are several types of objectives involve here for this study. The objectives of studies are

  • To get a clear picture of Loan  procedure of General banking and loans .
  • To find out the bank’s efficiency in managing loans.
  • To find out the bank’s efficiency in providing customer services.
  • To acquire the knowledge of practical operations and the function of the Bank.
  • To gain an overall idea and know about the financial position of the bank.
  • To find out the exiting problems of the bank (Branch) and provide some suggestions.
  • To analyze the bank’s overall performance
  • To show the trend of the key financial indicates faced by the bank branch.

 

METHODS OF DATA COLLECTION

In conducting the study the data have been used were collected by using two methods. The methods are as follows:

Observation Method

Observation method may be defined as the systematic watching of facts and events occurring in the field of study. The researcher has observed all the activities of Loan  banking services. Through this method, he has collected some data about Loan banking services.

Interview Method

Interview is a face to face situation where one person (the interviewer), asks a person being interviewed (the respondent), questions to obtain answer pertinent to research problems. To get the real information and data about Loan  banking services, researcher asked some respondents and clients directly.

 

SOURCES OF DATA

In preparing this report, both primary and secondary sources of information have been used.

Primary Sources of Data

When data are collected through direct searching in the field then it is called primary source of data. Primary Sources are:

  1. Personal observation.
  2. Desk work in different section.
  3. Discussion with the bank’s officers.
  4. Discussion with my bank’s advisor/ supervisor.

Secondary Sources of Data

The secondary data are collected from Internet, different article published in the journals and magazines. Secondary sources are:

  1. Annual report of the bank.
  2. Publication’s of Bangladesh Bank.
  3. Different types of book related with banking.
  4. Newspaper.
  5. Website information.

 

PRODUCT AND SERVICES

The bank has not only the traditional banking Product or services but also some tailor made products in liabilities and assets Monthly Saving Scheme and Double Benefit Scheme etc. For deposit mobilization in one hand and consumer credit scheme, lease finance, personal loan, Uttaran house repairing and renovation scheme and SME financing in another hand, Besides, the bank has also some electro-banking products based on information technology of which Q-cash UBL ATM card is worth mentioning for providing 24 hours services to customers.

  1. Monthly saving scheme :- People always saving their money for future. That’s why UTTARA BANK provide monthly saving scheme. When customer open this sceheme they also gain monthly interest rate their saving money.
  2. Double benefit scheme :– Some time UTTARA BANK provide more benefited scheme for customer. Double benefit scheme is saving money end of period  is double money.
  3. Consumer credit scheme :- The bank distributed loan of Tk. 64.0 million and Tk. 1448.9 million during the tear 20011 under two special project namely “Uttaran Consumer Loan Scheme” and “Uttaran House Repairing & Renovation Scheme respectively the outstanding of the same stood at Tk. 87.4 million and 4263.6 million respectively at the end of year 2011. It may be mentioned here that the recovery rate in these schemes is satisfactory.
  4. Lease finance :- The bank continue to disburse loan under a special credit scheme in the name of  “ Lease Financing Scheme ” the outstanding of which stood at Tk. 391.6 million in December 2011. Major sectors where the bank has extended its business are mainly import & export, commercial enterprise, steel re- rolling mills, readymade garments, textile, edidle oil, and cement factory etc.
  5. Personal loan :- To cater the urgent financial need of the services holders having limited income, an amount of TK. 0.2 million was disbursed during the year 20011under personal loan scheme the outstanding of the same stood at Tk. 2.6 million at the end of the year 2011.
  6. SME financing :- Uttara bank limited has been putting its emphasis on small and medium enterprise Financing in line with the prudential Regulations/Guidelines of Bangladesh bank. The banks strategy was to provide working capital and term loan to different small and medium scale manufactures, traders and services provides that fall under SME sector.
  7. Electronic banking :- Uttara bank electronic banking day by day strong. In past time that was so poor but in present time this cover all branch in electronic system.
  8. ATM services :- An automated teller machine (ATM) is a computerized telecommunication devices that provides the customer access to financial transaction in a public space without the need of a bank teller. Uttara bank limited offers ATM card facility in the name of Q-cash UBL-ATM debit card. Any card holders has 24 hours access to cash withdrawal facilities. Such facilities are available with almost all Q-cash ATM booths of BRAC bank ltd. Around the country. There are two ATM booths in corporate and shantinagar branch owned by the bank. However the bank has a plan to expand the number of ATM booths and related products.

 

BANK OPERATIONAL AREA

Uttara bank limited is one of the front ranking first generation private sector commercial bank in Bangladesh. Uttara bank operation area mainly is Deposited, Loans. Remittance, Capital market.

Deposited

The bank principal source of fund was deposit. The banks deposit stood at Tk.59387.3 million as on 31 December 2011 compared to Tk.50817 million, thus recording 16.87 percent growth in last year. When customer open more deposit in bank that’s why there banking earn very much high.

Loans.

The bank implemented the system of credit risk assessment and lending procedures by strict separation of responsibilities among risk assessment, lending decision and monitoring function to improve the quality and soundness of loan portfolio. In 2011 Uttara bank limited registered a steady growth in the credit portfolio posting a growth of 6.22 percent. Total loans and advances of the bank stood at Tk.39451.4 million during the year 2009 as compared to Tk.37141.3 million of the previous year. Average loan per Branch stood at Tk.187.0 million. Sector wise allocation of advance revealed a well-diversified portfolio of the bank with balance exposure in different sectors.

 Foreign Remittance

Extension use of the technology along with large delivery has significantly fostered the growth of UBL remittance business. Uttara bank limited has seen a successful year 2011 in terms of expansion of its remittance business through its foreign correspondent and exchange houses. The bank has been continuing to extend special importance on foreign remittance from the last couple years. The volume of foreign remittance in the year 2011stood at Tk.44635.3 million in the preceding year registering as increasing of 23.74 percent. In order to keep pace with the time a scheme namely “Express Payment Scheme” has been introduced for inward remittance by using modern technology. Under this scheme a payee having his account with any branch of Uttara bank limited gets the proceeds of remittance sent from any part of the world with in 2 hours.

Share Capital

The authorized capital of the bank increased from Tk.1600.0 million to Tk.3200.0 million during the year 2011. The paid up capital of the bank has been increased to Tk.1597.4 million from Tk.798.7 million due to declaration of 100 percent bonus share in 2009. The total number of share was 15,973,184. The government of the peoples republic of Bangladesh, eighteen banks and fifty two financial institution held total 676397 shares worth Tk.67,639,700.00 and remaining 42,499 private shareholders held total 15,296,787 shares worth Tk.1,529,678,700.00. The total equity of shareholders of the bank at the end of year 2009 stood Tk.6,206.9 million and in 2008 stood Tk.3,688.8 million.

That is most operation area in Uttara Bank Limited in Bangladesh.

 

CAPITAL AND RESERVE OF UTTARA BANK LIMITED

The Authorized capital of the Bank increased from Tk. 1,000.00 million to Tk. 1,600.00 million during the year 2011. But the bank has already got approval from Bangladesh Bank to raise its Authorized Capital from Tk. 1,600.00 million to Tk 3,200.00 million. The paid up capital of the Bank has been increased to Tk.1597.4 million from Tk. 798.7 million due to declaration of 100% bonus share in 2009. The total number of share was 15,973.184. The Government of the People’s Republic of Bangladesh, five Banks and fifty two financial institutions held total 676,397 shares worth Tk. 67,639,700.00 and remaining 42,499 private Shareholders held total 15,296,787 shares worth Tk 1,529,678,700.00. The total equity of shareholders of the Bank at the end of the year 2009 stood Tk 6,206.9 million and in 2008 stood Tk 3,688.8 million .

The Reserve Fund increased to Tk. 4,609.6 million during the years by increasing 59.49 percent increase over last years Tk. 2,890.2

FIVE TEARS AT A GLANCE

(Figure in million)

SL. No.   Particulars20092008200720062005
 Income Statement     
01Gross Income7396.56,313.55020.24435.14265.0
02Gross Expenditure4882.64,007.93554.03153.22650.4
03Gross Profit2513.92,305.61466.21281.91614.6
04Pre-tax profit218892,098.11143.7866.8782.6
05Post-tax profit1105.21,138.5409.5248.8142.6
 Balance Sheet
06Authorized capital3000.01,600.01000.01000.0200.0
07Paid-up-capital1597.3798.6399.3199.799.8
08Reserve fund and other reserves4609.62,890.22054.21885.81765.2
09Shareholders equity6206.93,688.82453.52085.41865.0
10Deposits59387.350,817.043586.439360.236891.9
11Advances(gross)39451.437,141.1328477.425163.921851.5
12Investments22502.511,188.314455.89564.510062.1
13Guarantee business1633.51,826.91474.41564.11781.4
14Export business15096.915,039.614784.518133.918191.8
15Import business29129.331,146.925407.922630.723092.4
16Foreign remittance44635.336073.229575.328728.127276.0
17Fixed assets1088.4165.71014.0942.1776.2
18Total assets71946.058444.352860.345217.042062.2
19Classified loans and advances2842.02633.83530.93783.93528.1
20Total off balance sheet exposures8560.58806.98830.57428.58538.8
 BIS CapitalMeasures     
21Required Capital3688.23420.52617.82083.01811.1
22Actual Capital5829.04048.42746.72273.02004.0
 Credit Quality
23Required Provision889.7684.8727.1790.6727.0
23.aProvision Maintain910.1792.8826.4907.4853.8
24Required Provision off balance sheet exposure85.688.144.2N/AN/A
24.aProvision Maintain101.7101.744.2N/AN/A
 Share Information
25Income per share69.19142.56102.56124.59142.83
26Market value per share1450.253393.754854.752312.252811.00
27Price earning ratio20.9623.8147.3418.5619.68
28Book value per share388.58437.88573.73957.661694.54
 Operating performance Ratio
29Advance-Deposit ratio0.66:10.73:10.65:10.64:10.59:1
30Total Advance/ Class. Advance7.20%7.09%12.40%15.04%16.14%
31Total Adv. Class. Advance5.21%4.46%8.83%13.40%12.37%
32Income from equity17.80%30.86%16.69%11.93%7.655
33Income from Assets1.54%1.95%0.77%0.55%0.34%
 Other Information
34Number of shareholders42570272281246753905351
35Number of Branches211207207201198
36Number of Employees32913476347635053265
37Human Resources Development123910621086698761

 

TOTAL ASSETS POSIION OF THE BANK FOR LAST FIVE YEARS

   Particulars20092008200720062005

 

Total Assets71946.058444.352860.345217.042062.2

 

TOTAL LIABILIT & SHAREHOLDRE EQUITY POSITION FOR LAST FIVE YEARS

   Particulars20092008200720062005

 

Total Liability65739.054755.450406.743131.538456.0

 

Shareholder Equity6206.93688.82453.52085.41865.0

 

 

INTRODUCTION OF GENERAL BANKING AND LOANS

There are several types of departments perform in a bank. General banking is one of the most important departments for banking sector. General banking department is that department which is mostly exposed to the minimum number of bank customers. It is the introductory department of the bank to its customers. There are no businesses in the world who doses not think about profit. All business concern about profit through selling product or provide services. A bank provides various type of financial service to its customers for profit. Dilkusha branch of Uttara bank ltd. has all required of general banking and all these section are run by manpower with their high quality banking knowledge.

Under General Banking department the following sector are included:

  • Account opening department
  • Cash department
  • Clearing department
  • Collection department
  • Local remittance department

In the following they are shortly describe

 

ACCOUNT OPENING DEPARTMENT

The relationship started with the customer and the bank by opening the account. Initially all the accounts are opened with a deposit of money by the customer. But in this day there are several types of rules and regulation provided by the government for opening the account. This is only for the terrorist (JMB) arise of our country that damages the total nation.  Now if any one wanted to open his/ her account then they must sign in the money laundering, they have to tell about there money sources and face various types of question.

 

Function of the Department  

The function of the department is to perform the following main function:

  • Accepting Deposit
  • Opening of account
  • Cheque book issue
  • Transfer of account
  • Closing of account

Accepting Deposit

Deposits are life blood of a commercial bank. Without deposit there are no accounts can be opened? In Shantinagar branch there are various types of account are offered for the various customer. They are different group. They are like

  • Demand deposit account
  • Time deposit account
  • Fixed deposit account

Demand Deposit Account

The amount in account are payable in demand so it is called demand deposit account. The following accounts are under Demand deposit accounts:-

  • Current account
  • Saving account
  • STD (Short notice term deposit)
  • CC (Cash Collection)

Current Account

These types of account can be opened by both individual and business concern. A current account holder can draw Cheque on his account for any amount for any number of times in a day as the balance in his account permits. When the amount is large than the account holder may be

remind it a few days ago. This account provides no interest. The minimum balance to be maintained is Tk. 2000/-. No new account can be opened with a Cheque.

Savings Account

Individuals for savings purposes open this type of Account. Current interest rate of these accounts is 5.50% per annum. A minimum balance of Tk.1000 is required to be maintained in a SB account interest on CB account is calculated and accrued monthly and credited to the account half yearly. Interest calculation is made for each month on the basis of the lowest balance at credit of an account in that month. A depositor can withdraw form his SB account not more than twice a week up to an amount not exceeding 25% of the balance in the account.

  • Any Bangladeshi National residing home or abroad may open savings account with UBL
  • This account may be opened in single/joint name.
  • The account holder may nominate his nominee in this account.
  • The nominee can get the balance amount without submitting succession certificate after the death of account holder.

Requirement for Opening of the A/C

  • Account opening form as per format below. The account opening form and signature card to be filled in and duly signed.
  • Two copies passport size photographs of the account holder.
  • Photograph of nominee (if any) duly attested by the account holder.
  • Photocopy of the 1st 7 pages of the passport for non-resident Bangladeshi national.

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

Special Notice Term Deposit (STD)

The deposit in this account is withdrawal on prior notice varying from 7 to 29 days and 30 days or more. The interest is paid on the balance of the account. Current interest rate is 6.50% per annum.

  • Semi-Govt., Autonomous organization and an individual may open STD Account with UBL.
  • UBL offers attractive/competitive rate of interest in STD 7 days notice required to withdraw big amount.

Opening Procedure

For opening such A/C, application in the prescribed from along with a set of specimen signature duly verified by Bangladesh mission abroad or by a reputable bank of any other person known to the bank, should be obtained by the brandies. In case of persons, already maintain any F.C A/C or N.F.C.D. A/C with them, reference to that F.C A/C will serve, the purpose of introduction, the branch may verify the signature from the specimen signature and already available with them. Only one such F.C A/C can be maintained and the balance in the A/C should not exceed $ 30.000/- or equivalent pound sterling at any one time. The A/C holder is also required to submit photocopies of passport, visa, and work permit/contract. As this is a current account no Interest is paid to the A/C holder.

Time Deposit Account:

The amount in this A/C is payable only after stipulated time. The following a/cs are under time deposit a/c: Fixed Deposits which are repayable after the expiry of fixed period and negotiable.

Bearer certificate of deposits (BCD), which are repayable after the expiry of fixed period but are negotiable. These are not renewable. Non –resident foreign currency deposits are them deposits

maturing after 1 month, 3 months, 6 months and 1 year. This a/c’s can be opened either in U.S dollar or pound sterling. No interest is paid in case of premature encashment.

Fixed Deposit Account

These are deposit, which are made with the bank for a fixed period specified in advance. The band need not maintain each reserve against these deposits and therefore, bank gives high rate of interest on such deposits. A FDR is issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest and the date on which the deposit will fall due for payment.

 

INTEREST ON DEPOSITS

ParticularsRate Of Interest
Interest Rate on Deposits:

Savings Deposits

Special Notice Deposits (STD)

 

5.50%

6.50%

Fixed Deposits (Time Deposits)

3 months

6 months

1 year

2 years and above

3 years and above

 

8.25%

8.50%

9.00%

9.25%

9.50%

 

OPENING OF ACCOUNT

It includes two steps. They are

  1. Account opening procedure.
  2. Classification of customer.

Account Opening Procedure

Documents needed for each accounts separately:

(Current/ Saving accounts)

 

Current Account

Limited Company

  • Certificate of Incorporation.
  • Certificate of Commencement of business.
  • Memorandum of association.
  • Article of association.
  • Power of attorney.
  • Resolution of the Board of Directors authorizing opening of an account.
  • Societies/ Club/ Association.
  • Other than above mentioned common documents resolution of who will operates the account
  • Must be noted.

 Proprietorship Firm

Name of the authorized persons, designation, specimen, signature card, trade license, and passport / chairman certificate.

Partnership Firm

  • Account must be opened in the name of the firm.
  • The form should describe the names and address of the entire partner.
  • Trade license from City Corporation is needed.
  • Partnership deed.
  • Letter of authority is achieving.

CLASSIFICATION OF CUSTOMER

It includes the following things:

  • Individual (Personal)
  • Proprietorship (Sole trades)
  • Partnership firms (Registered or unregistered)
  • Joint stock companies (Private limited companies/ public ltd.)
  • Public sector corporations
  • Municipalities/ Municipal/ corporations/ Local Bodies etc.
  • Clubs/ Societies/ Associations/ Schools/ Colleges/ Universities etc.
  • Executors/ Administrations
  • Trustees
  • Illiterate persons
  • Constituted attorney
  • Wage Earners.

ISSUE OF CHEQUE BOOK

According to Section 60f Negotiable Instruments Act, 1881, a Cheque is “A Bill of Exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.” To facilitate withdrawals and payments to third parties by the customer, UBL provides a Cheque book to the customer Cheque book contains 10 leaves for savings account while for current account is 25 or 50 or even100 leaves. A Cheque book issuing register is maintained in this regard. This register contains the Cheque book number, leaf number, issuing date. After giving this entries to this register, information are send to the Computer Department for taking necessary steps to pass the cheques during withdrawal. The Cheque book also contains requisition slip-which is used by the customer to obtain new Cheque book. When all the leaves are used, the customer submits this slip to the bank. A senior official then issues a new Cheque book and subsequent entries are given in the register and in computer.

If the Cheque book is lost, the customer has to furnish a guarantee indemnifying by an application to the bank. After fulfilling this, a new cheque book is issued. Seldom customers are allowed to use loose cheques if the customer wants to draw money without presenting previously issued cheque. A separate register is maintained in this regard. But this is highly discouraged in UBL. In a few days ago when the account holder will busy than he send a representative, the banker issued cheque and provide a acknowledgement with the cheque book. When the acknowledgement are return by the account holder by the signature than he can draw the cheque. But now the rules and regulation by the government is so heard, so the account holders have to come for issuing a new cheque book. A fresh cheque can be issue by following ways.

 

LOCAL REMITTANCE DEPARTMENT

UBL has its branches spread throughout the country and therefore, it serves as best mediums for remittance of funds from one place to another. This serves is available to both customers of the bank. The department, which provides the facility, is known as local remittance department.

Function of the Local Remittance Department

The following are the main function performed by the credit department:

Issuing & payment of demand draft.

All related correspondence with other branch & Banks

  • Compliance of Audit & Inspection
  • Balance of D.D. payable & D.D. paid with advice
  • Attached to sanchaya patra and wage Earners development Bonds.
  • Payment of Incoming TT.
  • Issuing, encashment of pay order and maintenance of record and proof sheet.
  • Issuing and encashment of all kind of sanchaya patras and wage earners development bond.
  • All related statement & correspondences with Bangladesh Bank & other Bank.
  • Issuance of Local Drafts
  • Issuing and encashment of BCD
  • All related correspondences
  • Issuing of outgoing TT
  • Issuance of Local Drafts
  • Issuance of T.T. ICA. IBCA & IBDA

Transaction Types

  • Collection of Cheque

Up to Tk. 25,000 @ .15%, Minimum Tk. 10.

Above Tk. 25,000- 1, 00, 000, @ .15%, Minimum Tk. 50.

Above 1, 00,000-5, 00,000 @ .10%, Minimum Tk. 150.

Above 5, 00,000 @ .50% Minimum Tk. 600- Maximum 1,200.

  • Demand Draft ( D.D )

Local Draft is an instrument containing an order of the Issuing branch upon another branch known as drawee branch, for payment of a certain sum of money to the payee or to his order on demand by the beneficiary presenting the draft itself.

 

CASH DEPARTMENT

Case department of different instruments is made in the cash section. Procedure of cash payment against Cheque is discussed under elaborately. Cash payment of Cheque includes few steps:

First of all the clients comes to the counter with the check and give it to the officer in charge there. The officer checks whether there are two signatures on the back of the Cheque and checks

his balance in the computer. After that the officer will give it to the cash in charge. Than the cash in charge verifies the signature from the signature card and permits the officer in computer to debit the client’s account by giving posting. A posted seal with teller number is giving. Then the Cheque is giving to the teller person and he after checking everything asks the drawer to give another signature on the back of the cheque. If the signature matches with the one giving previously then the teller will make payment keeping the paying Cheque with him while writing the denomination on the back of the Cheque. Cash paid seal is given on the claque and make entry in the payment register.  Cash department maintain 2 types of entry book. One is A book and another one is M book. A Book’s limit is 1-2500000 taka. And M Book’s limit is 2500000-5000000 taka. This system is followed both cheque receipt and payment.

There are few things that shell be scrutinized and checked before making payments.

  • Name or the drawer
  • Account number
  • Specimen signature
  • The validity of the Cheque and make it sure that is it not post dated or undated.
  • The amount in words and figures are same.
  • Cash balance calculation.

The calculation is done by the officer in charge of cash section and then manager or authorized officer will check the balance and sign in the cash balance book. The balance is maintained in the balance book. Opening balance of current day in the closing balance of the previous day. Total receiving of the current day is added with the opening balance and total payment is deducted for calculating the closing balance or each balance

 

CLEARING DEPARTMENT

According to the article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the number of the clearinghouse, are called as scheduled Bank. The scheduled banks clear the chouse draw upon one another through the clearing house. This is an arrangement by the central bank where every day representative of the member banks gather in the clear the chouse. Banks for credit of the procedure to the customer’s account accept Cheque and other similar instruments. The bank receives such instrument during the day from account holder. Many of these instruments are draw payable at other bank. If these were to be present at the drawee banks to collect the procedure, it would be necessary to employee many massagers for the purpose. Similarly, there would be many chouse draw on this the messengers of other bank would present bank and them at the counter. The whole process of collection and payment would involve considerable labor, delay, risk and expenditure. All the labor, delay, risk and expenditure are substantially reduce, by representative of all the banks meeting at a specific time, for exchanging the instruments and arriving at the net position regarding receipt or payment. The place where the banks meet and settle their dues is called the clearing house.

Function of the Department                   

The following are the main functions performed by the department:

  1. Pass outward instruments to the clearing house.
  2. Pass inward instruments to representative department.
  3. Return instruments in case of dishonor.
  4. Prepare IBCA or IBDA for the representative branch and HO.
  5. Accounting entries of clearing department.

 

COLLECTION DEPARTMENT

Cheque, drafts etc. are drawn on bank located outside clearing house are sent for collection. Principal branch collects its clients above mentioned instruments from other branch of UBL and branches of other than UBL. In case of out ward bills of collection customers account is credited after finishing the collection processor and in case of inward bills customers account is debited for this purpose.

CUSTOMER SATISFACTION OF LOAN .

We know, Customer is the main Source of the  Bank and Others Commercial Department. Banking business consists of borrowing and lending. Banks act as intermediaries between surplus and deficit economic units. Thus a banker is a dealer in money and credit. Banks accept deposit from large number of customers and then lend a major portion of the accumulated money to those who wish to borrow. In this process banks secure reasonable return to the savers, make funds available to the borrowers at a cost and earn a profit after covering the cost of funds. Banks, besides their role of intermediation between savers and borrowers and providing an effective payment mechanism, has been allowed to diversify into many new areas of better paying business activities.

Loans and advances comprise the most important asset as well as the primary source of earning for the bank. On the other hand, loan is also the major source of risk for the bank management. A prudent bank management should always try to make an appropriate balance between its return and risk involved with the loan portfolio and unregulated bank might be fraught with unregulated risk for maximizing its potential return. In such a situation a bank might find itself in serious financial distress instead of improving its financial health. Consequently not only the depositors but also the general shareholders will be deprived of getting back their money from the bank

Commercial banks collects money from one group of people as deposits and distribute them within the other group of customers as loans and advances and it is the most important function of commercial bank. By this way the bank earns profit.

As a private commercial Bank UBL has some inherent commitment to the society. It provides loans and advances to the customer, which can gear up the economy actively. Commercial and Industrial loans to business concerns to finance their day-to-day activities, to finance their longer term needs and for other business purposes. The maturity of these range from 1 (One) year to 10 (Ten) years or longer. UBL has been extending credit facilities to the potential, productive and sector as per Bangladesh Bank instructions. Good loans are profit-earning asset to the Bank. A big portion of opening income is generated from sound lending.

The Bank implemented the system of credit risk assessment and lending procedures by strict separation of responsibilities among risk assessments, lending decisions and monitoring function to improve the quality and soundness of loan portfolio. In 2009 Uttara Bank Limited registered a steady growth in the credit portfolio posting a growth of 6.22 percent. Total loans and advances of the Bank stood at TK 39,451.4 million during the year 2009 as compared to TK 37,141.3 million of the previous year. Average loan per Branch stood at TK 187.0 million. Sector wise allocation of advances revealed a well-diversified portfolio of the Bank with Balanced exposure in different sector.

So in this point of view , Customer is the method used for making reference to the metter Field.

 

CATEGORIES OF LOANS

Categories of loans offered by the bank UBL:

  • Agriculture
  • Large and medium scale industries
  • Export
  • Other commercial lending (Jute and fertilizer)
  • Small and cottage industries
  • Personal loan
  • Consumer loan
  • Others

Some other loans are:

  • Housing loans
  • Residential
  • Commercials
  • Transport
  • Cold storage
  • Brick field
  • Gold loans
  • Against work order
  • Against work (FDR) loan against sanchaypatar
  • Loan against WEBD, ICB, unit certificate
  • Loans against life insurance policy
  • Other special program.

 

Sector wise position of loans and Advance as on 31.12.2009 (Taka in millions)

Sectors of Loans & AdvancesPublic/ NationalizedPrivateTotal
Agriculture :

a)Crops

b)Fisheries

c)others

 

 

92.4

30.2

191.7

 

92.4

30.2

191.7

     2.    Industrial leading(Term):

a) Large & Medium

b) Small & Cottage

 

5167.3

11.3

5167.3

11.3

Industrial leading (Working Capital):

a) Large & Medium

b) Small & Cottage

 

 

545.6

25.7

 

545.6

25.7

Commercial Lending:

a)Export

b)Import

c)Internal Trade

 

10.5

 

858.4

3628.8

14439.3

 

858.4

3628.8

14449.8

Special Programmed:

a)Consumer Credit Scheme (Uttaran)

b) Personal loan Scheme

c) Small Business loan Scheme

d) Uttaran House Repairing and

Renovation  Scheme

 

 

87.4

02.6

246.3

4263.6

 

87.4 02.6

246.3

4263.6

Housing:

a)General Housing Building loan

b)Staff   Housing Building loan

 

 

32.7

402.6

 

32.7

402.6

     7.    Leasing Financing391.6391.6
     8.    Others5861.35861.3
     9.    Bills disconnected and purchased

a) In Bangladesh

b) Outside of Bangladesh

 

 

3027.0

135.1

 

3027.0

135.1

Total: Loan & Advance10.539440.939451.4

 

PERSONAL LOAN

Personal Loan Scheme for Salaried Officers

UBL started personal loan scheme for salaried officials of reputed organizations from 1999 to meet:-

  • Emergency expenses for own marriage of a service- holder or his dependents.
  • Emergency expenses of urgent surgical operation/ medical treatment.
  • Emergency educational expenses of the children for admission/purchase of books, examination fees etc.

Special Features

  • Any permanent salaried employee aged between 20 to 55 years is eligible to get loan.
  • No collateral security is required.
  • Maximum Amount of loan Tk. 1, 00,000.
  • Maximum period of loan up to 3 years.

Required Document

  • Document related to applicants job to prove himself
  • Two copies passport size photographs.
  • Photograph of nominee (if any) dully attested by the account holder.

 

CONSUMER-CREDIT SCHEME:

UBL started uttaran consumer’s credit scheme from 1996. UBL offers opportunity of financial assistance for-

  • Motor cycle/car-New or re-conditioned.
  • Refrigerator/deep freeze.
  • Television /VCR/VCP/VCD.
  • Radio/Two in one.
  • Air condition/Waters cooler/Water pump.
  • Washing Machine.
  • House hold furniture.
  • Cellular Telephone.
  • Electric Fan.
  • Bi-cycle.
  • Dish antenna.
  • Baby Taxi, Tempo/Microbus(For self employed person)
  • Kitchen articles such as Oven, Micro oven, Toaster etc.

Special Feature

  • No collateral security is required.
  • Simple rate of interest.
  • Quick sanction.
  • Maximum loan amount Tk. 300000.
  • % incentive on total interest charge.

 

CREDIT RATING OF THE BANK

The Credit Rating (Surveillance Rating) of uttara Bank Limited was rated by the Credit Rating Agency of Bangladesh Limited (CRAB) on the basis of audited Financial Statement as on 31.12.2008. The Summary of the rating is presented below:

Credit Rating Report (Surveillance Rating) on Uttara Bank

ParticularLong TermShort Term
Current Rating

(Based on 31.12.2008)

A2

(Strong capacity & High Quality)

ST-2

(Good grade)

Date of Rating25.06.200925.06.2009
Validity of Rating01(one) year01(one) year

 CRAB has awarded “A2” (Pronounced as single A Two) to Uttara Bank Limited in the Long Term and ST-2 in the Short Term.

 

DOUBLE BENEFIT DEPOSIT SCHEME

  • Any adult Bangladeshi National will be eligible to open this account.
  • Minimum Tk. 100000 (Taka one lac only) and multiples thereof will be accepted as deposit under this scheme.
  • The period shall be of 6 (six) years term.
  • Deposit may be encased before its maturity and no interest will paid if encased before 1 (one) year of deposit.
  • Interest will be paid at savings rate if encased after 1 (one) year.
  • Advance will be allowed up to 80% of the deposit after completion of one year.
  • Full amount including interest will pay on maturity.
  • Tax, surcharge, source-Tax, Levy, Govt. excise duty will be recovered from the depositors account.
  • Account holder can appoint a nominee against the account.
  • Bank reserves the right to close the account at any time and make amendment/ alteration of the terms & conditions of the scheme without assigning any reason.

 

 

SWOT ANALYSIS FOR UTTARA BANK LIMITED

Strength

  1. Uttara Bank is one of the largest and oldest private-sector commercial bank in Bangladesh,
  2. They have over two hundred (207) branch for customer service.
  3. The bank has more than 600 foreign correspondents worldwide.
  4. They have over 3000 employees’ for ensure best possible and fastest services to its valued clients.
  5. Uttara is a bank that serves both clients and country.
  6. They have an 18-storied building at Motijheel of their own.
  7. Working environment of UBL is such wonderful.

Weakness

  1. There banking system is not fully automation system.
  2. There security (Security Camera) system has to improve.
  3. There MIS is not so strong.
  4. The absence of certain strengths may be viewed as a weakness.
  5. They working system is know also manual system.

Opportunities

  1. The external environmental analysis may reveal certain new opportunities for profit and growth.
  2. They have a great opportunity of leading banking institution and to play a pivotal role in the development of the country though they have 207 branches.

Threats

  1. Compete with the huge number of competitors in the market.
  2. Changes in the external environmental also may present threats to the firm.

Going with new strategy would be risky.

 

RATIOS

Bank profitability ratios

ROA = return on assets =NI /ATA= net income / average total assets

Calculation:

Table-1

YearNet incomeAverage total assetRatios %
2005142.63505.10.00008
2006248.83768.00.00009
2007409.54405.00.00006
20081138.54870.30.00003
20091105.25995.50.01122

Interpretation:

From the graph we can see that the value of return on assets of Uttara Bank Ltd. was increased in 2005 to 2006 and the value of return of assets was decreased in 2007 to 2008 than previous year. In 2009 the value of return on assets was increased than previous all year.

ROE = return on equity =NI / SE= net income / average stockholders’ equity

Calculation:

Table-2

YearNet incomeAverage stockholders equityRatios %
2005142.61865.00.002
2006248.82085.40.002
2007409.52453.50.001
20081138.53688.80.0005
20091105.26206.90.13

Interpretation:

The value Return on Equity of Uttara Bank Limited was same in 2005 and 2006. The value of ROE was decreased in 2007 to 2008 from previous year and ROE dramatically increased in 2009 from all previous years

PM = profit margin = NI / OI = net income / operating income

Calculation:

Table-3

YearNet incomeOperation incomeRatios %
2005142.6782.60.0013
2006248.8866.80.0015
2007409.51143.70.001
20081138.52098.10.0004
20091105.22188.90.175

Interpretation:

From the graph we can see that the value of profit margin of Uttara Bank Limited was increased to 2005 to 2006 and the value was decreased in 2007 to 2008 from previous two years. In 2009 it was dramatically increased from previous year.

ROD = return on deposits =NI / ATD = net income / average total customer deposits

Calculation:

Table-4

YearNet incomeAverage total customer depositsRatios %
2005142.636891.90.0001
2006248.839360.20.0001
2007409.543586.40.00008
20081138.550817.00.00003
20091105.259387.30.014

Interpretation:

The value of return on deposits of Uttara Bank Limited was same in 2005 to2006 and the value of return on deposits was decreased to 2007 to 2008 from previous two years. ROE dramatically increased in 2009 from previous all year.

ROSC = return on shareholder capital = NI / SC = net income / shareholder contributed capital

Calculation:

Table-5

YearNet incomeShareholder contributed capitalRatios %
2005142.67213.60.036
2006248.84076.70.02
2007409.52442.30.008
20081138.51864.00.002
20091105.21654.10.505


Interpretation:

From the graph we can see that the value of return on shareholder capital of Uttara Bank Limited was decreased in 2005 to 2006 and in 2007 the value of return on shareholder capital increased and in 2008 the value was fall in 2008. In 2009 it was dramatically increased from all previous year.

NOM = net operating margin = OI / IN = operating profit or income / interest income

Calculation:

Table-6

YearOperating profit or incomeInterest incomeRatios %
2005237.8210.50.586
2006267.8274.20.509
2007314.3299.70.56
2008411.2408.40.443
2009460.6449.20.466

Interpretation:

From the graph we can see that the value of net operating margin of Uttara Bank Limited show up and down trade. The value of net operating margin was decreased from 2005 to 2006 and the value again increased in 2007 and in 2008, it was decreased and the value of net operating margin of Uttara Bank Limited was increased.

 

Bank efficiency ratios

IEE = interest income to expenses = (INIE) / ATLA = (interest income interest expenses) / average total Loans and advances

Calculation:

Table-7

YearInterest income – interest expenseAverage total loan & advanceRatios %
2005254.2209.10.012
2006274.2251.60.022
2007299.7284.70.021
2008408.4371.40.032
2009449.2394.50.024

Interpretation:

The value of Interest income to expenses of Uttara Bank Limited was increased from 2005 to 2006 and in 2007 the value was decreased slidely and the value was increased dramatically in 2008 but it was fall in 2009. So we can see that the value is going up and down.

OEA = operating expense to assets = OE / ATA = operating expenses / average total assets

Calculation:

Table-8

YearOperating expense Average total assetsRatios %
2005122.4420.60.028
2006139.6452.10.031
2007167.7528.60.032
2008180.7584.40.031
2009209.2719.40.029

Interpretation:

From the graph we can see that the operating expense to assets of Uttara Bank Limited was continuously increased from 2005 to 2006 to 2007. But it was decreased in 2008 to 2009 from 2007.

OIA = operating income to assets = OI / ATA = operating income / average total assets

Calculation:

Table-9

YearOperating income Average total assetsRatios %
2005237.8420.60.066
2006267.8452.10.059
2007314.3528.60.059
2008411.2584.40.07
2009460.6719.40.064

Interpretation:

The value operating income to assets of Uttara Bank Limited was 0.066 in 2005. It was decreased in 2006 and remains constant in 2007. OIA was increased in 2008 and in 2009 it was decreased.

OER = operating expenses to revenue = OE / OI = operating expenses / operating income (revenue)

Calculation:

Table-10

YearOperating expenseOperating incomeRatios %
2005122.4237.80.421
2006139.6267.80.521
2007167.7314.30.534
2008180.7411.20.439
2009209.2460.60.454

Interpretation:

From the graph we can see that the value of operating expense to revenue of Uttara Bank Limited was increased in 2005 to 2006 to 2007 and the value of operating expense to revenue was decreased in 2008 and the value of operating expense to revenue was increased in 2009.

ATO = asset turnover = IN / ATA = interest income / average total assets

Calculation:

Table-11

YearOperating incomeAverage total assetsRatios %
2005237.8420.60.048
2006267.8452.10.061
2007314.3528.60.057
2008411.2584.40.0698
2009460.6719.40.062

Interpretation:

The value of asset turnover of Uttara Bank Limited was increased in 2005 to in 2006. But in 2007 it was decreased and in 2008 ATO again increased and it was decreased in 2009 from previous one year. So we can see that the value of asset turnover is going up and down.

NIM = net interest margin = (IN IE) / ATA = (net interest income net interest expenses) / average total assets

Calculation:

Table-12

YearNet interest income – net interest expense Average total assetsRatios %
2005342.9420.60.012
2006847.0452.10.022
2007545.0528.60.021
2008190.9584.40.032
2009862.4719.40.024

 

Interpretation:

From the graph we can see that the value of net interest margin of Uttara Bank Limited was increased in 2005 to 2006. From 2007 to 2008 the value was increased from previous two years and the value of net interest margin was decreased in 2009 from previous year.

NNIM = net non – interest margin = (NIN NIE) / ATA = (net non-interest income net non-interest expenses) / average total assets

Calculation:

Table-13

YearNet non interest income – net non interest expense Average total assetsRatios %
2005384.9420.60.026
2006421.9452.10.0066
2007495.3528.60.0065
2008702.8584.40.0072
2009261.4719.40.0113

Interpretation:

From the graph we can see that the value of net non-interest margin of Uttara Bank Limited was highly increased in 2005. After that the value was dramatically decreased in 2006 to 2007 and the value was slowly increased from 2007 to 2008 to 2009.

Asset-quality indicators

  1. PEA = provision to earning assets = PLL / ATLA = provision for loan losses / average total loans and advances

Calculation:

Table-14

YearProvision for loan lossesAverage total loans & advanceRatios %
2005300.0234.60.01
2006400.0251.60.016
2007255.8284.70.009
2008925.5371.40.002
2009320.0394.50.008

Interpretation:

The value of provision to earning assets of Uttara Bank Limited was increased from 2005 to 2006. But the value was dramatically decreased in 2007 from previous two years. After that the value was increased in 2009 from previous year.

 

 

 

 

Improvement of their services

They have to improve their services. Now the entire bank of our country provides such outstanding services like ATM/ On-line banking/ Credit Card/ Debit Card and many others types of services. BRAC bank provides some extra services like ‘Campus account’ Uttara bank have to provide these types of services to the customers.

Disguised Employment

In course of my brief Bank’s career in UBL I found that a good number of employees are not working hour. This work force should be brought under utilization. The skill and experience of this section of employers should be utilized properly in the development of the Bank.

 

BETTER RECRUITMENT

Uttara Bank Ltd. must pursue a strong and an effective recruitment system so that the right persons are recruited in the right position (job). Though the bank is expanding, it must focus on attracting, getting and retaining qualified personnel’s for filling the vacant positions.

Disguised Employment

In current situation it would be the major problem of Uttara bank limited. The situation of too many heads but few heads must be eliminated for the future of the bank. In order to enhance the productivity of the work force at Uttara bank limited, the management must have to consider the appropriate amount of work force required and must assess the productivity of each employee. The employees who do not have many things to be done should be relocated or provision should be given to them for voluntarily retirement.

 

ENHANCEMENT OF REMUNERATION

The most important lacking of UBL that have to be improving immediately is Enhancement of remuneration. The current remuneration of Uttara bank limited in very poor, unimpressive and not capable to attract quality personnel to fill up its position. It have to be said that the foreign banks pay double that of Uttara bank limited and other private banks also pay a higher scale of remuneration than Uttara bank limited. It is the time the management should consider revising the remuneration package in order to attract the high quality human resource and of course to retain them in Uttara bank limited.

In course of my brief Bank’s career in UBL I found that a good number of employees are not working hour. This work force should be brought under utilization. The skill and experience of this section of employers should be utilized properly in the development of the Bank.

 

 

 

RECOMMENDATION

Before drawing the end I would like to offer the following suggestions for bringing improvements of UBL.

  • In general banking department they follow traditional system. The entire general banking system is not fully computerized so an implementation of fully automated system is required.
  • They are not using data base networking in information technology (IT) department. So they have to transfer data from branch to branch and branch to head office by using transferable disk. Such as –floppy which are risky?
  • The Accounts opening procedure is not easier to the customers, so every branch have to need a separate desk for account opening.

 

CONCLUSION

Banking sector is the chief financial intermediaries in a country. It’s also true for Bangladesh. Uttara bank limited is a very challenging institution. In the age of globalization and free trade, the process and the system of running a bank is changing. UBL (Uttara Bank Ltd.) is continuously managing itself with this changing environment. The company strategies are clean and concise. The return is pretty good. If the company performs this way, we can expect that in near future Uttara bank limited may become one of the top performer in banking sector of our country. They are also able to contribute to our economy in better way. The working environment of the bank is impressive. It was also found that the bank (Branch) is doing better in most of the sectors and their performance is better than average.  However during the year 20012 their investment is not sufficient. The investment during 2012 went down in comparison to that of the previous years.  Finally it can be said that the bank is doing very good in the competitive market and if it can continue to perform this way it can become a leading banking institution which can play a pivotal role in the development of the country.