United Commercial Bank Limited
1.1 Introduction of the study
Internship program is the systematic gathering, recording and analyzing of data about the subject that a student goes to learn on the program.
The aim of this Internship program is to connect practical knowledge with theoretical knowledge. Now the world is a competitive world. So everybody has to be expert in both practical knowledge and theoretical knowledge.
During my work, I have faced various obstacles. By the grace of Al Mighty Allah and by the help of some related person, I have overcome those problems successfully.
1.2 Objectives of the Study
The objective of the study is to gather practical knowledge regarding banking system and its operations. Theoretical classes of BBA provide us theories regarding different subjects whereas practical orientation gives us the chance to view those systems and their operations. More precisely we can identify the objectives of this report as follows:
- To know about the general Banking activities of the sample banks.
- To observe the working environment in commercial banks.
- To apply theoretical knowledge in the practical filed.
- To have exposure to the functions of foreign exchange section.
- To observe the various investment indicators of UCBL.
- To study the existing overall banker customer relationship.
1.3 Methodology of the Study:
In order to make the report more meaningful and presentable, the following of data and information have been used widely:
The primary sources of data are :
> Face to face conversation with the respective officer of the branch.
> Face to face conversation with the clients.
> Relevant file study as provided by the officers concerned.
The Secondary sources of data are:
> Annual reports of the UCBL.
> Periodicals published by the Bangladesh Bank.
> Different Books articles etc.
> Website of UCBL.
1.4 Scope of the Study:
Banking system occupies an important place in a Nation’s economy. A banking institution is indispensable in a modern society. It plays a vital role in the economic development of a country and forms the core of the money market in an advanced country. In recent times the banking sector over the world has been undergoing a lot of changes due to deregulation, technological innovation, globalization etc. Bangladesh banking sector is lagging for behind in adopting these changes.
In my report, the main areas of commercial banking have been covered is Foreign Exchange Section which comprises following three departments:
[ Foreign Exchange Department
- Foreign Remittance Section
- Import Section and
- Export Section.
1.5 Limitation of the Study:
There have been some limitations from which these report suffers. The limitations are briefly pointed out below:
v Time is the first limitation as the duration of the program was of three months only.
v Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.
v The data that seems insufficient may be suffering from lack of reliability to some extent.
v Supply of more practical and contemporary data is another shortcoming.
v The study was not done very successfully due to inexperience.
Bangladesh is a least developed country, whose economy is agro-based. The agriculture system is primitive and frequently affected by natural disaster. Poverty is the main problems of this country. About 47.6% of its population is living bellow the poverty line whoever as about 18% of the population is living below the hard core poverty line (with less then 1800 calories per head per day).
After the devastating flood 1998 and 2001, the economic activities of the country resume by taking various rehabilitation program and bumper production in the agriculture sector helps to recover the blow. Bangladesh economy has faced severe set back again after the terrorist attack on world trade center of USA on 11th September 2001, Afghan war, and Iraq war. This event has changed the world economics scenario and caused global economic recession. This global recession has severely affected export system & Bangladesh economy like readymade garments industry, Frozen food, Manpower export hotel and Tourism sector etc. Due to global recession foreign financial assistance also severely affected.
2.2 Overview of financial institution of Bangladesh:
Financial institutes play an important role for the economic development of any country. The objective of these institutions is to accumulate the scattered deposit and invest it in an appropriate manner for economic emancipation.
There are 51 schedule banks (January 2003) operate in Bangladesh. Of them 4 nationalized commercial banks, 5 specialized banks, 30 private commercial banks and 12 foreign banks. The number of branches of those banks is 6242. Of which 2511 (40.2%of total) are in urban areas and rest 3731 (59.8% of total) are in rural areas. But now days all nationalized banks has been shifted to the private sector.
For proper monitoring the operations of banks, Bangladesh bank introduces “problem bank monitoring Division” in addition to CAMEL RATING. To increase the economic activities Bangladesh bank reduces the bank rate to 6% from 7%.
To increase customer services banks are using various modern techniques like on line banking, ATM, Money Gram, Credit Card etc.
2.3 List of Banks operating in Bangladesh:
Private commercial bank (PCBs):
- Sonali Bank Ltd.
- Janata Bank Ltd.
- Agrani Bank Ltd.
- Rupali Bank Ltd.
- Basic Bank Ltd.
- Pubali Bank Ltd.
- Uttara Bank Ltd.
- Arab Bangladesh Bank Ltd.
- National Bank Ltd.
- The City Bank Ltd.
- International Finance Investment and Commerce Bank Ltd.
- Eastern Bank Limited.
- United Commercial Bank Ltd.
- Prime Bank Ltd.
- National Credit & Commerce Bank Ltd.
- South East Bank Ltd.
- Dutch Bangle Bank Ltd.
- Dhaka Bank Ltd.
- Mercantile Bank Ltd.
- One Bank Ltd.
- Jamuna Bank Ltd.
- Bank Asia Ltd.
- Standard Bank Ltd.
- Mutual Trust Bank Ltd.
- BRAC Bank Ltd.
- Premier Bank Ltd.
- Bangladesh Commerce Bank Ltd.
- Export and import Bank of Bangladesh Ltd.
- Shajalal Bank Ltd.
- Islami Bank Ltd.
- ICB Islamic Bank Ltd.
- Social Investment Bank Ltd.
- Al-Arafah Islami Bank Bangladesh Ltd.
- First Security Bank Ltd.
- The Trust Bank Ltd.
Foreign Commercial Banks:
- Standard Chartered Bank.
- Citibank NA.
- The Hong Kong & Shanghai Banking Corporation.
- State Bank of India.
- Woori Bank.
- Commercial Bank of Cylon.
- Bangladesh Shilpa Bank.
- Bangladesh Shilpa Rin Shonghsta
- Bangladesh Krishi Bank.
- Bank of small Industries & Cottage.
- Rajshahi Krishi Unnayan Bank (RAKUB).
Background of United Commercial Bank Limited
3.1 Historical Background
Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the Government, UCB started its operation in mid 1983 and has since been able to establish the largest network of 84 branches as on 01.03.2003 among the first generation banks in the private sector.
With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of Private Sector Banking through personalized service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role in the economic activities of the country, is firmly engaged in the development of trade, commerce and industry through a creative credit policy.
3.2 Mission Statement:
We shall be at the forefront of national economic development by:
- Setting industry benchmarks of world class standard in delivering customer value through our comprehensive product range, customer service and all our activities.
- Maintaining the highest ethical standards and a community responsibility worthy of a leading corporate citizen.
- Anticipating business solutions required by all our customers everywhere and innovatively supplying them beyond expectation.
- Continuously improving productivity and profitability, and thereby enhancing shareholder value.
- Building an exciting team-based working environment that will attract, develop and retain employees of exceptional ability who help celebrate the success of our business, of our customers and of national development.
- Wants to be leader among banks in Bangladesh and make its indelible mark as an active partner in regional banking operating beyond the national boundary
The Bank has in its Management a combination of highly skilled and eminent bankers of the country of varied experience and expertise successfully led by Mr. M. Shahjahan Bhuiyan, a dynamic banker, as its Managing Director and well educated young, energetic and dedicated officers working with missionary zeal for the growth and progress of the institution.
BOARD OF DIRECTORS
Mr. Md. Jahangir Alam Khan
Mrs. Qamrun Nahar
Mr. Zafor Ahmed Chowdhury
Hajee Younus Ahmed
Mr. M.A. Hasem
Mr. Sabbir Ahmed
Mrs. Monoara Jahangir
Mr. Sharif Zahir
Mr. Kazi Enamul Hoque
Mr. Md. Nayeem Kalam
Mr. Showkat Aziz Russell
Mr. Riyadh Zafar Chowdhury
Mr. Ahmed Arif Billah
Mr. Humayun Kabir Ahmed
Mr. Aziz-Al Mahmood
Mr. Md. Tanvir Khan
Mr. Dulal Abdul Hafiz (Govt. Director)
Ms. Farhana Akhter
Mr. Kaiser Ahmed
Mr. M. Shahjahan Bhuiyan
Mirza Mahmud Rafiqur Rahman
Executive Committee of the Board
Mr. Hajee M.A. Kalam
Mr. Md. Jahangir Alam Khan
Mr. Hajee Younus Ahmed
Mr. Showkat Aziz Russell
Mr. Shabbir Ahmed
Mr. Sharif Zahir
Mr. M. Shahjahan Bhuiyan
Mr. Showkat Aziz Russell (Convenor)
Mr. Kazi Enamul Haque (Member)
Mr. Humayun Kabir Ahmed (Member)
3.6 Strategies, Goals & objectives:
³ Utilize all available resources to develop various plan, policies and procedures in each of the objective and goal areas.
³ Synchronized and steady growth of the bank.
³ Implement plans, poleis and procedures.
³ Utilize team of professional employees.
³ Develop a plan for offering better customer service.
³ Develop a realistic deposit mobilization plan.
³ Develop appropriate lending risk assessment system.
³ Develop capital plan.
³ Develop a system to make good advances.
³ Develop appropriate mgt. structure, system, procedures and approaches.
³ Develop scientific MIS to monitor banks activities.
ª Ensure 100 % recovery of all advances.
ª Ensure a satisfied work force.
ª Make sound loan and investment.
ª Build up a low cost fund base.
ª Meet capital adequacy recruitment at all the time.
ª Focus on fee based income.
ª Install a scientific MIS to monitor Banks activities.
ª Adopt an appropriate management technology.
3.7 Banks Strategy :
United commercial bank limited aims at excellence and is committed to explore a new horizon of banking and providing a wide range of quality products and service.
It is a bank for the common people including businessman and professionals. It intends to serve with quality at a price competitive to anyone in the financial market. It would constantly keep on exploring the needs of the clients.
So the United commercial bank limited shall also develop a youthful and exuberant management team-technology sound and rich in experience. They would work hand in hand with zeal and enthusiasm to achieve the objective of the bank in the new millennium.
4.2 Scrolling :
Scrolling is not so important. Although few bank maintain scroll system for their own safety. If a client wants to deposited money in his account he must go to the scroll officer. Scroll officer at first see the a/c no, name, signature and amount are put in the deposit book properly. After that scroll officer entry the amount in the scroll registry. Then the serial number put on the deposit book.
4.3 Account Opening:
The different types of accounts are very commonly in practice:
« Current Deposits (CD)
« Savings Bank Deposits (SB)
« Short term deposits (STD)
« Fixed Deposit receipts (FDR)
« Monthly saving scheme (MSS)
« Cash credit (CC)
« Consumer credit scheme (CCS)
« Security overdraft (SOD)
Some common requirements and steps that are followed by national bank in general are:
- Application on the prescribed form
- Furnishing photographs
- Introduction by an account holder
- Putting specimen signatures in the specimen card
- Mandate, if necessary
- Birth certificate or passport
After fulfilling the above formalities, united commercial bank provides the customer a pay-in-slip book and a cheque book.
For Partnership / proprietorship Firm:
- Partner’s signature
- Partner’s name
- Trade license of all partner
- Filled out application from stating about the name and address of firm
- Partnership deed
- Undertaking/ declaration about the partnership is taken by the bank in a white paper (for proprietorship firms)
- Account agreement form.
For Limited Company:
- Certified true copy of the Memorandum & Articles of Association of the company.
- Certificate of Incorporation of the company for inspection and return with a duly certified photocopy for bank’s records.
- Certificate from the Registrar of the Joint Stock Companies that the company is entitled to commence business along with a duly certified photocopy for Bank’s records:
- Latest copy of Balance Sheet.
- Extract of Resolution of the Board, General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/ Managing Director of the company.
- List of Directors with addresses.
- Authorized signature & Name.
4.4 Remittance department:
Functions of remittance department:
q T.T. (Telegraphic transfer)
q D.D. (Demand draft)
q Pay Order
q LBC (Local Bill collection)
q OBC (Outward Bill collection)
Telegraphic transfer (T.T):
Telegraphic transfer TT may be done via telegram, telex, telephone, fax as desired by the remitter. But the most commonly practiced elephant road branch is the telephone and mobile. The drawer and the payee are required to have the account with the bank in order for this transaction to take place. TT is issued against cash, check, and letter of instruction. The client must be paid TT commission, telex charge and vat.
Pay order are done in inter city in any bank and any branch. The processing of pay order and DD is same. The entries involved are:
There are a commission and vat account charged for the issuing pay order.
Demand Draft (DD):
Demand draft this is an instrument issued by a particular branch of a bank to pay certain some of money bay the bank. It is the safest and most acceptable media and a banker’s note. Commission, vat and postage are charged on issue of DD entries for issuing DD.
Cash/client a/c ……………….Dr
Income a/c (postage)……………..……Cr
Commission on Remittance………….Cr
LBC means local bill collection. LBC issue in the local city of the internal bank.
OBC means outward bill collection. OBC issue out of the city of the internal bank.
It is a department which is completely involve with the Bangladesh bank. By collection a cheque in any other bank through Bangladesh bank its clearing. Every bank gets the cheque from different bank which is send to the zonal branch of the bank. Zonal branch make a sheet of this cheque and put the total amount on the cheque. The entire related officer is meeting in the clearing house in Bangladesh bank. And every bank submits their cheque list by the floppy disk to the Bangladesh bank. The officer are distributed the cheque to the related bank officer. Here own bank is getting the cheque which is classifying (cheque, pay order, DD) by branch and total amount of the cheque are putted in the back side of the cheque. Here end of the morning session.
At the evening session the officer are distributed the disowner cheque and then own bank get some disowner cheque which is distribute to the branch representative.
Causes of disowner a cheque:
Signature of related officer.
Cheque submitted by wrong way.
By an essential notice.
One cheque is going to another bank.
To submit wrong account number.
Show the wrong date.
4.6 Accounts Department:
The accounts department is the most delicate and the most confidential department in a bank. The main task of this department is to record all kind of transaction of the branch, confirming accuracy, preparing statement etc. under the computerized banking system, today the clean cash statement and the supplementary statement is in party ledger vouchers are printed of the computer. Accountants function can be divided into two parts:
I Daily functions
I Periodical functions
(A) The daily function of an accountant involves:
- Posting transfer from one account to another account
- Preparing of the supplementary
- Posting of various transactions in the computer that occurs through out the day.
(B) The periodical function of the account department is to prepare different types of statement for its own branch, head office, Bangladesh bank. The statements being:
- Daily position
- Daily resources position
- List of all transaction in a day
- Comparative resources position etc.
- Cash cum day book.
- General ledger.
- Weekly statement of affairs
5. Loan & Advances:
5.1 GENERAL SECTOR:
United commercial Bank allows credits to individuals /firms /companies to help their business in the following categories:
N Cash Credit (Hypothecation): This type of credit is allowed to the traders and industrial borrowers for promoting trade and commerce and industries.
N Cash Credit (Pledge): Allowed for promoting trade, commerce and industries of the country against pledge of stock in trade under Bank’s control.
N SOD (FO): Allowed against financial obligation for promotion of economic and business activities.
N Bank Guarantee / Bid Bond: Generally issued for business/ economic purpose for participating in the local /industrial tenders.
N SOD (General): generally allowed to the traders for business promotion and economic activities.
N Consumer’s Credit Scheme: Loans allowed to service people for purchasing domestic/household items repayable on monthly installment basis.
5.2 EXPORT LOAN:
The Bank allows credits to the exporters to help performing their exports under the following categories:
N PC (Packing Credit): Allowed to the exporter for packing the goods before shipment
N Back-to-Back LC: Import of Raw martial through opening back-to- back L/Cs against lien of Export L/Cs. This facility is extended to garment factorie.
5.3 IMPORT LOAN:
The Bank allows credits to the importers in the following forms:
N Lim (Loan against Imported Merchandise): Allowed to retire documents and clear the consignment form the customs Authority taking the goods under Bank’s Control.
N LTR (Loan against Trust Receipt): Allowed to the importer to retire documents and release the consignment from the customs authority against trust, receipt keeping the goods under importer’s control.
1. Foreign trade can be easily defined as a business activity, which transcends national boundaries. These may be between parties or Government ones. Trades among nations are a common occurrence and normally benefit both the exporter and importer. In many countries, international trade accounts for more than 20% of their national incomes.
This trade among various countries causes for close linkage between the parties dealing in trade. The bank which provides such transactions is referred to as rendering international banking operations. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. And this flow of goods and payment are done through letter of credit (L/C).
6.2 Function of foreign Exchange department:
X Pre-shipment advantages.
X Negotiating of foreign bills.
X Exports guaranties
X Purchase of foreign bills.
X Advance against bills for collection.
X Advising / conforming setters (latter of credit).
X Advance for differed payments exports.
X Bills for collection
X Advance bills.
X Opening of letter of credit (L/C)
X Import loan & guarantees.
X Issue of DD, TT, MT, etc.
X Payment of DD, TT, MT etc.
X Sale and enhancement of foreign currency notes.
X Issue and enhancement of traveler’s cheque.
X Non-resident accounts.
Bill of lading:
A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by sea. It is evidence of a contract of carriage, is a receipt for the goods and is a document of title to the goods. It also constituted a document that is, or may be, needed to support an insurance claim.
The details on the bill of lading should include:
8 A description of the goods in general terms.
8 The name of the carrying vessel.
8 Evidence that the goods have been loaded on board.
8 The ports of shipment and discharge.
8 The names of shipper, consignee and name and address of the notifying party.
8 Whether freight has been paid or is payable at destination.
8 The date of issuance.
8 The number of original bills of lading issued.
A bill of lading specifically states that goods are loaded for ultimate destination specifically mentioned in the credit.
6.3 Import operation:
Import is foreign goods and services purchased by customer, firm and Governments in Bangladesh. An importer must have import registration certificate (IRC). Given by chief controller of import and exports (CCI & E) to import any thing from other country. To obtain import registration certificate (IRC) the following certificates are required:
- Trade license
- Income Tax clearance certificate.
- Nationality certificate.
- Banks solvency certificate.
- Asset certificate
- Registration partnership deed (if any)
- Memorandum and article of association.
To import through United Commercial Bank Limited (UCBL), a customer or client requires:
- Bank account
- Import restriction certificate
- Tax paying identification number
- Pro-forma invoice/indent
- Membership certificate
- L/C application form duly attested.
- One set of IMP form.
- Insurance cover note with money receipt.
Opening of letter of credit (L/ C) by bank:
Opening of L/C means, at the request of the applicant (importer) issuance of a L/C in favor of the beneficiary (Exporter) by a bank. The bank which open or issue L/C is called L/C opening bank or issuing bank.
Before opening a L/C, the issuing bank must check the following:
L/C application properly stamped, signature verified and margin approved and properly retained.
Validity of LCA entitlement of goods, amount etc.
Indent/pro-forma invoice signed by the importer and indenter / supplier.
Conversion and rate of exchange correctly applied.
Charges lick commission, Postage, Telex charge, if any recovered.
Insurance cover note in the name of issuing bank –A/C importer covering required risks and voyage route.
In case of usance L/C, mention rate of interest clearly in the letter of credit.
Advising of Letter of Credit:
Advising means forwarding of a Documentary Letter o credit received from the issuing bank to the beneficiary (Exporter).
6.4 Export operation:
Practically by the term export we mean out carrying of anything from one country to another. As banker we define export as sending of visible things outside the country for sale. Export Trade Plays a vital note in the development process of an economy. With the earning we meet out import bills.
The following types of discrepancies may be noted while the negotiation bank examines the documents:
6.5 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 bank under takes the risk under the back to back credit. In this case, the bank’s main security is original credit. Te original credit (selling credit) is separate instruments in dependent of each other and in no way legally connected, although they both form part of the same business operation.
In UCBL papers / documents required for submission for opening of back to back L/C:
- Master L/C
- Valid import registration certificate (IRC) & export registration certificate.
- Pro- forma invoice or indent.
- Insurance cover note with money receipt.
- L/C application & LCA form duly filled in signed.
- IMP form duly signed.
6.6 Foreign exchange remittance:
“Foreign remittance” means purchase and sale of freely converted foreign currencies as admissible “foreign exchange regulations act- 1947” and “guidelines for foreign exchange transaction – VOL.1&2 of the country. Purchase of foreign currencies constitutes out ward foreign remittance.
So we see that there are two types of foreign remittance:
- Foreign inward remittance
- Foreign outward remittance.
The remittance which is received from abroad are called inward remittance.
Mode of inward remittance:
- Mail transfer(MT)
- Telegraphic transfer(TT)
- Payment Order (PO)
- Travelers Cheque (TC)
- Foreign currency notes
- Foreign demand draft (FDD).
Remittance which is made from our country to abroad is called outward remittance.
Mode of outward remittance:
ð Foreign mail transfer (FMT)
ð Foreign telegraphic transfer(FTT)
ð Travelers cheque (TC)
ð Foreign currency notes
ð Foreign demand draft (FDD).
Present limit of outward remittance fixed by Bangladesh bank:
- Seminar/ workshop/ conference
- Medical treatment
- Family maintenance
- Dividend /Gain of foreign companies/ shareholders
- Expense of office opened abroad
- Bank charges and sundries
10. Taking out/ bringing in of Bangladeshi taka.
6.7 Submission of returns to Bangladesh bank:
The ads must maintain adequate and proper records of all foreign exchange transactions including transaction on non-resident taka A/C in their book and furnish such particular in the prescribed statements / return for submission to the Bangladesh bank. The purpose of submission return & statements to Bangladesh bank for keeping systematic and proper records of all dealings in foreign exchange including transactions on non-resident taka A/Cs.
7.1 Problems of United Commercial Bank Ltd.
In recent Years, The banking business of united commercial bank Ltd is developing at a faster rate. Although the banking business loading day by day there are also some problems around it they are as per observation:
- There is no efficient management information system.
- There is lack of improved technology.
- There is no customer complains desk for this reason it is sometimes occurs as an irritate matter.
- Application of modern technology such as computerization is not sufficient.
- There is lack of training program for the UCBL personal.
- Lack of fair entrepreneur class.
- Some banking operation are not come to change at all, which very painful for customer.
- Internal conflict within the employees, which is not good sign for development of UCBL.
United Commercial Bank Ltd is an established privatized bank in our country. My some recommendation about it operations are:
I Introduction of such services would be an upgrade of facility to the customer.
I To arrange more employee for reducing the pressure.
I UCBL should be made advertisement on TV so that every initiative of the bank can go at the door of customers.
I Training programme should be taken more seriously.
I It facility are very important to faster the activities.
I Try to remove any conflict within the employees as early as possible.
7.3 Concluding Remarks:
Private commercial banks are paying a vita role in the development of our economy. But Govt. and Bangladesh bank play a crucial role to the private commercial banks through imposition of deposit restriction, lending role or other operations. In recent years of banking business, united commercial bank Limited has shown better performance comparing with other first generation banks.
It was great pleaser for me to do my internship program in esteemed organization like UCBL. I think it provides me a wide range of scope to observe the operation of bank.
Overall, the bank must make appositive attempt to be more outward looking in there goals and aware of what is happening. I hope, in spite of my all limitations, this experience of sharing works with such working environment will help me a lot in professional life.
¨ Annual reports2004& 2005 of UCBL.
¨ Website of UCBL (www.UCBL.com).
¨ Financial statement of 2007.
¨ The Daily Star (Today business)
¨ Annual reports2001& 2002 of UCBL.
¨ Website of UCBL (www.UCBL.com).
¨ Report on foreign exchange mechanism of UCBL by Mohammed Nasir Uddin, post graduate student of Dhaka University.
¨ “A text book on foreign exchange” –By L.R. chowdhury.
¨ Financial statement of 2003.
¨ The Daily Star (Today business)