Professional Documents
Culture Documents
Southeast University
Name of report: General Banking and Foreign Exchange Activities
Submitted to:
Batch: 6th
Letter of transmittal
I am, Mazharul Islam that the presented report of Internship titled General Banking and Foreign Exchange Activities of Uttara Bank Limited is uniquely prepared by me after the completion of two months work in Uttara Bank Limited from Malibagh Branch.
I also confirm that this is only prepared to my academic requirement not for any other purpose. It might not be used with the interest of opposite party of the corporation.
INTERNSHIP REPORT ON
General Banking And Foreign Exchange Activities Of UTTARA Bank Limited is prepared by MAZHARUL ISLAM 2004010000130 empted in term of quality.
.. Signature Supervisor
Acknowledgement
The report on General Banking And Foreign Exchange Activities Of
UTTARA Bank ltd" is designed on the basis of practical experience regarding the banking activities especially general banking of Uttara Bank Ltd. at Malibagh Branch. It becomes possible for me to make the report more effective and authentic for the constructive assistance of many individuals of the bank and of the different organizations. I like to express my profound thanks to our honorable supervising teacher LECTURER,Md Istique Arif on and guidance help me to write this report. I am also grateful to Mrs. Marzina Khatun AGM of the branch, whose active support inspired and helped me to work at the branch and to gather practical knowledge. I also express my gratitude to the officers and staffs for providing information and guidelines at the time of practical works in the bank. I would like to express thanks to all my friends, teachers and staffs, faculty of School of Business Studies, Southeast University for their cooperation and assistance.
Acronym
UBL
A/C BB L/C CCI & E CFR CIB CC C&F CRF CIF DD DP Note EPB ERC FC CCI&E ERC FDD FDR
Uttara Bank Limited Account Back to back Letter of Credit Chief Controller of Import & Export Cost & Freight Credit Information Bureau Cash Credit Clearing & Forwarding Clean Report Findings Cost Insurance & Freight Demand Draft Demand Promissory Note Export Promotion Bureau Export Registration Certificate Foreign Currency Chief Controller of Import and Export. Export Registration Certificate. Foreign Demand Draft Fixed Deposit Receipt
FOB HS Code IBC IBCA IBDA IMP IBCT IRC L/C LCAF OBC PO PAD SWIFT STD TC TIN TR TT
Free On Board Harmonized system of coding Inward Bills for Collection Inter Branch Credit Advice Inter Branch Debit Advice Import Form Inter Branch Credit Transaction Import Registration Certificate Letter of credit. Letter of Credit Authorization Form Outward Bills for Collection Payment Order Payment Against Document Society for Worldwide Inter Bank Financial Short Term Deposit Travelers Cheque Tax Identification Number Truck Receipt Telegraphic Transfer
Executive Summery
It is very much important to coincide the academic knowledge with the practical one. Keeping this view in mind, Institute of Business Studies, Southeast University, makes proper arrangements of practical orientations (internship) each year for the students of BBA which is a part of BBA program. This is because the academic knowledge is not sufficient enough to match with the real life situations. Dhaka Branch for my internship program to have a practical working experience and have an understanding of the real life with a closer look. The prime objective of internship program is to introduce the learners with the practical organizational environment. So that they can turn themselves for the jobs in future and can get an opportunity to reflect their theoretical learning with real life situation. In my internship with Uttara Bank Ltd. I worked with the activities of branch banking especially general banking and their functioning and accounting procedures. Bank is a financial organization, which is the lifeblood of the economy. This has the major contributor to the development process of a country. Banks keep the wheel of the economy to move forward and play a vital role for the mobilization of idle fund belongs to the people. These tasks performed by the bank in three sections, which are general banking services, loans and advances and foreign exchange transactions. Uttara Bank Ltd. provides all kinds of banking services like other banks. The major service area are receipt and payment of cash, clearing and remittance of bills, giving loans and advances, accounts opening, inward and outward mails, foreign exchange transactions etc. Uttara Bank Ltd. Malibagh Branch provides L/C facilities to its importers and exporters through establishment of correspondent relations and Nostrum Accounts with leading banks all over the world. It also performs effectively Finance and Loans, Export Import
Trade Finance, Corporate Finance, Industrial Finance, Lease Finance, Commercial Loans, Project Finance, Retail Loans, Mortgage Loans, Loan against Share and Securities etc. Uttara Bank Ltd Malibagh branch also provides the general banking service to the customer such as different categories of savings schemes, foreign exchange transactions, current account for business personnel etc. at the time of my work at the branch I understood the gap between the practical and theoretical knowledge. I tried my best to make the report fruitful and my all efforts will be valuable if any one bets any sort of benefit from my report. All sort mistakes or errors or omissions made in the report will go to my side and I am wholly responsible for it.
Introduction
1.1 History of the organization 1.2 Function of the organization 1.3 Role of the organization in the eco. dev. Of Bangladesh
1 1 2 3
3 1.4 Organ gram of the Organization 3 1.4.1 UTTARA BANK HEAD OFFICE. 1.4.2 Different Wings of UBL 1.5 Hierarchy of Malibagh Branch 1.6 Branches all over in Bangladesh. 3
CHAPTER- TWO
Research Methodology
4 2.1 Rational of the study 5 2.2 Objective of the Study 6 2.3 Data collection procedures 6 2.4 Limitation of the study 13 2.5 Hierarchy of Malibagh branch
CHAPTER-THREE 15
CHAPTER FOUR
22 4.1. General Banking 22 4.1.1 Account opening department 23 4.1.1.1 Accepting of deposit
26 4.1.1.2 Opening of account 28 4.1.1.3 Issue of checquebook 29 4.1.1.4 Issue of duplicate chequebook 29 4.1.1.5 Closing of account 30 4.1.1.6 Account transfer 30 4.1.2 Local remittance department 32 4.1.3 Cash department 33 4.1.4 Clearing department 34 4.1.5 Collection department 38 4.1.6 Loans and advance PART-FIVE 40 Foreign Exchange 40 5.1 Position of UBL in foreign exchange business 41 5.2 Foreign exchange transaction 41 5.2.1 Foreign remittance 42 5.2.1.1 Outward and inward remittance 42 5.2.1.2 Spot and forward transaction 42 5.2.1.3 Spot and forward rate 42 5.2.2. Import
43 5.2.2.1 Latter of credit 49 5.2.2.2 Parties to the L/C 50 5.2.3 Export 52 5.3 SWOT analysis CHAPTER-SIX 54
Introduction
1.1 History of the organization:
Bank system was practiced in the Indian subcontinent from the ancient period. In Indian subcontinent merchants, goldsmith moneylenders were the primary bankers. During the Moghal period banking and credit business was enchanted rapidly. Then the agency house ofJagth Seth was similar to the merchant house of Lombardy Street. In 1700 AD "Hindustan Bank" was established as the first joint stock bank. In 1784 "Bengal Bank" and in 1786 General bank of India was lunched. Then both the bank absolved respectively in 1793 and 1832. During the early period of nineteenth century in 1806 "Bank of Bengal" in 1840 "Bank of Bombay" and in 1843 "Bank of Madras" was established. These Banks were called Presidency Bank. Then in 1920 these three banks merged to "Imperial Bank of India". In 1947 after the separation bank business in our country faced a severe disaster as non Muslim Bankers left to India. Then "Reserve bank of India" acted as the "Central Bank of Pakistan" in 1948 to re-build the Bank Business "State Bank of Pakistan" was established as central bank of Pakistan. In 1971 Bangladesh became independent. After liberation "Bangladesh Bank" was automated with the assets and liabilities of former "State Bank of Pakistan". It is the central bank of Bangladesh. During Pakistan period in our country there were 1090 branches of 12 commercial
banks. Three foreign banks were also active with 14 branch offices. Before liberation 80% of banking activities of our country was controlled by Pakistan. Consequently Bangladesh traders and industrialists didn't get notable help from the .Commercial Banks. After liberation reformed the destroyed economy on 26th March 1972 the banking sector of Bangladesh was nationalized. After nationalization government of Bangladesh changed the entire bank to six banks which are Sonali Bank, Rupali Bank, Janata bank, Agrani Bank, Pubali Bank & Uttara bank. But the last two banks have been handed over two private sectors. From 1983 lot of private banks are establish and they playing their role in development of trade and commerce of Bangladesh as well as in the development of economy.
Uttara Bank-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. 203 branches at home and 200 affiliates worldwide create efficent networking and reach capability. Uttara is a bank that serves both clients and country. The bank has more than 600 foreign correspondent World wide. The total number of employees nearly 3000. The board of director consists of 14 members.
1. General Banking 1.1 Account opening department 1.1.1 Accepting of deposit 1.1.1.1 Fixed deposit account. 1.1.1.2 time deposit account. 1.1.1.3 demant deposite account. 1.1.1.3.1 current account. 1.1.1.3.2 saving account. 1.1.1.3.3 Short notice term deposite. 1.1.2 Opening of account
1.1.3 Issue of checquebook 1.1.4 Issue of duplicate chequebook 1.1.5 Closing of account 1.1.6 Account transfer 1.2 Local remittance department 4.1.3 Cash department 4.1.4 Clearing department 4.1.5 Collection department 4.1.6 Loans and advance
services account. This aided continued improvement in the balance of payments, resulting in a further build-up in foreign exchange reserves. Gross official reserves increased to US$2,593 million (or 3 months of imports) at the end of January 2004 from US$1,613 million (2.2 months of imports) at the end of January 2003. External reserves as of 20 April 2004 further increased to US$2,722 million or about 3 months' equivalent of imports.
Board of director
SL 01 02 03 04 05 06 07 08 09 10 11 12 Name Azharul Islam Md. Asaduzzaman Md. Mahfuzus Sobhan Saroar Badius Salam Abu Hossaain Siddiki Abul Barak Alvi Faruk Alamgir Ms.Kamal Prof. Mirza Majharul Islam Sayad ANM Wahed Mustafizur Rahman Shah Habibul Haque Status Chairman Vice- Chairman Director Director Director Director Director Director Director Director Director Director
Executive officer
Senior officers
MTO
Principal Officer
M.D Ashraf Uddin
Officer
MD. Khandukar Hossain Mrs. Ferdous Akter Mrs. Marium Akter MD. Momun. MD. TanvirHossain Mrs. Morshada khatun MD.Ferdous
Assistance Officer
Mrs. Fouzia Akter
Source: - www.uttarabank-bd.com
Research Methodology
2.1 Rational of the study: Both descriptive and exploratory
research has been selected to complete this paper. Comparison analyses also have been taken part of this paper.
general banking manual, foreign exchange manual, investment manual, general report and other publication etc.
2.4 Limitation of the study: While collecting data, they did not
disclose much information due to the confidentially of the organization because of banking sector is sensitive and competitive by its nature. However I faced some following problems during the study, 1. Lack of time and resources. 2. Lack of perfect co-operation. 3. Insufficiency of data
3.2 CAPITAL
The authorized capital of Tk. 1000.00 million in 2006 and. Paid up capital became 199.70 million and 99.80 million as on 31st December 2006 & 2005 respectively
3.3 CAPITAL STRUCTURE:Authorized and paid-up capital of UTTARA Bank Limited for the last 5 years is given below. Table 01:- Capital position of Uttara bank.
Year
CAPITAL STRUCTURE
1200 1000 Value 800 600 400 200 0 2006 2005 2004 Year Authorized Capital (Tk.) in million Paid-up Capital (Tk.) in million 2003 2002
3.4 DEPOSIT
The total deposit of UTTARA Bank is increasing year to year. The total deposit in 2006 is 39360.20 million which was 36891.90 million in 2005. Table 02:- Deposit of Uttara bank.
Amount of deposit (TK in million) 50000 Amount 40000 30000 20000 10000 0 2006 2005 2004 Year Amount of deposit (TK in million) 2003 2002
2005
Taka
Taka
Cash In Hand (including foreign currencies) Balance with Bangladesh Bank and its Agent Bank (including foreign
4,198,204,110
3,900,921,392
1,218,636,280
1,028,655,935
2,979,567,830
2,872,265,457
currencies.)
Balance with other Banks and financial institutions In Bangladesh Outside Bangladesh
2,586,566,001
2,697,313,652
2,350,103,677
2,501,479,672
236,462,324
195,833,980
130,000,000
810,000,000
and
25,163,857,021
21,851,539,700
19,834,853,491
2,526,991,226
2,016,686,209
Building, Furniture Fixtures Other Assets Non Banking Assets TOTAL ASSETS 45,217,006,469 and
942,071,927
776,234,974
2,631,766,789
1,964,086,185
42,062,201,299
LIABILITIES AND CAPITAL Liabilities Borrowings from other Banks, Financial Institutions Agents
and
56,194,089
46,508,006
Deposits and 39,360,207,187 other accounts Current and Other 10,473,849,824 Accounts etc. Bills Payable 1,074,690,778
36,891,910,320
9,382,984,326
1,312,766,792
Savings Deposits
Bank
16,874,922,684
15,115,144,287
Fixed Deposits Bearer Certificate of Deposit Other Deposits Other liabilities TOTAL LIABILITIES
10,037,191,494
10,233,066,793
915,000
700,000
898,637,407 3,715,166,371
847,248,122 3,258,749,083
43,131,567,647
40,197,167,409
Subscribed and paid up capital Proposed issue of bonus share (1:1) Statutory reserve Other reserve Profit and Loss account surplus TOTAL SHARE HOLDERS' EQUITY
199,664,800
99,832,400
199,664,800
99,832,400
520,837,039 1,161,297,628
510,837,039 1,150,962,512
3,974,555
3,569,539
2,085,438,822
1,865,033,890
42,062,201,299
EQUITY
Sl. No.
Particulars
2006 Taka
2005 Taka
2004 Taka
Paid-up-Capital
199,664,800
99,832,400
99832400
Total Capital
2,272,970,808
2,004,050,376
1740684000
168434200
Capital (Deficit)
surplus/
190,013,808
192,973,376
187805000
150855000
Total Assets
45,217,006,469
42,062,201,299
39700932623
36671006147
Total Deposits
39,360,207,187
&
36,891,910,320
34615240208
31477589673
25,163,857,021
21,851,539,700
18601012262
18786283470
Total Contingent Liabilities Credit Deposit Ratio (%) Ratio of Classified Loan to total Loans & Advances (%) Profit after tax & provision Amount of classified loan during the current year Provision kept against classified loans Provision surplus / (deficit) Cost of Fund (%) Interest Assets earning
7,428,456,156 63.93%
8,538,820,824
7883579500
9021529268
53.74%
59.68%
27.06%
15.04%
10
248,753,254
142,710,008
1209656205
1113981270
11
12
907,448,567
853,751,185
954218525
1187741000
13 14
116,872,567 4.68%
126,736,185 4.14%
15
34,858,397,642
32,723,645,096
32344967516
16
10,358,608,827
9,338,556,203
7355965107
6210834048
3.6 Highlights on the overall activities of the bank for the year 2003 to 2006
Year
50,000,000,000 40,000,000,000 30,000,000,000 20,000,000,000 10,000,000,000 0 2006 2005 Total Assets (Taka) 2004 2003
Amount
Paid-up-Capital 250,000,000 Amount 200,000,000 150,000,000 100,000,000 50,000,000 0 2006 2005 Year Paid-up-Capital 2004 2003
Part Four 4.1 General Banking: General Banking Department usually performs
a lot of important banking activities. General banking department is that department which is mostly exposed to the maximum number of bank customers. It is the introductory department of the bank to its customers. All business concerns earn a profit through selling either a product or a service. A bank does not produce any tangible product to sell but does offer a variety of financial services to its customers. The Malibagh Chyduripara branch of UBL has all the required sections of general banking and these sections are run by manpower with high quality banking knowledge. Hence, a touch of rich customer service is prevailing in the branch. In UBL the following departments are under general banking section: Account opening department. Local remittance department. Cash department. Clearing department. Collection department. Loan and advances. In the following Chapters brief discussion on the above departments are
presented respectively.
Opening Procedure: For opening such A/C, application in the prescribed form along with a set of specimen signature duly verified by a reputable bank of any other person known to the bank. 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. I) 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 are negotiable. Bearer Certificate of Deposits (BCD), which are repayable after expiry of fixed period but are negotiable. These are not renewable. Nonresident Foreign Currency deposits are term deposits maturing after 1 month, 3months, 6months 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. II) Fixed Deposit Account These are deposit, which are made with the bank for a fixed period specified in advance. The band need not maintain each reserve against these deposits and therefore, bank gives high rate of interest on such deposits. A FDR is issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest and the date on which the deposit will fall due for payment.
Interest on Deposits: Particulars Interest rate on Deposit Saving Deposit Special Notice Deposit (std) Fixed Deposit ( time Deposit ) month deposit 6 month deposit 1 Year 2 Year and above 3 year Rate of Interest 5.50 % 6.50 % 7.00 7.50 8.00 8.25 8.25 % % % % %
Opening of Account It includes the following stages: 1. Account opening procedure 2. Classification of customers Account opening procedure Persons over 18 years (except some restricted persons) Commissioner Certificate/Id. Card/ Pass Port Copy/ Voter Id. Card Two Copies A/C opening persons Photo Nominees Photo one copy (Major/Minor) Introducer Valid Signature KYC (Know Your Customer) TP (Transaction Profile) Money Laundering Papers Signature TIN Certificate Resolution Copy (For Company A/C)
Savings Accounts: 1. An existing Current Account holder of the Bank, 2. Photocopy of Passport / Chairman/Commissioner Certificates. 3. Two (2) copied of Passport size photograph. Current Account: 1. Proprietorship Firm: Name of authorized persons, designation, specimen, signature Card, Trade License, Passport/ Chairman Certificate. 2. Partnership Firm: Account must be opened in the name of the firm. The form should describe the names and addresses of all the Partners. Trade License from city corp. is needed. Partnership Deed. Letter of authority is achieved 3. Limited Company: Certificate of Incorporation. Certificate of Commencement of Memorandum of Association. Article of Association. Power of Attorney. account Societies/Club/Associations: Other than above mentioned common documents resolution of who will operate the account must be noted. Resolution of the Board of Director authorizing opening of an Business;
2. Classification of customers It includes the following: Individual (personal) Proprietorship (Sole traders) Partnership firms (Registered or Unregistered) Joint stock Companies (Private Limited companies/Public ltd.) Public Sector Corporations Clubs / Societies / Associations / Schools / Colleges / Universities etc. Executors/Administrators Trustees Illiterate persons Constituted Attorney Wage Earners.
4.1.3Issue of chequebook:
Fresh chequebook is issued to the account holder only against requisition on the prescribed requisition slip attached with the checkbook issued earlier, after proper verification of the signature of the account holder personally or to his duly authorized representative against proper acknowledgment.
after verification of the signature of the Account holder from the specimen signature card and on realization of required Excise duty only with prior approval of manager of the branch. Check series number of the new checkbook should be recorded in ledger card signature card as usual. Series number of lost checkbook should be recorded in the stop payment register and caution should be exercised to guard against fraudulent payment. Account Transfer The customer submits an application mentioning the name of the branch to which he wants the account to be transferred. His signature cards, advice of new account and all relevant documents are sent to that branch through registered post with acknowledgment the balance standing at credit in customers account is sent to the other branch through Inter Branch Credit Advice (IBCA).
Closing of Account:
The following circumstances are usually considered in case of closing an account or justifying the stoppage of the operation of an account: Notice given by the customer himself or if the customer is desirous to close the account. 1. Death of the customer. 2. Customers insanity and insolvency.
Account Transfer:
Customer has to submit an application mentioning that he/she wants to transfer his/her A/C to his desired Branch and the officer will verify the signature, Customer has to be certified by different department of Bank that he/she has no liabilities to the bank. Then total particulars of A/C holder will prepare and sent to the Customer's desired branch. Liability of
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 @ .05%, 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.
Flow Chart of DD Payment: Receive Money Issuing Branch DD Presented Paying Branch
Issues DD
Payment of DD
method. There are different modes of telegraphic transfer such as Fax, Mobile, Telephone Telex, and Telegram. If an applicant wants to transfer money quickly to the pay in another city or district he /she may request the banker to send it by TT.
Cash Department:
Cash payment of different instruments is made in the cash section. Procedure of cash payment against cheque is discussed here 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. Then 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 given. Then the cheque is given 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 given 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 cheque and make entry in the payment register. There are few things that shall be scrutinized and checked before making payments. Name of the drawer Account number Specimen signature The validity of the cheque and make it sure that it is 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 is the closing balance of the previous day. Total receive of the current day is added with the opening balance and total payment is deducted for calculating the closing balance or cash balance.
Clearing Department:
According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the chouse drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the chouse. Banks for credit of the proceeds to the customers' accounts accept Cheque and other similar instruments. The bank receives many such instruments during the day from account holders. Many of these instruments are drawn payable at other banks. If they were to be presented at the drawee banks to collect the proceeds, it would be necessary to employ many messengers for the purpose. Similarly, there would be many chouse drawn on this the messengers of other banks 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. Risk, delay and expenditure are substantially reduced, by the representatives of all the banks meeting at a specified 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 Clearinghouse. Functions of the Department The following are the main functions performed by the department: Pass outward instruments to the Clearing-House.
Pass inward instruments to respective department. Return instruments incase of dishonor. Prepare IBCA or IBDA for the respective branch and HO. Accounting Entries of Clearing Department 4.1.5. Collection Department 1. Clearing: As far safety is concerned customers get crossed Cheque for the transaction. As we know crossed Cheque cannot be encased from the counter rather it has though been collected through banking channel i.e. clearing. A client of UTTARA Bank received a Cheque of another bank, which is located with in the clearing range deposit, the Cheque in account at UTTARA Bank. Now UTTARA Bank will not pay the money until the Cheque is honored. 2. Transfer Delivery: Transfer delivery is a cheque collection procedure among internal branches within the Clearing House. When a cheque is of a Branch Office is deposited to another Branch Office, then collecting branch on that date sends that cheque to their, Local Office, sends that cheque to that respective branch and takes necessary action for honoring cheque. If the cheque is dishonored then authorized branch send the cheque to the local office and Local Office send that cheque to the collecting branch on the collecting date.Here Clearinghouse function is not required because transactions occur among the same branch of same Bank within the Clearing House. 3. Cheque is of a Same Branch of UTTARA Bank: If the cheque is of a Branch Office of a Bank (within the Clearing House of same city) then the collection branch send the cheque to the authorized branch/drawn on branch and issues an IBCA to the collecting branch.
On the other hand, if the cheque is of another Bank (outside of Clearing House to another city) then cheque collecting branch will find out whether any branch office of the collecting branch situated near to Authorized branch. If yes, then cheque collecting branch will send the cheque to the branch office near Authorized branch, that branch (near Authorized branch) office collect the cheque from drawn branch and issues an IBCA. If not, then the collecting branch will send that cheque to the Authorized branch, after that Authorized branch will send a DD with mentioning the name of their branch office near collecting branch and collecting branch will collect that cheque thereby. 4. Outward Bills for Collection (OBC): Customers deposit Cheque draft etc for collection attaching with their deposit sleep. Instrument within the range of clearing arc collected through local clearing house but the other which are outside the clearing range are collected through OBC mechanism. A customer of UTTARA bank principal branch local office Dhaka is depositing a Cheque of Sonali bank Coxs-Bazar. New as a collecting bank UTTARA Bank principal branch will perform the following task. 1. Received seal on deposit slip. 2. UTTARA Bank local office principal branch crossing indicating collecting bank. 3. Endorsement give payees A/C will be credited on realization. 4. Entry on register from where a controlling number is given. Collecting bank can collect it either by its branches or by the drawer's bank they will forward the bill then to that articulate branch. OBC number will be given on the forwarding letter. 5. Inward Bills for Collection (IBC): In this case bank will work as an agent of the collection bank branch receives a forwarding letter and the them as
bill. Next steps are: 1. Entry in the IBC register, IBC number given. 2. Endorsement given- "our branch endorsement confirmed". 3. The instrument is sent to clearing for collection. 4. Miscellaneous creditor A/C. Now following procedures will take place in case of the following two case. 6. Credit Transaction: When a branch requests another branch (of the same bank) to pay a certain amount against any instrument (cheque, DD etc) and become liable to that bank, issues a IBCA to that branch and these transactions are recorded in the Credit side of IBCA A/C serially. 7. Debit Transaction: When some cheques or any sort of financial instrument of another branch are deposited in a branch and this branch pays those instruments on behalf of authorized branch, issues an IBDA to that branch and these transactions are recorded in the Debit side of IBDA A/C. Responding Branch: When a branch responds against an IBCA or an IBDA that branch is called Responding Branch. 8. Credit Transaction: Cheques are deposited for payment in a branch that branch sends those cheques or other financial instrument to Clearing House for clearing. After clearing those cheques or financial instruments collecting branch makes payment against those financial instruments, before paying this branch as Originating Branch sends an IBDA to the Authorized Branch/Responding Branch. If those financial instruments are dishonored then respective parties are not paid and authorized Branch/Responding Branch again sends an IBDA to the Originating Branch. These returned financial instruments advice are recorded in the Credit side of the IBCA A/C.
9. Cash: Cash section demonstrates liquidity strength of a bank. It also sensitive as it deals with liquid money. Maximum concentration is given while working on this section. As far as safety is concerned specials precaution is also taken. Tense situation prevail if there is any imbalance in the case. 10. Teller Customers Relationship: In a bank a person who delivers and receives cash from the cash counter is known as teller a customer meets most of the time in a bank with a taller on the counter. So teller should hold certain quality should be friendly, provided prompt service and be accurate in his task. 11. Cash Packing and Handling: Cash packing and handling needs a lot of care as any mistake may lead to disaster. Packing after banking hour when the countries closed cash is packed according to denomination. Notes are counted several times and packed in bundle Stetted and stumped with initial.
Part Five
Foreign Exchange
POSITION OF UBL IN FOREIGN EXCHANGE BUSINESS: Foreign exchange business is totally controlled by the Central Bank of Bangladesh (Bangladesh Bank). Central Bank permits some specific branches to
perform the foreign trade. Those who have the authority .To operate foreign trade business are known as AD branch. UBL is an AD Bank. UBL operates foreign exchange trade through its branches. To handle foreign exchange business effectively and efficiently, the Bank has/ over the years, developed a wide network of correspondents throughout the world. The bank has more than 600 foreign correspondents worldwide. UBL is equipped with all modem technology & provides following international banking services. Plays a vital role in import, export and other foreign currency ofthe country through more than 200 foreign correspondents worldwide. Renders fastest service to the exporter and importer through its SWIFT service. Offers competitive price for importers and exporters. a ,, Provides support to the exporter and importer by extending working capital, preshipment, post shipment facilities. Uploads its commitment in international payment. UBL has got its independent treasury and dealing room equipped with Reuters. Dealings System and provides... Effective service to the client. Daily exchange rate buying and selling. Forward cover at competitive price. Deals in foreign currency with Central Bank, Commercial Bank and other potential clients. Buying and selling third currency with all leading banks worldwide. Covers exchange fluctuation risk by providing competitive premium FOREIGN EXCHANGE TRANSACTIONS: The transactions of UBL in foreign exchange involve outward and inward remittance of foreign exchange from one country to another. UBL makes sales and purchase of equivalent foreign currencies on spot or forward basis. The sale involves exchange of foreign currency for home currency. The purchase involves
exchange of home currency for foreign currency. The conversion of foreign currency into home currency takes place at an agreed rate of exchange which the Banker quotes, one for selling and another for buying, each one separately for spot transactions and forward transactions. . There are three kinds of foreign exchange transaction: A) Foreign Remittance B) Import C) Export A) Foreign Remittance: This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services. The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In this process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like, other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender. Remittance procedures of foreign currency 1. Outward and inward remittance: Outward remittance comprises remittance on account of imports and export remittance on sundry items, sale, travel cheques, currency notes and coins. The remittances are affected through UBL's foreign braches as the case may be. 2. Spot and forward transactions: When the conversion of currency for purchase or sale is put through immediately to account for a present
transaction, the transaction is called "spot" or "ready" transaction. When the conversion of currency for purchase or sale is arranged in advance to account for a future transaction, the transaction is called forward transaction. 3. Spot and forward rate: The rate of exchange, at which the conversion of the currency takes place for a spot transaction, is called the spot rate and the rate in which is fixed up in advance for a forward transaction, is called the forward rate.
B) Import: According to Import and Export Control Act, 1950, the Office
of Chief Controller of Import and Export provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by 'Letter of Credit'. 1 Letter of Credit(L/C): Definition of letter of credit: A letter of Credit Is a definite undertaking of the Issuing Bank, to make the payment for the import, on behalf of the importer in other words, it is a letter of the Issuing Bank to the beneficiary, undertaking to effect payment under some agreed conditions. It is an undertaking of the Issuing Bank to be Beneficiary to make payment or to accept bill of exchange. It is also an authorization of the issuing Bank to another Bank to effect Payment or to negotiate bill of exchange, against stipulated documents, complying credit terms. L/C is called documentary letter of Credit. Because the undertaking of the Issuing Bank is subject to presentation of some specified documents.
KINDS OF LETTERS OF CREDIT (L/C) Revocable Letter of Credit. , Irrevocable Letter of Credit Confirmed Letter of Credit. Confirmed and Irrevocable Letter of Credit Transferable or Divisible Letter Of Credit Back To Back Letter Of Credit Red Clause Letter Of Credit Sight Letter Of Credit Usance Letter Of Credit Revolving Letter Of Credit Stand-By Letter Of Credit All letters of credit therefore, should clearly indicate whether they are revocable or irrevocable. In the absence of such indication the credit shall be deemed to be revocable. REVOCABLE L/C: A revocable L/C may be amended or canceled by the issuing bank at any moment and without prior notice to the beneficiary. In case of revocable credit, however, the L/C issuing bank is bound to: (I) Reimburse a branch or bank with which a revocable credit has been made available for deferred payment, if such branch or bank has, prior to receipt by it for notice of amendment or cancellation, taken up documents which appear on their face to be in accordance with the terms and conditions of the credit. (ii) Reimburse a branch of bank with which a revocable credit has been made available for sight payment, acceptance or negotiation, for any payment, acceptance or negotiation made by such branch or bank prior to receipt by it for notice of amendment or cancellation, against documents which appear on their face to be in accordance with the terms and
conditions of the credit. IRREVOCABLE L/C An irrevocable L/C constitutes a definite undertaking of the issuing bank provided that the stipulated documents are presented; the terms and conditions of the credit are complied with. The full name of "L/C" is Irrevocable Letter Of Credit which means once it is issued by the bank for the buyer and received and accepted by "he beneficiary (the seller), it cannot be canceled or withdrawn by the buyer or the opening bank, unless with the consent of the beneficiary. In short, once the buyer opens the L/C from his bank to cover the goods he has purchased, he will have to pay for the goods when the seller ships the goods exactly as per the terms stipulated in the L/C. Therefore, as far as the seller is concerned, the sooner he has the L/C on hand, the safer he is. L/Cs can be opened in many ways, but in essence, it is a promise the buyer's bank makes to the supplier, to pay him when he does certain things with evidence to prove. The things the L/C opening bank wants the supplier to do are called "terms". Therefore, when the supplier receives an L/C, he must read the terms carefully to make sure he is capable of fulfilling them all exactly as they are written. If some terms are beyond his ability to fulfill, he must point them out to the buyer and explain why he cannot comply with those terms, and request the buyer to amend them by means of an official amendment through the bank. CONFIRMED L/C: This is such a credit for which exporter's bank gives all sorts of surity for the advance of payment. CONFIRMED AND IRREVOCABLE L/C: Confirmed and Irrevocable L/C which combines the quality of confirmed L/C and Irrevocable L/C clause. TRANSFERABLE OR DIVISIBLE L/C: A Transferable credit is a credit under which the beneficiary has the right to request the bank called upon
to effect payment or acceptance or any bank entitled to effect negotiation to make the credit available in whole or in part to one or more other parties (second beneficiaries.) A credit can be transferred only if it Is expressly designated as "transferable" by the issuing bank. Terms such as " divisible", "fractional", "assignable" and "transmissible" add nothing to the meeting of the term "transferable" and shall not be used. In that case the bank requested to effect the transfer (transferring bank), whether it has confirmed the credit or not shall be under on "Transferable" by the issuing bank. Terms such as divisible", "fractional", "assignable" and "transmissible" add nothing to the meeting of the term "transferable" and shall not be used, In that case the bank requested to effect the transfer (transferring bank), Whether it has confirmed the credit or not shall be under no obligation to effect such transfer except to the extent and in the manner Expressly consented to by such bank. Bank charges in respect of transfers are payable by the first beneficiary unless, otherwise specified. A transferable credit can be transferred once only. Fractions of transferable credit (not exceeding in the aggregate the amount of credit) can be transferred separately^ provided partial shipment are not prohibited, and the aggregate of such transfers will be considered as constituting only one transfer of the credit. The credit can be transferred only one the terms and conditions specified in the original credit, with the exception of the amount of the credit. BACK TO BACK L/C: A back to back letter of credit is a new credit. It is different from the original credit based on which the bank undertakes the risk under the back to back credit. In this case the bank main surety / secure are the original credit. The original credit (selling credit) and the back the back credit although they both from the part of the same business operation. The supplier (beneficiary of the back to back credit) ships goods to the importer or supplies goods to the exporter and presents the
document to the bank as is specified in the credit. It is intended that the exporter would substitute his own documents and ships the goods to the importer, if necessary, and present documents for negotiation under the original credit, his liability under the back to back credit would be adjusted out of these proceeds. RED-CLAUSE L/C: In this credit, the exporters' bank is directed to advance his dues even before they produce all export documents to the bank. SIGHT L/C: It means when the shipper ships the goods covered by the L/C, and presents the documents to the bank for negotiation, the bank (the negotiating bank) will credit the proceeds to the shipper's account immediately after checking and finding the, documents in order. When the documents are sent by the negotiating bank to the L/C opening bank, the VC opening bank will effect payment to the negotiating bank immediately. Such L/Cs usually says "AT SIGHT" which means "pay when the bank sees the documents USANCE L/C: It means L/C with time allowed for the opening bank to make payment of a foreign bill of exchange. Or, put it in another way, payment from the L/C opening bank to the negotiating bank will only be made after a period of time as stipulated in the L/C. The length can be worked out between the buyer and the supplier, sometimes 60 days, sometimes 90 days or 120 days. Sometimes when the exporter receives a uses L/C of, for instance, 90 days sight, he may think he has to wait 90 days after shipping goods to receive payment, or if he wishes to receive payment at once, he will have to pay interest to his bank. However, this is not always the case. Sometimes, the L/C may say" 90 days sight with interest to be borne by the L/C opener". If
it does say this, he virtually can use it like a sight L/C. After he has presented the documents to his bank, his bank should pay him in full (not discounted) at once after checking them and finding them in order. However, his bank/the negotiating bank would have to wait 90 days for the L/C opening bank to pay. Therefore, does say this, he virtually can use it like a sight L/C. After he has presented the documents to his bank, his bank should pay him in full (not discounted) at once after checking them and finding them in order. However, his bank, the negotiating bank would have to wait 90 days for the L/C opening bank to pay. Therefore, as far as he is concerned, he can receive payment as if is a sight L/C. If the usage L/C does not say "Interest is to be borne by the L/C opener", then either he. will have to wait till the maturity of the 90 days or whatever the time spent $ is as specified in the L/C to receive payment/or he may request his bank to .pay him at once and charge him for the interest. His bank usually should accept his request. because the undertaking of the Issuing Bank is subject to presentation of some specified documents.
Accepting Bank:
condition of the credit). Usually it is the issuing bank Reimbursing Bank: It is the bank, which would reimburse the negotiating bank after getting payment - instructions from issuing bank.
VI. Reporting to the Bangladesh bank: As per instruction by Bangladesh Bank the bank has to report to respective department of Bangladesh bank by mentioning latest payment. VII. Issue to proceeds realization certificate (PRC): Bank has to issue proceed realization certificate of export LC to the supplier / exporter for getting cash assistance.
4 SWOT Analysis:
The Banks strength and competitive capabilities can be shown by the SWOT analysis. The SWOT analysis is grounded in the basic principle that strategy-making efforts must aim at producing a good fit between a companys resource capability and its external situation. The SWOT analysis is as follows:
Strength:
The banks have provided services successfully and have achieved goodwill in all over the country. UTTARA bank has sponsors from various sectors of Bangladesh. The most successful entrepreneurs from various sectors started this company. As a result there was a combination of different thoughts and skills in the management of the bank, which is very much essential for success in todays competitive market. Bank has a very competent and experienced top Management. . Branches: UTTARA bank is operating their business all over the
country with 202 branches. It has strengthened the distribution of the banks services.
Weakness:
The bank does not have any formal promotional activity. They do
not give any sort of advertisement or do not have any marketing activity. They do not even too many bill boards. The remuneration of the officers of UTTARA bank is lower
compared to other banks. Even the internship students are paid nothing. This is why high skilled human resources are discouraged to join here. The decision making of the bank is too many centralized. No
Opportunity:
UTTARA bank is operating corporate banking. In our country there is a huge opportunity of consumer banking. So UTTARA bank can reposition their branding and introduce consumer banking with corporate banking. The banking sector of the country is becoming modernized in the country. People like to draw money any time from anywhere. So ATM card is getting popularized in the country. UTTARA bank can introduce ATM system in their bank. The intention of the people has been changing. They now want to
save more. They also want some benefit on their saving. So UTTARA bank can introduce more products and schemes.
Threat:
In Bangladesh, after economic reform, more private bank has started their operation in the country. They are coming with different types of attracting products. This has increased the completion among the banks. The value of local currency is decreasing. So investment in banking is decreasing. More over the inflation is increasing in the country. So people
want to save money but in many cases they cannot. As a result, the banks are getting less deposit. There is a tendency of the people of the country to become
bankrupt. Few days ago Oriental bank has a great suffering. In our country, the receivable from top 20 bankrupt companies stood 88.36 billion. This is discouraging banks to make new investment.
CHAPTER-SIX
management should immediately apply the performance appraisal system and take appropriate actions on the basis of that appraisal. All sorts of promotions or other benefits should be based on the report of the performance appraisal. The traditional method of considering years of work experience as the criteria should be changed and rather the new method of looking at the output, productivity and quality of the work should be considered. The HR wing has to be more active rather the maintaining administrative duties. Other than the head of this division, the staffs in this wing are incompetent for this position. More qualified and skilled HR professional should be recruited for this department for the future growth of the HR in UBL. The HR department should be gradually extended at the branch level as the bank is expanding so that each branch has a HR official.
Enhancement
of
remuneration
package:
The
present
compensation package at UBL is very unimpressive and not capable to attract quality personnel to fill up its positions. Many skilled and devoted officers of the bank are depressed with their compensation package. Currently, the management is trying to attract more MBA's in future. But the bank must redesign its compensation' package to attract quality human resources particularly qualified MBA's for the bank. Since the foreign banks pay double that of UBL and other private banks also have a higher scale than UBL, it is high time that the management should consider revising the remuneration package in order to attract quality human resources.
6.3 BIBLIOGRAPHY
Annual Report (2003) of Uttara Bank Limited Annual Report (2004) of Uttara Bank Limited Annual Report (2005) of Uttara Bank Limited. Annual Report (2006) of Uttara Bank Limited. A/C Brochure of Uttara Bank Limited. Web Site- www.uttarabank-bd.com