Banking system Occupies an important place in a nation economics banking institutions is indispensable in a modern society. It plays a pivots role in the economics development of a country and forms the core of the money market in a advance country, in recent times the banking sector of 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. To thrive well in this changing environment, but only development of appropriate infrastructure is necessary but also infusion of professionalism in to banking service is essential. The banking sector is one of the highly regulated sectors in our country. It is governed by the rules and regulations of central bank of the country i.e. Bangladesh bank and security and Exchange commission. The bank companies are forced to comply the best accounting practices. It strictly follows international Accounting Standard (IAS) norms. It publishes to financial statement every year getting it duly audited by recognized audit firms. Every bank of our country has a division named financial Administration Division (FAD) which takes care of the accounting issues of the Bank. Most of the personnel who lead these divisions are of accounting background. Among the account based FAD personnel who know the banking operation better can contribute mere in the banks.
1.2 History Behind the Report
For Internship report each student has to prepare a report on their choice. According to this requirement, I have already completed by internship report. I know the conventional banking system. For by reporting purpose a lot of time I went IVTRA to collect necessary information. On the basis of my practical experience as well as theoretical knowledge, I have completed the report regarding “An Analysis of the Activities of General Banking Division of Uttara Bank Ltd. Moghbazar Branch” the main focus of my study is to analyze the deposit and banking system. Conventional bank is given by interest against its deposit and lend money or issue securities with fixed interest. Instead it finance in various schemes approved by council board to achieve its goal.
1.3 Objectives of the Study
The main objectives of the study are to gather practical knowledge regarding banking system and operation. This practical orientation gives us a chance to coordinate out theoretical knowledge with the practical experience. The following are of objective for this practical orientated in bank.
To apply theoretical knowledge in the practical field.
To find out the overall features deposit scheme of UBL
To fined out the overall pictures of investment of UBL.
To identify strength and weakness of lending of overall banding system,
To identify the problems related to investments faced by UBL and other conventional bank.
1.4 Scope of the Study
The conventional banking system is acquired by the practical knowledge of the Uttara Bank Ltd. Moghbazar Branch. They are nationally Commercial Banks, local private Commercial bank. I am working condition set up air-condition. The bank is working processed used by computer excel. I am acquiring by the knowledge observation face to face conversation. I required by the one desk to other desk. I am working conventional banking system of Uttara Bank Limited. The banking division in internship is practical report of the general banking division. The internship report of the University is an integral part of the BBA program. So it is obligatory to undertake such task by the students who desirous to complete and successfully end-up their BBA degree. This also provides an opportunity to the students to minimize the gap between theoretical and practical knowledge. During the internship the teachers of the department are attached to actively and constantly guide the students. Students are required to work on a specific topic based on their theoretical and practical knowledge acquired during the period of the internship program and then submit it to the teacher. That is why we have prepared this report.
1.5 Methodology of the Study
For smooth and accurate study every one have to follow some rules and regulations, the study impute were collected from two sources
(a) Primary sources
I. Practical desk work
II. Face to face conversation with the officer
III. Directs observations
(b) Secondary Sources
I. Annual Report of UBL
II. Files & Folders
III. Memos & Circulars
IV. Various Publications on Bank
VI. Different circulars sent by Head office and Bangladesh Bank
There are two major methodologies of the study. Describe which are below:
- Primary Sources.
There are three items of primary sources which are below:
- Practical Desk Work: – Any student is practical knowledge acquired by the desk to desk. I acquired practical knowledge one officer to another officer.
- Face to face conversation with the officer:- The internship way is the practical knowledge from the bank officer. The banker are busy all-time. So , the banker is some time learned by the practical knowledge.
- Direct Observation:- Direct Observation are acquiring by the knowledge. It is possible acquired by the practical knowledge.
B. Secondary Sources.
There are some secondary sources. Describe are which secondary sources:
- Annual Report of UBL:- The annual report of UBL are needed by the making report. The report are making by the needed by the internship of the Bachelor of Business Administration.
- Files and Folders:- The file and folders are needed by the internship report completed by the Bachelor of Business Administration. The file and folders are needed by the cover page forwarding loan section .
- Websites:- The websites are needed by the internship report by the completed by the BBA program.
- Different circulars sent to Head Office and Bangladesh Bank: – The diffident circulars sent to Head office of the Bangladesh Bank. At first any circular is Bangladesh bank sent to Head office message.
1.6 Limitations of the Report
There were some problems while I conducting the orientation program, a whole hearted effort was applied to conduct the orientation program and to bring a reliable and fruitful result, in spite of having the whole hearted effort, there exit some limitation which acted as a barrier to conduct the program. The limitations were…
- Three months time is not enough for such an extensive study. It is very difficult to collect all the required information in such a short period.
- Due to some legal obligation and business secrecy banks reluctant to provided data. For this reason, the study limits only on the available Published data and certain degree formal and informal and informal interview.
- The Bankers are very busy with their jobs, which lead me little time to consult with.
- Lack of experience.
- Learning all the banking function about credit within just two and half months was really tough.
- Another limitation of this report is banks policy of not disclosing some data and information for obvious reason, which could be very much useful.
Profile of the Organization
2.1 An Overview of Uttara Bank Limited.
Uttara Bank is one of the largest and oldest private sector commercial bank in Bangladesh, with years of experience. Adaptation of modern technology both in terms of equipment and banking practice ensures efficient services to clients 209 branches at home and 600 affiliates worldwide create efficient networking and reach capability. Uttara is a bank that serves both clients and country.
2.2 Historical Background of UBL
Uttara Bank Limited is deeply related with the history tradition and living standard of human of the country. This Bank started its operations on 28th January 1965 as a commercial bank by Eastern Banking Corporation, which is interpreting by a private organization. In 1972 the Bank takes this name Uttara Bank. It had been limited company in 1983 that is named Uttara Bank limited. On 21st August 1983 it
2.3 Objectives of Uttara Bank Ltd.
The objectives of UBL are follows:
- Mobilizing deposit from the surplus economic unit to deficit economic unit.
- Cater to all different segments of retails and wholesale customer.
- Being a high quality distributor of products and services.
- Serve the people of the country by providing financial assistance.
- Help the nation in reducing the employment problem by securing services to a large number of people.
- Ensure balanced economic development though out the country.
- To expand business.
- To keep position in the competitive market.
- To contribute in profitability of UBL.
2.4 Features of UBL
The bank is committed to turn all its activities as per council board. UBL through its steady progress and continuous success has earned the reputation of being one of the leading private sector banks of the country. The distinguishing features of UBL are as follow:
- All its activities are conducted on interest banking system according to council board.
- Establishment of participatory banking instead of banking in debtor creditor relationship.
- Investment is made though deterrent modes permitted under council board.
- Investment income of the bank shared with depositors according to a ratio to endure a reasonable fair rate of return on their depositors.
- It aims are to introduce a welfare oriented banking system and also to establish equity and justice in the field of all economic activities.
- It extends economic and financial services to the poor , helpless and height income group of the people for their economic up liftman particularly in the rural areas.
- It plays a vital role in human resource development and employment generation particularly for the unemployed youths.
- Its aim is to achieve balanced growth and equitable development of the country through diversified investment operations particularly in the priority sector and in the less developed.
- It extends cooperation to the poor the helpless and the height income group for their economic development.
2.5 Functions of UBL
The operation of Uttara Bank Limited. Can be divided into three major categories:
2.5.1 General banking : it includes:-
a) Mobilization of deposits.
b) Receipts and payment of cash.
c) Handling transfer transaction
d) Operations of clearing house
e) Maintenance of accounts with Bangladesh band and other bank
f) Collection of cheque and bill
g) Issue and payment of Demand Draft, telegraphic transfers and payment order
h) Executing customers standing instructions
i) Maintenance of safe deposit lockers
j) Maintenance of internal accounts of the bank
While doing all the above noted work UBL issue cheques-book, Deposit account opening form, SS card, Ledgers, Cash book. Deposit account ledgers, preparation statement of accounts. Pass Book, Balance of different accounts and calculated profits
UBL offers to open the following account to the depositors:
- Current Account
- Saving Account
- Term Deposit account. (3 month/6month /12 month /36month / 60 month)
- Cash Credit Account.
2.5.2 Foreign Exchange Business
Foreign Exchange Business plays a vital role in providing substantial revenue on the bank income pool.
- Opening letter of credit against commission for importing industrial agricultural and other permissible items under council board.
- Opening letter of credit on the principle of sale, on the principle of under wage earner scheme.
- Handling of export /import document.
- Negotiation of export and import document when discrepancy occurs.
- Financing import under import board.
- Financing to export on profit or loss sharing
- Handling inward and outward remittance.
2.5.3 Other activities
The UBL performs the following task for the welfare of the nation. There are some point which is below:-
v Income generating scheme for the unemployed youth of the nation.
v Monorom sale center for marketing homemade garment, handicraft and other items.
v Education scheme for assisting poor scholar student to case and help them to continue their study.
v Health scheme for fulfillment of health needs of rural people.
v UttaraUniversity was established to extend service to the student.
UTTARA BANK LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2008
|Interest paid on deposits, borrowings etc||19||2,200,521,205||1,876,351,450|
|Net Interest Income||1,883,766,884||1,121,081,427|
|Income from Investment.||20||784,896,516||921,189,131|
|Commission, Exchange and Brokerage||21||907,895,386||744,994,717|
Other Operating Income22 431,106,660 356,650,099Total operating income 4,007,665,446 3,143,915,374OPERATING EXPENSES Salary and allowances 1,272,357,540 1,158,073,662Rent, taxes,insurance,electricity etc 151,877,811 188,502,215Legal expenses 9,429,329 48,215,055Postage,stamp,telecommunication etc. 39,680,054 48,215,055Stationery,printing,advertisements etc 51,324,78740,275,975Managing Director’s salary & allowances and fees 6,424,333
Directors’ fees and expenses29 2,264,000
Auditors’ fees 250,000
Repair, maintenance and depreciation30 107,256,133
of Bank’s property Other expenses31 166,472,931
Total operating expenses 1,807,336,918
Operating profit 2,200,328,528
Add: Profit on sale of fixed asset32105,289,644
Profit before provision 2,305,618,172
Provision for loans & advances33 92,550,000
Provision for off balance sheet exposures 3457,450,000
Provision for outstanding unrecognized entries 3555,000,000
Transfer to gratuity fund –
Transfer to benevolent fund 2,500,000
Profit before tax 2,098,118,172
Provision for Tax 959,600,000
Current tax 940,000,000
Deferred tax 19,600,000
Profit after tax 1,138,518,172 409,535,557Retained surplus brought forward 3,196,722
Profit available for appropriation 1,141,714,894
Statutory reserve 1,000,000,000
General reserve 140,000,000
Issue of bonus share –
Retained earnings 1,714,894
Earning per share (EPS)40 142.55
The profit and losses are chart collect by the internet of the Uttara Bank Ltd.
3.1 What is Bank?
The word “Bank” bas been originated from an Italian word “BANCO” expressing the meaning. “A tall bench”
A Financial institution which buys money at lower price and sells money at higher price is called bank.
In the crude language spread means the difference between the deposit rate and lending rate i.e spread =lending rate-Deposit rate.
Financial institutions whose statute rules regulation and procedures expressing state its commitment to the Islamic shariah and to the banning of receipts and payments of interest in any of its activities is called Islamic bank.
3.2 Objective of a Bank.
ü To facilitate the transferring of fund from the surplus unit to deficit unit
ü To accelerate the savings
ü To accelerate the investment
ü To enhance the economies development
ü To facilitate the trades and commerce’s
Bangladesh Bank is the Central bank of Bangladesh. It is the monetary authority of the country. It came into existence under the Bangladesh Bank Order 1972 (Presidential Order No. 127 of 1972) which took effect on 16 December 1971. Through this order, the entire operation of the former State Bank of Pakistan in the eastern wing was transferred to Bangladesh Bank.
Bangladesh Bank has 9 branch offices, two in Dhaka city (sadarghat and Motijheel), and one each in Chittagong, Khulna, Rajshahi, Sylhet, Bogra, Rangpur and Barisal. The head office discharges its duties with 28 departments.
History of Bangladesh Bank
After the liberation war, and the eventual independence of Bangladesh, the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank. This reorganization was done pursuant to Bangladesh Bank Order, 1972, and the Bangladesh Bank came into existence with retrospective effect from 16 December 1971.
Objectives of Bangladesh Bank
As the central Bank of Bangladesh, the broad objectives of the Bank are :
a) To regulate currency issuance and to keep foreign exchange reserves.
b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value.
c) To preserve the par value of the Bangladeshi Taka.
d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country’s productive resources.
e) To Reserve all the rights of the bank
Functions of Bangladesh Bank as Central Bank
Bangladesh Bank performs all the functions that a central bank of any country is expected to perform, and such functions include maintaining the price stability through economic and monetary policy measures, managing the country’s foreign exchange and the gold reserve and regulating the banking sector of the country. Like all other central banks across the globe, Bangladesh Bank is both the Government’s banker and the banker’s bank, a “Lender of the Last Resort”. Bangladesh Bank, like most of the central banks of different countries, exercises monopoly over the issue of currency and the banknotes. Except for the 1 and 2 taka notes, it issues all other denominations of Bangladeshi Taka.
Bangladesh Bank has been entrusted with all the traditional central banking functions including the sole responsibilities of issuing currency, keeping the reserves, formulating and managing the monetary policy and regulating the credit system of Bangladesh with a view to stabilizing domestic and external monetary value and promoting and maintaining a high level of production, employment and real income in the country. The bank acts as the banker to the government and accepts government deposits, cheques and drafts, and undertakes collection of cheques and drafts drawn on other banks. The government deposits all its cash balances with the Bangladesh Bank free of interest. The bank transfers government funds from one place to another as requested by the government and its agencies.
Bangladesh Bank is empowered to act as the watchdog of the country’s banking system, and all scheduled banks are accountable to Bangladesh Bank, which has extensive powers to ensure soundness of the banking system. No bank can commence banking business in Bangladesh and no existing bank can open a new branch in or outside the country or shift any branch from one place to another without obtaining a license/permission from the Bangladesh Bank.
The highest official in the bank is the Governor (currently Dr. Atiur Rahman). The Governor chairs the Board of Director. The Executive Staff, also headed by the Governor, are responsible for the day to day affairs.
Bangladesh Bank has correspondent relationships with one international and 8 foreign central banks viz., the Federal Reserve Bank of New York, Bank of Canada, Bank of England, Banque de France, Deutsche Bundesbank, Bank of Japan, Sveriges Riksbank of Stockholm, Reserve Bank of India and the Bank for International Settlements, Basle. Besides, Bangladesh Bank has now invested its foreign exchange reserves with 14 banks at different international financial centers
Analysis and Findings
General Banking Department
General Banking Department is considered as the direct service center. The clients and customer build their impression whether they are going for further dealings with the bank or not on the basis of the service in the department, Moreover this department is the one that gives the first impression about the bank to the clients. So, general department should be taken carefully.
4.1 Function of General Banking
The functions of general banking are as follows:
- Establishing of banker-customer relationship of account opening.
- Remitting customer’s money from one place to another.
- Collecting bills for customers.
- Taking deposits and honoring cheques drawn over local office.
- Clearing taking function.
Different Parts of General Banking:
General Banking Department constitutes of the following sections:
- Account Opening Section
- Cash and Computer Section
- Remittance Section
- Clearing Section
The functions of the different department are discussed below:
4.1.1 Account Opening:
Banking business is very much correlated with banker customer relationship. To be a customer one person must have some sort of banking relationship with the bank. Account opening section establishes that relationship by opening a new account for the customer.
Uttara Bank Limited. Allows its clients to open the following types of accounts and receives deposits in those accounts. There are three months current accounts opening seventy only. Every account is needed TK. One thousand only. Saving account this three month are opening one hundred eighty. The fixed account is not opening by the UBL. This three months are not opened UBL.
Types of Accounts:
- Current Deposit
- Savings Bank Deposit
- Fixed Deposit
- Short Term Deposit
Key Features of opening an account in UBL:
- Current deposit account: Current deposit accounts should be opened with a minimum amount of TK. 1000/= But under special circumstances in may be opened with TK. 500/=. It is payable on demand, No interest is paid in these types of accounts.
- 2. Savings Bank Deposit Account. Minimum amount of TK.1000/= is required for opening this type of account, the account may not be retained it the balance falls below TK.200/= Not more than one account should be opened in one name. A depositor is allowed to withdraw per week up to 25% of the balance of his or her account. For calculation of interest the minimum balance at the credit of an account by the close of 8th the month should be taken into consideration.
Fixed Deposit Account: Fixed deposit accounts are opened for a diced period, varying from three months to three years or above and are payable at a fixed date of maturity, interest on this deposit is paid at the rate fixed by Head office of the from time to time depending on the period of maturity. Interest is payable only at the maturity of the deposit.
The following table shows different FDR rates:
Years 2001 t0 2007
|From 3 months up to 6 months||9.5%|
|From 6 months up to 1 year||10%|
|From 1 year up to 2 year||10.5%|
|From 2 year up to 3 year||11.5%|
The data collect by the Annual Report.
The following table shows different FDR rates:
Years 2008 & 2009
|Short-Term Account||3.5 %|
|From 3 months up to 6 months||7.75%|
|From 6 months up to 1 year||8%|
|From 1 year up to 2 year||8.25%|
|From 2 year up to 3 year||8.50%|
The date collects by the Bank Chart of UBL.
4. Short Term Deposit Account: The deposits held in these accounts should be payable on short time, lice in 7 days or in 30 days. The deposits may be accepted for a certain period and Head Office fixes the rate of interest from time to time. The STD interest rate in UBL is 5.5%
Nature of Accounts
UBL may open following types of accounts:
1. Individual Accounts
2. Joint Accounts
3. Proprietorship Firm Accounts
4. Partnership Concerns Accounts
5. Private Limited Companies Accounts
6. Public Limited Companies Accounts
7. Accounts of Societies, Clubs, Association etc
8. Trust Accounts
9. Accounts of Local Authorities
General procedure of opening accounts
Current Deposit Account
v The account opening form of current deposit account and specimen signature card is supplied to the customers, which is filled and signed by them.
v In case of individual account, an account holder signs the AOF and SSC in his / her individual capacity both under yours faithfully and specimen Signature. In case of partnership firms & proprietary concerns, it is to be signed by the persons / partners in their individual capacity under Yours Faithfully and in their official capacity under Specimen Signature. in other cases private and public limited company both signatures must be in official capacity.
v ACD account holder of the bank shall introduce the new account holder. An Elite of the locality, who is well known to the banker can introduce it, official other than the staff of UBL can also introduce it.
v Clear instructions with regard to operations are noted in the AOF and SSC Specially in case of death or inability of any kind in regard of the joint account holder.
v The officer in charge of the Deposit Department verifies the signature of the introducer. The stamp signature verified is affixed near the signature of the introducer and the deposit officer signs over it.
v Approval of the branch in charge in obtained on the Account Opening Form.
v The signature of the account holder is admitted by the in charge of deposit department and signature Admitted stamp is affixed near the specimen signature of the account holder.
v Particulars of the account opening form are entered in the account opened & closed register in a serial order.
v The account number allotted to the new account in given on the AOF, SSC and on Cheque book requisition slip.
v The customer is supplied with a pay in Slip Book and requested to deposit the money with cash officer.
v Cheque is only issued after the account opening form has been completed is all respects and initial cash deposit has been made. The cheque book series is noted in the cheque requisition slip.
v Particulars of the account opening form are entered in the Reference Book under alphabetical order.
v Accounting opening forms are posted in a file in serial order, on the other hand, the specimen signature cards are placed in the Specimen signature card Box in numerical order.
v Lastly, while issuing new cheque book signature on the cheque book requisition forms should be properly verified.
Saving Bank Deposit Account
The procedures of opening current deposit accounts are also applicable for opening the savings bank deposit accounts. There are only the following exceptions.
- Use of separate Account opened & closed Register also reference book and posting files are different here.
- Pay –in-Slip Book
Fixed Deposit Account:
- Account opening form and specimen signature card should be given to the customer.
- Voucher no. SF-12, crediting “Fixed Deposit Account” with the amount of deposit with full narration should be prepared and should be given to the deposit cash with the cash officer after recording the particulars. In case of payment by cheque, it should be attached with the credit voucher and sent to the deposit department for posting.
- On receipt of the vouchers from the cash department, a fixed deposit receipt should be prepared and recorded.
- To admit the signature of the account holder the stamp “Signature Admitted” should be affixed near the specimen signature card.
- The AOF, SSC, the voucher and the recording ledger should be sent to the officer in charge for signature.
- Then the documents should be sent to the manager official for his/her signature on those.
- The branch manager should ensure that the printer number on the deposit receipt books in use are invariable noted.
- At the closing of each business day, the officer in charge should verify the total amount for which the deposit receipt has been used during the day, both from the credit vouchers and the counter foils of the various deposit receipts.
Current Deposit Account
The following documents duly completed should be obtained from the customer at the time of opening a current deposit account of:
- Partnership Firms
- Proprietorship counters
- Societies, Clubs, Associations
The documents are:
√ Account opening form
√ Specimen signature card Mandate for opening an individual account is obtained where a customer wants to authorize another person to operate the account
√ Certified true copies of by laws in case of societies, clubs, associations and limited companies etc.
√ Certified copies of resolution authorizing and operating of account with the bank passed by the Executive committee of the society, club or association and limited companies etc.
√ List the numbers of the executive committee, list of directors.
For limited companies, corporation, autonomous bodies the following documents should be collected.
ü Account opening form
ü Specimen signature card
ü Memorandum and Articles of Association
ü Resolution of the Board of Director authorizing opening the account with the bank.
ü Certificate of Incorporation
ü Certificate of Commencement of Business
ü List of Directors
ü Act / Ordinance etc. in case of corporations/ Autonomous Bodies
Savings Bank Account
ü Account opening form
ü Specimen signature card
ü Mandate should be obtained in case the customer wants to authorize another person to operate the account
Fixed Deposit Account
ü Account opening form
ü Specimen signature card
Short Term Deposit Account
Form, which is used for CD account, can also be used for opening this type of account. Notice period should be noted in the special instruction column.
Transfer of Account to other Branch
An account holder can request to transfer hid/ her account by gibing the following instructions:
1) Reasons for transferring the account
2) Address at which he /she is to contacted by the transferee branch
3) The unutilized check book must be returned to the transferring branch before transferee branch before transfer of account.
At first, the approval should be verified by the manager to transfer the account. Then the specimen of the for working letter of transferee branch should be sent. After the application is received duly approved from the manager, the branch transfers the account.
Closing of an Account
To close an account, one may be requested to send an application along with the unused pages of the check book that is issued to the person. After receiving the application, the signature of the account holder should be verified and the number of unused pages of the check book should be noted. Before the account is closed the manager will approve the application. Lastly closing charge should be debited to the account.
A cheque is a very important document. Cheque is an instrument in printed form containing an unconditional order. Signed by the account holder directing a certain person to pay certain amount of money only to or to the order of a certain person or to by barer of the instrument, a cheque is always supposed to be drawn against the funds in the person’s account in the bank.
Issue of a Cheque Book
At the time of opening an account, a person is required to sign a “Cheque Book Requisition Slip”. If the account opening form is found complete in all respects, a cheque book is issued to client, the account number is written in cash leaf of the cheque book and in it requisition slip. The name and account number of the client is also entered in the Departmental cheque books issued register against the particular cheque book series and it is also recorded in the computer. Lastly the requisition slip is preserved as voucher.
4.1.2 Cash section
Cash is one of the most important sections of general banking department because it deals cash.
- Receiving cash
- Paying Cash
- Issuing Vouchers
- Keeping record
4.1.3 There are some frequent situations, such as customer of a bank needs to transfer his her fund or money to some where within the country boundary , if is really a risky thing to carry a big amount of money from on place to another so most of the time they just purchase an instrument or mean so that their fund can be transferred thorough his/ her own bank. This sort of activities is cubed under the inland Remittance. These are
ü Demand Draft
ü Telegraphic Transfer
ü Pay Order
These are discussed below:
This is an order to pay money, drawn by one branch of a bank upon another branch of the same bank for a sum of money payable to order on demand.
Procedure of issuing D.D
A client is asked to complete a form. This is treated as an application as well as credit voucher for head office account. Commission charges are calculated and inserted the voucher is given to the client to deposit the cash; the cashier receives the cash and delivers the voucher to the remittance department against initials in his/her book. Draft is prepared and recorded in the Draft issued register. The amount of the draft is also protecting graphed. The draft number is written on the voucher, then the officer in charge checks and signs the draft and the other vouchers. After that a second officer gives his/her signature in the draft and also in the other vouchers. a credit voucher and head office advices are sent to the accounts department. Lastly, advices are sent to Dispatch section for onward transmission to the respective branches.
The Cheque is sent for passing and collection. After the Cheque is passed, similar procedures are Explained in case of cash are adopted.
Against letter of instruction
The letter is cent to the deposit section for verification of signatures. The letter is attached with the debit voucher. After the debit voucher is passed, similar procedures as explained in case of cash are adopted.
Cancellation of D.D
On receipt of application along with the demand draft for its cancellation the signature of the applicant is verified from of original application form. The genuineness of the D.D is also examined. Before the drags is cancelled it is ascertained they no duplicate draft has been issued and the drawee branch has not paid the same earlier, the draft is cancelled by tearing out the signature there on and a note on this effect in red ink is made in the original application form. Lastly, the cancelled draft is attached with the debit voucher.
Payment of D.D
On receipt of advice from drawing branches the particulars are checked and initialed by the in-charge.
Payment in cash
First a token is issued. The dates, amount in words and figures, branch drawn upon and signatures on the drafts are checked. A stamp is affixed on the face of the draft. Particulars are recorded. The draft is sent towards the officer in-charge for cancellation, after cancellation its dent back for payment. In case of any irregularity in the draft an advice letter is sent to obtain the confirmation of the branch.
Payment in clearing
Collecting bank’s crossing, stamp and discharge are checked. Other procedures are similar with the payment is cash.
In telegraphic transfer the issuing branch sends a telegraphic message of the branch at the other end to pay a certain amount of money to named payee’s account maintained with the drawee branch.
Issue of a Telegraphic Transfer
The client is asked to complete form which is also treated as credit voucher for head office account branch concerned. A credit voucher is prepared for telegrams charges. Test of telegram is prepared and handed over to the in charge. The test is then checked, coded and tested by the in-charge. The message is typed on form in duplicate, the test in then signed by the in-charge and also by the manager. Original telegram and the confirmation are sent to the dispatch section.
Commission charges are calculated and inserted. Client is advice to draw cheques, favoring the branch and deposit the same to the receiving cashier. Cashier then receives cheque and cent it to the officer in charge for passing and cancellation, the client is asked to fill up the application form, particulars are recorded, ATT number is written in the voucher and the voucher is then signed by the officer in charge. After that similar procedure is followed like the TT against cash.
Against letter of instruction
At first, the letter is sent to deposit department for verification of signature. After that the procedures are same as in the TT against cash.
Payment of T.T
Telegram is detected and test verified by the in charge and the manager. If the test does not match a telegram is sent to the concerned branch asking them to repeat the message with correct test. If the test marches, a stamp is fixed on the telegram and signed by the officer.
Advice to payee
When TT advice is received by the paying branch from the issuing branch, the advice is recorded. Then the officer in charge signs it, after the sign of the in charge, the manager signs it. Lastly, the receipt is sent of the payee.
Pay order is an instrument, which is issued from a certain branch of a bank and must be encased from the same branch. It is like the cash but not exactly cash, one, who is maintaining the account with UBL, can purchase a pay order. it is used for remittance purpose within the clearing area covered by the branch.
At first, the client is asked to complete a form. This is treated as credit voucher. Commission is charge and a voucher is prepared crediting Income Account Commission. After receiving the voucher from the cash section duly signed by the in charge, the pay order slip is prepared according to the voucher. The number of the officer in-charge checks it and signs. After his/her sign another sign is taken form an officer as second signature.
The cheque is passed. After that the procedures are same the PO against cash.
Against Letter of Instruction
The letter is sent to the deposit section for verification of signatures. Other procedures are same as the P. O against cash.
Payment of Pay Order
When a client submits a PO for payment, at first it is authenticated by comparing its particular with the records. If it matches then a seal is given. After that the records and the PO is given to the officer to verify it. If the officer finds that its OK then he/she signs it and it to the cash section for payment.
When a customer of UBL presents an instrument drawn on other bank for collection, the instrument is collected through clearing house of Bangladesh Bank. Every day two houses are arranged in Bangladesh Bank. One in the evening and another in the morning. The evening house is known as return house. Everyday the instruments that are drawn go to the officer of the clearing section. He enters bank name, branch name, number and the amount through a software named “Nikash22” in the main schedule of banks. Then the officer makes a copy of it and goes to the clearing house of Bangladesh Bank. Bangladesh Bank official take the copy. Then they set off the claims of UBL on other banks.
4.3 Loan Section & Credit Section
In case of loan, the banker advances a lump sum for a certain period at an agrees rate of interest. The interest is charged for the amount the client withdraws from his/her account. The banker considers the following 5C’s before sanctioning the loan.
v Character: The most valuable asset of a person which is based on the integrity and reliability of the borrower.
v Capacity: This indicates the borrower’s ability to employ the funds profitability and repay the advance.
v Capital: It refers to the borrower’s own funds invested in the business.
v Collateral: It indicates the security offered by the borrower.
v Condition: It refers to external factors that are current business situation of the country.
Functions of loan Department
The functions of loan department are as follows:
- Ensuring that funds are disbursed only after compliance with terms and conditions or required documents received.
- Make sure that the bank has always valid and current loan documentation.
- Ensuring that the collateral security is adequate at times to support the loans.
- Keeping the loan documentation under safe custody.
- Monitoring the receipt of periodical receivables.
- Debiting the client for all charges, interests etc.
- Marinating the central liability records for all extensions of credit and balancing the totals with General Ledger.
Secured overdrafts, Temporary overdraft, Cash Credit (Hypothecation), Cash Credit (Pledge) are covered in this type of advance. Overdraft is an arrangement between a banker and his client by which the later one is allowed to withdraw over and above his credit balance in the CD account up to an agreed limit, a cash credit differs from overdraft in the respect that CC is used for long term and overdraft is used for short term.
Temporary Overdraft (TOD)
Bank sometimes grant unsecured overdraft for small amounts to clients having CD account with the bank. TOD is permitted only when reliable sources of funds are available to the borrower for repayment. It is usually provided against DD, cheque etc. which have been presented for collection but not yet collected. Though these documents are not lined but these are kept in the respective departments for collection. When these are collected, the advances are realized from the proceeds of these instruments.
Secured Overdraft (SOD)
Banks permit overdraft against securities like FDR, DPS, savings certificate, word order etc, Currently, UBL issues SOD only against financial obligations. They are:
- Share Certificate
- ICB Unit Certificate
- Savings Certificate
- Wage Earners Development Bond (WEBD)
- Defense Certificate
Cash Credit (Hypothecation)
The mortgage of movable property for securing loan is called hypothecation. Hypothecation is a legal transaction whereby goods are made available to the lending banker as security for a debt without transferring either the property in the goods or either possession. The banker has only equitable charge on stocks, which practically means nothing. Since the goods always remain in the physical possession of the borrower, there is much risk to the bank. So it is granted to parties of undoubted means with the highest integrity.
Cash Credit (Pledge)
Pledge is the bailment of goods as security for payment of a debt or performance of a promise. In a contract of pledge, bailer must deliver the goods pledged to the bailer cither actually or constructively. Transfer of possession is the judicial sense, is essential in the valid pledge. In case of pledge goods the bank acquire the possession of the goods or a right to hold goods until the repayment for credit with a special right to sell after due notice to the borrower in the event of non-repayment.
Advance department of Moghbazar branch deals with the following types of loans.
1) Personal Credit Scheme
2) Transport Loans
3) Loan (General)
4) House Building Loan
5) House Building Loan
6) Staff Car Loan
Required Information for Loan Sanction
Prior to loan sanction, investigation should be made about the person’s business, trade experience, dealings, assets and liabilities etc. this information should be taken from various sources. His/her account statement with others banks should also be included is this investigation, financial statements and income tax returns should be checked. Lastly, personal interview should be taken.
So, before sanctioning a loan a banker should consider the following points:
- Loan Application
- Trade License, Partnership Deed, Memorandum of Association.
- Market Report
- Study of Accounts
- Financial Statement
- Personal Interview
- Other Bank’s confidential opinion
- CIB report of Bangladesh Bank
For sending proposals to the Head office the following documents are required:
- Loan application
- Photograph of the borrower
- Declaration of the borrower
- Credit report on the borrower, which should be prepared by the branch
- Limit sanction advice
- Statement of stock
- Documents—memorandum of deposit of title deed.
– Mutation Certificate
– Up to date pay receipt
– Legal opinion
– Valuation certificate of the property
Different types of loans are discussed below
Personal Credit Scheme
It is a personnel facility provided to the stalls of the Moghbazar branch. These loans are provided for buying necessary householder items. At first a staff applies for loan in a prescribed form. He / she affix the statement of his /her savings the statement of his/her savings account and quotation of the good from three sellers of that good. After receiving the application the authorized officer verify it. He / she prepared a credit proposal and sends it to the Credit Division of Head Office. The credit division appraises the proposal on the basis of the balances in the account, the designation of the employee. If credit division id satisfied it fixes the margin, amount of loan, mode of payment, rate of interest and instruct for obtaining other necessary documents from the staff. Credit division prepares a sanction letter mentioning all those information, after getting the letter the advance department informs the staff about that. A pay order is prepared in favor of the seller with the amount of loan and margin provided by the staff. The staff handover the pay order to the seller and gets his/her goods. The goods are hypothetic to the bank.
Loans against Transport
These types of loan are usually provided to the client who wants to start transport business, or need a transport for carrying goods. The client brings quotation from three sellers of the vehicle. License of the vehicle is made in joint name of the banker and the client. Payment is made directly to the seller through a pay order. At the payment of the loan the client becomes the only owner of the vehicle.
The purpose of this type of loan is not specific. It can be sanctioned against any kind of security. Securities can be BSB, PSP.Share certificate, WEDB, FDR etc. Here the money is directly transferred to the clients account.
Staff Car Loan
This is a personal facility provided to the higher officials of the bank. Officials of the post of A.G.M. and above can get this loan, the car is licensed in the name of the bank and staff jointly. The bank makes payment of the installment of the loan from its own fund. When the loan is fully recovered, the staff becomes the owner of the car.
House Building Loan
This type of loan is provided to the staff for building their own house; the staff must have a land to make the house. The land and the building is mortgaged to the bank. The loan is realized from the monthly salary of the staff. At the dime of sanctioning the loan the monthly salary of the staff, his/her designation, balance of his/her account etc are taken into account.
This type of loan is provided to the clients of the bank to build house. Registered mortgage of the land and building is taken from the client.
4.4 SWOT Analysis of UBL
SWOT analysis provides an opinion and adjustment whether organizations currently position is satisfactory or not.
- All the level of the management is solely directed to maintain a culture for the betterment of the quality of the service.
- The bank has earned customer loyalty as organizational loyalty.
- Skilled personals have developed professional relationships with their customers and clients, which is an emotional tie on regular business.
- UBL is always trying to add new and modern equipments.
- Employees are sharing good atmosphere in UBL so that it gave them reason to work efficiently and to become dedicated in banking.
- UBL maintain corresponding relationship with many foreign banks so that it is an effective measure for the smooth business.
- The top management officials all have had reputed of banking experience, skill and proficiency.
- The advertising and promotional activities of this bank are up to the mark.
- Reference appointment is very much effective in UBL. As a result of this there are many who are only drawing salaries at the end of the month but making a minimum contribution towards the organization.
- There are some officers who work hard but are not appreciated by the authority.
- AIBL has not set up proper network system among branches.
- A remarkable portion of the total human resources is inefficient.
- The bank does not have any research and development division.
- The bank can introduce more innovative and modern customer service to better survive in the competition.
- They can also offer micro credit business for individual and small business.
- It is high time that they should move toward the online banking operation; because some banks are already introduce the online banking operation.
- Bank will be able to accommodate knowledgeable. Skilled, experience and hard working person by offering attractive remunerations and fringe benefits with nice working environment.
- By expending the financial policy with credit facility customer are very much secure in business environment.
- 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.
Recommendations and Conclusion
As per earnest observation some suggestion for the important of the situation are given below:
- To attract more clients UBL has to create a marketing strategy, which will increase the total exporter-import business.
- Effective and efficient initiatives are necessary to recover the default loans.
- Attractive incentives package for the exporter will help to increase the exporter and accordingly if well diminish the balance of payment gap of UBL.
- Long-term training very much required for the foreign exchange official.
- Places, Firstly it is registered on the supplementary sheet, then it come for computer posting and lastly it comes to the section in charge for verification of the signature and for cancellation, after that it goes to the cash payment officer for final payment, for this system, the client has to frequently enquire that whether his/her check has been passed for payment or not, also it takes their valuable time, so. UBL needs to change this system and move on to a better Cheque passing system.
- Due to lack of one stop service, the client of UBL ha to move on from one desk to another. Now in modern banking system, this type of movement is considered as one type of harassment.
- The bank should launch new products such as auto teller machine, tele bank etc for betterment of customer services.
- Strict supervision must be adopted in case of high-risk borrowers. Time to time visit the project should be done by the bank officials.
Banking sector being a service of Bangladesh continues to contribution to a great in the economy of Bangladesh, Uttara Bank Ltd. Is one of the leading banking services of the country.
I also think that there is bright future waiting for the Uttara Bank Ltd. Another thing I have to mention here that the UBL is going through he oath in which they need to go and as like today it will bring more and welfare oriented activities in the banking sector in the years to come.