An Overall Banking Practice of Uttara Bank Ltd

CHAPTER-2

PROFILE OF UTTARA BANK LIMITED

Uttara Bank Ltd. has been a nationalized bank in the name of Uttara Bank under the Bangladesh Bank (Nationalization) order 1972, formally known as Eastern Banking Corporation Limited.

  Uttara Bank ltd. started functioning from 28.01.1965

  Consequent upon the amendment of Bangladesh Bank (Nationalization) order 1972

  Uttara Bank ltd. converted into Uttara Bank ltd. as a public limited company in the year 1983 and obtained business commencement certificate on 21.08.1983.

  Uttara Bank ltd. floated its shares in the year 1984.

  Uttara Bank ltd. has 207 branches all over Bangladesh

  The bank is listed in the Dhaka Stock Exchange Ltd. and also in Chittagong Dhaka Stock Exchange Ltd.

  It publicly quoted company for trading of its shears.

  The registered office of the Bank is located in 47, Bir Uttom Shahid Ashfaq-us-samad Road (90, Motijheel Commercial Area), P.O. Box No. 217 & 818 Dhaka-1000, Bangladesh.

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 service to clients. 207 branches at home and 600 affiliates worldwide create efficient networking and reach capability. Uttara is a bank that serves both clients and country.

UBL is one of the largest private banks in Bangladesh.

  It operates through 207 fully computerized branches ensuring best possible and fastest services to its valued clients.

  The bank has more than 600 foreign correspondents worldwide.

  Total number of employees nearly 3600.

  The Board of Directors consists of 15 members.

  The bank is headed by the Managing Director who is the Chief Executive Officer.

The Head Office is located at Bank’s own 18-storied building at Motijheel, the commercial center of the capital, Dhaka.

UBL Networks

The Head Office is located at Bank’s own 18-storied building at Motijheel, the commercial center of the capital, Dhaka.

Vision

To become a leading banking institution which play a pivotal role in the development of the country.

 Mission

i)        Continuous improvement in our business policies.

ii)      Cost reduction integration of the technology at all level.

Uttara Bank ltd. has 207 branches all over Bangladesh. Shantinagar Branch is one of them. Like other branch it’s operate several department. They are like

1. 1.      General Banking
2. 2.      Loan and Advance, And
3. 3.      Foreign exchange

In this branch operation is mostly covered by the computer system. By the use of computer here operate is like Clearing, E-mail, Money Laundering, Clean Cash and all types of letter/ application and other related works with computer.

Through there are a little bit work of foreign exchange, but FDD, LC,SC,LSC,DD,MT,TT are doing here.

Corporate Governance is the system by which business companies are directed and controlled. Since its inception, Uttara Bank has actively and fully adhered to the principle of sound corporate governance. Fairness, Transparency Accountability and Responsibility are the minimum standard of acceptable corporate behavior today. Uttara Bank Limited continues to ensure the compliance of corporate Governance as per Securities and Exchange Commission rules and regulations. Corporate governance establishes specific responsibility and ensures accountability.

The basic driver of CSR consists of values that have taken place within businesses where they not only feel responsible for creation of wealth but also for social and environmental well being.  Uttara Bank Ltd. Considers socially responsible activities as an important part of its culture, identity and business practice. We have a deep commitment, loyalty and a high sense of responsibility to our nation and its people. Uttara Bank Ltd. conforms to all of the astringent regulations issued by the Government and the Bangladesh Bank. As per of our corporate social responsibility, Bank contributes greatly to the nourishment of the country’s all types of calamities, arts, culture and sports.

Financial Position of the Branch (June-09) 

From when I started here as an internship I expired that this branch is always over crowed with a lot of customers. This has promoted me to find out the financial position of the branch. Here I was able to extract the following data regarding the branch.

 Profit of the Branch

The Profits of the branch starting from January’09 to June’09 are given below:

The profit of this branch is Tk.852359, 432825, 496232, 470211,466010 and 2990506 in the month of January, February, March, April, May and June respectively.

FIGURE: Total Profit of the Branch

Interpretation: From the graph it is easily understand that the profit of the branch is going high which is very good for the total organization. Because they are always provide profit for the total organization means Uttara bank limited.

 Total Inflow

FIGURE: Total Income of Total Inflow

Interpretation: It is found that the Total income is like Tk. 1203504,781413, Tk. 935575, Tk. 1058725, Tk. 1043861, and Tk.3631896 in the month of January, February, March, April, May and June respectively. From the chart it is said that the total income of UBL Shantinagar branch is growing up since from January to June. The branch shows good performance by them.

 Total Expense

FIGURE: Total Expense

Interpretation: Total expense of Shantinagar Branch is Tk. 351145, Tk. 348588, Tk. 439343, Tk. 588514, 577851 and Tk. 641389 in the month of January, February, March, April and May respectively. The expense is decrease in May from the previous month which is shown a good responsibility by the branch.

Uttara Bank’s operation has achieved the confidence of its customer with sound fundamentals in respect of deposit accumulation; loans & Advance, Import & Export business, remittance business and profitability. As a result the bank has been able to earn remarkable profit in business. Overall performance of Uttara Bank Limited has been improved for maintaining effective and constructive principle of Bangladesh Bank.

Cash

Cash in stood at TK 1,341.4 million in 2009 which is lower than that of the previous year and the same amounted to TK 1,585.5 million in 2008.

Share Capital

The Authorized Capital of the Bank remained at tk 1600.00 to Tk.3200.00 million during the year 2009. 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 for 2009. The total number of shareholders was 15973184. The Government of the Peoples Republic of Bangladesh, eighteen Banks and fifty two financial institutions held total 676397 sahares worth Tk. 67639700.00 and remaining 42499 private shareholders held total 15,296,787 shares worth Tk. 1,529,678,700.00. The total equity of shareholders of the Bank at end of the year 2009 stood at Tk.6,206.9 million and in 2008 stood at Tk. 3688.8  million.

Reserve Fund

The reserve fund of the bank increased to TK 4,609.6 million during the year by registering 59.49  percent increase over last years Tk. 2,890.2 million.

FIGURE: Authorized capital, Paid-up-Capital, Reserved fund & other Reserves

Capital Adequacy

As per guidelines of Bangladesh Bank, the Bank adopted BIS (Bank for International Settlement) risk adjusted capital standerd to measure capital adequacy. Capital adequacy indicates the equity base with respect to risk weighted assets derived from both on and off balance sheet activities of the bank.. At the end of the year 2009, the actual capital of the bank stood at Tk 5,829.0 million against required capital of Tk 3,688.2 million on the basis of tier-1 and tier -2 showing surplus capital of Tk 2,140.8 million. Risk weighted assets increased by Tk 2,677.8 million and stood at Tk 36,882.4  million in  2009 mainly due to increase in loans and advances.. The capital adequacy rate of the Bank stood at 15.91 percent against required 10.0 percent as fixed by Bangladesh bank, which is indicative of the sound capital base of the bank.

Deposit

The Bank’s principle source of fund was deposit. The Bank deposit stood at Tk 59,387.3 million as on December, 2009 compared to Tk 50,817.0 million in 2008, thus recording 16.87 % growth. Competitive interest rates, attractive deposit products, deposit mobilization efforts of the Bank and confidence reposed by the customer in the Bank contributed to the notable growth in deposit. The Bank evolved a number of attractive deposit scheme to cater to the requirment of small and medium savers.

Investment

The total investment during the year 2009 were mostly in government Securities which stood at TK 22,344.1 million as against TK 11,091.8 million making a growth of 101.44 percent over the last year. The Uttara Bank Limited is primary dealer of Government securities. The Bank as a primary dealer is purchase the unsold Bond/ Bill which are put to auction in order to keep underwriting commitment. As a result the investment in Bond and Treasury bill increased. Besides one of the investment activities of the Bank was maintenance of statutory Liquidity Reserve which mainly comprise Government Treasury Bond and Treasury bill of different terms, National prize Bond, Government Approved Debenture and ICB shares. The Bank invested total Tk. 22,502.5 million in 2009 as compared to TK 11,188.8 million of the previous year.

Investment in treasury bonds and others securities

Utilization of surplus fund was a major function of Treasury Department. Due to decline of surplus fund against previous year the entire Investment of the Bank stood at Tk. 22,502.5 million at the close of the year 2009. Mentionable that Bank has been able to increase Loans and Advance in Small Business as well as different sector by reducing investment.

Bank was maintenance of “Statutory Liquidity reserve” which generally compromise of Govt. Treasury Bills and Bonds (HTM) of various tenures, National Prize Bonds and

Govt. approved Debenture. The shares of Govt. Securities were amounted to Tk. 22,344.1 million in total Investment, which was 11,091.8 million in the previous year.

Head wise position of Bank’s invested Fund at the end of the Year 2009 is given below

Approved Debenture (in purchase price)

Share & Debenture of ICB sponsored companies

Prize Bond                                                22,182.9

151.0

7.3

10.2Ordinary Shares:

1. Eastern Bank Ltd.                                            104.0

2. Karmasangsthan Bank                                       10.0

3. ICB (Approved)                                                 31.8

4. CDBL                                                                  1.0

5. Other Companies                                                 4.3                                                              

       Total:                                                22,502.5

Skilled and motivated staff plays a vital role in achieving top performance. Knowledge and skill development is a continuous process and to keep our employees abreast of the latest developments in the banking sector, the Bank continuous to organize various training programmers and workshops.

The Bank’s own Training Institute is nicely decorated and equipped with the sophisticated instrument has been striving to bring about a qualitative change and improvement in human resources of the bank by imparting continuous different training throughout the whole year. Guest speaker specialized in banking participate in each training program of the bank excluding highly educated faculty members of the institute. Besides, a number of executives and officers were sent to various training institution including Bangladesh Institute of Bank Management (BIBM), and abroad for higher training.

The total manpower of the bank in different grades as on 31.12.2009 was under:

2. Officers

3.Assistant Officers

4. Others132

1,991

420

7484.01%

60.50%

12.76%

22.73%Total: 3,291100.00%

(Figure in million)

CHAPTER-3

GENERAL BANKING

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. Shantinagar 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

  Loan and advance.

In the following they are shortly describe:

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 1^st 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.

  Govt., Semi-Govt., Autonomous organization and an individual may open STD Account with    UBL.

  UBL offers attractive/competitive rate of interest in STD Account.

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.

Savings Deposits

Special Notice Deposits (STD)

Fixed Deposits (Time Deposits)

3 months

6 months

1 year

2 years and above

3 years and above

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

 1. 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.

 2. Proprietorship Firm

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

 3. 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.

Account opening procedure    

Account opening form duly filled up.
Specimen signature cards in duplicate.
Certified copy of bylaws, rules and regulations in case of corporations and autonomous body are to be obtained.
Certified copy of the resolution-authorizing opening of an account.
List of members of the executive committee and list of directors are to be obtained
Partnership deed, in case of partnership.
Certificate of incorporation in case of both public and private limited companies.
Memorandum / Articles of Associations, Resolution of the Board of  Directors authorizing opening of the Account for limited companies and  corporation.

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.

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. 

The following circumstances are usually considered in case of closing an account or justifying the stoppage of the operation of an account:

Notices given by the customer himself or if the customer is desirous to close the account.

1. Death of the customer.
2. Customer’s insanity and insolvency.

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

1)      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.

2)      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.

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.

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.

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.

CHAPTER-5

LOANS & ADVANCES

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.

Categories of loans offered by the bank UBL

  Agriculture

  Large and medium scale industriesü  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)

a)Crops

b)Fisheries

c)others

2.    Industrial leading(Term):

a) Large & Medium

b) Small & Cottage

Industrial leading (Working Capital):

a) Large & Medium

b) Small & Cottage

Commercial Lending:

a)Export

b)Import

c)Internal Trad

Special Programmed:

a)Consumer Credit Scheme (Uttaran)

b) Personal loan Scheme

c) Small Business loan Scheme

d) Uttaran House Repairing and

Renovation  Scheme

Housing:

a)General Housing Building loan

b)Staff   Housing Building loan 

7.    Leasing Financing-

8.    Others-

9.    Bills disconnected and purchased

a) In Bangladesh

b) Outside of Bangladesh

Total: Loan & Advance10.5

Figure: Sector wise Loans & Advances

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.

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.

  Fax.

  Photocopier.

  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.

  5% incentive on total interest charge.

Required Document

  Documents related to applicants jobs to prove him.

  Two copies passport size photocopies.

  Photograph of nominee (if any) duly attested by the account holder.

Figure in Million

Figure: Deposit & Advance (TK in millions)

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

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

  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.

  Govt. 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.

CHAPTER-6

RATIO ANALYSIS

Definitions of 26 financial ratios

Bank profitability ratios

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

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

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

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

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

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

Bank efficiency ratios

7. IEE=interest income to expenses= (IN−IE) /ATLA= (interest income−interest expenses) / average total

Loans and advances

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

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

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

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

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

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

Asset-quality indicators

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

15. APL=adequacy of provision for loans=ALL/ATLA=allowance for loan losses at the end of the year / average total loans and advances

16. WRL=write-off ratio=WR/ATLA=write-off of loans during the year / average total loans and advances

17. LR=loan ratio=ATLA/ATA=average total loans and advances / average total assets

18. LTD=loans to deposits=ATLA/ATD=average total loans and advances / average total customer deposits

Liquidity ratios

19. CTA=cash to assets=C/ATA=cash / average total assets

20. CTD=cash to deposits=C/ATD=cash / average total customer deposits

Risk ratios

21. DTA=deposits to assets=ATD/ATA=average total customer deposits / average total assets

22. EM=equity multiplier=ATA/SE=average total assets / average stockholders’ equity

23. ETD=equity to deposits=SE/ATD=average shareholders’ equity / average customer total deposits

24. TLE=total liabilities to equity=TL/SE=average total liabilities / average stockholders’ equity

25. TLSC=total liabilities to shareholder capital=TL/SC=average total liabilities / shareholder contributed capital

26. RETA=retained earnings to total assets=RE/ATA=retained earnings / average total assets

Table-1: ROA of Uttara Bank from Year 2005 to 2009

Figure1: ROA from 2005 to 2009

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.

Table-2: ROE of Uttara Bank Limited from Year 2005 to 2009

Figure-2: ROE from 2005 to 2009

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 year.

Table-3: PM of Uttara Bank Limited from Year 2005 to 2009

Figure-3: PM from 2005 to 2009

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.

Table-4: ROD of Uttara Bank Limited from Year 2005 to 2009

Figure-4: ROD from 2005 to 2009

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.

Table-5: ROSC of Uttara Bank Limited from Year 2005 to 2009

Figure-5: ROSC from 2005 to 2009

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.

Table-6: NOM of Uttara Bank Limited from Year 2005 to 2009

Figure-6: NOM from 2005 to 2009

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.

Table-7: IEE of Uttara Bank Limited from Year 2005 to 2009

Figure-7: IEE from 2005 to 2009

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.

Table-8: OEA of Uttara Bank Limited from Year 2005 to 2009

Figure-8: OEA from 2005 to 2009

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.

Table-9: OIA of Uttara Bank Limited from Year 2005 to 2009

Figure-9: OIA from 2005 to 2009

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.

Table-10: OER of Uttara Bank Limited from Year 2005 to 2009

Figure-10: OER from 2005 to 2009

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.

Table-11: ATO of Uttara Bank Limited from Year 2005 to 2009

Figure-11: ATO from 2005 to 2009

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.

Table 12: NIM of Uttara Bank Limited from Year 2005 to 2009

Figure 12: NIM from 2005 to 2009

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.

Table 13: NNIM of Uttara Bank Limited from Year 2005 to 2009

Figure 13: NNIM from 2005 to 2009

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.

Table 14: PEA of Uttara Bank Limited from Year 2005 to 2009

Figure 14: PEA from 2005 to 2009

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.

Table 15: LR of Uttara Bank Limited from Year 2005 to 2009

Figure 15: LR from 2005 to 2009

Interpretation:

From the graph we can see that the value of loan ratio of Uttara Bank Limited was increased in 2005 to 2006 and the value was decreased in 2007 from previous year. The value of Loan Ratio was increase in 2008 and in 2009 it was decrease from previous year.

Table 16: LTD of Uttara Bank Limited from Year 2005 to 2009

Figure 16: LTD from 2005 to 2009

Interpretation:

From the graph we can see that the value of loans to deposits of Uttara Bank Limited was continuously increased from 2005 to 2006 to 2007 to 2008. After that in 2009 the value was decrease from 2008.

Table 17: CTA of Uttara Bank Limited from Year 2005 to 2009

Figure 17: CTA from 2005 to 2009

Interpretation:

The value of cash to assets of Uttara Bank Limited was same from 2005 to 2006. The value of Cash to Assets increases in 2007 to 2008 from previous year. After that the value was decrease in 2009.

Table 18: DTA of Uttara Bank Limited from Year 2005 to 2009

Figure 18: DTA from 2005 to 2009

Interpretation:

From the graph we can see that the value of Deposits to Assets of Uttara Bank Limited was increased slowly from 2005 to 2006. After that in 2007 the value was dramatically decreased from previous two year and in 2008 the value was increased from 2006 then it was again decrease in 2009 from previous year.

Table 19: EM of Uttara Bank Limited from Year 2005 to 2009

Figure 19: EM from 2005 to 2009

Interpretation:

From the graph we can see that the value of Equity Multiplier of Uttara Bank Limited was continuously decreased from 2005 to 2009.  So the value of Equity Multiplier is not better.

Table20: ETD of Uttara Bank Limited from Year 2005 to 2009

Figure20: ETD from 2005 to 2009

Interpretation:

From the graph we can see that the value of Equity to Deposits of Uttara Bank Limited was continuously increased from 2005 to 2009. So the value of Equity to Deposits is better.

Table 21: TLE of Uttara Bank Limited from Year 2005 to 2009

Figure 21: TLE from 2005 to 2009

Interpretation:

The value of Total Liabilities to Equity of Uttara Bank Limited was continuously decreased from 2005 to 2009. So the value of Total Liabilities to Equity of Uttara Bank Limited is not good.

Table 22: TLSC of Uttara Bank Limited from Year 2005 to 2009

Figure 22: TLSC from 2005 to 2009

Interpretation:

From the graph we can see that the value of Total Liabilities to Shareholder Capital of Uttara Bank Limited was continuously decreased from 2005 to 2009. So the Total Liabilities to Shareholder Capital of Uttara Bank Limited is a loss project.

Table 23: RETA of Uttara Bank Limited from Year 2005 to 2009

Figure 23: RETA from 2005 to 2009

Interpretation:

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

CHAPTER-7

FINDINGS

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.
3. Going with new strategy would be risky.

Now a day’s Uttara bank ltd. is one of the top performer bank in our country. But the security system is very weak. Because they have no security camera in the bank and of course the branch also which is very weak sector of Uttara bank limited.

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.

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.

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.