1.

INTRODUCTION:
In the present-day, Money is circulating everywhere unimaginably. Financial Institutions
mainly banks play a pivotal role in matching depositors and lenders, channeling money
and making the economy more efficient. Although the history of Banking goes back to
the 14th century in Europe, but Banks are now everywhere which play a noteworthy role
in the economy compared to other financial institutions. In Bangladesh, there are different
types of banks specialized for different purposes with different brands and capital
structure and are regulated by the BASEL standards (to keep a minimum amount of
capital) such as BASEL II. Banks offer a wide range of products and services to appeal to
different customers and be competitive in the market place. Among the 39 commercial
banks which operate in Bangladesh, United Commercial Bank Ltd. has a unique position
in the minds of clients and regulatory bodies. The Company was founded in 1983 and
operates in more than 104 countries worldwide.
1.1.

BACKGROUND OF THE REPORT

To complete the BBA program magnificently, each participant is required to undergo the
internship program in an organization for three months to acquire practical knowledge of
business activities. To achieve the aforesaid requirement, I am assigned as an internee in
United Commercial Bank Ltd (UCBL), Karwan Bazar Branch for 3 months starting from
May 06, 2014 and provided with the topic for preparing internship report on Credit
Management Analysis of United Commercial Bank Limited, under the supervision of
Professor Dr. Mahbubul Haque, University of Asia Pacific. This program enables a
student to expand analytical skills and scholastic attitude.
1.2.

RATIONAL OF THE STUDY

Now a day, credit risk is a major risk of banking industry. Profitability of banks depends
on this sector. Liquidity is another major issue related to credit risk. Each and every bank
is now facing liquidity crisis. To reduce liquidity crisis, banks need to handle credit risk
proficiently. Most of the shares of the total revenue of bank come from credit operation
and the existence of the bank depends on quality of assets portfolio. So, efficient
management of credit risk indicates paramount importance. Credit risk is the loss,
associated with degradation in the credit quality of borrowers. In a banks portfolio, losses
1

stems from outright default due to the incapability or unwillingness of the customer or
counter party to meet commitments in relation to leading, trading, settlement and other
financial transaction. Alternatively, losses result from reduction in portfolio value arising
from actual or perceived determination in credit quality. As the credit department plays a
vibrant role in a banks overall performance, this department seems to me very
challenging and that is why I have chosen this topic for my internship report and
hopefully this learning will help me to take different credit related decisions in different
stages of my impending profession.
1.3.

OBJECTIVE OF THE STUDY

The objectives of the study may be viewed as

General Objectives
Specific Objectives

General Objectives:
The internship report is generally prepared to complete the Bachelor of Business
Administration (BBA) degree required under the department of business
administration, University of Asia Pacific.
Specific Objectives:

To analyze the performance of UCBL

To understand the Credit Management Procedure of UCBL.
To identify the problems of Credit operations of UCBL.
To provide suggestions for the improvement of Credit Management of the Bank.
1.4.

SCOPE OF THE REPORT

As I went to the Karwan Bazar Branch of UCBL, the scope of the study was only limited
to this Branch. This report has been prepared on the basis of experience gathered during
the period of internship. It covers the organizational structure; background, functions and
the performance of the bank and specially focuses on the credit operation system and
credit management of UCBL.
1.5.

METHODOLOGY
2

While conducting the study various data were collected from various sources. The
collected data are divided according to their different natures and sources. The study is
done with the help of the following data:
1. Primary Data.
2. Secondary Data.
Collection of Primary Data
The primary data are fresh data those are collected for the first time and thus happen to be
original in character. I have used the following techniques to collect primary data:

Direct observation during the internship period of the bank

Face to Face Interviews.
Practical deskwork.
Take expert opinion from concerned officials.

Direct observation during the internship period of the bank: Observation is the
process of recognizing and noticing peoples objects and occurrences rather than asking
for information. Informal observations remove the elements of biasness and effect of
reaction from any study.

Face to face Interview: As the field of study was limited within UCBL; I have decided
to collect information by direct face to face interview of some clients and tried to know
their opinion about the service of UCBL.

Practical Deskwork: When I was working at UCBL, I have worked in different desks.
While working in the Company I have collected the data which is needed to accomplish
the report.

Take expert opinion from concerned officials: During my internship period, the officers
not only help to perform my responsibilities as an intern but also provide me much
significant information for my internship report.
Collection of Secondary data:

Previous internship reports

Annual Report of UCBL
Different Articles on UCB
Various official documents

For preparing my internship report, the multiple linear regression model has been
developed through the analysis of data from 6 banks, 5 years data of each bank, that
means a total 30 periods data by using the specific SPSS instruments, version 16.0. The
data is collected from the financial statements of fiscal year 2009, 2010, 2011, 2012, and
2013 of each bank and obtained by the access to websites of the banks.

1.6.

LIMITATIONS

Objective of the practical orientation program is to ensure practical exposure for the
students. My tenure was for twelve weeks only, which was somehow not sufficient to
know entirety in details. To prepare my internship report I have faced some limitations
those are mentioned here:

The main constrain of the study was insufficiency of information, which was
required for the study. Due to some legal obligation and business secrecy banks

are reluctant to provide confidential data.

Since the bank personnel were too busy, they could not provide enough time to

me.
For this reason, maximum of the study limits on the available published data.
Only a few parts are prepared on the basis of informal interviews of the credit

officers.
Lack of opportunity to visit more than one branch.
Absence of required published documents.
Lack of experience and efficiency to prepare the standard report.
Time constraint was also one of the factors that curtailed the scope of the study.

1.7.

STRUCTURE OF THE REPORT:

The report is divided into four main chapters:

Chapter One: Introductory Part includes origin, rational, objectives, methodology,

scope, limitations of the report.
Chapter two: Organizational Part contains Industry overview, company profile,
Performance of the bank for five years, Products of UCB, Departments and
General Advance, steps in credit approval process, disbursement process, ratio
analysis, SWOT analysis
Chapter three: Findings and Recommendation
Chapter four: Conclusion

2.1.

THE BANKING INDUSTRY OF BANGLADESH:

The banking world has been going through vigorous changes. The motion of these

changes has been sustained even after experiencing the global financial agitation during
the past few years. It is well recognized that there is an urgent need for better-qualified
management and better-trained staff in the dynamic global financial market. Bangladesh
is no exception of this leaning. Bank education is a practice-oriented education and
Banking Industry in Bangladesh is facing challenges from different projection though its
prospect is bright in the future.
5

There are two sectors in the Banking Industry of Bangladesh; Specialized Banks
(SBs) and Commercial Banks (CBs). The Specialized Banks are those banks that deal
with particular divisions or industry of an economy. There are four Specialized banks in
Bangladesh. For instance, Bangladesh Krishi Bank (BKB) only does agreement with the
agricultural sector of the economy; Bangladesh Shilpa Bank (BSB) only deals with the
industrial sector of the economy, etc. On the other hand, Commercial Banks are
Scheduled Banks that are directing in the country under the rules and regulations of the
Central Bank. Commercial banks can be categorized as Nationalized Commercial Banks
(NCBs); Foreign Commercial Banks (FCBs) and Private Commercial Banks (PCBs).
The financial sector in Bangladesh is operated by four NCBs, nine FCBs and forty PCBs.
The Bangladesh Bank (BB) Order created in 1972, authorized Bangladesh Bank
(BB) as the central bank of the country. Bangladesh Bank Order 1972 and the Banking /
Companies Act 1991 mainly guide the commercial banks in Bangladesh. Commercial
Banks in Bangladesh are not allowed to do business other than just banking. Normal
activities include borrowing, raising or taking up of money, lending or advancing of
money with or without security. They are also authorized to issue letters of credit, trade in
precious commodities and buying and selling of foreign goods excluding foreign bank
notes. They are also authorized to trade in bills of exchange, promissory notes, coupons,
drafts, debentures, certificates and other instruments approved by Bangladesh Bank (BB).
Banking companies are required to provide safe vaults and are authorized to collect
money and securities.

2.1.1. RATIONALIZING THE BANKING INDUSTRY OF BANGLADESH

WITHIN PORTERS FIVE FORCES:

Threats of New Entry:
It is not only incumbent rivals that pose a threat to firms in an industry; the

possibility that new firms may enter the industry also affects competition. There is no
longer existence of barriers to enter in banking industry.

Bangladesh Government

policies reinforce to start new bank. That is why; many private and foreign banks are
entering in the market.
6

Intensity of Competitive Rivalry:

The increase of the number of banks within the industry is fast and in any case

there is now a great struggle for banks to create and maintain a good market share.
Though there might be an increase of the number of customers, but that cannot dilute the
fact that there is a tension of competition between the existing rivals in the industry.

Bargaining power of Buyers or Customers:

The people, who receive loans and utilize the services of a bank, are the buyers or

customers. Customers have bargaining power as they have numerous alternatives. For
instance they can compare the interest rate and go for the banks that offering low interest
rate for certain period. In addition they are free to select any banks services.

Bargaining power of Suppliers:

The core business of the banking industry is service which mainly focuses on

safety of wealth. In banking industry, suppliers are called depositors. Depositors are those
people who have surplus money and want to earn expected income with safety. As
Bangladesh bank usually takes decisions associated with interest rate and banks have to
follow that rules and regulations so the bargaining power of suppliers are low.

Threat of Substitution:
In Porter's model, substitute products refer to products in other industry that

satisfy the same need of customers offering by banks. Main requirement of saving money
for the people is to keep it secure for future need and that is why the foremost attraction
towards Government bonds are being seen. Moreover, Non Banking Financial Institutions
can also be substitute of Banks.
2.2.

AN OVERVIEW ON UNITED COMMERCIAL BANK LIMITED:

United Commercial Bank (UCB) started its journey in mid 1983, sponsored by

dynamic and reputed entrepreneurs and distinguished industrialists of the country. The
bank established itself as one of the largest first generation banks in the country. With a
immense network of 139 branches the Bank has already made a distinct representation in
7

the region of Private Sector Banking through personalized service, innovative practices,
dynamic approach and efficient Management.
The Bank has prolonged its arena in different and varied divisions of banking. For
instance, Retail Banking, SME Banking, Corporate Banking, Off-shore Banking, and
Remittance etc. the Bank provides export and import loan to deserving aspirants which in
turn helps the overall economy of the country through increased earning of foreign
exchange. Other consumer products like UCB Cards have been showing tremendous
success and growth since its inception in 2006 and soon became the leader in local market
with around 40000 card holders.
With a firm pledge to endorse SME sector, the Bank is also levying and
monitoring business loans, managing business financing risks, pricing products and
working for further expansion of SME. Its Corporate banking service includes simple
business of issuing loans to more intricate matters, such as assisting minimize taxes paid
by overseas subsidiaries, managing changes in foreign exchange rates or working out the
details of financing packages necessary for the construction of a new office, plant or other
facility. Its area of proficiency is in-depth knowledge in financial scrutiny with analytical
competence of financing large project including RMG and infrastructure development
projects.
The Bank, aspiring to perform upon a leading role in the economic activities of
the country, is decisively occupied in the advancement of trade, commerce and industry
by investing in network extension and new technology adoption to have competitive
advantage.
Vision:
To be the bank of first choice through maximizing value of our clients, shareholders and
employees and contributing to the national economy with social commitments.
Mission:
To offer financial solutions that create, manage and increase our clients wealth while
improving the quality of life in the communities we serve.
Core values:
8

 We put customers first.

We emphasize on professional ethics.
We maintain quality at all levels.
We believe in being a responsible corporate citizen.
We say what we believe in.
We foster participative management.
2.3.

BRANCHES OF UCB:
Table: 2.1 : Branches around Bangladesh

Division Name

Urban

Rural

Total

Dhaka
Chittagong
Rajshahi
Rangpur
Sylhet
Khulna
Barisal
Total

41
25
6
2
7
6
1
88

23
19
1
0
7
1
0
51

64
44
7
2
14
7
1
139

Source: Annual Report of UCB, 2013

It has opened 9 new branches during the year 2013.The number of Authorized Dealer
(AD) branches is 25.Furthermore, the bank currently has 363 correspondents covering
61 important countries in all the continents of the world to meet the growing cross- border
banking needs of the customers. UCBL also has arrangement with a number of Exchange
Houses at U.K,
Table: 2.2: LAST FIVE YEARS PERFORMANCE OF UCBL

Sl.
1
2
3
4
5
6
7

Particulars

2013

2012

2011

2010

2009

Authorized Capital
Paid-up capital
Deposits
Advances
Investments
Import
Export

15,000
8366.12
184,896.85
148,664.86
35,587.25
117,542.90
94,288.50

15,000.00
8,366.12
170,530.54
136,071.65
26,090.32
94,843.80
78,309.10

8000.00
7,274.88
139,484.75
115,606.33
19,383.42
90,919.70
76,962.80

8000.00
2,909.95
113,070.78
93,560.70
15,048.23
86,666.50
50,712.10

1000.00
1,193.83
77,730.4
61,692.2
9,346.39
58,857.0
38,519.0

8
9
10
11
12
13
14
15
16
17
18

Interest Income
Interest Expenses
Operating Profit
(before Provision)
Net Profit before
Tax
Net Profit after Tax
Fixed Assets
Total Assets
Number of branches
Number of
Employees
No. of ATM
Cost of Fund

22,999.36
15,919.86
7,126.37

21,318.92
14,705.21
5,762.22

15,351.63
10,203.21
5,972.91

9,648.36
5,632.95
4,733.12

6,965.32
4,348.23
3,125.17

5,887.32

3,739.06

5,172.91

3,632.60

1,541.86

3,065.41
7,957.31
226,333.13
139
3,445

1,586.13
5,222.78
52,153.26
130
3,374

2,945.80
3.288.09
40,255.37
115
2,982

2,182.43
1,966.35
40,797.74
107
2,738

932.90
1,305.81
22,098.1
98
2,508

101
11.66

81
12.46

77
11.09

54
9.81

12
10.72

Source: Annual Report of UCB, 2009 to 2013

2.4.

GRAPHICAL REVIEW

10

Deposits (BDT in million)

200000
180000
160000
140000
120000
100000

184,896.85

80000

170,530.54
139,484.75

60000

113,070.78

40000

77,730.40

20000
0
2013

2012

2011

2010

2009

Figure 2.1

Loans & Advances (BDT in million)

160,000.00
140,000.00
120,000.00
100,000.00
80,000.00

148,664.86

60,000.00

136,071.65
115,606.33
93,560.70

40,000.00

61,692.22
20,000.00
0.00
2013

2012

2011

Figure 2.2

11

2010

2009

Operating Profit (before Provision) (BDT in million)

8,000.00
7,000.00
6,000.00
5,000.00
4,000.00

7,126.37

3,000.00

5,762.22

5,972.91
4,733.12

2,000.00

3,125.17

1,000.00
0.00
2013

2012

2011

Figure 2.3

12

2010

2009

Total Assets (BDT in million)

250,000.00

200,000.00

150,000.00

226,333.13
100,000.00

50,000.00

52,153.26
40,255.37

40,797.74
22,098.19

0.00
2013

2012

2011

Figure 2.4

13

2010

2009

14

2.5.

DEPARTMENTS OF UCBL:

I was appointed as an internee in UCBL Kawran Bazar Branch from the date of 12th May,
2014 to 12th August, 2014 and I have worked there for three months. I worked there in
almost all desks under the supervision of my on field supervisor Md. Shamsul Alam
Khan. In branch the desks I had to cover is given below in diagram.

UCBL

General Banking

General Advance

Cash Management

Foreign Exchange

Foreign Exchange Export

Account Opening
Foreign Exchange Import
Account Bills & Remittance
Department

Foreign Exchange
Remittance

Online Banking
Operation
2.5.1. GENERAL BANKING

General Banking is the initial peak of all the banking operation. General Banking
department assists in taking deposits and simultaneously provides some supplementary
services. It is the department, which provides day to-day services to the customers. They
are as follows

15

Cash Section

It is the most important department that is contributing to the earning of the bank in terms
of goodwill and customer satisfaction with their quality and prompt services. Cash
department of UCB Kawran Bazar Branch is well equipped and decorated. There is also
electronic counted machine and computers with online system in this department. Balance
of account can be seen with few seconds. So cash payment can be made very promptly. It
has two types of services:
Cash Receipt
Cash Payment
Account Opening Management
Responsibility of the customer service starts with opening of new account in the name of
new customer. This is the first step of the client bank relationship. The bank associate its
customer to avail the facilities provided by the bank by opening an account
Types of Accounts:
UCBL has several types of deposits for its customers. Like

Savings Bank (SB) Account

Current Deposit (CD) Account
Short Term Deposit (STD) Account
Fixed Deposit Receipt (FDR) Account
Account Bills and Remittance:

Now a day business person cannot run his business without bank remittance facilities.
Sending some money from one station to another through banking channel is called
remittance. Remittance may be both local and foreign. The main instruments used for
local remittance of fund are:

Pay Order (PO)

Demand Drafts (DD)
Telegraphic Transfer (TT)
Payment in Cash
Outward Bill Collection (OBC)
Internal Bill Collection (IBC)
16

On-Line Banking Operation

This department joins the overall banking system of UCBL into one network. To do its
operation through on-line UCBL uses PC BANK 2000 operating system. In this department I
learn how to input different bills of other branch of UCBL and other banks. Moreover, the
process of clearing the cheques through Bangladesh Banks Clearing House has been
experienced here.
The function of clearing can be divided into two parts:
Outward Clearing
Inward Clearing
2.5.2. FOREIGN EXCHANGE DEPARTMENT:
Foreign Exchange Department is an important one in UCBL that deals with import, export,
and foreign remittance and post import financing. The Bank is purchasing primary security
by giving loan in form of loan against imported merchandise (LIM), and loan against trust
receipt (LTR). Bank branch should be Authorized Dealer with the approval of Bangladesh
Bank to run foreign exchange business. This department is playing an important role in
enhancing export earnings, which aids economic growth and, in turn, will be helpful for
economic development. On the other hand, it also helps to meet those goods and services,
which are more demandable and not adequate in our country.

Function of Foreign Exchange:

L/C opening & L/C

Foreign & Local Bill Purchase

Foreign Currency Account

amendment
Sanctioning PAD, LIM, LTR,

Maintaining
Foreign Currency Remitted

Packing credit

The Foreign Exchange Department of UCBL is divided into three broad sections:
Foreign Exchange Import
Foreign Exchange Export
17

 Foreign Remittance
2.6.
GENERAL ADVANCE:
The General Advance Division associates with asset selling of the Bank. In general
financial institutions like Commercial Banks accumulate fund from the public in terms of
deposit & deal with this fund in terms of credit to different organizations in business society
as well as to individuals with scarcity of fund in the society. This feature is commonly
identified as loan. The objective of bank is to provide solutions to the business as well as to
the individuals for their financial requirements.
The function of UCBLs credit is to actively participate in the development and growth of
our national economy by supplying credit to various lenders, efficiently distributed and
competitively valued. UCBLs client pedestal comprises corporate, organizational and private
clients to help them comprehend their short term goal as well as long term objective.

Loan & Advance

Term Loan
Continuous Loan
Demand Loan

LOAN & ADVANCES

Loan and advances have primarily been divided into three main heads as follows:
Term Loan

Term loan is the non-swiveling loan with fixed reimbursement program. This loan is
granted for a particular period and usually reimbursed in equivalent payment either of
18

monthly or quarterly. The interest may be paid quarterly or along with the payment. Term
loans are classified into three categories based upon which is defined as follows:
Short-term loan: The tenure of this loan is less than one year.
Mid Term loan: The tenure of this loan is between one to five years. This type of loan
is most preferred by both bank and the borrower. This loan is comprises with consumer
credit, Agro credit, Micro Credit etc.
Long Term Loan: The tenure of this loan is more than five years. Here the fund is
locked up for a long period and hence risk exposure is higher than other term loans.
Continuous Loan
Continuous Loans are the swiveling loans having no fixed reimbursement program, but
have a termination date and renewable on satisfactory presentation of the customer.
The customers obtain this loan facility continuously for a specific time period and they
can get benefit from the facility at any time within the period. In addition, he can enjoy the
facility as much as he desires within specific maximum value and that is why this loan
agreement is also termed as revolving loan. Continuous loan is preferred form of loan facility
in the business society. Two most popular continuous loans are as follows:

19

Continuous Loan

Cash Credit (CC)

Over Draft (OD)

Secured OD

Temporary OD

CC Hypo

CC Pledge

a. Over Draft (OD)

Over draft is a loan arrangement between bank and customers by which the

customer can draw money from his account up to a certain limit as approved by the bank.
This loan is usually for one year time and renewable upon maturity.
1. Secured Overdraft (SOD): Overdraft which is normally granted against the
security of tangible assets such as pledge/lien of FDR, bonds ICB unit certificate etc.
are called SOD. Description of overdraft will depend upon the nature and types of
security charged to the bank.
2. Temporary Overdraft (TO): Customers who maintain satisfactory performed
account may be accommodated at their specific request to overdraw their balance in
the current account to meet unexpected and urgent requirements for credit facilities.
The amount up to which overdrawing is permitted is dependent on the need of the
20

customer, the previous conduct of his account with the bank and the turnover in the
account, average balance maintained etc.

b. Cash Credit (CC)

This is an agreement for congregating the firms working capital needs. Generally

this loan is offered to get hold of raw materials and to complete it in finished goods.
Therefore typically the security of this loan is the finished goods stock for which the loan
is approved. In addition, other collateral securities are also may be kept for this facility.
Depending on its nature Cash credit can be categorized in the following types:
1.CC Hypothecation: In this arrangement the custody of goods (subject matter of the
loan) goes with the client or borrower but the ownership is in banks hand. Client pays
back loan from the sales income by turn. Here primary security is the goods purchased
by the sanctioned loan and secondary security may be cash equivalent instrument or
any mortgage property.
2. CC pledge: The tenure and custody of the goods, subject matter of the loan, lies
with the bank. Upon prior payment the client release goods from banks custody and sale
accordingly.

Demand Loan

These are the non-revolving loans which are neither continuous nor fixed but have

to be repaid on demand. This loan is repayable by the borrower on demand. That means
for this loan the borrower is bound to pay back on demand of Bank.

Personal Loan (Consumer Credit Scheme)

The purpose of this loan is to grant necessary household enduring to the fixed income
group (Service Holders) and other eligible borrowers. Car loan, loan for house renovation,

21

vacation loan, marriage loan and loan for household equipment as well as entertainment
products are governed by personal loan program.:

Table 2.3: The Total amount of loans along with the duration in which these loans
taken, need to be repaid is given below

Type of

Loan Amount (Tk. In

Lac)

Product
Home Loan
Auto Loan
Doctors
Loan
Advance
Against Salary
Type of
Product
Any Purpose
Loan
Education
Loan
Travel Loan
Marriage Loan
Hospitalization

Up to 10
2.00
5.00

Rate of

Tenu

Interest

re

16.50%

10 to

17%-18%

20 years
5

17%

years
5
years

5.00

17%

4
years

Loan Amount (Tk.

Rate of

Ten

In Lac)

Interest

ure

17%

17%

years
4

17%

years
3

17%

years
3

17%

years
2

10.00
5.00
2.00
3.00
5.00

Loan

years
22

SOURCE: ANNUAL REPORT, 2013

2.6.1. STEPS IN CREDIT APPROVAL PROCESS

Step-1: A potential borrower collects prescribed Credit Application Form from the
Relationship Officer of Branch. Later, he/she submits the filled in Credit Application
Form along with required papers and documents.
Step-2: The Relationship Officer assesses creditworthiness and scrutinizes other
documents submitted by the customer. If Relationship Officer finds the proposal not credit
worthy, a refusal letter to the customer would be sent immediately. On the other hand, if
Relationship Officer finds the proposal acceptable within the parameter as set by the
Credit Policy and instructions issued time to time by Credit Department, Relationship
Officer will forward the application with his comments to the concerned Relationship
Manager.
Step-3: The Relationship Manager, singly or jointly with Relationship Officer, visit the
customers business premise and try to acquire proper understanding about the business
position, business expertise and assesses the value of the security to be offered and
prepares Valuation Report, sources of repayment, etc. Besides, he negotiates with the
customer about the structure of the proposed credit facility to control the risks. Finally, the
Relationship Manager summarizes all these information in the Pre- sanction Inspection
Report in the Banks prescribed format in which he recommends for specific credit facility
for the customer. At the same time, The Relationship Officer collects filled CIB Inquiry
Form from the customer accordingly and sends the same to the Credit Administration
Department of Head Office to collect latest CIB Report from Credit Information Bureau
of Bangladesh Bank.
Step-4: Credit Administration Department on receipt of the request letter from the
Branch will send the CIB Inquiry Form to Bangladesh Bank. After getting the receipt of
the report, Credit Administration Department will send the CIB report immediately to the
concerned Relationship Officer. Everything may be closed if ad verse CIB report is
23

received. In that case, letter of regrets would be issued to the customer informing the
reason accordingly.
Step-5: If clean CIB Report is received, the Relationship Officer originates a formal
Credit Proposal in prescribed format that should carry the recommendations of the
Relationship Manager. After signing by him, it is to be sent to the Corporate Banking
Division, Head Office and a copy to the Credit Risk Review Department of Credit Risk
Management Division. It is to be mentioned here that for renewal proposal, a certification
of Credit Administration officer is required stating the documentation status following
existing sanction advice.
Step-6: Corporate Banking Division, Head Office after modifying the proposal as
required place the proposal along with Head of Corporate Banking Divisions
recommendation before the Credit Committee. Head of Credit Risk Review Department
of (CRMD) or his authorized representative may report his observation in writing/verbally
before the Credit Committee. Corporate Banking Division should inform the list of
proposals that are to be placed before the Credit Committee at least 15(fifteen) hours
before to the Credit Risk Review Department of CRMD for smooth functioning of the
committee except the exception cases.
Step-7: Credit Committee will examine the proposal and if found feasible then
recommend for sanction to the appropriate delegation of credit approval authority with
their remarks. If the proposal is endorsed by the Credit Committee, Corporate Banking
Division will prepare required Memo reducing the weakness/risk factors and integrating
the suggestion/observation of the Credit Risk Review Department as well as Credit
Committee for sanction of the appropriate authority. The modified Memo should be
routed through Credit Risk Management Division for further inspection. On receipt of the
Memo will be shared to the respective Credit Officer to review, inspect and evaluate in
line with the business plan, risk acceptance criteria of the bank and general credit
standards. Credit Officer after assessing the credit information, facility structure and risk
factors summarize his observations with reasons and forward for concurrence of Head of
24

Credit. The Head of Credit may contact with the Head of Corporate Banking Division for
clarification/rectification on any issues if required.
Step-8: Be getting approval from the appropriate approval authority, Corporate Banking
Division will send the copy of approval Memo/Note sheet to Credit Risk Management
(CRM) Division. Credit Risk Review Department of CRM issues Sanction Advice to the
originating Branch along with a Documentation Check List that clearly spells out what
documentation formalities are required to complete before disbursement. Copies of the
Sanction Advice are also sent to Corporate Banking Division and Credit Administration
Department.
Step-9: According to Credit Risk Review Department of CRM sanction advice, sanction
letter is sent to the customer under dual signatures of Relationship Manager and Credit
Administration Officer from the originating Branch

2.6.2. DISBURSEMENT PROCESS

Receipt of written clearance is needed from Credit Risk Management of Head Office
before disbursement of a loan sanctioned by the competent authority. The disbursement
process generally goes through some basic principles. These are as follows:

Separation of Authority

25

Relationship Department and Disbursement Authority shall be separate from each

other to minimize the risk. Relationship Department will market the products along with
preparation of credit proposal while Credit Administration Department will deal with
disbursement of approved credit facilities after completing all formalities as mentioned in
the Sanction Advice.

Documentation Check List

While issuing Sanction Advice to the Corporate Division/Branch, the Credit

Division will enclose there with a Documentation Check List in which documentation
formalities will be specified that to be completed by the Credit Administration Unit of the
disbursing branch before any disbursement to secure the credit facility. Documentation is
obtaining such agreement where all the terms and condition and securities are written and
signed by the borrower. It specifies rights and liabilities of both the banker and the
borrower. In documentation each type of advances requires a different set of documents. It
also differs with the nature of securities. The documents should be stamped according to
the stamp Act. There are no hard and fast rules of documentation and it varies from bank
to bank. Generally, the documents are taken in the case of a secured advance by UCB:
Demand promissory note: Here the borrower promises to pay the loan as and when demand
by bank to repay the loan.
Letter of arrangement.
Letter of continuity.
Letter of hypothecation of goods and capital machinery.
Stock report: This report is used for OD and CC. In this report, information about the
quality and quantity of goods hypothecated is furnished.
Memorandum of deposit of title deed of property duly signed by the owners of the property
with resolution of Board of Directors of the company owning the landed.
Personal guarantee of the owners of the property.
Guarantee of all the directors of the company.

26

 Resolution of the board of directors to borrow fund to execute documents and completes
other formalities
Form no. XVII/XIX for filling charges with the register of joint stock companies under
relevant section.
Letter of Revival
Letter of lien for advance against FDR.
Signing Documentation Check List

Relationship Officer is responsible for getting the document signed by the

customer and completing other formalities as per checklist. After completion of

documentation formalities as per checklist, the Branch will submit the same to the Credit
Risk Administration Department, Head Office, duly signed by the Relationship Manager
(Head of the Branch) and countersigned by the Credit Administration officer at the Branch
seeking Disbursement Authority (In case of credit facilities approved by Branch
incumbent within delegated approval authority from Managing Director, copy of signed
Documentation Check List is to be sent to CAD, Head Office for information). It is the
responsibility of the Credit Administration Officer to verify the proper execution of
documents/security/collaterals before countersigning. However, both the signing officer
will be equally accountable for any lapses in documentation.
Deferral of Documentation

No credit facility is to be released for utilization, if requisite documentation is not

available or proper deferral approvals have not been obtained. If there is any inadequacy
in documentation as per sanction advice, the Relationship Manager shall have to seek
temporary deferral/waiver stating the reasons and specific time frame. Request of deferral
will only be processed in cases of extreme need, i.e., all reasonable attempts have been
made to complete the documentation prior to disbursements and have failed only because
of unusual circumstances. Such temporary deferral/waiver shall be approved by the Head
of Credit Risk Management Division/Additional Managing Director and/or the Managing
Director depending ON the issues. However whole responsibility for removal of the
inadequacy within the stipulated time shall rest with concerned Relationship
27

Officer/Manager and respective Credit Risk Administration Unit are responsible for
monitoring deferrals.
Disbursement Authority
All the approved credit facilities except the facilities approved under delegated
authority of Branch incumbent shall be disbursed only after having written disbursement
authority/clearance from the Credit Administration Department, Head Office. If there is
any inadequacy in documentation, the CAD Officer at Branch level will specifically
mention it in the Documentation Check List / Certificate of Documentation and concern
Relationship Manager/ Branch Manager will mention reason behind the inadequacy and
asked for temporary deferral with specific time frame along with reasons behind for
deferral. If the request is approved by the authority as mentioned in the preceding
paragraph, Credit Risk Administration Department will intimate the deferral of
documentation for specific time as approved and will issue disbursement authority to the
Relationship Manager/ Branch Manager. However, Branch will not disburse any facility
without proper documentation and if necessary, should obtain deferral approval from
CAD, Head Office.
Facilities Approved by the Head of Branch

Loan against financial obligation or others under the approval authority of Branch

incumbent, if authorized by Managing Director, may be disbursed after completion of

documentation formalities and signing of the Documentation Check List by the Head of
the Branch and countersigning by the CAD Officer of the Branch . Limit will be input in
the system by the CAD officer independently to control the accounts.

Valuation

Valuation of assets charged to the Bank is a crucial function, as it has a direct

bearing on the amount of loss that the Bank might have to suffer in the event that the
Borrowers default. The method of valuation employed, has to be appropriate to the nature

28

of the assets. All valuations must be supported with factual data, in order to qualify the
collateral for credit value; valuators estimates without supporting documents are not
acceptable. Valuation should be conducted by an enlisted Valuator of Banks choice.
Where the exposure is not large, joint valuation by Relationship Manager and another
officer of the bank may be accepted since it will not be cost effective. Apart from
Valuators valuation independent valuation by Relationship Manager and another Officer
should also be carried out.
Legal Vetting

Mortgage documents should be properly vetted by the Bank's Legal Counsel.

He/she will also certify that proper documentation, borrower's legal standing and
enforcement of securities are in place. Finally, Lawyer's Satisfaction Certificate shall have
to be obtained regarding documentation where there are securities/collaterals other than
Personal Guarantee and Financial Obligation.
File Maintenance

Maintenance of credit files is an important part of the credit process and is required

to determine whether or not credit extensions are based on adequate and complete
information. Credit files contain records of analysis and business strategy information
submitted to the Bank by the clients. Adequate system is required to be in place to restrict
access to this confidential information to only those personnel who are authorized to use it
and maintain it.Each borrowing client should have separate and independent file(s) and
shall be maintained under the custody of the concerned Relationship Officer of Branch
and Credit Officer of Credit Department, Corporate Banking Division and Recover y Unit
(Where applicable) of Head Office. Credit Administration Department will also maintain
independent files for each borrower where copy of Sanction Advice, acceptance of the
borrower, signed Documentation Checklist, Disbursement Authorization Memo, Deferral
letter and other papers related with CAD will be maintained. It is the responsibility of the
concerned officer for proper filing of the papers to ensure that required information is

29

easily locatable and maintained in good order. An officer who does not handle the file will
have to take written permission from the higher authority to have access to it.
To maintain an appropriate credit administration, measurement and monitoring
process UCBL maintains following values:

The bank has in place a system for the ongoing administration of various credit risk
bearing portfolios. Dedicated independent risk management units like credit risk
management units, credit administration department, credit monitoring ad recovery
department, internal audit division are developed for those purposes. Dedicated
committee at management level has been set up to monitor risk viz. credit risk
through credit review committee and risk management units.

The bank has in place a system for monitoring the condition of individual credits,
including determining the adequacy of provision and reserves. For NPL provisioning
and write off the guidelines established be Bangladesh Bank for CIB reporting,
provisioning and write off of bad doubtful debts and suspension of interest are
followed in all cases.

The bank has in place a system for monitoring the overall composition and quality of
the credit portfolio. All credit extensions must comply with the requirements of the
banks memorandum and articles of the association, Bank Company Act, 1991 as
amended from time to time, Bangladesh Banks instruction circulars, guidelines and
other applicable laws, rules and regulations, Bans credit risk management policy,
credit operational manual and all relevant circulars in force. Any deviation from the
internal policy of the bank must be justified and well documented. The portfolio shall
always be well diversified with respect to sector, industry, geographical region,
maturity, size, economic purpose etc. Concentration of credit shall be carefully
avoided to minimize risk.

To ensure adequate controls over credit risk UCBL maintains followings values:

30

UCBL has a system in place for managing problem credits and various other workout
situations. All NPLs are assigned to account manager within the recovery
department, which is responsible for coordination and administering the action plan,
or recover of the account and serve as the primary customer contact after the account

is downgraded to substandard.
UCBL ensures that the credit granting function is being properly managed and that
credit exposures are within levels consistent with prudential standards and internal
limits. The bank has established and enforced internal controls and other practices to
ensure that exceptions to policies, procedures and limits are reported in a timely

manner to the appropriate level of management.

UCBL has established a system of independent, ongoing credit risk review and the
results of such reviews are communicated directly to the board of directors and senior

management.

2.6.3. OVERVIEW OF RATIO ANALYSIS

Ratio Analysis is a tool which is used as a way of analyzing the performance of any
company or organization.. Ratio analysis determines trends and exposes strengths or
weaknesses of a firm.
Classified loan to total loan portfolio:
Any bank loan that is in danger of default is the classified loan. Classified loans have
unpaid interest and principal outstanding, and it is unclear whether the bank will be
able to recover the loan proceeds from the borrower. This ratio indicates the
percentage of classified loan of a bank has. The formula is:

Classified Loan
100
Total Loan Portfolio

Provisions for Non-Performing Loans to Non Performing Loans:

31

 A non-performing loan is a loan in which the debtor has not made his or her
scheduled payments for at least 90 days. However, this can depend on
the contract terms. A nonperforming loan is either in default or close to being in
default. The ratio shows the extent to which non-performing loans are already
covered by provisions.

Provisions for NPLs

100
NPLs

Interest Income to Total Income:

Net interest income is the difference between interest received from assets and
interest paid on liabilities. This ratio measures the percentage of interest income that
covers to total income.

Interest Income
100
Total Income

Total Loan to Total Assets

This ratio shows the percentage of loan and advance which the bank has in Assets.

Total Loan
100
Total Assets

Return on equity (ROE)

Return on equity (ROE) is a measure of profitability ratio that calculates how many
taka of profit a company generates with each taka of shareholders' equity. The Return
on Equity of a company measures the ability of the management of the company to
generate adequate returns for the capital invested by the owners of a company.

32

Net Profit after Taxation

100
Equity

Return on Assets (ROA)

The Return on Assets of a company determines its ability to utilize the assets
employed in that company efficiently and effectively to earn a good return. Return on
assets measures the amount of profit that the company generates as a percentage of
the value of its total assets. A company's return on assets (ROA) is calculated as the
ratio of its net income in a given period to the total value of its assets.

Ne t Profit after Taxation

100
Total Assets

Deposits to Equity Ratio

The ratio shows the relationship between total deposits in a bank to the total
shareholders equity.
Total Deposits
100
Shareholder ' s Equity

33

2.6.4. ANALYSIS AND COMPARISON OF FINANCIAL RATIOS OF UCBL

WITH OTHER BANKS:
Table 2.4: Classified loan to total loan portfolio:

2009
2010
2011
2012
2013

Unite
d
Com
merci
al
Bank
2.63%
1.20%
1.79%
3.69%
4.02%

The
City
Bank
Ltd

4.87%
4.41%
3.44%
7.51%
7.98%

34

Bank
Asia

1.56%
1.62%
2.70%
5.62%
5.45%

Brac
Bank

6.04%
5.69%
5.38%
6.69%
6.36%

Classified loan to total loan portfolio

9.00%
8.00%
7.00%
6.00%
5.00% UCB

City Bank

Bank Asia

Brac Bank

4.00%
3.00%
2.00%
1.00%
0.00%
2009

2010

2011

2012

2013

Figure: 2.5

The data shows that UCB has lower percentage of classified loan (CL) to total loan
then other banks in the respective years. In 2013, the ratio was 4.02% which is much
lower than the industry average. However, in the last five years it can be seen that in
2013 the CL was high according to UCBL data.

Table 2.5 : Provisions for Non Performing Loans to Non Performing Loans:

2009
2010
2011
2012

UCB
35.46
%
25.44
%
33.80
%
36.90

The
City
Bank
Ltd
31.58
%
28.67
%
34.39
%
49.81
35

Bank
Asia

Brac
Bank

45.27
%
27.61
%
34.33
%
50.29

47.52
%
56.82
%
58.46
%
43.25

 2013

%
35.47
%

%
40.60
%

%
52.30
%

%
35.80
%

Provisions for NPLs to NPLs

70.00%
60.00%
50.00%
40.00% UCB

City Bank

Bank Asia

Brac Bank

30.00%
20.00%
10.00%
0.00%
2009

2010

2011

2012

2013

Figure: 2.6

This ratio shows the percentage to which non-performing loans are already covered
by provisions. The needed amount of provisions depends very much on the
probability of the loan not being repaid, the quality of the loan security (such as real
estate for a mortgage loan, which could be sold when the loan defaults), or bank
regulation. According to above data it can be said that the ratio is an satisfactory level
then the other banks.

36

Table 2.6 :Total Loan to Total Assets

Unite
d
Com
merci
al
Bank
68.18
%
72.10
%
68.47
%
65.66
%
65.90
%

2009
2010
2011
2012
2013

The
City
Bank
Ltd

Bank
Asia

Brac
Bank

56.87
%
66.76
%
66.28
%
63.64
%
61.58
%

73.21
%
75.58
%
70.54
%
66.14
%
65.39
%

67.80
%
70.50
%
69.17
%
63.24
%
64.40
%

Total Loan to Total Assets

80.00%
70.00%
60.00%
50.00%
40.00%

UCB

City Bank

Bank Asia

Brac Bank

30.00%
20.00%
10.00%
0.00%
2009

2010

2011

2012

2013

Figure: 2.7
As banks main business is interest earning so the larger percentages of this ratio
brings more revenue to the bank. According to above data the percentage of this

ratio is in an acceptable level. In addition, in 2013 this ratio was 65.90% which
was higher than the other three private banks.

Table 2.7: Interest Income to Total Income

2009
2010
2011
2012
2013

Unite
d
Com
merci
al
Bank
746.6
3%
434.3
7%
521.2
4%
1344.
84%
749.5
4%

The
City
Bank
Ltd

Bank
Asia

Brac
Bank

701.4
4%
379.5
4%
458.9
2%
1564.
33%
2734.
97%

470.7
3%
434.3
6%
558.4
1%
1634.
09%
1106.
24%

670.0
6%
531.9
9%
788.0
6%
2504.
78%
1397.
37%

Interest Income to Total Income

3000.00%
2500.00%
2000.00%
1500.00%

UCB

City Bank

Bank Asia

Brac Bank

1000.00%
500.00%
0.00%
2009

2010

2011

2012

2013

Figure: 2.8

This ratio measures the percentage of interest income that covers to total income.
According to above data interest income to total income ratio is not good enough
for UCB. The data shows that in 2013 City Bank Limited has the higher
percentage, which is 2734.97%, than the other banks. Moreover the ratio of UCB
was 1344.84% and 749.54% on 2012 and 2013 respectively which is decrease
than the previous year. So it is in need to be improved.

Table 2.8: Total Deposits to Shareholder's Equity

UCB

2009

13.62
%

The
City
Bank
Ltd
10.64
%

Bank
Asia

Brac
Bank

11.07
%

8.91%

 2010
2011
2012
2013

14.46
%
8.73%

5.79%
4.67%

12.23
%
7.55%

9.38%
9.02%

5.2%
5.88%

8.4%
9.18%

8.95%
10.2%
12.18
%
9.73%

Total Deposits to Shareholder's Equity

16.00%
14.00%
12.00%
10.00%
8.00%

UCB

City Bank

Bank Asia

Brac Bank

6.00%
4.00%
2.00%
0.00%
2009

2010

2011

2012

2013

Figure: 2.9
This ratio shows the percentage of total deposit to shareholders equity. As the
deposit is a liability for a bank so it is expected to be low. UCB has higher
percentages in the last five years than the other three private banks. However, it
has got decrease in 2011, 2012 and 2013, which are 8.73%, 9.38% and 9.02%
respectively then the 2009 and 2010, which are 13.62% and 14.46% respectively.

Table 2.9: Return on Assets (ROA)

Unite
d
Com
merci
al
Bank
1.03%
1.68%
1.47%
0.84%
1.41%

2009
2010
2011
2012
2013

The
City
Bank
Ltd

Bank
Asia

1.23%
2.21%
1.95%
0.62%
0.68%

Brac
Bank

2.18%
2.22%
1.72%
0.70%
0.96%

1.56%
1.55%
1.36%
0.35%
0.72%

Return on Assets (ROA)

2.50%

2.00%

1.50%

UCB

City Bank

Bank Asia

Brac Bank

1.00%

0.50%

0.00%
2009

2010

2011

2012

2013

Figure: 2.10
ROA is a profitability ratio which shows how profitable a bank is related to its
total assets. ROA gives an idea that how efficient the management of a bank is to
generate profits using its assets. In 2009, 2010 and 2011 UCB had lower ROA

than the other three banks but in 2012 and 2013 it has higher ROA than others.
However the percentages were not that much changed than previous years.

Table 2.10: Return on Equity (ROE)

2009
2010
2011
2012
2013

Unite
d
Com
merci
al
Bank
16.35
%
27.89
%
18.45
%
8.73%
14.97
%

The
City
Bank
Ltd
13.96
%
16.21
%
11.48
%
4.40%
2.70%

Bank
Asia

Brac
Bank

26.79
%
27.33
%
19.61
%
7.11%
10.55
%

19.19
%
18.95
%
17.90
%
5.47%
11.46
%

Return on Equity (ROE)

30.00%

25.00%

20.00%

15.00%

UCB

City Bank

Bank Asia

Brac Bank

10.00%

5.00%

0.00%
2009

2010

2011

2012

2013

Figure: 2.11
Return on equity measures a banks profitability which calculates how much net
profit that bank may generates with the money that shareholders have invested as
equity. ROE is very popular ratio toward the shareholders of any bank. After
doing the analysis its shows UCB has maintained higher ROE in the last few years
than the other three private banks.

2.7.

SWOT ANALYSIS OF UNITED COMMERCIAL BANK

 SWOT analysis refers to analysis of strengths, weaknesses, opportunities and

threats of an organization. This facilitates the organization to make its future
performance improved in comparison to its competitors. An organization can also
study its current position through SWOT analysis. For all of these, SWOT
analysis is considered as an important tool for making changes in the strategic
management of an organization.
2.7.1. STRENGTHS OF UCBL:
Strong corporate identity
According to the customers, UCBL is the leading provider of financial services
identity worldwide. With its strong corporate image and identity, it has better
positioned itself in the minds of the customers. This image has helped UCBL grab
the personal banking sector of Bangladesh very rapidly.
Young enthusiastic workforce
Selection & recruitment in UCBL emphasizes on having the skilled graduates &
postgraduates who have little or no previous work experience. The logic behind is
that UCBL wants to avoid the problem of 'garbage in & garbage out' and this type
of young & fresh workforce stimulates the whole working environment of UCBL.
Empowered Work force
The human resource of UCBL is extremely well thought & perfectly managed. As
from the very first, the top management believed in empowering employees,
where they refused to put their finger in every part of the pie. This empowered
environment makes UCBL a better place for the employees. The employees are
not suffocated with authority but are able to grow as the organization matures.
Strong Financial Position
It has been seen that the net profit has been gradually rising over the years.
Furthermore, return on asset is also dynamic. That means profitability of this bank
is high. UCBL is not just sitting on its previous years success, but also taking
initiatives to improve.
High Branch Network
In Bangladesh, The bank has 139 branches to provide services to the people. All
these branches are located in such places where customers feel comfortable and

safe to make their transactions. This creates a positive image in the minds of the
potential customers and many people get attracted to the bank.
Interactive Corporate Culture
UCBL has an interactive corporate culture. The working environment of UCBL is
very friendly, interactive and informal. And, there are no hidden barriers or
boundaries while communicate between the superior and the employees. This
corporate culture works as a great motivation factor among the employees of the
bank.
Distinct operating procedures
Repayment capacity as assessed by UCBL of individual client helps to decide how
much one can borrow. As the whole lending process is based on a client's
repayment capacity, the recovery rate of UCBL is close to 100%. This provides
UCBL financial stability & gears up to be remaining in the business for the long
run.
Competitive pricing
Price of products those are offered by UCBL is reasonable. Interest rates both on
deposit schemes and credit schemes are comparatively similar to other
commercial banks.
Low Staff Turnover
Staff turnover is low in UCBL because of its popularity and also for friendly
corporate culture.
2.7.2. WEAKNESSES OF UCBL:
Centralization Decision:
For making decision on different silly issues UCBL is fully dependent on
corporate branch. Decision making process is not decentralize which a great
weakness for a renowned bank like UCBL.
Lack of Promotional Activities:
Like other commercial banks, UCBL doesnt promotion itself and its product
attractively. Currently it has introduced new SME products i.e. UCB Bikash, UCB
Disha, UCB MOhati, UCB Nistha, UCB Odammaya, UCB Uddom, UCB
Unmesh, UCB Srejon and also involved in Corporate social responsibilities in

seven crucial areas i.e. sports, education, health, disaster management, art &
culture, environment and socio-economic development which are not known to all
as absence of proper promotion.
Insufficient ATM Booths:
Though UCB has successfully created a brand image in the mind of people of the
whole country, it should try to deliver best services to its customers. UCB does not
have sufficient amount of ATM Booths which works properly. For Example, In
Karwanbazar, which is one of the renowned commercial areas, UCB has only two
ATM Booths in which one booth does not work. This scenario is same in other
areas which more or less creates a negative impression on its potential customers.
Not enough innovative products
Currently UCBL is offering similar products to its customers but in order to be
more competitive in the market, it should come up with more new attractive and
innovative products. This is one of the weaknesses that UCBL is currently passing
through.
Outdated Software and Hardware at UCBL ( Karwanbazar):
Some of the PCs in this branch have very outdated hardware which is very slow
and affects the customers and hence the performance of the bank as a whole. The
windows software are also outdated Windows 2003, XP and even also Windows
95 which prevent smooth operations.
2.7.3. OPPORTUNITIES OF UCB:
Improved Information & Communication Technology (ICT):
The management has updated the operational software and has replaced it with
Robust Core Banking software (CBS) one system for all branches i.e. online
service. UCB has opened 10 new Branches and expected to open 8 more branches
where Information Technology (IT) Division has implemented modem ICT
infrastructure and also 20 new ATM booths where IT Division has migrated ATM
Switching software which will ensure more secured operation of Debt Cards along
with more facilities in near future.
Introducing special corporate scheme:

 UCBL has introduced special corporate schemes for the corporate customers or
officers who have an income level higher from the service holders. At the same
time, it has also introduced schemes or loans for various service holders and the
schemes are separated according to the professions, such as doctors loan.
Product line proliferation:
UCBL has expanded its product line to enhance its sustainable competitive
advantage i.e. Mobile Banking Service under the brand name UCash on 23
November, 2013.
High Saving Rate (Karwanbazar)
As I have observed, number of savings account & FDR in this branch is very high
through which it can be implied that this bank can invest more in different areas
which is definitely an opportunity of UCB.
New endeavors in 2014:
UCB has drawn a business plan which will exploit the increased globalization in
banking Sector. UCB will open a Representative office in Singapore with the
ultimate objective of establishing a fund management company to create an
apparatus through which foreign funds may flow into the Bangladeshi economy. It
will also establish an Exchange House in Malaysia for the inflow of remittance to
Bangladesh.

2.7.4. THREATS OF UCB:

Upcoming Banks/Branches of Existing Banks:
In 2013, 9 new commercial banks have launched and existing banks are opening
new branches often which pose serious threats to the existing banking network of
UCBL.
Similar products are offered by other banks
Now-a-days different foreign and private banks are also offering similar type of
products with an almost similar profit margin. So, if all competitors fight with the
same weapon, the natural result is declining profit.
Default Loans
The problem of non-performing loans or default loans is very minimum or
insignificant. However, this problem may rise in the future thus UCBL has to

remain vigilant about this problem so that proactive strategies are taken to
minimize this problem.

3.

FINDINGS:
While working at United Commercial Bank, Bashundhara Branch, I have attainted

to the newer kind of experience. After the collecting and analyzing of data I have got
some findings. Those findings are completely from my personal point of view. Those
are:

Branch Manager Conscious efforts to achieve the targets and knows how to

motivate employees and how to represent the Bank well in the local community.
The employees of the bank are young, energetic, co-operative and friendly. Their
dealings with the clients are co-operative and friendly which create positive

perception about the bank in the clients mind.

The credit analysts have a strong background in accounting financial statement
analysis, business law and economics along with good negotiating skills. This

lessens the possibility of bad debt.

There is no provision of trend analysis in the existing proposal format of UCB.
Trend analysis has to be included. Because trend analysis is an analysis of a firms
financial ratios over time used to determine the improvement or deteriorate in its
financial situation. Trend analysis provides information about whether the firms
financial position is more likely to improve or deteriorate in the future. Trend
analysis is done by changing the percentage and comparing the current year with
the previous years. UCB, at present does not do trend analysis. Therefore to
understand the improvement or deterioration of the financial condition UCB

should introduce trend analysis.

The loans and deposits of this bank are rising at an impressive rate.
The working environment of the office is very nice.
The bank provided online banking in all branches .The operations of the Bank are

computer oriented to ensure prompt and efficient services to the customers.

In UCBL, customers can open DPS within the first ten days of a month.

The web-site of UCBL is not updated. Only a few amount of information are

given.
United Commercial Bank Limited should properly advertise and Communicate to

public about the services provided by it. So that, more customers will be attracted.
Credit scoring is the way to find out how much cash will be generated by the firm.
There are two kinds of credit score: one is Z score and the other is Y score. Z
score should be applied to the manufacturing companies and Y-score should be
applied to all trading companies. In UCB, the Head Office does the credit scoring.
If credit scoring is done in branch then the financial analysis will be more reliable

and transparent.
In view of the potential UCB is focusing on expansion of Retail Loans/consumer
Credit during last couple of years. The growth rate of business has rapidly
increasing. A number of products were developed and existing products were relaunched with better pricing structure and repayment period, which have received
good response. In order to give easy access to products and to give best possible
services at the doorstep of existing and potential customers, the Bank introduced
direct selling services. The objective of the facilities is to increase the buying
power of the middle class people, which ultimately leads to increasing the
standard of living of the people of Bangladesh.


4. RECOMMENDATION:
In credit management, it is conventional that proposals of credit facilities must be
supported by a complete analysis of the proposed credit. More importance should be
given on refund of loans out of funds generated by the borrower from their business
activities instead of realization of money by disposing of the securities held against
the advances, which is very much uncertain in present context of Bangladesh where a
large numbers of creditors are willful borrowers because of default credit culture.
The credit officer of the branch who deals with respective credit disbursement
should accurately measure the risk associated with the credit facilities. He should
properly evaluate the viability of the project as well as choose the proper client for
credit facility. The credit analysis should covers the selection of right borrowers,
credit purposes, viability of the project, loan repayment capacity, right and secured
collateral, proper documentation etc. The Branch should improve the file management
system to faster the dealings with the clients proposal.

UCBL Kawran Bazar branch is one of the very busy branches of UCBL. But
the space of that branch is too short to do its activities properly. So I think it
should enlarge the branch space to accomplish its work effectively.
Using the five-force model the client must be appraised to identify types of
competition it would face and how strong each of the competitive forces are on
the business of the client where the following things must be highlighted.

The rivalry among the competitor.

The potential entry of new competitors in terms of economies of scale,

technological know-how, Experience curve effect, resources requirements, access
to the distribution network.

Bargaining power of the buyer.

Suppliers influences and bargaining power over the business of the client.

Potentiality of the substitute products.

 Product Comparison should be done between competitors in terms of

Characteristic, Price, Packaging, Ingredients, and Unique Selling Proposition (in
case of service analysis).
The management of UCB may invest in interest sensitive asset by taking deposit
of short term and lend for long to reduce maturity gap between its interest rate
sensitive assets and interest rate sensitive liabilities.
Proper communication regarding the products and services of the bank should be
enforced. As a result confusions will be minimized and customer satisfaction will
enhance.
UCB should actively manage the complaints of various customers and encourage
customers to give feedback about the services. The management should collect
document complaints, use that information to identify dissatisfied customers,
correct individual problems where possible and identify common service failure
points. Research showed that this strategy would radically improve the overall
customer satisfaction.
The Bank should focus more on existing customers in order to build strong and
loyal relationship with them as most satisfied customers recommends the bank to
friends and relatives. Thus the power of relationship will foster positive Word of
Mouth Communication and will attract new customers at a lower cost.
Employee training and workshops should be administered in order to give them
knowledge and professionalism in customer interactions. With a more professional
base, employees can better satisfy the customers. They should be taught about
how to deal with problem customers and problematic situations.
The scope of credit diversification is limited due to shortage of specialist
manpower in relevant fields. It is recommended that the UCB authorities consider
the deployment of technical manpower in various fields, particularly in the fields
of computer software, diagnostic centers etc. in order to diversify the credit areas
and increase the credit volume of UCB.

CONCLUSION:

 Private commercial banks are playing a vital role in the development of our
economy. Government and Bangladesh Bank also play a crucial role in banking
sector by regulating the overall banking systems and setting rules and regulation
in the activities of commercial banks. In recent years of banking sector, UCBL has
shown better performance comparing with other first generation banking.
UCB limited is well positioned to meet the challenges of 2012 and will continue
to strive to innovate and capture opportunity for growth and value creation. The
Bank will focus on its large customer base to generate more business from
existing customers. This strategy is supported by wide spectrum of product and
services and level of customer service delivery. The Bank will continue to harness
the potential of Retail, Credit Card and Remittance market. However, continued
pressure on interest margins, fees, exchange earnings and increased provision
requirement for Retail, Credit Card will pose a challenge to the financial
institutions during 2012 also. In its pursuit for growth, the Bank will always
adhere to good corporate governance and practices and sound risk management
policies and strict credit evaluation procedure.
It was great pleaser for me to do my internship program in reputed organization
like UCBL. The three months of practical orientation helps me to provide a wide
range of scope to observe the operations of bank. Overall the bank must make
appositive attempt to be more outward looking in their goals and aware of what is
happening. I hope, in spite of all my limitation the experience of sharing works in
such environment will help me a lot in my future professional life. I wish
continuous success and healthy business portfolio of UCBL Kawan Bazar Branch,
Dhaka.

REFERENCES:

1.

Dr. Khan, A.R. (2003) Bank Fund Management, 5th Edition, Puni Traders.

2.

Foster, George(2002) Financial Statement Analysis, Second Edition, Pearson

Education Asia.

3.

Aytar, G.S.(2001) Theory and Practice of Banking,

International Edition, Saxena Traders.
4. Peter A. Rose and Sylvia C. Hudgins, Bank Management and Financial
Services, McGraw- Hill
5. Different Instruction Circular Issued by United commercial Bank Head office.
6. Credit Manual, Foreign Exchange Manual, Issued by United commercial Bank
Head Office.
7. Stanley, B. b., & Geoffrey, A. H. (2008 - 2009). Foundation of Financial
Management. International: McGraw-Hill.
8. Brigham, E. F., & Gapenski, L. C. (1995). Intermediate Financial Management
(Fifth ed.). International: The Dryden Press.
9. Madura, J. (2008). Finencial Market and Institution. USA: Thomson SouthWestern.
10. Annual Report United commercial Bank Ltd, 2009, 2010, 2011, 2012 & 2013
11. Annual Report The City Bank Ltd, 2009, 2010, 2011, 2012, & 2013
12. . Annual Report Bank Asia, 2009, 2010, 2011, 2012, & 2013
13. Annual Report Brac Bank Ltd , 2009, 2010, 2011, 2012, & 2013

APPENDIX
Organogram of UCB


Managing Director (MD)
Deputy Managing Director (DMD)
Executive Vice President (EVP)
Senior Vice President (SVP)
First Vice President (FVP)
Vice President (VP)
First Assistance Vice President (FAVP)
Assistance Vice President (AVP)
Senior Executive Officer (SEO)
Executive Officer (EO)
Senior Officer
Management Trainee Officer
Officer
Junior officer