United Commercial Bank Limited was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation in mid 1983 and has since been able to establish one of the largest networks of 130 branches among the first generation banks in the private sector. It has authorized capital of Tk. 8000 million and paid up capital of Tk. 2910 million. The Bank has 130 branches across the country and a wide network of correspondents all over the world.
The report is divided into seven chapters. The First chapter of the report describes the introduction of the study, objectives, its scope, methodology along with the limitation encountered.
The second chapter of the report covers an overview of the banking industry of Bangladesh covering rules & regulations, banking sector’s total deposit & credit, assessment criterion for banks and CAMEL rating, Structure of Banking System in Bangladesh and Distribution of bank branches in different regions.
The third chapter deals with the organization profile of United Commercial Bank Limited. This part gives a brief look at the structural and managerial overview of the Bank. It includes historical Background, Mission Statement, Core Value, Strategies, Goal & objectives, Products & Services (UCB) and last five year financial performance at a glance.
The fourth give the main focus of the general banking activities of United Commercial Bank Limited. It includes banking services of UCB, account opening, rate of interest on deposit, remittance department, clearing, accounts department, loan schemes, SMS banking service and foreign exchange.
The fifth chapter emphasizes on financial performance of united commercial bank. It includes profitability ratio, liquidity ratio, credit risk ratio, ROE, ROA etc.
The sixth and seventh chapter of the report deals with the Findings, recommendation & conclusion about the general banking activates of United Commercial Bank Limited.
At last it contains the Appendixes.
Internship program is the systematic gathering, recording and analyzing of data about the subject. The aim of this internship program is to connect practical knowledge with theoretical knowledge. Now the world is a competitive. Therefore everybody has to expert in both practical knowledge and theoretical knowledge.
During my work, I have faced various obstacles. By the grace of God and by the help of some related person, I have overcome those problems successfully. Through internship I become aware of organizational culture and learn how to show professional excellence to a great extent. This learning helps me when I finally enter into practical field.
Origin of the Report
The BBA program conducted by Primeasia University was introduced in order to provide a number of fresh graduates in business sector. Bachelor of Business Administration (BBA) program requires usually a three months attachment with an organization followed by a report assigned by the supervisor in the organization and endorsed by the faculty advisor. As well as, this program has been designed to facilitate the students and the executive to provide basic theoretical knowledge and practical in the job activities in the context of Bangladesh.
Since the BBA Program is an integrated, practical and theoretical method of learning, the students of this program are required to have practical exposure in any kind of business organization last term of this course.
This report on practical orientation has been originated above thinking.
Objectives of the study:
- The general objective is to prepare and submit a report on the topic “General Banking of United Commercial Bank Limited”.
- To apply theoretical knowledge in the practical field.
- To observe the functions of general banking section.
- To observe the working environment in commercial bank.
- To study the existing overall banker customer relationship.
- To comply with the entire branch banking procedures.
- To analyze the performance of the branch as well as UCBL as a whole.
- To have some practical exposures that will be helpful in our practical life.
- To gather knowledge about the functions of different departments of the branch and to compare ongoing practices with theory.
- To examine whether the attributes of good performance are observed in United Commercial Bank Ltd.
- To sort out problems in management by United Commercial Bank Ltd. and suggest remedies.
Scope of the study:
A banking institution is indispensable in a modern society. It plays a vital role in the economic development of a country and forms the core of the money market in an advanced country. In recent times the banking sector over the world has been undergoing a lot of changes due to deregulation, technological innovation, globalization etc. In Bangladesh banking sector is lagging far behind in adopting these changes.
Scope of the study has described in terms of two grounds:
Organizational scope: I worked in every departments of UCBL, Tongi Station Road Branch. For time constraint, I did not get the opportunity to work in foreign exchange department. But I provided high emphasis to learn the work of general banking departments, Credit department and Clearing department.
Periodical scope: The program has been started from October 17, 2012 and continued up to January 17, 2013.
The methodology of this report is totally different from many reports. I have emphasized on the practical observation. Almost the entire consists of my practical observation. While preparing the report, I have taken from two sources:-
- Primary Sources:
Primary sources include interviews and conversation with officers and executives of the bank of different divisions and departments.
- Secondary Sources:
Secondary sources of information include annual report, internet, general report, investment manual, general banking manual, foreign exchange manual, Banking related Books, selected books journals and other publications etc.
There have been some limitations from which this report suffers. The limitations are briefly pointed out below:
- Time is the first limitation as the duration of the program was of one and a half month only.
- Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.
- The data that seems insufficient may be suffering from lack of reliability to some extent.
- Supply of more practical and contemporary data is another shortcoming.
- The study was not done very successfully due to inexperience.
Definition of Bank:
According to Britannica.com, a bank is an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates paid and charged, respectively.
The name bank derives from the Italian word banco “desk/bench”, used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, traces of banking activity can found even in ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint.
A bank is a government-licensed financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money at differing maturities. It is an institution for receiving, keeping, and lending money at interest. In order to make profits, modern banks generally “borrow short and lend long” (i.e. take money from depositors and lend that money for longer-term projects)
A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits. After the Great Depression, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S. law, some use the term “commercial bank” to refer to a bank or a division of a bank primarily dealing with deposits and loans from corporations or large businesses. In some other jurisdictions, the strict separation of investment and commercial banking never applied. Commercial banking may also be seen as distinct from retail banking, which involves the provision of financial services direct to consumers. Many banks offer both commercial and retail banking services.
Roles of a Commercial bank:
Commercial banks engaged in the following activities:
Processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means and issuing bank drafts and bank cheques.
Accepting money on term deposit and lending money by overdraft, installment loan,.
providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures
Safekeeping of documents and other items in safe deposit boxes also exchange currency.
Sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a “financial supermarket”.
After the independence, banking industry in Bangladesh started its journey with 6 nationalized commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In the 1980’s banking industry achieved significant expansion with the entrance of private banks. Now, banks in Bangladesh are primarily of two types:
Scheduled Banks: The banks which get license to operate under Bank Company Act, 1991 (Amended in 2003) are termed as Scheduled Banks.
Non-Scheduled Banks: The banks which are established for special and definite objective and operate under the acts that are enacted for meeting up those objectives, are termed as Non-Scheduled Banks. These banks cannot perform all functions of scheduled banks.
There are 47 scheduled banks in Bangladesh who operate under full control and supervision of Bangladesh Bank which is empowered to do so through Bangladesh Bank Order, 1972 and Bank Company Act, 1991. Scheduled Banks are classified into following types:
- State Owned Commercial Banks (SOCBs): There are 4 SOCBs which are fully or majorly owned by the Government of Bangladesh.
- Specialized Banks (SDBs): 4 specialized banks are now operating which were established for specific objectives like agricultural or industrial development. These banks are also fully or majorly owned by the Government of Bangladesh.
- Private Commercial Banks (PCBs): There are 30 private commercial banks which are majorly owned by the private entities. PCBs can be categorized into two groups:
- Conventional PCBs: 23 conventional PCBs are now operating in the industry. They perform the banking functions in conventional fashion i.e interest based operations.
- Islami Shariah based PCBs: There are 7 Islami Shariah based PCBs in Bangladesh and they execute banking activities according to Islami Shariah based principles i.e. Profit-Loss Sharing (PLS)
- Foreign Commercial Banks (FCBs): 9 FCBs are operating in Bangladesh as the branches of the banks which are incorporated in abroad.
There are now 4 non-scheduled banks in Bangladesh which are:
- Ansar VDP Unnayan Bank,
- Karmashangosthan Bank,
- Probashi Kollyan Bank,
- Jubilee Bank
Rules & Regulations:
Laws that directly regulate the banking system of Bangladesh are: Bangladesh Bank Order 1972; Bank Company Act, 1991; Bangladesh Bank (Nationalization) Order 1972; Companies Act 1913 and 1994; Deposit Insurance Order 1984; Bankruptcy Act 1997; Insolvency Act 1920; Financial Court Act 1990; Foreign Exchange (Regulation) Act 1986; Financial Institutions Act 1993; Financial Institutions Rules 1994; and Co-operative Societies Ordinance 1984.
Laws that indirectly influence the banking system and for which references are made in the Banking Company Act 1991 are: Code of Civil Procedure 1898; Code of Criminal Procedure 1898; Evidence Act 1872; General Clauses Act 1897; Limitations Act 1908; Negotiable Instruments Act 1881; Penal Code 1860; Trust Act 1882; Transfer of Property Act; and Bangladesh Chartered Accountant Order 1973.
The total operations of every bank were assessed according to five fixed criteria. These criteria are capital adequacy, asset quality, management efficiency, earning capacity and liquidity (CAMELS).
A-Quality of Assets
M-Quality of Management
S – Sensitivity of the Bank to Market Risk
Capital Adequacy: For the safety and protection of depositor’s benefit, capital adequacy must be maintained at 10%. It is also the coverage of financial debacles like loan loss, share market loss, foreign currency dealing loss, interest rate fluctuation loss and the protection for off balance sheet affairs hit.
Asset Quality: A large percentage of the assets of the banking sector are used as loans and advances. High rate of classification enhances vulnerability of assets. It is necessary for the banks to keep required provision against the classified loan risk from the profit during the year.
Management Efficiency: Management is the key to the development and expansion of a bank. Management efficiency is judged on the basis of the ratio of total expenditure to income, operational expenses and total expenses, per head employee income & expenditure and interest rate spread.
Earning Capacity: Strong earning and high profitability is the good sign of a bank’s present and future strength. Any loss can be compensated from the profit of a bank. Earnings calculated on the basis of return on asset (ROA), return on equity (ROE) and nil interest margin (NIM) ratios.
Liquidity: The banks have to keep 19% SLR against their deposit with central bank, of which 6% average in the form of CRR. The central bank—Bangladesh Bank (BB) keeps CRR in current account and rest of SLR in cash and government securities. Islamic banks have to keep 10% SLR and specialized banks are given exemption of keeping the SLR but they have to keep 6% CRR.
Sensitivity of the Bank to Market Risk:
Market risk is based primarily on the following evaluation factors:
Sensitivity to adverse changes in interest rates,
foreign exchange rates,
Nature of the operations of the bank.
Trends in the foreign currencies exposure
Changes in the value of the fixed assets of the bank
Importance of real estate assets resulting from loans write off
Ability of management to identify, measure and control the market risks
CAMEL Rating: Analyzing the overall operational activities of all commercial and specialized banks; central bank, the regulatory authority of country’s banking sector has ranked 6 ‘A-class’, 27 ‘B-class’, 8 ‘C-class’, 5 ‘D-class’ and 2 ‘E-class’ banks, which was completed recently.
Background of the United Commercial Bank Ltd:
In the backdrop of economic liberalization and financial sector reforms, a group of highly successful entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable services with superior value products. United Commercial Bank Limited (UCBL), being managed by highly professionals and delegated team with long experience in banking. They constantly focus on understanding and anticipating customer needs.
UCBL was established under the rules & regulations of Bangladesh Bank & the Bank companies Act 1991,on the 3rd June 1983 with the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial which would contribute to the social economic development of our country. He has a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize dream. Indeed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable chairman.
Formation of UCBL:
United Commercial Bank Limited (UCBL) is a First-generation private commercial bank established in Bangladesh in the year 1983 under the Companies act. Since inception, it has committed to provide high quality financial services to the people of this country o accelerate economic development of the nation. As such, it has been working for stimulating trade and commerce, accelerating the pace of industrialization, boosting export, creating employment opportunity, alleviating poverty, raising standard of the living of the people etc and thereby contributing to the sustainable development of the country.
Capital and Reserves:
During the year under report authorized capital of the Bank remained unchanged at Tk 1,000 million and the paid up capital stood at Tk. 230 million. The reserve fund of the Bank increased by 33% to Tk 1,045 million as against Tk 783 million in the previous year.
The capital fund of the bank stood at Tk 1,943 million in 2008 against Tk 1,389 million of 2007 recording an increase of Tk 554 million (39.88).core capital (tier-1) increased by Tk 492 million and stood Tk 1,735 million while supplementary capital (tire-11) increased by Tk 62 million and stood at Tk 208 million. Total capital fund is equivalent to 9.72% of risk weighted assets.
Vision of the UCBL:
“To be the bank of first choice through maximizing value for our clients, shareholders & employees and contributing to the national economy with social commitments.”
Mission of the UCBL:
“To offer financial solutions that create, manage and increase our clients’ wealth while improving the quality of life in the communities we serve.”
Objectives of the UCBL:
- To provide quick and superior service. By applying modern Information technology.
- In all respect the UCBL launched development growth of the bank to be sustained and this technique is to be maintained.
- By improving congenial relationship between the bank and the customers, we want to come closer to play a vital role in national development.
- By investing the liquidity of our valued shareholders income generating projects and give them maximum dividends.
- In this competitive market, the bank is to provide new innovation banking services to its valued customers and build up their own image.
- To ensure the improvement of professional quality of man power by increasing the work efficiency and technological knowledge.
- To its own position by creative banking service in competitive market.
Values of the Bank:
- We put our customer first.
- We emphasize on professional ethics.
- We maintain quality at all levels.
- We believe in being a responsible corporation citizen.
- We say what we believe in
- We foster participate management.
Logo & Corporate Slogan:
Board of Directors of the Bank:
Mr. Showkat Aziz Russel
Director & Chairman, Executive Committee
Mr. M. A. Sabur
Director & Chairman, Audit Committee
Mr. Md. Jahangir Alam Khan
Mr. M. Shahjahan Bhuiyan
Deputy Manager Director & Company secretary
Mr. Miraz Mahmud Rafiqur Rahman
Members of the Board:
|Mr. M. A. Hasan (Director)||Mr. Kazi Enamul Hoque(Director)|
|Hajee yunus Ahmed (Director)||Hajee M. A. Kalam (Director)|
|Saifuzzaman Chowdhury (Director)||Mr. Nur uddin Javed (Director)|
|Mr. sabbir Ahmed (Director)||Mr. Sharif Zahir (Director)|
|Mrs. Sultana Rezia begum (Director)||Mr.Emran Ahmed (Director)|
|Mr. Riyadth Zafar Chowdhury (Director)||Mrs. Setatra Begum (Director)|
|Mr. Ahmed Arif Billah (Director)||Mr. Nasim Kalam (Director)|
|Nurul Islam Chowdhury (Director)|
Hierarchy of Management:
UCBL always places utmost importance on the client service. With that end in view the Bank continued its personalized approach in rendering improved and modernized services. Presently the number of branches stands at 130 covering almost all the important places of the country. All the branches are equipped with computers in addition to modern facilities, logistics and professional competent manpower. The numbers of authorized dealer branches are 21. Besides, international correspondent’s network of the bank has also continued to expand keeping pace with time and requirement covering the important countries in all the continents of the world. Moreover the Bank has arrangement with a number of Exchange Houses at Singapore, U.A.E, Oman, Qatar and Kuwait to facilitate remittance from expatriate Bangladeshi’s.
No. of Branches
Table 02: Number of Branches
To face the challenge of the information technology and modern banking all the branches are being computerized. The Bank is examining the possibility of introducing new computer programs, on line banking facilities, credit card, etc. for improving customer services. SWIFT has already been introduced and installed at 21 A.D branches to speed up international transactions and passing of L/Cs. The SWIFT code of the Bank is UCBLBDDH.
Products & Services (UCB):
PRODUCTS (BOLD PRODUCTS ARE RECENT CONCERNS) of UCB
UCB Multi Millionaire UCB Money Maximizer
UCB Earning Plus UCB DPS Plus
Western Union Money Transfer SMS Banking Service
Online Service Credit Card
SME Loans Loan Syndication
Working Capital Finance Trade Finance
Industrial Finance Consumer Credit Scheme
Locker Service One Stop Service
Time Deposit Scheme Monthly Savings Scheme Inward & Outward Remittances Travelers Cheques
Deposit Insurance Scheme
The deposit of the Bank registered an increase of 17% in the year under review. At the close of 2008, total deposits stood at Tk 24,559 million against Tk 20,970 million in the previous year. The deposit mix comprised Tk 5,772as demand and Tk 18,787 million as time deposit. The ratio between demand and time liability was 24.76. Out of the total deposits. Tk 21,557 million was mobilized from the private sector whiles the balance Tk 3002 million from public sector.
The bank continued its participation in different credit programmer for financing new industrial projects, working capital, trade finance, international trade etc. consequently total credit rose to Tk 20,211 million in 2008.The credit deposit ratio stood at 0.82:1. Sector wise credit during the year was as follows:-
Taka in million
|Agriculture & fishery||442|
|Whole sale/ retail||5,710|
At the close of 2011, total investment of the bank stood at Tk 2,877 million against Tk 3,020 million in 2009. Income of Tk 8 million has been earned from dividend of different companies during the year under report.
Money market operation, foreign Exchange dealings, Assets liability management and other fixed income product constitute the functions of treasury. Maintenance of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR) is one of the major functions of treasury. Treasury department of the bank has been actively participating in local money market as well as foreign currency market in a prudent way and has been a lender in the market during the year 2008 for utilization of surplus fund. The bank investment in treasury bills and other security was Tk 2,877 million during the year. An amount of Tk 1,670 million was placed at call and short notice as of end 2005. The treasury operation contributed 18.22% in the total income.
During the year 2008, in the bank opened 14.740 letters of credit for import amounting to Tk 29.408 million compared to 12.386 million in 2004. The volume of export bills handled by the bank in 2008 was Tk 14.785 million compared to Tk 10.470 million in Tk 2004.
Skilled manpower is the most important strategic resource of any organization. With this end of view, human resources development has always been receiving highest priority in the bank. UCB has strong focus on imparting training towards enhancement of the skills and competencies of the employees to take over the challenge of modern banking. Since there is no alternative to training for acquiring the required efficiency and professional excellence, Bank training institute was busy throughout the year to focus on creating awareness about the best principles and practices in banking through imparting training on different aspects of banking. 34 in house training courses were arranged during 2008 in which 900 officers took part. Moreover, a number of executive and officers were sent to Bangladesh institute of bank Management (BIBM) and other training agencies. Employee’s performances are regularly evaluated and a good number of themes have been promoted as a reward and recognition of their good performance. At the end of 2008total number of employee were 1949 comprising of110 executive, 1,126 officers and 713 staff.
Experienced official of internal Control and Compliance Division regularly audit and inspect the activities of the bank throughout the year. During 2010 audit and inspection were carried out covering all the 115 branches. Besides, a number of surprise inspections were also carried out. Periodical branch manager conference is conducted to review progress of business.
An Overview of United Commercial Bank (UCB) Limited:
Three months of internee it’s really short period of time. By that time knowing all about the company is not possible. First one month they do not allow me to do any work because of their rules and to maintain confidentiality and that time they tried to teach me about the general banking works of the bank. That time I was with my supervisor Shahidul Islam Molla (Assistant Vice President & Operation Manager) just like a supportive hand but that time was very much valuable to me. That time I have learned a lot of thing about the basic banking activities. That kind of work I have done is described down:
Responsibility of the customer service starts with opening of new account in the name of new customer. This is the starting point of the client bank relationship. By opening an account, the bank bridge it’s customer to avail the facilities provided by the bank.
Types of Account:
UCBL has several types of deposits for its customers.
Savings Bank Account:
This is an interest bearing account and only individuals can open this type of accounts.
Current Deposit (CD) Account:
It is popular known as Current Account. Any individual, company, firm, may open this type of account in its own name. This is non-interest bearing account.
Short Term Deposit (STD) Account:
This is opened and operated for short term and for specific purpose. It is also an interest bearing account and where rate of interest is generally below the savings rate.
Double Benefit Deposit Scheme:
- The deposit scheme shall be issued for 6 years term
- After 6 years terminal value will stand at Tk. 2 lacs from the initial fixed deposit of Tk. 1 lac
- Minimum deposit is Tk. 25,000/- and multiples thereof but maximum limit is Tk. 25.00 lac at a time will be acceptable under this scheme
Monthly Benefit Deposit Scheme:
- This is a Deposit Scheme where the depositor gets a fixed amount of profit every month without disturbance of the principal
- Deposit of Tk. 25,000.00 and multiples thereof shall be acceptable for the Scheme
- Profit shall be paid on monthly basis @ Tk. 1,000 per Tk. 100,000.00
- The Deposit shall be for a period of 5 (five) & 10 (ten) years. The Principal amount is refundable on maturity.
UCBL Millionaire Scheme:
- Monthly installment shall be Tk. 12,465.00 /Tk. 7,890.00 /Tk. 4,570.00 for the tenor of 5/7/10 years respectively
- Terminal amount on maturity shall be Tk. 10.00 lac
Fixed Deposit Receipt (FDR) Account:
Individuals, Firms, Companies, Associations may open this account. The deposit is taken for a specific fixed period of time, such as 1 month, 3 months, 6months, 1-year etc.
Fixed Deposit Accounts:
Unlike CD, SND and SB account, Branch shall accept deposit of fixed amount of money from the customers for a fixed period of time with interest under the term plan time to time.FDR is neither transferable nor negotiable and such payment against this instrument with interest shall normally be made to the depositor on maturity. Payment against FDR can also be made to nominee or assignee after observing essential formalities.
Fixed deposit account can be opened in the name of:
Two or more persons (Joint).
Sole Proprietorship Concern.
Partnership concern (Firm).
Limited Companies (Both Public and Private).
Society / Club / Association / Local Bodies / Govt. / Semi Govt. Organization etc.
|Opening of Fixed Deposit A/C:|
|Any Bangladeshi National (Adult, sound-minded having bonafide income) and institutions / organizations incorporated and operating in Bangladesh who are not adjudicated as insolvent by any Court of Law of the land can open Fixed Deposits Account for fixed tenure with any amount but not less than BDT 10,000 (Ten thousand).|
Table 04: Interest rate offered against FDR
Special Notice Deposit Account:
Any individual or corporate body can open Special Notice Deposit Account, which is an interest bearing deposit account, for a short period of time. However, 7 days of notice is required if the customer wishes to withdraw money from this account.
Interest rate on SND accounts will be varied based on the amount and not on the customer or tenure.
Features & Benefits:
Attractive Interest Rates
Customer has to notify 7 days before withdrawing money.
MICR Cheque Book with every SND account is a must.
Minimum Balance Fee : NIL
Incidental Charge Ledger Fee: NIL
Service Charge: NIL
Account Maintenance Fee: Maximum BDT 500.00 Only (half yearly basis)
Account Closing Fee: Maximum BDT 300.00 Only
|Less Than BDT 1 Cr.|
|BDT 1 Cr. to less than BDT 25 cr.|
|BDT 25 Cr. to less than BDT 50 Cr.|
|BDT 50 Cr. to less than BDT 100 Cr.|
|BDT 100 Cr. and above|
Table 05: Interest rate offered against SND
Growth of Deposits:
(Fig. in Tk. Millions)
Table 06: Last Five Year’s Deposit
Deposits for United Commercial Bank (UCB) Limited have been increasing from year 2006 to 2010. In 2007, growth for deposit was 28.18% and over the years it took steeper look as it stood 45.47% in 2010. In 2010, growth rate of deposit was highest compared to those earlier years. The deposit mix comprised Tk. 20,143 million as demand and 92,928 million as time deposit. The ratio of demand and time deposit to total deposit was 17.81% & 82.19%. So, it can be estimated that in coming years it will hold its ongoing flow of growth.
Formalities for Opening an Account:
For opening the account, the first hand requirements:
Application on the prescribed form
Introduction of the applicant
Two copies of passport size recent photograph with attested by the introducer.
At first customer service desk want to know whether the customer has introducer to open the account or not? If yes then give him/her a printed Account opening Form along with Specimen Signature Card, Customer Transaction Profile Form and Information form on Money Laundering. After that, request customer to fill up the form duly and submit the form with required documents.
- Personal Account:
- Two Copies of Passport size photographs of the applicant attested by the Introducer and one copy passport size photograph of the Nominee attested by the applicant.
- Copy of passport/National Identity Card/ Voter ID Card/ Certification from Ward Commissioner or Union Parishad.
- Details of occupation/employment and sources of wealth or income.
- Current Proprietary:
- Same as personal account plus Trade License.
- Partnership Account:
- Same as personal account plus Trade License and Partnership deed.
- Limited Company:
- Certificate of Incorporation.
- Memorandum and Articles of Association.
- Resolution of the Board of directors.
Maintenance of Account Opening Form:
Account opening form is kept in KOF cabinet according to the account type as well as account number. Signature should be retained in card cabinet arranged in account number order. The key of the cabinet should be held by an authorized officer who should ensure the security of these forms.
Closing an Account:
When a customer wants to close his account in the bank he has to follow the following procedure:
- The client writes a written application.
- She/he surrenders the unused checkbook.
- The bank takes charge TK. 200. For closing fee.
- The rest amount gives to the customer.
- Closed rubber stamp uses top of the respective account opening form.
Issuance A New Cheque Book:
A cheque book contains a number of cheques, which is given to a customer upon written request and after marking the payment for the cheque book. It enables a customer to make withdrawal from his account or make payment to various parties by issue of cheques.
All the account opening formalities must be completed before, issuance of cheque book. Particulars of the cheque book requisition should be completed containing title of account, account number, number of leaves and signature of the customer. Signature of the customer is verified on the requisition. If customer is unable to collect his cheque book, then he can give authority to the third person to collect his cheque book on his behalf by signing on the back of the requisition.
Cheque book is taken out from the locker. It is assured that series of the cheque book is in order. Particulars are entered in the cheque book issuance register. Account number is stamped on every leaf of the cheque book and those leaves are counted. Name of the account holder is written on the cover of the cheque book and requisition on the cheque book for further issuance is properly filled stamped and signed by officer of the bank.
Pay Order (PO):
Payment order is meant for making payment of the bankers own of the customer’s dues locally and not for affecting any remittance to outstation. In a sense, the payment order is used for making a remittance the local creditors.
Issuance Of Pay Order:
- The customer should fill up PO application form.
- Money should be received by cash or by debiting clients account.
- Give necessary entry in the Pay Order register where payee’s name, date, PO no, etc is mentioned.
- Printed payment order leaf should be filled and signed by two authorized officers.
- Entry should be given in computer under supervision of authorized officers.
- After scrutinizing and approval of the instrument by the authority, it is delivered to customer.
- Signature of customer is taken on the counterpart.
Demand Draft (DD):
A bank draft is an order to pay money drawn by one office of the bank on other office up on other office of the same bank for a sum of money payable to order on demand. A bank draft is an order by one branch to another branch of the same bank outside the clearing zone.
Issuance Of demand Draft:
Issuance procedure of Demand Draft is same as of Pay order.
Issuance Of Duplicate PO/DD:
f the customer wants to issue a duplicate DD, than customer is asked to do the following formalities:
- Making a general diary (GD) in the nearest Police Station.
- Furnishing an Indemnity Bond in Tk.50/= stamp.
]The banker immediately marks “Stop Payment” in the register after receiving the application from the customer and a duplicate PO/DD is issued.
Telegraph Transfer (TT):
Sometimes the remitter of the fund requires the money to be available to the payee immediately. In that case, the banker is requested by him to remit the funds telegraphically. Here fund is transferred through the aid of Test Key Materials and SWIFT. TT can be both foreign and local. On received of TT massage test number should be checked immediately.Then voucher to be passed through register duly authenticated by officials.
Crossing of Cheques and Endorsement:
Cheque is a negotiable instrument. Cheques can be of two types:-
- Open or Uncrossed Cheque.
- Crossed Cheque.
An open cheque is a cheque which is payable at the counter of the drawer.
A crossed cheque is a cheque which is payable only through a collecting banker and not directly at the counter of the bank. There are two mode of crossing- General Crossing and Special Crossing.
Endorsement is an essential part of day to day work in Bank. A cheque requires varieties of endorsement like-
- Branch Name
- Account Number
- Signature Verification etc.
The function of clearing department can be divided into two parts:
- Outward Clearing
- Inward Clearing
- Messengers of different branches bring instruments drawn on other Banks to the clearing section of Head Office.
- Bills section of UCBL Head Office also sends the instruments drawn on other Banks to the clearing section for collection.
- The clearing stamps are affixed on the instruments and endorsed.
- The particulars of these instruments are entered in the main schedule of Banks through NHCASH22 software and inserted in floppy disc.
- The diskettes along with the instruments are carried to the Clearing House.
- After going there the concerned officials of UCBL gives the instruments to the representative of respective Banks.
- Claims of UCBL on other Banks are set off by Bangladesh Bank through debiting other Bank’s account and crediting UCBL’s account.
- This function is done in the first house.
- The instruments drawn on UCBL are received from other Banks in the Clearing house.
- The amount and numbers of instrument are entered in the house from main schedule of respective Banks.
- The instruments with schedule are arranged branch-wise.
- The instruments are sent to the branches concerned for clearance and IBCAs are collected from them for honored cheques.
- The dishonored instruments are sent back to respective Banks through the second house.
Collection of Cheques and Bills:
One behalf of counts banks play a vital role to collect cheques and bill a credit to the beneficiary’s a/c through banking channel. For collection of cheques and bills the bank follows two systems:
Loan Schemes Offered by UCB:
United Commercial Bank Limited offers different types of loan scheme for its clients. The following sections will define different types of loan schemes under four main categories these are general loan and advance, import loan and advance, export loan and advance. UCBL allows general credits to individuals/firms/companies to help their business in the following categories:
Cash Credit (CC):
Cash credit is the favorite mode of borrowing by traders, industrialists, agriculturists etc. for meeting their working capital requirements. This type of facility is always against pledge of goods, produce and merchandise. It is opened like overdraft account. Depending on the needs of business, the borrower can draw on his cash credit account at different time and when he gets money can adjust the liability. UCB charges interest on the daily balance in the account. Depending on the charging security, there are two types cash credit one is CC (Hypothecation) and another is CC (Pledge).
Cash Credit (Hypothecation)
This type of credit is allowed to the traders and industrial borrowers for promoting trade and commerce and industries. It is the bank sanctions or a short-term arrangement by which a customer is allowed to borrow money up to a certain limit for a certain time. In a manufacturing company, whose stocks of raw materials and manufactured goods constantly fluctuate, it is difficult for the bank to control such changes; so hypothecation facilities are allowed to them. The same procedure is applicable for small traders and small industrialist.
In this case, ownership and possession of the goods remain with the borrower although by virtue of the hypothecation agreement, the bank can take possession of the goods if the borrower defaults. Under the condition the borrower is required to submit the stock fortnightly in the bank specimen form. It is allowed to maximum a period of one year.
Cash Credit (Pledge)
This credit is allowed for promoting trade, commerce and industries of the country against pledge of stock in trade under Bank’s control. It is also a continuous loan allowed against pledge of goods as primary securities fall under this head of advance. It is a separate account by itself and is maintained in a separate ledger. In addition, goods ledger, go-down registers, go-down key register, go-down index card, etc. are also maintained. Deliveries of goods are made on the strength of delivery order issued by the banks and, goods are received through goods chalan deposited by borrower. It is operated upon like an overdraft account.
This credit is allowed against Financial Obligation (FO) like lien of FDR, Government Securities, ICB Unit certificate, and company’s stock etc. for promotion of economic and business activities. The most important and the guiding point to be remembered in allowing advances against such securities are that the certificates must got transferred in the name of bank and the same will be re-transferred in the name of the borrower after the advances are fully and finally liquidated. To this end the manager should ensure that the certificates have been issued in the name of borrower/guarantor and the other identification requirement are original. Bank’s lien must be marked with issuing office of the certificates and a written confirmation must be obtained. A written assurance is needed that the proceeds of the certificates with interest will be paid to bank on demand without reference to buyer. In case of companies share manager should ensure that the share of the particular company is quoted in the stock Exchange. Share must be fully paid up. Before sanctioning the loan, bank must evaluate the market value of the share and its intrinsic value.
Generally it is allowed to the traders for business promotion and economic activities. Usually these loans are given against different work orders and supply orders. The purpose of loan should be specific. It is not a continuous loan. Risk element in such financing is more than any other mode of financing. The work/ supply order must be issued/ allotted to the contactor by a government department, corporation/autonomous body against allocated and available fund. The genuineness of the work/supply order must be verified to the best possible satisfaction of the manager. Certificate of availability of fund for payment of bill under the concerned work/supply order and how he accomplished the task should be attached with the credit proposal of SOD (General).
Issuance of Bank Guarantee on behalf of client is a common banking service rendered by commercial bank. Guarantees are expressed commitment to compensate any financial loss faced by the beneficiary of the guarantee. It may sustain when the party named in the guarantee, on whose account the guarantee is issued, fails to perform the contract or discharge his/her obligation under the guarantee. It as such, a contingent or anticipated financial liability but charges interest on it as like as other loans and advances. In keeping with the ever increasing business need of its clients Bank may require to issue guarantee against payment, in the shape of bid bond, performance bond and investment bank guarantee. Normally UCBL issues guarantee for a period not exceeding one year at different percentage of margin and security determined on the basis of banker customer relationship and the nature of liability undertaken.
Some Popular Loan Product Offered By UCBL:
UCBL provide different type of loan facility for its clients on the basis of the clients demand. Mostly used loans and advance by the customers are as follow:
Import Loan Pledge
Transport (Auto) loan
General Loan/Time Loan
Staff House Building Loan
Loan Against Foreign Bill Purchased
Loan Against Trust Receipt (LTR)
Exporters Development Fund & Packing Credit
Working Capital Loan
Any Purpose Loan
Last Five Years at Glance:
|2||paid up Capital||230||230||230||230||230|
|13||Number of employees||1,812||1,819||1,874||1,878||1,989|
|14||Number of Branches||79||80||83||90||100|
|15||Number of shareholder||3,539||3,943||3,907||3,979||4,164|
Financial Performance Evaluation of UCBL:
Performance Evaluation of a company is necessarily important for a company because it enables us to understand what is going on in the organization & also whether it will achieve its financial goals in future. In this section, some ratios shall be analyzed based on which it will be easier to make financial decisions about the bank in near future. These ratios are analyzed based on last five years financial performance of the bank.
Return on Equity (ROE)
Table 13: Last Five Year’s Return on Asset
Return on Equity (ROE) measures the rate of return on the ownership interest (shareholders’ equity) of the common stock owners. ROE shows how well a company uses investment funds to generate earning growth. As long as ROA is greater than cost of debt higher debt-equity ratio will result in higher ROE. For UCB, ROE was highest in year 2010 of 27.91% with a desirable growth of 70.70%. Over the last five years period ROE has a average growth of 11.42% (from 2006 to 2010). However, ROE was lowest in 2009, only 16.35% resulted a down fall in growth of -6.25%. Form the average growth as well as last year’s growth performance of ROE the bank is in a good position in market.
Return on Assets (ROA):
Table 14: Last five Year’s Return on Assets
The Return on Assets (ROA) shows how profitable a company’s assets are in generating revenue. It is a useful number for comparing competing companies in the same industry. The cause of change in ROA is inherent in both Asset Management &Expense Management. For UCB, ROA was highest in year 2010 as 1.68% with a growth of 63.11% compared to last year. For the last five years, a average growth on ROA is 11.26% though a down fall in ROA has been recorded in 2008 & 2009. In 2008 ROA was 1.18% with a negative change of 27.16% and in 2009 ROA was 1.03% also with a negative change of 12.71%. However, a total turnoff in last five year on ROA is satisfactory.
Earnings Per Share (EPS):
|Year||Earnings Per Share||Changes|
Table 15: Last Five Year’s Earnings Per Share
Earnings per Share are the amount of earnings per each outstanding share of a company’s stock. It shows the profitability on a per share basis. In year 2010 EPS for UCB was 7.49 with a growth of 79.62%. In 2009 EPS was 4.17. However, in 2009 stock of UCB was splinted into 1:10 and as we can see from the table in n2008 EPS was 42.71 (consolidated). In 2008 basic EPS was 255.59 and in 2007 it was 272.43 and in 2006 it was 252.76. The EPS was continuously dropping from 2006 to 2009. In turn last year EPS however turned back from it trend line and went for a growth of 79.62% which is a good indication for future for the bank and its shareholders as well. Basically EPS is a measure with which stockholders choose a particular company’s’ stock for its ease of understanding.
SWOT Analysis of UCBL:
SWOT is a short form that is used to describe the particular strengths, weakness, opportunities and threats that are strategies factors for a specific company. For the United Commercial Bank Limited I found it as follows
- Ø Efficient management.
- Ø Leading Retail loan providers
- Ø Better employee relations.
- Ø Better location of the branch.
- Ø Better financial standing.
- Ø Interesting consumer schemes.
- Ø Quick delivery of foreign exchange.
- Ø On line Banking
- Ø ATM facility
Growth of the banking sector.
Difficult consumer service scheme of the UCBL.
Make the goodwill.
Perform more quickly services.
Go beyond the national boundaries.
Inadequate work force.
Conservative loan facility.
Profit rate is less than others.
Lack of sufficient own ATM booths.
Government rules and regulation.
Policy of competitive banks.
- Ø The Bank Should Speed up processing of General Banking applications.
- Ø In the modern banking system credit card market is much needed for the Bank, so the Bank should immediately enter into the credit card market.
- Ø Introduction modern technology.
- Ø Information System should be developed
- Ø Development of human resources.
- Ø Employee behavior should be developed.
- Ø Lack of good cooperation
- Ø No direct communication Branch office and Bangladesh bank.
- Ø To get proper information is the customer is quite difficult.
- Ø To get actual value of proper mortgage property is very had.
- United commercial bank ltd. needs to increase the number of personnel especially in customer services department to respond its customers demand smoothly.
- United commercial bank ltd. should establish effective motivation among the employees and the existing benefits should be maintained properly.
- United commercial bank ltd. should upgrade the promotional activities so that customers as well as other people can be well informed about the facilities given by united commercial bank ltd.
- The foreign banks are front-runners in introducing some technology-based products such as live inter-branch connections, credit cards, ATMs, and not too far away internet banking. United commercial bank ltd. should be aware of introducing these products.
- Efficient and effective distribution of labor should be maintained in united commercial bank ltd.
- Equal treatment should be maintained at all level in United commercial bank ltd.
- More training facilities should be provided to employees for introducing new technological inventions.
It is widely accepted that credit is a phenomenon of economic development and the banking system is a vital agent which plays a crucial role in this process. In other that economic development is rapid and meaningful proper utilization of banks funds is required. Financial intermediaries, particularly banks have important role in rising of the financial resources because of their capacity to tap resources from a wider spectrum of people and diversified nature of their operations. Banks ability to make a positive contribution in igniting the process growth depends to a great extent on the way the banking funds are invested. It functions as a catalytic agent for bringing about economical, industrial and agricultural growth and prosperity of the country.
United Commercial Bank Limited has a vision and mission to improve the financial sector of Bangladesh i.e. economic condition of Bangladesh by providing effective and innovative banking and financial product in financial market. However, in every economy of the world financial sector is highly regulated. Therefore, financial products of every bank are almost same as same law & regulation them. However as the united commercial bank limited has a vision and mission to do something different, therefore, the united commercial bank limited people are trying to be different from another bank and that can be the quality &efficient management of the financial product of the united commercial bank limited.
As from the findings of the study it has been seen that UCBL is improving itself in all aspects of banking but this efforts need to be continued for some more years. In the past, UCBL performance was not good. For which the BB classified it as problem bank but very soon they able to overcome the capital shortfall and reserve by issuing of right share.
Annual Reports of United Commercial Bank Limited. (Five years).
Web site of Bangladesh Bank. www.bangladesh-bank.org
Web site of United commercial bank ltd. www.ucbl.com
Interview with the GB In-charge of United Commercial Bank Limited, Tongi Station Road Branch.
Daily Prothom-alo , Date-01.01.2013
Marketing Research, 7th Edition, Stanley F. Stasch,Ph.D