uttara bank

Introduction"A bank is an establishment which makes to individuals such advantage of money as may

be required and safely made and to which individuals entrust money when not needed by

them to use."......Kinlay

Banking system occupies an important place in a nation economy. A banking institution

is indispensable in a modern society. Banks safeguard money and valuables and provide

loans, credit, and payment services, such as checking accounts, money orders, and

cashier's checks. Banks also may offer investment and insurance products, which they

were once prohibited from selling. As a variety of models for cooperation and integration

among finance industries have emerged, some of the traditional distinctions between

banks, insurance companies, and securities firms have diminished. In spite of these

changes, banks continue to maintain and perform their primary role accepting deposits

and lending funds from these deposits.

The banking sector of Bangladesh is the largest service sector of Bangladesh. The growth

of this sector is emerging. Almost all the banks are improving year after year. But, the

growth of a bank depend mostly their general activities to its customers.

In the world of consumerism the business organization of the world strive for the

consumers satisfaction as a number one business strategy whatever may be the product of

the organization, either service or non service . Service is the product of the bank .There

is a saying that customer service starts right from the bank building .The guard at the door

is the first person represents the bank, receives a customer with wishes in smiling race.

Origin of the Report

This report has been prepared as a part of the internship which is an integral part of the BBA

program of Department of Business & Economics, Faculty of Business, Daffodil

International University, The prime objective of the report is to get practical exposure to

organizational environment as well as to understand the system and methodology adopted in

conducting day to day banking activities by The Uttara Bank Limited. Besides this, the report

has been composed to obtain some practical knowledge.

Specific Objectives:

To describe the products and services of Uttara Bank Ltd.

To describe the general banking activities of Uttara Bank Ltd.

To analyze the SWOT of Uttara Bank Ltd.

To describe the liquidity position of Uttara Bank Ltd.

To find out some problems of general banking activities and liquidity

management of Uttara Bank Ltd. at Ramna branch.

Methodology

Analyzing the quantitative and qualitative information collected through primary and

secondary source are used for preparing this report. It contains present and future facts,

figures and situation of UBL. Thus the methodology used for this paper may be expressed

as primarily through observation method. Through this method I have taken daily notes

on my diary about the ways employees work there and collected facts and figures through

informal sources of talking and discussing with the relevant people.

Secondary sources of my report were prospectus of UBL, various circulars, papers of the

bank, different public ants regarding products and services. I have also search web site of

UBL.

1) Primary Sources:

Employees of UBL

Customers of UBL

2) Secondary Sources:

Company's brochure & Annual report

Web-site

Organizational Part

1.1 History of Uttara Bank Limited

At first Uttara Bank Limited was established in 1964 named as an EASTERN BANKING

CORPORATION. After liberation war it was changed to Uttara Bank. In 1984 it issued its

share through stock exchange and named as Uttara Bank Limited. Uttara Bank is one of the

largest and oldest private sector commercial banks in Bangladesh with years of experience.

Adaptation of modern technology, both modern equipment and banking practice ensure

efficient service to their customers. Within 207 branches at home and 600 affiliates

worldwide create efficient networking and well capability. UTTARA Bank is serving both

clients and country. It stared its banking business through opening of import letters of credit

in favor of foreign suppliers on behalf of various import clients. After starting operation as a

commercial bank from November 1, 1985 on words, side by side with the traditional products

it also started providing all types of foreign exchange related services to its different

categories of clients. As such the establishment of a strong international division was felt

since the very inception of the bank. The division has been managing by executives and

officers who are well conversant with foreign exchange related operations so that branches

dealing in foreign exchange related transactions could get all the supports from the head

office, Besides giving international trade related support to the branches the division is also

responsible for proper maintenance of the nostrum accounts for investment of excess foreign

reserves.

1.2 Profile of the UBL

Name of the organization: Uttara Bank Limited

History: 1984, issued market share & named Uttara Bank Limited

Year of establishment: 1964, named Eastern Bank Corporation

Nature of organization: Private Commercial Bank.

Products: Banking Services.

Total employee: 3562

Customers: Business Enterprise and Individuals

Head office: Uttara Bank Bhaban,

90, Motijheel Commercial, Area, Dhaka, Bangladesh.

1.3 Mission of UBL

Establishing banking through the introduction of welfare oriented banking system and also

ensuring equity and justice in the field of all economic activities, achieving balanced growth

and equitable development through diversified investment operations, particularly in the

priority sectors and development areas of the country; encouraging socio economic uplift and

financial services to the lower income communities, particularly in the rural areas

We shall be the forefront of economic development by:

• Anticipating business needs for financing.

• Setting industry benchmarks of world class standard delivering customers

value through our comprehensive product range, customers service and all our

activities building an exciting team-based working environment that will

attract, develop and retain employers of exceptional ability who help celebrate

the success of our business, our customer and of national development.

• Maintaining the highest ethical standards and a community responsibility

worthy of a leading corporate citizen.

• Continuously improving productivity and profitability, and thereby enhancing

shareholder value.

• Creating and maintaining a set of efficient and hard working employees.

1.4 Vision of UBL

To be in the front of national development by providing all the customers inspirational

strength, dependable support and the most comprehensive range of business solution through

our team of professional that work passionately for everything .

The vision of the Uttara bank are given below

To establish and maintain modern banking technique to ensure the soundness and

development of financial system.

Try to encourage savings in the form of direct investments.

Be one of the best banks in Bangladesh.

To contribute to the socio-economic development of Bangladesh.

To establish relationship banking and improve service quality through development

of strategic marketing plan.

To ensure optimum utilization of all available resources.

1.5 Goal of the UBL

To share a significant portion of banking sectors by utilizing manpower and also state of

the art technology for maximizing the shareholders wealth.

• Long term goal:

- To maximize the wealth of the shareholders.

• Short term goal:

— To earn satisfactory rate of return on investment by providing wide

range of banking service.

1.6 Organogram of UBL

Managing Director (MD)

Additional Managing Director (AMD)

Deputy Managing Director(DMD)

Assistant Managing Director (AMD)

Consultant (Credit)

General Manager (GM)

Deputy General Manager (DGM)

Assistant General Manager (AGM)

Senior Principal Officer (SPO)

Principal Officer (PO)

1.7 The Organization Hierarchy

• Chairman Secretarial

• Managing Director's Secretariat

• Board Department

• Share Department

• MIS and Computer Department

• Establishment Department

• Stationary and Record Department

• Transport Department

1.7.1 Human Resources Department

• Personnel Department

• Test Key Department

• Disciplinary Department

1.7.2 Marketing Department

• Business Development Department

• Branch Department

• Engineering Department

• Public Relation Department

1.7.3 Credit Risk Management Division

• Credit Approval Department

• Credit Admin &Monitoring Department

• Credit Marketing Department

• Credit Recovery Department

1.7.4 Central Account Department

• Account Department

• Reconciliation Department

1.7.5 Internal Control and Compliance Division:

o Audit and Inspection Division

o Monitoring Department

o Compliance Department

1.7.6 International Division:

Treasury Division

1.8 Map of Bangladesh showing the different branches

1.9 Overall Function of UBL

Figure: Basic Banking Function

This is a picture of a commercial bank. It creates surplus deposits by giving low

interest and provides loans, taking comparatively high interest. The differentiable

interest rates between these two activities are the earnings of commercial banks.

1. Accepting Deposit

Current deposit

Fixed deposit

Saving deposit

2. Lending money

Overdraft

Loan Account

3. Agency service:

Collection of bill

Correspondence and representative

4. General utility services:

Issue of letters of credit

Travelers cheques

Accepting valuable for safe custody

Surplus

Group

Commercial Bank

Deficitgroup

Products of Uttara Bank Limited

Before discussion about products of Uttara Bank, we have to understand what bank's

products are. Bank is a service oriented industry and deals with various financial products

and services for financial gains.

Financial products and services products that a bank offers to its customers are mainly

classified as under:

• Deposit Products to generate funds.

• Lending products for financial gains

• Money Transmission products

• International business products

• Special fee earning services

• Social services products

Products that are marketing by Uttara Bank are as under

Deposit Products:

Deposit is the lifeblood of a bank. From the history and origin of the banking system we

know that deposit collection is the main function of a bank.

Accepting Deposits:

Procedures of collecting deposit procedure are almost same in the entire, bank and the

branches as well. The deposits that are accepted by Uttara BANK like other banks may be

classified into:

• Current Deposit

• Short term deposit

• Saving Deposit

• Fixed deposit

• Special Saving Scheme Deposit (SSS)

Lending Products

Bank has its own principle about the credit sanction or loan to the customers, but

lending product of a bank or of a branch is equally important to verify the

performance at the end of any fiscal year. Every bank pays special attention about

their lending products, because these products are handed over on a regular basis.

- Continuous Loan:

A) Secured Overdraft against Financial Obligation {SOD (FO)}

Advances allowed to individual /firms against financial obligation (i.e. lien of

FDR/PSP/BSP/Insurance Policy etc.) and against assignment of works order for

execution of contractual works fall under this head. It is a continuous advance facility.

By this agreement, the banker allows his customer to overdraft his current account up

to his credit limits sanctioned by the bank. The interest is charged on the amount,

which he withdraws, not on the sanctioned amount. Uttara BANK sanctions SOD

against different security.

B) Secured Overdraft against Work order/Real Estate etc [SOD (G)}

Advances allowed against assignment of work order or execution of contractual works

falls I under this head. This advance is generally allowed for a definite period and

specific / purpose i.e. it is not a continuous credit. It falls under the category "Others".

C) Cash Credit (Hypothecation): Advances allowed to individual /firm for trading

as well as wholesale purpose or to industries to meet up the working capital

requirements against hypothecation of goods as primary security fall under this type

of lending. It is a continuous credit. It is allowed under the category

• "Commercial Lending" when the customer is other than a industry' and

• Working Capital when the customer is an industry.

D) Cash Credit (Pledge)

Financial accommodation to individual / firm for trading as well as sole- sale purpose or

to industries as working capital against pledge of goods as primary security fall under this

head of advance. It is also a continuous credit and like the above allowed under the

categories

• "Commercial Lending" and• "Working Capital".

E) Export Cash Credit (ECC)

Financial accommodation allowed to a party for export of goods falls under this head

and is categorized as "Export Credit," The advances must be liquidated out of export

proceeds within 180 days.

- Demand Loan:

Demand Loan Definition

Time Period Demand Loan

Demand Loan Type

Assign percentage

(Forced LIM, BLC,

PAD, IBP etc).

Overdue period will

be accounted from

the day following

the date of expiry of

such loan.

Less than 6 months Unclassified 1%

6 months or more but

less than 9 months

Sub-standard 20%

9 months or more but

less than 12 months

Doubtful 50%

More than 12 months Bad/loss 100%

Table 1: Demand Loan

A) General Loan

Short term, Medium term & Long terra loans allowed to individual /firm /industries

for a specific purpose but for a definite period and generally repayable by installments

fall under this head. These types of lending are mainly allowed to accommodate

financing under the category (a) Large & Medium Scale industry and (b) Small &

Cottage Industry. Very term financing for (a) Agriculture & (b) Others are also

included here.

B) Demand Loan against Ship breaking

This type of loans does not exercise in this branch, but being exercised to another

branch that provide advances against ship breaking.

C) Payment against Documents (PAD)

Payment made the bank against lodgment of shipping documents of goods imported

through L.C. falls under this head. It is an interim advance connected with import

and is generally liquidated shortly against payments usually made by the party for

retirement of the documents for release of imported goods from the customs authority.

It falls under the category "Commercial Lending"

D) Loan against Imported Merchandise (LIM)

Advances allowed for retirement of shipping documents and release of goods

imported through L.C. taking effective control over the goods by pledge in brokerage

house under bank's lock & key fall under this type of advance. This is also a

temporary advance connected with import which is known as post-import finance and

falls under the category "Commercial Lending."

E) Loan against Trust Receipt (LTR)

Advance allowed for retirement of shipping documents and release of goods imported

through L.C. without effective control over the goods delivered to the customer falls under

this head. The goods are handed over to the importer under trust with the arrangement that

sale proceeds should be deposited to liquidate the advances within a given period. This is also

a temporary advance connected with import and known as post-import finance and falls under

the category "Commercial Lending".

F) Packing Credit

Advance allowed to a party against specific L.C/firm contract for processing/ packing

of goods to be exported falls under this head and is categorized as "Packing Credit."

The advances must be adjusted from proceeds of the relevant exports within 180 days.

G) Foreign Documentary Bills Purchased (FDBP)

Payment made to a customer through purchase/ negotiation of a foreign documentary bills

rails under this head. This temporary advance is adjustable from the proceeds of the

shipping/export documents. Its falls under the category "Export Credit"

H) Local Documentary Bills Purchased (LDBP/IDBP)

Payment made against documents representing sell of goods to local export oriented

industries which are deemed as exports and which are denominated in Local currency

Foreign currency falls under this head. The bill of exchange is held as the primary security.

This temporary liability is adjustable from the proceeds of the bills.

I) Festival Business Loan:

This type of loan is generally sanctioned depending on the occasion, more man two festival

business loans are generally sanctioned in an annum.

A) Project Loan

Uttara BANK offers different conventional credit/investment schemes and the Banking

products to their customers. So far loans and advances portfolio includes Project Finance in

the form of Term Loan, Real Estate Finance, Secured Overdraft against FDR, different

security certificates, working capital in the form of Cash Credit Hypothecation, Import Trade

Finance in the form of PAD/LIM/TR etc.

Uttara BANK considers the loans, which are sanctioned for more than one year as term loan.

Under this facility, an enterprise is financed from the starting to its finishing from installation

to its production

B) Transportation Loan

Considering the loans, which are sanctioned for the purpose of delivering the goods on to its

final destination, it's generally used in the form of inland exporting or back to back Later of

credit.

C) House Building Loan

Loans allowed to individual/ enterprise construction of house (residential or commercial)

fall under this of advance. The amount is repayable by monthly installments within a

specified period, advances are known as Loan House Building Loan.

D) Small Business Loan

Short term and long term loans allowed to individual/ firms / industries for a specific

purpose but a definite period and generally repayable by the installments fall under this

head. These types of lending are mainly allowed to accommodate financing under the

categories.

Small and Cottage Industries, Very often term financing for agriculture and others are

also included here.

E) Consumer Finance Loan

Uttara BANK keeping in mind the economic development and helping the fixed income

group in fulfilling their demand to upgrade the standard of living will continue before

consumer finance scheme for: Household appliances, Furniture & Fixture, Air

Conditioner, Fax Machine, motor cycle/Car, Cellular phone, and Other equipment.

F) Lease Finance

UBL to keep its contribution to the growth of national GDP, accelerate the total economic

development by infusing the fund in productive sector in more efficient and effective

way: diversity its portfolio and satisfy the customers need would go for lease finance for:

• Setting up of small and cottage industries/Projects, BMRE of existing projects

• Transports (roads/marine), Medical equipment/surgical/clinical/lab equipment/x-ray

machine etc, Construction equipment and other fixed assets of other productive and

service oriented ventures.

G) Personal Loan

To meet emergency financial requirement especially for medical treatment/surgical

operation, marriage, admission of children/ educational expenses, maternity the loan

facility may be extended.

3.1.1Money Transmission Product: Carrying cash money is troublesome and risky.

That's why money can be transferred from one place to another through banking channel.

This is called remittance. Remittances of funds are one of the most important aspects of

the Commercial Banks in rendering services to its customers.

• Payment order/security deposit receipt (PO/SDR): This term will be discussed in the

overall activities section under remittance department.

• Demand Draft (DD): This term will also been discussed in the overall activities section

under remittance department.

• Telegraphic Transfer (TT): This is also a common term that in the remittance section

as well..

• Travelers Cheque:

Issue of TC: TC is useful to travelers abroad. Customers can encase the TC in abroad

from the drawer bank. TC is alternative to holding cash and it provides better security

than holding cash in hand.

Buying Of TC: If any unused leaf of TC is surrendered, bank buys it from the customers.

All payments are made in local currency. Banks generally buy only those TC.

1.10 International Business Products:

In banks when we talk of international business products, we refer to the general

mechanism by which a bank converts currency of one country into that of another.

Foreign Exchange Department (FED) is the international department by which a bank or

an AD branch transects with other international bank or of a branch. Bangladesh Bank

issues license to scheduled banks to deal with foreign exchange. These banks are known

as Authorized Dealers. If the branch is authorized dealer in foreign exchange market it

can remit foreign exchange from local country to foreign countries by transacting their

international business products. So Uttara BANK, Principal branch is an authorized

dealer

• Letter of Credit (L/C)

• Back to back Letter of credit (BTB L/C)

• Buying and selling of foreign exchange

• Foreign demand draft (FDD):

• Foreign telegraphic transfer (FTT)

Outward remittance covers sales of foreign currency through issuing foreign T.T.

Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against

import bills retired.

1.11 Special Fee Earnings product:

Uttara Bank considers the special earning product to the different consumer, as it to play a

comprehensive role in financing the bank product. Among those following are some issues

relate to special fee earning product:

• Bank guarantee

• Foreign bank Guarantee (F.B/G)

• Underwriting

• Brokerage House and locker Service

• Issuances of Sanchaya Patra, Wages Earners Development Bond, National Investment

Bond, and Prize Bonds are some special earning fee product of Uttara bank.

1.12 Social Service Products:

Uttara Bank Consider and several service products by looking at the social point of view. At

this competitive edge, banking might have reached to preserve its market share and to

penetrate new market share through diversification of its product range. Following are the

services that are designed to provide for society:

• Sale of Lottery Tickets for collection of fund for social establishment.

• Collection of Zakat Fund.

• Collection of Haji Deposit.

Projected Part

Bank Account

Demand deposit Time deposit

Current saving Short term Fixed deposit

2. General Banking system of UTTARA Bank LimitedGeneral Banking is the starting point of all the banking operating. General Banking

department aids in taking deposits and simultaneously provides some ancillaries services. It

provides those customers who come frequently and those customers who come one time in

banking for enjoying ancillary services. In some general banking activities, there is no

relation between banker and customers who will take only one service form Bank. On the

other hand, there are some customers with who bank are doing its business frequently. It is

the department, which provides day-to-day services to the customers.

2.1 Concept of deposit:

Basically bank has two types of deposit, these are

Demand Deposit

Time Deposit

2.2 Demand Deposit

There two types of demand deposit accounts they are

1. Savings Account

2. Current Account

2.2.1 Savings Account

This deposit is primarily for small savers. The main objective of this account is to save

small savers' money. Hence there is restriction on withdrawal in a month. Heavy

withdrawals are permitted only against prior notice.

2.2.2 Current Account

It is purely a demand deposit account. There is no restriction of withdrawal of money

from this account. That is, the account holder can withdraw the deposited money for

several times even any day. The current account is most suitable for traders, merchants,

exporters, importers, who are business people.

For opening current account requires minimum deposit of TK 2000 along with

introductory reference. No interest is given against this account.

2.2.3 Time Deposit

There are mainly two types of time deposits, they are

• Short Term Deposit

• Fixed Deposit

2.3 Short Term Deposit

Short term deposit account opening procedure is similar to the saving account. The rate

of interest on this type of account is 4.5%per annum .interest rate varies on term of

deposit.

Duration Rate of interest

Tree months to less than six months 6.5%

Six months to less than lyear 6.75

One year to less than two years 7.0%

Two years 7.50%

2.4 Fixed Deposits

Many export bankers think that the fixed deposit receipt is not an account. It is merely a

deposit receipt. It is popularly known as time deposit. Because this deposit is not

repayable on demand but there is a withdrawal subject to period of notice. The

prospective fixed deposit holder is expected to fill up an application form prescribed for

the purpose, stating the amount and the period of deposit. The application contains the

rules and regulations of the deposit including the space specimen signatures

• Any Bangladeshi national residing home or abroad may open FDR with UBL.

• FDR may be opened in single/joint name for a period of 3, 6, 12,24 and 36 month

• UBL offers attractive rate of interest in FDR.

Chart of Interest Rates on Deposits

Particulars Rate of Interest

Interest rate on deposit:

1) Savings deposits

2) Special notice deposit.

5.50%

6.50%

Fixed deposit (Time deposit)

1) 3 months

2) 6 months

3) 1 year

4) 2 year and above

5) 3 years.

7.00%

7.50%

8.00%

8.25%

8.25%

2.5 Monthly Deposit Scheme

a) Any adult Bangladeshi National is eligible to open this account.

b) The period of the scheme will be 5 (five) years' and 10 (ten) years' term.

c) Monthly installment will be Tk.500/-, 1000/-, 2000/-, 3000/-, 5000/- & 10000/-

d) Monthly installment to be deposited within the first 10 days of the month.

After the due date a penalty of Tk.50/- will be realized from the A/C holder. If the

A/C holder fails to deposit 3(three) consecutive monthly Installments, the account

will be automatically closed.

e) No cheque book will be issued against the account.

f) Deposit may be enchased before maturity. But no interest will be paid if

enchased before one year of deposit.

g) Interest will be paid at Savings rate if enchased after l(one) year of Deposit, h)

Advance will be allowed up to 80% of the deposit after completion of one year, .i)

Account holder can appoint a nominee against the account.

j) Bank reserves the right to close the account at any time and make amendment /

alteration of the terms & conditions of the scheme without assigning any reason.

k) Govt. tax, Surcharge, Source Tax, Levy, Govt. Excise duty will be deducted from the

depositor's A/C.

2.6 Account Openings

Bank receives and pays through an account. After opening an account clients can deposit

on a specific rate and can disburse money within specific time duration. So account

opening is a fundamental important thing.

2.6.1 Opening of a Saving Account

• Any Bangladeshi national residing home or abroad may open savings account with

UBL

• The account may be opened in single /joint name

• The account holder may nominate his/her nominee for his/her account

• The nominee can get the balance amount without submitting succession certificate

after the death of that account holder

Feature

Minimum amount: TK 1000

• Rate of interest :6%

• l%above the normal rate of interest on credit balance of Tk 2.001acs and above can

be kept in the savings account for more than 6 month

• Opportunity to apply for safe deposit locker

• Collect foreign remittance in both T.C and Taka draft

• Transfer fund from one branch to another o Demand draft

o Mail transfer

o Telegraphic transfer

Transfer of fund on standing instruction arrangement

• Collection of cheques through clearing house

• Issuance of payment order /call deposit

^ Required documents

\

• Account opening form as per format. The account opening form and signature card to

be filled in and duly signed.

• Two copies passport size photographs of the account holder.

• Photograph of nominee.

• Photocopy of the first 7 pages of the passport for nonresident Bangladeshi national.

• Signature in the account opening form /card must be same with the signature of the

passport.

2.6.2 NON RESIDENT FOREIGN CURRENCY DEPOSIT ACCOUNT (NFCD)

• All non resident Bangladeshi nationals including those having dual nationality

ordinarily residing abroad may open this account with any branch of UBL.

• The NFCD account may be opened in single /joint name for period of 1,3,6,12 months

• This account may be maintained as long as account holders desires

• On the maturity, the account holder can encase it into locals' currency or can transfer

the amount including accrued interest anywhere he/she likes.

• The account offers attractive interest payable in foreign and tax free.

• The account with accrued interest can be renewed either of the instruction of the

account holder or be renewed automatically if there is instruction otherwise.

• No interest is given on premature encashment.

2.7 Resident Foreign Currency Deposit Account

• Persons ordinarily resident in Bangladesh may open and maintain RFCD Account

with foreign currency at the time of his /her return from abroad.

• Any amount brought in with declaration to customs authorities in the form FMJ and

up to US$ 5000 brought in without any declaration can be deposited in this account.

• Balance in this account can be freely transferred abroad.

• Funds from this account may also be issued to the account holder for the purpose of

his foreign travels in the usual manner.

• Interest in foreign currency is paid in this account if the deposits are for a term of not

less than one month and the balance is not less than US$ 1000 or GBP 500 or its

equivalent.

2.8 Clearing

Clearing means settlement but from banking point of view it refers to the procedure of

receipt and payment of proceeds of cheque and other instruments through banks. Clearing

house is a place where the representatives of all members bank meet together and settle

mutual obligation of banks arising out of cheques and other instruments drawn on one

bank and deposited with another bank for collection, under a special arrangement. The

characteristic of the clearing house is that at the time of coming to this place the

representatives of every bank brings with him/her all cheque etc, drawn on other banks

along with schedules and delivers the cheques etc drawn on his/her bank and on the basis

of cheque etc . Delivered and received the mutual obligations between bank are

ascertained and settled through their respective bank accounts maintained with the central

bank or any other bank which conducts the clearing house.

2.8.1 Types of Clearing:

There are two types of clearing, such as internal and inter branch clearing and inter bank

clearing. Under the first type all branch of the same bank situated in a particular city settle

their mutual obligations through the main branch of the bank. In some banks the term

"transfer delivery" is used to mean internal clearing. In the other case, in one city the

obligations between all banks are settled. In this case Bangladesh bank or sonali bank

performs the function of the clearing house.

2.9 Cash and Others

2.9.1 Procedure of cash receipts:

»«* While receiving cash the receiving cashier should see that the paying in slip has

been properly filled in. *J* The paying in slip doesn't bear the name of another branch or

the customer has

not mentioned the name of another branch. * The title and number of account have been

mentioned on the paying in slip and

the counterfoil.

•*» The amounts in the words and in the figure are the same.

*** The particulars and amount on the pay in slip and the counter foil are same.

«J« The cashier should receive money, count it and mention the denomination of on

the back of the paying in slip and see that the total tallies with the amount of the

paying slip. <» He should count the currency notes again and verify the amount which is

mentioned on the paying slip. <* He should enter the particulars as to the name of the

party, account number and

amount in to receipt register. »J* He should then hand over the paying in slip and the

receipt register to the

authorized person, officer in charge /head cashier. <» He should sign on the both the parts

of the paying in slip i.e. voucher and

counterfoil. •J* For the amount received on account of commission, telegram and postal

charge

where no separate voucher is passed he should maintain record in separate book

or enter the same in receipt register immediately. He should prepare relevant

vouchers and hand over the same to authorized person for affixing the cash

received stamp and obtain the counter signature from the officer. *»* After the close of

business hours, he should balance the cash receipts from the

register and should keep the cash ready for checking by authorized person.

2.9.2 Procedure of Cash Payments:

*»* The payment cashier first sees the cheque the amount in the words and in the

figure and point both are the same. <» Then he should request the presenter of the cheque

to sign on the back of the

cheque <« The cashier sees the signature of the ledger keeper and in case of big amount

the

signature of the officer and the manager are there on the cheque as token of

having posted as a supervised the cheque. <» If the cheque is payable to the order of

payee, the payee or endorsee has been

properly identified.

Then he should take out cash and call out name of the party and ask him about the amount

of the cheque and his token number. If the amount stated by the party differs from the

cheque amount, he should tally the token number; if the token number is same and the

amount differs he should report the mater to the officer in charges or manager. «> He

obtains another signature of the party on the back of the cheque. Then he

compared the second signature with on first one already on it. * He ask the amount of

cheque and count the cash for the second time before making

payment .When satisfied in all respect he makes the payment. <* He should affix the

CASH PAID stamp bearing the date of payment. *«* He put the full signature under the

cash paid stamp. •J* He enters the particulars of the cash payment in his/her payment

register.

2.10 Bank Guarantee

A contract of guarantee has been defined under section 126 of the contract Act as "a

contract of performing a promise or discharging the liability of a third party incase of

his/her default. The person giving the guarantee is called "security" and the person on

whose account the guarantee is given is called the "principle debtor" and the beneficiary

of the guarantee is called the "creditor".

Meaning

Issuance of a bank guarantee on behalf of the client's is a common banking service

rendered by a commercial bank. Guarantees are expressed commitment to make a good of

any financial loss the beneficiary of the guarantee may sustain when the party named in

the guarantee on whose account i.e. the principal debtor, guarantee is issued, fails to

perform the contract and or discharge his /her obligation under the guarantee. In this

situation to give financial help it is the responsibility of the bank to pay the money to the

beneficiary or creditor of the guarantee according to the agreement.

Purposes

In keeping with the ever increasing business need of its client's bank may be required to

issue guarantee against advance payment, in the shape of bid bonds, performance bond,

investment bank and guarantee and the like.

2.10.1 Classification

It may be three types

• For payment of the creditor or the principal debtor by the guarantor.

• For payment of price of goods sold.

• Fidelity guarantees i.e. to discharge liability of a person for good conduct of a service

holder.

Precaution

Before the issuance, the sample of the guarantee should be thoroughly examined to

identify the problem. The extent of the liability should be clearly defined. It also should

be ascertained before issuance of the guarantee whether the client would need further

credit facility to enable him/her to discharge his/her obligation under the proposed

guarantee. Possibilities of such eventuality should be examined very carefully before

issuing guarantee.

Duration

Normally bank issues guarantee for a period not exceeding one year at different

percentages of margin and security determined on the basis to the banker -customer

relationship and the nature of liability undertaken may be issued basis on the security

aspect.

2.11 How to guarantee is revoked

• By notice for revocation -will be effective only for the transaction after receipt of the

receipt of the notice, but not for the transaction already entered into before receipt of notice.

• Death of surety - automatically revoked for future transaction after death

• After surety's liability is discharged.

When surety is discharged

• Notice for revocation -for future transaction only.

• Death of surety - for future transaction only.

• Variation in the contract - if done without surety's consent.

• Release or discharge of the principal debtor

Application

When customers are interested to take the guarantee the manager should ask for submission

of the following papers

• A written request specifying the purpose , amount ,period, and the security offered with

supporting papers.

• The details of the security other than cash margin

• Specimen of the guarantee, incase a prescribed specimen doesn't exist, a specimen may

be drafted to suit the requirement incorporating the amount, tenor and purpose with bank's

obligation

2.12 Bangladesh Bank Rule

As per directive of central bank, enforce, besides margin fixed on the basis of banker -

customer relation, the uncovered portion of the guarantee is to be got covered by readily

realizable security

2.13 SWOT AnalysisStrength

• Wide network through out the countries present 211 branches are operating

• Good relation with wage earners which supports their currency payment

• Their training institute is very helpful for the employees

• Good position of UBL in banking sector of Bangladesh

• Well reputed directors In this bank

Weakness

• Backward in using technology

• So many areas in our country are still out of their network

• Reluctance to promotion and advertisement campaign

• Banking service is very lengthy and traditional basis

Opportunity

Scope of banking operation is widening day by day

There are many small and medium enterprise in our country they need loan .some

of them are taking help from other private commercial bank and UBL has a

prospect on that group

There are more opportunities in rural areas to develop agriculture

Huge potential in village for micro credit

The UBL can create new schemes for many other segments of people in our

country like people living on hill tracks.

Threat

More than 52 private banks in Bangladesh.

Different types of business recession and default of risk may affect profit of UBL

Many higher technologies for banking sector have been developed but UBL has

not adopted them yet.

Many multinational bank are providing online banking and modern banking

services

Customers are not much satisfied about the services of UBL comparing others

new banking.

CHAPTER 3: ANALYSIS & INTERPRETATION OF DATA

LIQUIDITY INDICATOR RATIO:

3.1.1 Cash position indicator:

Cash position indicator =

Cash + Deposit

Total assets

Table 3.1.1: Statement of (cash + deposits) and Total assets of UBL during the

period of 2005 to 2008

Year Cash - Deposit (I) Total Assets (II) Cash position

Indicators - (I)/(II)

2006 39480064920 42,062,201,299 93.86%

2007 42483720519 45,217,006,469 93.96%

2008 48588917912 52,860,332,730 91.92%

2009 55071561747 58,444,332,118 94.23%

(Source: Annual Report of UBL during the period 2005 to 2008)

Interpretation;

• The cash position indicator of UBL for the period 2006 to 2009 implies that from

2006 to 2007 the bank had a greater proportion of cash, the ratio falls in 2008 and

again it increase in 2009. This is a good symptom for the bank's liquidity.

3.1.2 Liquid Securities Indicators:Liquid Securities indicators =

Government securities

Total Assets

Table 3.1.2: Statement of Government securities and Total assets of UBL during

the period of 2006 to 2009

Year Government

securities (I)

Total Assets (II) Liquid Securities

Indicators - (I)/(II)

2006 9995574557 42,062,201,299 23.76%

2007 9498487782 45,217,006,469 21.01%

2008 14381918295 52,860,332,730 27.21%

2009 11091865330 58,444,332,118 18.98%


Interpretation:

The liquid securities indicator ratio of the bank 2009 is low but in the other years

it's almost stable with its assets portfolio. The bank's liquidity position tends to be

fluctuating. Management should concern about this situation. As well as this

position is good.

3.1.3 Net Treasury Funds Position:

Balance of the reserve with BB Net treasury funds position~=

Total Assets

Table 3.1.3: Statement of Balance of the reserve with BB and Total assets of UBL

during the period of 2006 to 2009

Year Balance of the

reserve with BB (I)

Total Assets (II) Net Treasury Funds

Position = (I)/(II)

2006 2872265457 42,062,201,299 0.07

2007 2979567830 45,217,006,469 0.07

2008 3289497661 52,860,332,730 0.06

2009 4274548861 58,444,332,118 0.07


Interpretation:

• Net treasury funds positions during the period 2006, 2007 and 2009 are .07 but

these ratios indicate that in the year of 2008 is 0.6. The liquid security position is

stable.

3.1.4: Short Term Deposits to Assets Ratio:

Short term deposit to assets ratio =

Short term deposit

Total Assets

3.1.4: statement of short term deposits and total assets of UBL during the period of

2006 to 2009.

Year Short Term

Deposit(I)

Total Assets (II) STD to assets ratio =

(I)/(H)

2006 3654944435 42,062,201,299 0.09

2007 4045574813 45,217,006,469 0.09

2008 4909744900 52,860,332,730 0.09

2009 5866968573 58,444,332,118 0.10

(Source: Annual Report of UBL during the period 2006 to 2009) Interpretation;

The short term deposits to assets ratio indicate the liquidity demand than assets. As

the ratio is gradually increased now 2006 to 2009.

2 TreaSUly performanceanalysisBL for the year 2007 Particulars

G°vt. Other Bonds Treasury BillsF"nd Placement

& Debentures

Other

&2008

Incon,e(Tk. In Bill,' 1.19

.23 .09 .13 .08

Report of UBL, 2009)

"le treasury performance of th

Interpretation:

• The bank's main concentration is on investing in Govt. and other bonds which

is the earning and safe of all treasury operation.

• Treasury portfolio secondly, concentrates on treasury bills which is another

liquid investment.

Interpretation on overall liquidity position of Uttara Bank:

• Net result of the Liquidity Statement represents Shareholder's Equity of the

Bank.

• Two section's (up to 1 month & 3 to 12 months) total current assets are less

than total current liabilities. Traditionally most clients prefer entering into saving

bank deposits which are payable on demand but usually rolled over for the next

periods repeatedly. As a result these are particularly long term deposits & source

of long term fund.

3.4 PROFITABILITY RATIOS

3.4.1) Return on Equity (ROE):

Net profit/loss after tax

Return on Equity = __________________

Total equity capital

Table3.4.1: Statement of Net profit/loss after tax and Equity of UBL during

the period of 2006to 2009.

Year Net profit/loss after

tax (I)

Total Equity capital

(II)

ROE= (I)/(II)

2006 142,590,008 1,865,033,890 7.65%

2007 248,753,254 2,085,438,822 11.93%

2008 409,535,557 2,453,557,159 16.69%

2009 1,138,518,172 3,688,842,300 30.86%

(Source: Annual report of Uttara Bank Ltd. during the period 2006 to 2009)

Interpretation:

• Owner's equity of UBL is gradually increased in 2006 to 2009.

• Return on owner's equity increase in 30.86% in year 2009 from year 2006.

ROE trend of UBL is gradually increased. This indicator is shown that the

shareholders have benefited from investing their capital in the bank.

3.4.2) Return on assets (ROA):

Net profit/loss before Provision

Return on assets=-

Total Assets

Table2: Statement of Net profit/loss before provision and Equity of UBL

during the period of 2006to 2009.

Year Net profit/loss after

tax (I)

Total Assets (II) ROA= (I)/(II)

2006 142,590,008 42,062,201,299 3.84%

2007 248,753,254 45,217,006,469 2.84%

2008 409,535,557 52,860,332,730 2.77%

2009 1,138,518,172 58,444,332,118 3.94%


Interpretation:

• The returns on assets during the period 2006 to 2009 are 3.84%, 2.84%,

2.77%and 3.94%. In 2009 ROA in high but its gradually declining from 2006 to

2009. So the management of the bank are not efficiently utilized the proper use the

bank's assets into earning. But return have increased in 2009.

3.4.3) Net interest Margin (NIM):

Net interest Margin= Net interest income

Total assets

Table3.4.3: Statement of Net interest income and Total assets of UBL during


Year Net Interest

Income(I)

Total Assets (II) NIM= (I)/(II)

2006 523,118,063 42,062,201,299 1.24%

2007 985,207,837 45,217,006,469 2.18%

2008 1,121,081,427 52,860,332,730 2.12%

2009 1,883,766,884 58,444,332,118 3.22%


Interpretation;

• The net interest margin of the bank for the year shows that the bank kept the

growth of revenue efficiently ahead of arising cost in2008. The ratio is very poor

in 2006. It's a good comeback to the year of 2007 & 2009.

3.4.4) Net Non Interest Margin:

Non interest revenue- Non interest expense

Net Non Interest Margin=

Total Assets

Table3.4.4: Statement of Total Non interest Revenue and total expense and

Total assets of UBL during the period of 2006to 2009

Year Non interest

revenue-Non interest

Expense

Total Assets (II) Net Non Interest

margin^ (I)/(II)

2006 1,091,471,945 42,062,201,299 2.59%

2007 -1,396,394,535 45,217,006,469 -3.09%

2008 -1.677,679,817 52,860,332,730 -3.17%

2009 -1.807.336.918 58,444,332,118 -3.09%


Interpretation:

• The net non interest margin in 2006 is 2.59% but 2007 to 2009 its negative

value. Because of non interest revenue is less than non interest expenses.

Management should reduce this expense.

3.4.5) Net Bank Operating Margin:

Net Bank Operating Margin=-

(Total operating revenue-Total operating expense)

Total Assets

Table3.4.5: Statement of Total operating revenue and total expense and Total

assets of UBL during the period of 2006to 2009

Year Total operating

revenue- Total

operating Exp.(I)

Total Assets (II) Net bank operating

margin= (I)/(II)

2006 1.390.858.278 42,062,201,299 3.31%

2007 1,505.634.984 45,217,006,469 3.33%

20C8 1,466,235,557 52,860,332,730 2.77%

2009 2,200,328,528 58,444,332,118 3.76%


Interpretation:

• The net bank operating margin is satisfactory in 2006, 2007 and 2009 it was good.

But in2008 is lower than other years the bank management and staffs were

unconscious about revenue generation and cost was high.

3.4.6) Net Profit Margin:

Net profit after tax

Net Profit Marein=

Total operating revenue

Table3.4.6: Statement of Net profit after tax and Total operating revenue of

L'BL during the period of 2006to 2009

Year Net profit after tax

(I)

Total Operating

revenue

(II)

PM= (I)/(II)

1 :«6 142.590.008 2,787,252,813 5.12%

1 ~ 248. "55.254 2,678,297,789 9.29%

2008 409.535.557 3,143,915,374 13.03%

2009 1,138,518,172 4,007,665,446 28.41%


Interpretation:

• The Net Profit Margin is gradually increased in 2006 to 2009. In the year of

2009 it is very high. The management of the bank is efficiently operating the cost

in the year of 2009.

3.4.") Assets Utilization:

-ts Utilization^

Total Operating Revenue

Total Assets

Table 3.4.": Statement of Total operating revenue and Total assets of UBL


Year Total Operating

revenue

(D

Total Assets (II) AU= (I)/(II)

; :.~8".:5:.8i3 42,062,201,299 6.63%

: :i? 2.6-8.297.789 45,217,006,469 5.92%

:oo8 3,143,915,374 52,860,332,730 5.95%

2009 4,007,665,446 58,444,332,118 6.86%


Interpretation:

UBL utilized its assets in a good sequence during the year of 2006 to 2009 except

2007. It is good that the bank management is aware about their portfolio

management policies.

3.4.8) Equity Multiplier:

Equity Multiplier-

Total Assets

Equity Capital

Table 3.4.8: Statement of and Total assets and Total equity Capital of UBL


Year Total Assets (TD Total Equity capital

(II)

EM= (I)/(II) Times

42.062.201.299 1,865,033,890 22.55

2007 -5.21 -.006.469 2.085.438,822 21.68

2008 52.860.332,730 2,453,557,159 21.54

2009 58,444,332,118 3,688,842,300 15.84


Interpretation:

• The EM of UBL shows that it is gradually increase that in the year of 2006 to

2008 it is satisfactory. But on the year of 2009 Equity Multiplier is low. In the

overall situation is indeed a good management effect.

perating Efficiency Ratio:

Operating Efficiency Ratio=

Total Operating Expense

Total operating Revenue

Table 3.4.9: Statement of the Total operating expense and Total operating rev

enue of DBL during the period of 2006to 2009.

Year Total Operating Total Operating Operating

expense (I) revenue Efficiency Ratio=

(II) (I)/(II)

: 1,172.662.805 2.787.252,813 42.07%

: ' :.. ; 96.394.55 5 2,678.297,789 52.14%

2008 1.677.679,817 3,143,915,374 53.36%

2009 1,807,336,918 4,007,665,446 45.10%


Interpretation:

• The total operating efficiency ratio was fluctuating around the last four years.

May be the bank could not reduce their expense.

3.4.10) Earning Per Share:

Earning per Share

Net profit/loss after tax

No. of ordinary shares.

Table 3.4.10: Statement of the Net profit/loss after tax and Equity of UBL during


Net Profit loss After

Tax

Ordinary Shares

Outstanding(II)

EPS= (I)/(II)

.-1.590.008 998,324 142.8293901

- I-S. "55.25- 1.996.648 124.5854322

2008 409.555.557 7,986,592 51.27788636

2009 1.138.518,172 7,986,592 142.5536915


Interpretation:

EPS of the Uttara Bank Ltd. is fluctuating over the year of 2006 to 2009. In ear

2006 & 2009 almost same net profit after tax is increase side by side no. of

ordinary share is increased in 2006 to 2008. So the EPS is decreases. In the year

2008 & 2009 no .of Share is same and net profit after tax is increased more than

110°o so the EPS is increased 51.27 to 142.55. In the year of 2009 EPS is decrease

because bank issued new share in both DSE & CSE

55 I BL: Highlight on the overall activities of the Bank for the year 2008 and 2009

Particulars 2009 2008 Change in

Taka Taka %

Paid up Capital 1,597,318,400 798,659,200 100

Total Capital (Teir -1+II) 5,829,047,757 4,048,371,732 44

Capital surplus/(Deficit) 2,140,806,757 627,909,732 241

Total Assets 71,945,998,489 58,444,332,118 •23

Total Deposits 59,387,263,182 50,816,975,020 17

Total Loans & Advances 39,451,355,571 37,141,342,619 6

Total Contingent Liabilities 8,560,482,934 8,806,887,103 -3

Advance / Deposit Ratio (%) 66.43% 73.09% -9

Ratio of Classified Loan to total Loans & Advances (%) 7.20% 7.09% 2

Profit after tax & provision 1,105,226,569 1,138,518,172 -3

Amount of classified loan during the current year 1,038,900,000 618,600,000 68

Provision kept against classified loans 475,526,169 388,219,720 22

Provision surplus / (deficit) 20,443,169 108,051,720 -81

Cost of Fund (%) 4.94% 4.96% 0

Interest earning Assets 59,765,413,539 45,673,440,549 31

Interest non-earning Assets 20,741,067,883 12,770,891,569 62

Return on Investment (ROI) % 8.18% 7.02% 17

Return on Assets (ROA)% 1.54% 1.95% -21

Income from Investment 1,840,039,983 784,896,516 134

Earning per Share (Taka) 69.19 142.55 -51

Mei income per Share (Taka) 69.19 142.55 -51

Earning Ratio (Times) 20.96 23.81 -12

Net Assets value per share 388.58 230.94 68

CHAPTER 4: RESEARCH FINDINGS & ANALYSIS

4.1 ANALYSIS OF LIQUIDITY

From the previous analysis of liquidity indicators of Uttara Bank Ltd. for the last

four years, we comment that the overall liquidity position of UBL is satisfactory.

The cash position indicator was little bit volatile during the year of 2009. The

major liquidity indicators of net treasury fund ratio were decrease for the year.

Because of capital shortfall of the year. Other wise, it was almost stable. The short

term deposit indicator show that in the year 2009 it increased. This may be

influenced by the inflationary state of the economy.

4.2 ANALYSIS OF PROFITABILITY

The examined profitability ratio for the last four years presents a significant

outcome in different aspects of profitability. These are

• Return of Equity (ROE) has gradually increased for the last four years.

• In the year of 2006 & 2009Return on Assets are satisfactory but 2007&

2008 it fall.

• Net interest Margin (NIM) trend are good over the last four years. Net Non

Interest margin ratio are fall, may be due to the increase of expenses.

Operating Efficiency Ratio is good except 2009.

• Net Bank Operating Margin and Assets Utilization Ratio has almost a good

sequence of trend. This is for the proper utilization of bank assets and

revenue generation.

• Net Profit margin ratio has a good trend and it is gradually increased.

• Equity Multiplier (EM) is stable position in the year 2006 to 2008 but it is

little bit fluctuate for the year 2009may be the fault of management.

4.3 RECOMMENDATION

Based on the research and discussion with the officials of the Central Account

Division following recommendations can be taken under consideration:

• As Fund Management and Treasury division is the center point of liquidity

management. UBL should be more considerate and up to date about their

treasury operation.

• The bank should be cautious about their interest income, as it is the main

income source of a bank. Uttara Bank Ltd. also should mange interest

expenses and collect fee incomes, thus they can maintain consistency in

their profit.

• As one of the leading privatized commercial banks, Uttara Bank Ltd. can

also expand their asset portfolio to meet liquidity needs while seeking the

highest return from any assets acquired.

• UBL should carefully measure and control its exposure to risk so that losses

don't overwhelm income and equity capital.

• Another matter that UBL should carefully think is about their marketing

policy. Different banks are currently providing many promotional activities

in order to attract more clients to boost their profit. But Uttara Bank Ltd.

still follows the old and traditional way of attracting the customer. They are

not promoting what they are currently offering for clients while other banks

through intense promotional activity upholding their services to potential

business personnel and industries and therefore increasing their client's

number.

• Training facility should be enhanced in UBL to make its Treasury,

investment and profit projection officials more efficient and aware of the

latest aspect of liquidity management as well as profit maximization.

• UBL should launch different schemes and programs for client's retention

and should improve its counter service. UBL should also immediately take

measure to provide centrally integrated data based system so that proper

service can be made. Otherwise it will loose more clients to other banks.

• Uttara Bank limited is run manually so it takes more time to serve their

clients. Management should take online banking system policy.

• Most of the liquidity & profitability ratio is little bit fell in the year of 2009

May be it is the effect of the world recession. But Uttara Bank Ltd. is trying

to overcome these problems. And another thing is that, Uttara Bank is more

eager to maintain profitability for the customer demand.

CONCLUSION

Form the whole study regarding the analysis of Liquidity management of Uttara

Bank Limited: we can come to a conclusion that the overall situation of the

liquidity management of Uttara Bank limited is in a satisfactory level. But there

are little fluctuation in different indicators of liquidity and management. These ups

and downs are particularly not inefficiency of Uttara Bank limited, due to the

impact of global recession. As an oldest commercial bank Uttara Bank has a long

term reputation to deal with needs of customers. This helps it to retain the earning

efficiency for the years. A large number of commercial banks are already in the

market to acquire business. So as a reputed commercial bank Uttara Bank should

be up-to-date with the changing financial conditions & customer needs. Thus as an

individual financial institution it can be able to increase reserve as well as earning.

Reference:

1) Annual Report of UBL 2006-2009

2) Files and folders

3) Bank rate sheets

4) Websites

5) Different circulars sent by Bangladesh Bank

6) Some books on Banking