Intershi Report on Uttora Bank Ltd.
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Transcript of Intershi Report on Uttora Bank Ltd.
1.
Foreign Exchange Trading
Stamford University Bangladesh
Foreign Exchange Trading of Uttara Bank Limited
Internship Report On
Foreign Exchange TradingOf
“Uttara Bank Limited”
Submitted to: Sajeda AfrozLecturer(Internship supervisor)Department of Business Administration (Marketing)Stamford University Bangladesh
Submitted by: Sayed Sirajul IsalmBBA 03009614Batch no: 30(I) (A)Major: MarketingDepartment of Business Administration (Marketing)Stamford University Bangladesh
Date of submission…
Stamford University Bangladesh
Foreign Exchange Trading of Uttara Bank Limited
December 6, 2009
Sajeda Afroz
Lecturer (internship Supervisor)
Department of business administration
Stamford University Bangladesh.
Sub: Submission of internship report.
Dear Madam
I hereby submit the internship report on the topic “Foreign exchange trading of Uttara bank
Ltd” intended to fulfill the partial requirement of my BBA program.
It would be difficult to me to get the work done without your proper supervision &guideline.
Tried my best to work sincerely to cover all aspects regarding the matter. Though I faced some
limitation in preparing this report, I have thoroughly enjoyed in preparing this internship report,
which has contributed significantly to my understanding on the essentials and important practical
knowledge.
I therefore hope that the report will fulfill the requisite objectives that you wanted to get done by
me.
Sincerely yours
…………………………
Sayed Sirajul Islam
BBA 03009614
Batch: 30(I)
Major: Marketing
Department of Business Administration
Foreign Exchange Trading of Uttara Bank Limited
Stamford University Bangladesh
Student Declaration
I do hereby declare that this report entitled “Foreign exchange trading of Uttara bank Ltd” is
an original one and work done by myself in the fulfillment of Bachelor of Business
Administration of Stamford University Bangladesh as a part of academic curriculum.
………………………….
Sayed Sirajul Islam
BBA 03009614
Batch: 30(I)
Major: Marketing
Department of Business Administration
Stamford University Bangladesh
Foreign Exchange Trading of Uttara Bank Limited
certification
This is to certify that Sayed Sirajul Islam, student of Business administration (BBA) major in
Marketing of Stamford University Bangladesh has completed the internship report on “Foreign
exchange trading of Uttara bank Ltd”. I believe that he has completed this report by himself
while he has doing his internship in Uttara Bank ltd. This report is an authentic work on the
foresaid subject. No part of this report has been submitted by him for any degree, diploma, title
or recognition before.
He is permitted to submit the internship report & I wish him every success in life.
…………………………….
Sajeda Afroj
Lecturer
(Internship Supervisor)
Department of Business Administration
Stamford University Bangladesh.
Foreign Exchange Trading of Uttara Bank Limited
Head of Department’s Declaration
STAMFORD UNIVERSITY BANGLADESH
The internship report, entitled “Foreign exchange trading of Uttara bank Ltd”, submitted by
Sayed Sirajul Islam, ID No- BBA 03009614 Batch number 30( I ) is a student of the Department
Of Business Administration, Stamford University Bangladesh, has been accepted as satisfactory
for the partial fulfillment of the requirement for the degree of Bachelor of Business
Administration and approved its style, method and contents.
-----------------------------------------
(Mohammad Nazmul Huq)
Assistant Professor & Head of Marketing)
Department of Business Administration
Foreign Exchange Trading of Uttara Bank Limited
Stamford University Bangladesh
Preface
The field of banking has always been a source of inspiration for me during my entire academic
career. To work in a bank, to acquaint with its working mechanism was always a point of interest
for me and God gave me a golden opportunity to complete my internship at UBL, one of the
leading bank in Bangladesh. I had a general idea about the banking, but once I practically started
the internship in banking field I observed much about banking, I realized the importance and
significance of commercial banking for the development of economy. To adjust myself in such a
large commercial organization was not an easy task, but by the grace of Almighty Allah aid my
internship in a befitting manner and I learned a lo about the overall banking arena. This
expanded my vision about the banking sector, which in turn enabled me to make an appraisal of
the economic situation of our country.
This report is a thorough essence of my rigorous studies which I undergone
through in a period of three months in a commercial bank. I have exclusively
studied and observed the operations/ functioning of the bank and tried my best to
abreast myself with all the dimensions of the banks. The purpose of this report is
to evaluate the performance of UBL in diversified avenues and give concrete
recommendation for further improvement. Although the bank is functioning
satisfactory, but the path to ultimate success is still full of threats and hurdles.
It was a great experience to work there. I am thankful to all those who helped me in one-way or
the other and guided me n the preparation and compilation of this report in a presentable fashion
Foreign Exchange Trading of Uttara Bank Limited
ACKNOWLEDGEMENTInitially, I would like to thank the almighty Allah for giving me the strength to complete this
internship report. Then to say that I could not be able to complete this report without the help of
some honorable person who gives me proper guideline to go ahead.
First I like to express my deepest sense of gratitude to my honorable teacher & supervisor of my
internship program Sajada Afroz.
I am very much pleased to offer my thanks and gratitude to the HRD of Uttara bank Ltd. For
giving me the opportunity to work with the bank in its Jatrabari Branch. I would like to give
thanks to Tanvir Ahmed (2nd Officer), Bushra Mazid, Abdul Hamid, S M Rafiqul Islam of
Jatrabari Branch to help me throughout my internship program.
Very special thanks to Branch manage and Relationship Manager.
I also give a special thanks to all the personnel of Jatrabari Branch of Uttara bank ltd for
helping me to collect data.
Foreign Exchange Trading of Uttara Bank Limited
Executive summary
This internship report is a partial requirement for the Bachelor of Business Administration
program. The report is based on working experience on UTTARA Bank Ltd (UBL). I was
assigned in the Jatrabari Branch, Dhaka of Uttara Bank Ltd. This report gives a clear idea of the
activities, operation strategies and the performance of UTTARA BANK LTD.
There are several variable taken for analyses of the report which are number of letter of credit
opening, irrevocable letter of credit, commission on foreign exchange, volume of import, back-
to-back L / C, foreign documentary bills for purchase, export finance, volume of export, foreign
currency deposit etc, exchange gain, foreign remittance.
The data has been collected from primary and secondary source. Primary sources are group
discussion, practical work experience, case study. Secondary sources are DSE library, several
books and periodicals related to the banking sector, Bangladesh banks report, different circular
sent by the head office and Annual report of Uttara bank limited (UBL)
The report consists of six parts. The first part describes the introductory matters of a formal
report which includes objectives, methodology, limitations etc.
The second part gives a concise description of the organization. These include origin &
evaluation of Uttara bank limited.
Mr. Azharul Islam is the chairman of the bank. His progressive leadership and continuous
inspiration provided a boost for the bank in getting a foothold in the financial market of
Bangladesh. The bank was formally known as the Eastern Banking Corporation Limited which
started journey on and from 28/1/1965. Now with 211 branches it has created a strong network in
Bangladesh. Besides, to create a strong connection with the globe 600 affiliates are active to
support the bank.
Foreign Exchange Trading of Uttara Bank Limited
The third part of the report analyzes the theoretical aspects of Foreign Exchange Activates of
Uttara bank limited. There are three kinds of foreign exchange transaction –Export, Import and
Foreign remittance. Foreign exchange business starts with a letter of credit (L/C).This part I also
describes various terms used in foreign exchange business like back-to-back L/C, FOB,
understanding shipment, LIM, LTR etc.
According to export and import control act 1950 the officer of the chef controller of import and
export provides the registration (IRC) to the importer. After obtaining this, this person has to
secure a letter of credit authorization (LCA) from Bangladesh bank and then a person becomes a
qualified importer. He is the person who requests or instructs the opening bank to open and L/C.
He is also called opener or applicant of the credit.
UTTARA BANK LIMITED is an authorized dealer (AD) to operate foreign exchange
transaction. With the legal formalities the bank serves the customers with export, import &
remittance service. In the process of providing remittance service it sells and buys foreign
currency, the conversation of one currency to another takes place at an agreed rate of exchange,
which banker quote one for buying and another for selling. There are various types of income of
the bank in Foreign Exchange Sector.
The forth part of the report provides leanings through my internship and comparison between
textual works in school and in internship.
The fifth part is the analysis & findings of the report. The working environment of UTTARA
BANK LIMITED is very conductive and friendly. Although they don’t maintain strict
hierarchical protocol among the staffs the environment is much more relaxed and easy. The
staffs are specialized in their respective fields. Each of them works on their own and there is
close supervision from the top. The motivation of the employees comes from the very sense of
responsibility.
The sixth part ends up the report with complementary remarks & conclusion.
Foreign Exchange Trading of Uttara Bank Limited
With all analyses and judgment, I have tried to evaluate the performance of UTTARA BANK
LIMITED (UBL) in foreign exchange activities. I express my heartiest gratitude to all the parties
related to make the work done.
Contents
List of acronymsList of TableList of Graphical Presentation
1.1 Introduction1.2 Objective of the study1.3 Methodology of the study1.4 Scope & limitation of the study
2.1 Background of UBL2.2 Board of director2.3 Vision of UBL2.4 Mission of UBL2.5 Hierarchy of UBL2.6 Risk Management2.7 Product & service2.8 Bank operational area2.9 List of Branch2.10 Capital & reserve2.11 At a Glance Profitability Position of UBL2.12 Total Asset Position2.13 Shareholder equity position2.14 Historical performance of UBL2.15 About the department I worked
3.1.1 Import3.1.2 Export3.1.3 Foreign remittance
Foreign Exchange Trading of Uttara Bank Limited
3.1 Foreign Exchange Activities
Chapter three: Foreign Exchange Trading and Loan & Advance
Chapter Two: Overview of UBL
Chapter one: Orientation of the study
Particular Page no
3.1.4 Miscellaneous Services by this Department3.1.5 Risk in Foreign Exchange Business
4.1 Learning through my task
5.1 Analysis5.2 Finding & Discussion
5.2.1 Investment income position5.2.2 ROA5.2.3 Investment income as % of total deposit5.2.4 Cash as % of total assets5.2.5 Dividend as % of net income5.2.6 Return on investment5.2.7 Return on equity5.2.8 Price earning ratio5.2.9 Earning per share5.2.10 Market value per share
6.1 Recommendation6.2 Conclusion
Foreign Exchange Trading of Uttara Bank Limited
Chapter Four: Assessment of Internship
Chapter Five: Report Analysis & Findings
Chapter Six: Recommendation & Conclusion
Bibliography
Acronyms
Terms ElaborationAD Authorized DealerALCO Asset Liability CommitteeALCOM Asset Liability Management CommitteeBDT Bangladesh TakaBAS Bangladesh Accounting standardsBIBM Bangladesh Institute of Bank
ManagementCA Current AccountCRA Credit Rating AgencyCRM Credit Risk ManagementCRR Credit Reserve RequirementCRISL Credit Rating information & Service
Ltd FD Fixed DepositFDR Fixed deposit ReceiptsDDP Demand Draft PurchasedDPS Deposit Pension SchemeGD General DiaryHO Head OfficeIBCA Inter Branch Credit AdviceIBDA Inter Branch Debit AdviceIBP Inland Bill PurchaseID International divisionLO Local officeLC Letter of creditMGRM Money GramNBR National Board of RevenueNFCD Non Resident Foreign Currency Deposit
AccountPO Pay OrderRDS Return Dealing SystemRFCD Resident Foreign Currency Deposit
Account
Foreign Exchange Trading of Uttara Bank Limited
RM Relationship ManagerSB Saving AccountSTD Short Term DepositTT Telegraphic TransferUBL Uttara Bank Limited
List of Tables
Particular Page noBoard of DirectorDouble Benefit schemeMonthly Deposit SchemeHistorical PerformanceTransfer Scroll for TTParties to the L/CAccounting Procedure in case of L/C OpeningRemittance ProcessSector wise loans & advances positionLoans, Cash Credit and Over DraftBills Discounted and PurchasedNet loan & advanceMaturity grouping of loans & advancesLoans & advances on the basis of significant concentrationGeographical area basis loans & advances
Foreign Exchange Trading of Uttara Bank Limited
List of Graphical Presentation
Particular Page noCapital & Reserve FundAt a Glance Profitability Position of UBLTotal Assets position of UBLShareholder Equity PositionInsert paid on different accountImport businessExport businessForeign remittanceLoans & AdvancesSector wise loans & advances positionROAInvestment income as % of total deposit(2008)
Foreign Exchange Trading of Uttara Bank Limited
Chapter oneOrientation of the study
Foreign Exchange Trading of Uttara Bank Limited
Introduction of the topic
The necessity of foreign Exchange activities and Risk management can not be ignored in any
ways because of its dependency in the banking sector. It can be considered as the backbone of
any bank as it shows the ways to do all the banking tasks and it is actually the starting point of all
the banking operations. It provides the opportunity to its clients to deposit money and at the same
time attractive services are ensured as per the customer needs, wants and close accounts, mail
transfer, demand draft, receive Cheque for clearing etc. It also offers the customers to deposit
money for FDR (Fixed Deposit Receipts) with attractive interest rate at maturity. So, all the
operations are started from the Foreign Exchange activities and all of these are based on the
monetary transition. As a result, recording of all monetary transaction has become compulsory in
the modern business sector. Not only recording, but also it includes the process of
communicating, summarizing and explaining the economic events of a bank within a specific
period of time. So considering all of these reasons, I have chosen the “Identify and Evaluate
Foreign Exchange Trading and Risk Management of Uttara Bank Limited (UBL)” as my
internship topic. Where I will considerate on marketing practice and remittance program of UBL.
I strongly believe that any business graduate thought to have the basic understanding about
Foreign Exchange Trading and Risk Management as it can show the ways to enter in the new
business of its strong relation with all of the financial activities. In all of my internship report I
have tried of my best to provide almost all of the basic idea of Foreign Exchange activities and
Risk Management and basic accounting procures that’s practiced in all of the branches of UBL. I
have also concerned about the performance evaluation from different perspective.
Foreign Exchange Trading of Uttara Bank Limited
Objective of the Report
Broad Objectives:
The main objective of this report is to know about the Foreign Exchange activities and
evaluating the performance of the bank and also to find out the ultimate solution to solve all
of the problems that the bank is facing. That will cover mainly foreign remittance department
of UBL and some basic accounting practice of the Bank.
To make familiar with the terms what I have studied during BBA course.
To know about the banking sector in Bangladesh.
To get an overall idea about the management terms and operation strategy and the
limitation of a bank by going though the Uttara Bank Ltd.
To get the general idea about corporate level.
Specific Objectives:
To represent an overview of and foreign Exchange activities and basic accounting
practice.
To find out the difference of academic and real life accounting practice those are
practiced in the bank.
To know the tasks of different department of the bank.
To know how the bank is concerned about the changing environment.
To understand about day to day operations of the bank.
To realize how the customers are behaved in different situation.
To identify the usages of modern technology in different operation.
To identify how the bank is careful to segregate the duties & responsibilities of all
employees.
Foreign Exchange Trading of Uttara Bank Limited
To represent what types of analysis the bank undertakes for its financial events.
To know about the culture that the bank follows.
To find out where the bank was and where the bank is standing at present time.
To identify the main problems that the bank is facing.
To recommend on how the problems can be fixed.
To know the objectives and planning of a bank.
To be familiar with the banking sector.
To gather comprehensive practical knowledge on the total banking function.
Critically analyze the functions and the operation of each level of the Uttara Bank
Limited.
To fulfill the partial requirement of BBA degree.
To get the practical idea about what we learn during our course.
Create a chance to know the corporate culture.
To analyze the Islamic Banking situation and performance of Uttara Bank Ltd.
Foreign Exchange Trading of Uttara Bank Limited
Methodology of the Study
To meet the objectives of the study I have applied various qualitative & Quantitative techniques
like statistical tools & software and other relevant methods. Formal and oral discussion, direct
observation, questioning clients and printed papers of the bank were found useful.
Source of information
Primary Source:
The primary data were collected from Jatrabari Branch of ULB that was my working place for
last two months. During that time, interviews of the manager & different officials of different
departments were taken. Besides that various organizational procedures & structures were
observed & communication directly wit the customers was helpful, Primary data were mostly
gathered from the discussion with the employees & through surveys on customers of the
organization.
Secondary source:
Secondary sources of information have also been used for the research study that can be
presented like the following:
Internal Sources
● Annual Report of UBL
● Various publication of the bank
● Various circulars issued by head office
Foreign Exchange Trading of Uttara Bank Limited
● Any information regarding the Banking sector
External Sources
● Different books and periodicals related to the banking sector
● Stamford University library
● Magazines & newspapers
Foreign Exchange Trading of Uttara Bank Limited
Scope and Limitation of the report:
Uttara Bank Limited is one of the traditional banks of Bangladesh. The scope of the report
covers the organizational overview & structure, background, basic functions, transaction
procedure, customer dealings & performance of the bank. With a view to completing the whole
report, it was required to concentrate on the overall banking process. However, in this report, the
presentation of the basic functions & process of Foreign Exchange activities and Risk
Management with the basic accounting practice are focused that the bank is following and also
different analysis & comparison are showed to evaluate the performance of the bank. But to
complete all of these mentioned above, following limitations were present.
Enough time to concentrate on all of the investigations was required.
All sufficient data & information were not enough for the purpose of study & assumptions
were made in some cases.
The website of the Bank was not that much rich to collect data.
This report has been prepared on the activities of all branches, but visiting all the branches to
collect data & information was not possible.
Sometimes such kinds of asks were given in the Bank that was no way related to my topic &
really it was responsible to beak my concentration in my major area of investigation.
Foreign Exchange Trading of Uttara Bank Limited
Chapter TwoOverview of UBL
Background of Uttara Bank Limited
Uttara Bank formed in 1972 as a scheduled bank with assets and liabilities of the Eastern Banking Corporation set up in East Pakistan on 28 January 1965. It started banking business 22
Foreign Exchange Trading of Uttara Bank Limited
June 1965 and became a member of the Dhaka Clearing House on 17 September 1965. At the time of establishment, Eastern Banking Corporation had a paid up capital of Tk 1.42 million and deposit resources of about Tk 10 million. It was the only scheduled bank formed with capital raised entirely from the small income group of people of East Pakistan.
Eastern Banking Corporation was nationalized under the Bangladesh Banks Nationalization Order 1972 and its name was changed to Uttara Bank. At that time, the bank had 182 branches. The government retracted 95% of its share capital and allowed it to operate as a private bank. It was transformed into a limited company on 15 September 1983. On 31 December 2000, the authorized capital of the bank was Tk 200 million divided into 2 million ordinary shares of Tk 100 each. It’s issued and paid up capital was Tk 100 million, of which Tk 5 million is subscribed by the government. The bank is listed with both Dhaka and Chittagong Stock Exchanges.
The bank performs all traditional commercial banking functions. It renders agency services to the government in food procurement and collection of government revenue through the network of its branches all over the country. The total volume of foreign exchange business handled by the bank during 1998-99 amounted to Tk 16,600 million which comprised exports servicing Tk 4,450 million, imports financing Tk 10,560 million and remittances facilities Tk 1,590 million. The bank has correspondent relationships with 300 foreign banks/bank offices and exchange houses in 72 countries. With the objective of attracting the Bangladeshi wage earners abroad and the non-resident foreigners to invest in Bangladesh, the bank offered them the opportunity to open non-resident foreign currency deposit accounts and foreign currency current deposit accounts with it. Further, the bank floated Wage Earners' Development Bond and established Wage Earners Investment Cell. The bank has some other schemes to induce the wage earners to invest their savings in the securities market of the country.
The volume of deposits at the bank in 1972 was Tk 4.43 million of which Tk 2.44 million comprised demand deposits. Prior to privatizations in 1983, the deposits were Tk 21.81 million and their volume increased to Tk 24,730 million in December 2000? Total loans and advances including bills purchased and discounted amounted to Tk 2.34 million in 1972 and Tk 22,307 million in December 2000. The interest rate offered by the bank on the savings deposits in both rural and urban areas is 7.25%, while the lending rates charged by it on different sectors varied between 10% and 16.5%, the lowest being charged on export credits. The broad economic areas in which the bank provided lending and the total outstanding amount of advances to those areas up to June 1999 were (a) agriculture and fisheries Tk 26 million, (b) small and cottage, large and medium sized industry Tk 4,675 million, (c) retail/wholesale trade and hotels and restaurants Tk 2,202 million, (d) transport/communication and storage Tk 169 million, (e) special credit programmers including POVERTY alleviation Tk 134 million, (f) INSURANCE, real estate and business services Tk 5,523 million, and (g) others Tk 3,771 million.
In December 2000, the total assets including off-balance sheet items of the bank were valued at Tk 31,296.5 million. The quality of assets was severely deteriorated due to accumulation of a huge amount of non-performing loans. The bank's classified loans amounted to Tk 7,372 million in December 2000. The bank's investments in government securities, TREASURY BILLs, debentures and shares and other approved securities were Tk 108.5 million in 1972 and Tk 2,564 million in 1999. Up to December 1999, its loans to the government amounted to Tk 50 million.
Foreign Exchange Trading of Uttara Bank Limited
In addition, the bank lent Tk 115 million in 1999 in poverty alleviation projects and Tk 129 million in a special project called Uttara, the objective of which was to assist the customers with credit facility for buying consumer goods.
In 2000, the total and net income of the bank was Tk 3,060 million and Tk 1,040 million respectively. The bank's net interest income increased during the period from 1992 to 2000. But the increase in operating expenses arrested the growth of its net income. Also, the compulsory maintenance of provisions for classified loans from profit is responsible for slow growth of its net income.
The management of the bank is vested in a 15-member board of directors consisting of a chairman and 14 directors. The managing director is the chief executive assisted by a deputy managing director and 2 assistant managing directors. In 2001, the bank had 198 branches (150 urban and 48 rural) and the number of employees in all its branches 2,822 including 84 executives, 1,756 officers, 326 assistant officers, and 656 employees of non-officer grades. The bank's branch banking is supervised through its 12 zonal offices in different parts of the country.
Transportation:
In the year of 2007, total vehicles of the Bank were 98. The vehicles are being used to
transportation the Banks employees & to transfer money from feeding branches to other
branches.
Premises of Bank:
UBL has its own building of 18 stored that is using as head office located at Motijheel
Commercial Area of Dhaka city. Bank has also its own building in the following locations-
Local office,
Eastern Plaza branch,
Hotel Isakha branch,
Dar-us-salam road branch,
Lease financing unit in Eastern Tower Building,
Training institute of the Bank at Eastern plus ( 145, shantinagar), Dhaka,
Nabagram branch in Manikgonj,
Foreign Exchange Trading of Uttara Bank Limited
Zonal office and KDA branch in Khulna and Shaheb Bazar branch in Rajshahi,
SWIFT:
At present International Division of Head Office and 38 branches are under SWIFT operation.
As a result the bank has been able to transmit letter of credit, fund and message instantly
throughout the world at low cost.
Vision of the UBL
To be the most efficient bank of terms of customer service, profitability and technology application.
Foreign Exchange Trading of Uttara Bank Limited
Mission of the UBL
Cost reduction through integration of technology at all levels.
Continuous improvement in its business policies and procedures.
Goal:
On delivery of quality service of all areas of banking activities with the aim to add increased value to
shareholders investments and offer the highest possible benefits to the customers.
Objective
The main objective of Uttara Bank Ltd. Is to maximize the profit through customer satisfaction
which very much reflects the idea of fundamental marketing concept. It has been pursuing to earn
maximize profit by providing best and improved customer service.
To ensure high return on investment and with different products and services.
To remain as the market leader, diversification of business and the automaton of banking
operation.
To play a significant role in the economic growth of this country.
To strive for profit and sound growth.
Foreign Exchange Trading of Uttara Bank Limited
2.4 Board Of Directors Of Uttara Bank Ltd.
ChairmanMr. Azharul Islam
Vice ChairmanMr. Iftekharul Islam
Managing Director Mr. Shamsuddin Ahmed
Mr. Shah Habibul Haque
Director
Mr. Abul Barq Alvi Director
Foreign Exchange Trading of Uttara Bank Limited
Mr. Faruque Alamgir Director
Col. Engr. M. S. Kamal (Retd)Independent Director
Mr. Syed A. N. M. Wahed Director
Mr. Sk. Amanullah Director
Major General Prof. M. A. Mohaiemen (Retd) Director
Dr. Md. Rezaul Karim Mazumder Director
Lt. Col. Dewan Zahedur Rahman (Retd) Director
Engr. Tofazzal Hossain Director
Mr. Mohammed FarooqDepositor Director
Mr. Muhammad Quamrul AhsanDepositor Director
HIERARCHY OF UBL
BOARD OF DIRECTORS
Foreign Exchange Trading of Uttara Bank Limited
Azharul Islam Chairmen
Iftekharul Islam Vice-Chairman
Shah Habibul Haque Able Barq Alvi Col.Engr.M.S.Kamal(Ret) Director Director Director
Sayed A.N.M.Wahed Sk.Amanullah M.J.Prof.M.A.Mohaiemaen Director Director Director
Dr.Rezaul Karim Mazumder L.Col.Dewan Zahedur Rahman (Ret) Eng.Tofazzal Director Director Director
Mahammaed Farooq Muhammad Quamrul Ahsan Asif Rahman Director Director Director
Mr. Shamsuddin Ahmed Managing Director
NAME OF THE SENIOR EXECUTIVE
Foreign Exchange Trading of Uttara Bank Limited
Managing DirectorShamsuddin Ahmed
Additional Managing Director Shaikh Abdul Aziz
Deputy Managing Directors Md. Abdul Halim
Abdul Matin Abu Ahmed
Executive General ManagersMd. Fazlur Rahman
Salim Nazrul Hoque ChowdhuryMd. Kamal Uddin
Md. Ali Newaz KhanSabera Aktari Jamal
GENERAL MANAGERS
Md. Abdur Rashid Sayed Shaikhul ImamMd. Namul Haq Md. MobinuzzamanSribash Chandra Sarker Qazi Shanaz BugumMd.Abdul Hamid Md. Abdul MazidA.K.M. Idris Ali Faquir Abdul AwalKazi Md. Monzur Hossain Md. Mosharaf HossainNarayan Chandra Basak Mohammed Rabiul Hossain
DEPUTY GENERAL MANAGERSForrokh Ahmed Md.Abdus SatterAbdul Bashir Ahmed Iftekhar Zaman
Foreign Exchange Trading of Uttara Bank Limited
Sheikh Sadeque Ahmed Mohammad AliSulzar Ahmed Rowshanara HafizGulzar Hossain Pramanik Jalal Uddin Ahmed Abdul Hannan Matubbar Ashutosh Kumar PaulAlamgir Hossain Howlader Md. WazhiullahUttam Kumar Bhuiyan A.H.M.YaheyaMd. Ashraful Huq Md. Mofizul Islam Md. Shamsul Alam Bhuiyan Gulshan Ara BegumSarder Ruhul Amin Ranjit Kumar DuttaNirmal Chandra Paul Md. Rafiquddin AamedAshoke Kumar Sikder Md.Aminuddin BhuiyanMd. Ashraf –uz- Zaman Haradhan Chandra RouthMd. Abdul Quddus Hassan MahmudBegum Khairun Nahar Maksudul Hasan Md. Abdul Razzaque Md. Osman Gani A.K.M. Shahidul Alam Md. Siddiqur RahmanKazi Rezwanul Kabir Md. Reaz HasanMd. Golam Mostafa
Risk Management:
Foreign Exchange Trading of Uttara Bank Limited
The risk management within the bank always calls for careful and responsible handling of the
risks. Commercial banks are exposed to various risks. The management of Uttara bank limited is
fully cognizance to the importance of various risks involved in the banking business. Risk
management is one of the critical factors in banking. Bangladesh bank has identified 05(five)
core risks of management of the bank and has provided necessary guidelines for prevention there
from. The five core risks are:
Credit risk management.
Asset liability management.
Foreign exchange risk management.
Prevention of money laundering.
Internal control and compliance.
Effective risk management is indispensable fro smooth commercial operation in all spheres of
business. So Uttara bank limited has implemented the following risk management system
prepared in line with guidelines go Bangladesh bank to prevent relevant risks.
Credit risk management:
Credit risk is defined as the risk that arises from the uncertainties of counterparty’s ability to
meet its obligations to the bank as they become due. Our endeavor in identifying, measuring,
monitoring and controlling credit risk fro each borrower and also at the portfolio level are
working as the guiding principles of credit risk management. Uttara bank limited always
acknowledges effective risk management as the key to steady and stable growth for the bank.
The bank own lending policy has been introduced in the bank in line with the directives received
from the Bangladesh bank and the government. The branches are the business unit of the banking
system. The loan application assessment process starts at branch level by the relationship
manager (RM) through zonal office and ends at credit committee with its recommendations.
Mentionable that credit approval authority has been delegated to the individual executives.
Proposal beyond their delegation is submitted to the executive committee and the top
management.
Asset liability management:
Foreign Exchange Trading of Uttara Bank Limited
Asset liability management (ALM) is an integral is an integral part of Bank Management. It is
essential to have a structure and systematic process for managing the balance sheet. Efficient
Management of both on and off balance sheet activities of the bank by maintaining required
liquidity position leads to higher profit keeping the soundness of the bank intact. The Asset
liability Management Committee (ALCOM) holds meetings regularly to discuss both the
opportunities and threats to the Bank balance sheet & Liquidity. As per Bangladesh Bank
guidelines the bank formed Asset Liquidity Committee with combination of following members:
Managing Director & CEO
Additional Managing Director
Deputy Managing Director
Head of treasury
Head of ICT (Information & communication Technology)
Head of marketing Division
Head of Central Accounts Division
ALCO members sit at least once in a month to review mainly the aspects of economic and
money market status risks as a whole, liquidity risks related with Balance sheet, transfer pricing
risks, risks related to interest rate on deposits and advances and various important aspects
including monetary policy of Bangladesh Bank. The ALCO is also entrusted with the
responsibility of ensuring sufficient liquidity at all times to meet its obligations when these
become due without compromising the earning potential of the funds.
Foreign exchange risk management:
Foreign exchange risk is the exposure of an institution to the potential impact of movements in
foreign exchange rate. Managing foreign exchange risk is a fundamental component in the safe
and sound management of all institutions that have exposures in foreign currencies.
Foreign exchange risk arises form adverse movement of exchange rate when the bank has
position in foreign currencies which may affect the profit of the bank. The introduction of market
based exchange rate of Taka has resulted in both trading opportunities and associated foreign
exchange volatility risk. Foreign exchange risks are the potential change in earning arising due to
change in foreign currency prices. Hence the enhanced needs for management control system.
The front office of the banks Treasury Department continues to determine foreign exchange rate
Foreign Exchange Trading of Uttara Bank Limited
& tries to reduce the associated risk while the back office settles all foreign exchange
transactions and reconciliation. As a result treasury activities of the bank are being operated
smoothly and efficiently.
Prevention of money laundering:
Money laundering risk can be defined as the violation of regulations and being negligent in the
prevention of money laundering. In order to prevent and control illegal hundi, unauthorized
transfer of money abroad and money laundering, the bank has taken various steps. The bank
continued its anti money laundering campaign through training programmed. The regulatory
requirements are complied with and the KYC (Know Your Customer) and TP (Transaction
Profile) are followed for opening new accounts for prevention of money laundering. Manual for
prevention of money laundering has been established as per Bangladesh Bank guidelines and the
Bank has taken all types of steps to prevent acts of money laundering. For mitigating the risks
the bank has a designated chief compliance officer at branches who independently review the
transactions of the accounts to verify suspicious transactions.
Internal control and compliance:
The bank stresses on both the design and operation effectiveness of its internal control system to
protect the bank from possible loss that may arise from either intentional / unintentional errors or
from fraudulent activities. The bank has taken various steps for ensuring internal control and
compliance as per directives and guidelines of Bangladesh Bank for managing core risk in
banking with a view to conducting banking business more effectively and efficiently.
Management through Internal Control and Division undertakes periodical and special audit of the
branches and departments at Head Office for review of the operation.
Product & service:
Foreign Exchange Trading of Uttara Bank Limited
The bank not only the traditional banking products and services but also some tailor made products in liabilities and assets monthly savings scheme and double benefit scheme etc. for deposit mobilization in one hand and consumer credit scheme, lease finance, person loan, Uttara house repairing and renovation scheme and SME financing in another hand, besides, the bank has also some electro-banking products based on information technology of which Q- cash UBL ATM Debit card is worth mentioning for providing 24 hours services to customers.
Special loan scheme
Consumer credit UBL started Uttara Consumers Credit Scheme from 1996. UBL offers
opportunity of financial assistance for-
● Motorcycle/car-New or re-conditioned.
● Refrigerator/Deep Freeze.
● Television/VCR/VCP/VCD
● Radio/Two-in-one/Three-in-one
● Air-Conditioner/Water cooler/Water Pump
● Washing Machine.
● Personal Computer/UPS/Printer/Typewriter
● Sewing Machine.
● House hold furniture- Wooden & Steel.
● Cellular Telephone.
● Fax
● Photocopier.
● Electric Fan-Ceiling/Pedestal/Table.
● Bi-Cycle
● Dish Antenna.
Foreign Exchange Trading of Uttara Bank Limited
● Baby Taxi, Tempo/Microbus/ (For self employed persons)
● Kitchen articles such as Oven, Micro-oven, Toaster, Blender, Pressure Cooker etc.
Special Features:
● No collateral security is required.
● Simple rate of interest.
● Quick sanction.
● Maximum Loan amount Tk. 3, 00,000/-
● 5% incentive on total interest charged
Required Documents:
● Documents related to applicant’s job to prove himself.
● Two copies passport size photographs.
● Photograph of nominee (if any) duly attested by the account holder.
Personal loan
Personal Loan Scheme for Salaried officers-
● Emergency expenses for own marriage of a service-holder or his dependents.
● Emergency expenses of urgent surgical operation/medical treatment.
● Emergency educational expenses of the children for admission/purchase of books,
examination fees etc.
Special Features:
Foreign Exchange Trading of Uttara Bank Limited
● Any permanent salaried employee aged between 20 to 55 years is eligible to get loan.
● No collateral security is required.
● Maximum Amount of loan Tk. 1, 00,000.
Required Documents:
● Documents related to applicant’s job to prove himself.
● Two copies passport size photographs.
● Photograph of nominee (if any) duly attested by the account holder.
Deposit scheme
Savings account:
Any Bangladeshi Notional residing home or abroad may open savings account
with UBL
The account may be opened insingle/jointname.
The account holderamy nominate his nominee in this account.
The nominee can get the balance amount without submitting succession certificate
after the death of account holder.
Things to concentrate:
* Minimum amount to be kept in account:
* Cheque-book facility at negligible cost.
* Opportunity to apply for safe deposit locker facility
* Collect foreign remittance in both T.C & Taka draft.
* Transfer of fund from one branch to another by
* Demand Draft
* Mail transfer
Foreign Exchange Trading of Uttara Bank Limited
* Telegraphic Transfer
* Transfer of fund on standing instruction arrangement
* Collection of cheques trough clearing house.
* Issuance of Payment Order/Call Deposit.
Things to be carried on & special guidelines to open SB Account
Account opening form delivered by UBL
The account opening form and signature card are to be filled in and duly signed.
Two copies passport size photographs of the account holder.
Photograph of nominee (if any) duly attested by the account holder.
Photocopy of the 1st 7 pages of the passport for non-resident Bangladeshi national.
Signature in the account opening form/card must be same with the signature of
the passport.
De4tails have been discussed in chapter three.
Short term deposit account:
Government, semi government, autonomous organizations and an individual may open STD
Account with UBL. The Bank offers attractive & competitive rate of interest in STD Account.
But, 7 days notice is required to withdraw large amount from the STD Account.
Fixed deposit receipt account:
Foreign Exchange Trading of Uttara Bank Limited
● Any Bangladeshi national residing home or abroad may open FDR with UBL.
● FDR may be opened single/joint name for a period of 3, 6, 12, 24 and 36 months.
● UBL offers attractive/competitive rate of interest in FDR.
● Details have been discussed in chapter three.
Double benefit deposit scheme:
a) Any adult Bangladeshi National will be eligible to open this account.
b) Minimum Tk. 1, 00,000/- (Taka One Lac only) and multiples thereof will be accepted as
deposit under this scheme.
c) The period shall be of 7 (seven) years term.
d) Deposit may be encashed before its maturity and no interest will be paid if encashed
before 1(one) year of deposit.
e) Interest will be paid at saving rate if encashed after 1(one) year.
f) Advance will be allowed up to 80% of the deposit after completion of
g) Full amount including interest will be paid on maturity.
h) Govt. Tax, Surcharge, Source Tax, Levy, Govt. Excise duty will be recovered from the
depositor’s A/C.
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.
* Monthly deposit scheme
a) Any adult Bangladeshi National will be eligible to open this account
Foreign Exchange Trading of Uttara Bank Limited
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/- & 10,000/-
d) Monthly installment to be deposited within 10th day of the month. After due date a
penalty of Tk. 50/- will be realized from the A/C holder. If the holder fails of 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 been cashed before maturity. But no interest will be paid if encashed before
1(one) year of deposit.
g) Interest will be paid at Savings rate if encashed after 1(one) year of deposit.
h) Advance will be allowed upto 80% of the deposit after completion of one year.
i) Full amount including interest will be paid on maturity.
j) Govt. tax, Surcharge, Source Tax, Levy, Govt. Excise duty will be recovered from the
depositor’s A/C.
k) Account holder can appoint a nominee against the account.
l) 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.
International Banking
* Opening account:
i. Foreign Currency Account
* For private individual/firm/organization-
● Any person/firm/organization who earns foreign currency can open Foreign Currency
Account with UBL.
Foreign Exchange Trading of Uttara Bank Limited
● Payments in foreign currency may be made freely abroad from this account and local
payment in BDT may also be made from this account.
● Bank pay interest provided the accounts are maintained in the form of term deposit for
minimum period of 90 days.
● The account opening form and signature card are to be filled in and duly signed.
● Two copies passport size photographs of the account holder duly attested by remitter’s
Bank/Embassies
● Photo copes of the first 7 pages of the passport duly attested by the remitters
bank/exchange
* For Bangladeshi Nationals working and earning abroad-
● No initial deposit is required.
● A/C holder may nominate his nominee to operate the account.
● The account holder can freely transfer entire amount in foreign currency anywhere he
chooses or can convert into Bangladesh Taka currency.
● Funds from this account may also be issued to the account holder up to his entitlement for
the purpose of his foreign travels in usual manner.
● The account opening form and signature card to be filled in and duly signed.
● Two copies passport size photographs of the account holder are required to carry.
● Copies of employer’s certificate/work permit are also required.
● One copy of the passport sizephotogr4aph of the nominee if any to be attested by the
account holder.
Foreign Exchange Trading of Uttara Bank Limited
● Photocopies of the first 7 pages of the passport of the account holder to be carried.
ii. NFCD Account:
● Allnon-resident Bangladesh nationals and persons of Bangladesh origin including those
having dual nationality ordinarily residing abroad may open this account with any
‘Authorized Dealer (AD)’ branches of Uttara Bank Ltd.
● The NFCD account may be opened in single/joint name for a period of 1, 3,6,12 months.
● This account may be maintained as long as account holder desires.
● On maturity the account holder can encase it in local currency or can transfer the amount
including accrued interest anywhere he likes.
● Initial deposit US$ 1000 or GBP 500 sterling or equivalent currency.
● The account offers attractive interest Payable in foreign and tax free.
● The account with accrued interest canbe renewed either of the instruction of the account
holder or be renewed automatically if there is no instruction otherwise.
● No interest is given on premature encashment.
● The account opening form and signature card to be filled in and duly signed.
● Two copies passport size photographs of the account holder to be carried.
● Photocopies of the first 7 pages of the passport duly attestd by the remitters
bank/exchange companies having drawing arrangement with UBL or by Bangladesh
mission
iii. RFCD Account:
Foreign Exchange Trading of Uttara Bank Limited
● Persons ordinarily resident in Bangladesh may open and maintain
RFCD account with foreign exchange brought in at the time of his return from travel
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 that one month and the balance is not less than US$ 1000 or GBP 500 or its
equivalent.
● The account opening form and signature card to be filled in and duly signed.
● Two copies of passport size photograph of the account holder are the must.
● Photocopies of the passport and the relevant pages showing evidences of traveling abroad
are compulsory.
Bank operational area
Foreign Exchange Trading of Uttara Bank Limited
Uttara Bank operation has achieved the confidence of its customers with sound fundamentals in
respect of deposit accumulation, loans and advances, import and export business, remittance
business and profitability. As a result the bank has been able to earn remarkable profit in
business. Overall performance of Uttara Bank limited has been improved for maintaining
effective and constructive principles of Bangladesh Bank. Uttara bank operation in different area,
which are given below by a figure:
Foreign Exchange Trading of Uttara Bank Limited
Bank Operational Area
General Banking
Foreign Remittance
Loan & Advance
Foreign Exchange
International Banking
Branches of Uttara Bank Limited According To Division
Uttara Bank Limited is one of the largest and oldest private commercial Bank of Bangladesh. The Bank formally known as the Eastern Banking Corporation Limited which started journey on & from 28/ 1/ 1965. From that period of time, it has been expanding its operation with years of experience to serve the clients as well as the country. Now with 211 branches it has created a strong network in Bangladesh. Besides, to create a strong connection with the globe 600 affiliates are active to support the Bank. Now I provide branches of Uttara bank according to division, which are given below:
Foreign Exchange Trading of Uttara Bank Limited
Total Asset Position
Total assts positions of the Uttara Bank limited increased more during the year 2009. In 2009
total assts stood at Tk. 71,946.0 million as compared to the volume of Tk. 58,444.3 million in
2008. Now I provide a figure of total assts of the Uttara Bank five years at glance, which is given
below:
Total Assets Position
0.0010,000.00
20,000.0030,000.00
40,000.0050,000.00
60,000.0070,000.00
80,000.00
2005 2006 2007 2008 2009
Total Assets Position
Foreign Exchange Trading of Uttara Bank Limited
Capital & Reserve
The authorized capital of the bank increased from Tk. 1600.00 million Tk. 3200.00 million
during the year 2009. The paid up capital of the bank has been increased to Tk. 1597.4 million
from Tk. 798.7 million due to declaration to 100 percent bonus share in 2009. The total number
of shares was 15,973,184. The government of the peoples Republic of Bangladesh, eighteen
banks and fifty two financial institutions held total 676,397 shares worth Tk. 67639,700.00 and
remaining 42,499 private Shareholders held total 15,296,787 shares worth Tk. 1,529,678,700.00.
The equity of shareholders of the bank at the end of the year 2009 stood Tk.6, 206.9 million and
in 2008 stood Tk. 3688.8 million.
RESURVE FUND:The Reserve Funds increased to Tk.4, 609.6 million during the year by registering 59.49 percent
increase over last year Tk.2, 890.2. Now I provide a figure for better understanding which is
exhibited below:
0
1000
2000
3000
4000
5000
2005 2006 2007 2008 2009
Capital & Reserve ( Taka in Million)
Authorised Capital Paid-up-Capital Rrserve Fund & Others Reserve
Foreign Exchange Trading of Uttara Bank Limited
At a Glance Profitability Position of UBL
Uttara bank profit stood Tk. 1083.6 million as compared to Tk. 940 million of previous year.
That means Uttara bank profitable position in 2009 is more than 2008, that are very much
effective for the Uttara bank and this profit is increased day by day from 2005 to present that is a
good sign for the bank. Now we provide 2005 to 2009 post tax profit and pre tax profit basis on
table and figure also, which are exhibited below:
2005 2006 2007 2008 2009Post tax Profit 850 900 400 1083.6 1075Pre tax Profit 100 200 1100 2100 2250
Profit (Taka in Million)
0
500
1000
1500
2000
2500
2005 2006 2007 2008 2009
Post tax Profit Pre tax Profit
Foreign Exchange Trading of Uttara Bank Limited
Now I also provide profit position of five years at glance and if we see the figure then we can
easily understand that profit positions are increase day by day. So I provide line chart for better
understand of the five years gross profit position of Uttara Bank Limited.
GrossProfit
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
2005 2006 2007 2008 2009
GrossProfit
Foreign Exchange Trading of Uttara Bank Limited
Shareholder equity position
Net result of the Liquidity Statement represents the "Shareholders'Equity" of the Bank:
LIABILITIES AND CAPITAL / SHARE HOLDERS' EQUITY
Liabilities
Borrowings from other Banks,
Financial Institutions and Agents 10 225,086,084 2,899,505,333
Deposits and other accounts 11 50,816,975,020 43,586,356,057
Current and other accounts etc. 15,570,321,322 12,372,373,980
Bills payable 1,605,516,899 1,643,287,611
Saving bank deposits 19,547,765,743 17,876,529,810
Fixed deposits 12,164,269,906 10,417,183,199
Bearer certificate of deposit - 50,000
Other deposits 1,929,101,150 1,276,931,457
Other liabilities 12 3,713,428,714 3,920,914,181
TOTAL LIABILITIES 54,755,489,818 50,406,775,571
CAPITAL/SHARE HOLDERS' EQUITY
Issued, subscribed and paid up capital 13.2 798,659,200 399,329,600
Issuance of bonus shares - 399,329,600
Statutory reserve 14 1,550,837,039 550,837,039
Other reserves 15 1,337,631,167 1,100,864,198
Retained earnings 16 1,714,894 3,196,722
TOTAL CAPITAL/ SHARE HOLDERS' EQUITY 3,688,842,300 2,453,557,159
TOTAL LIABILITIES AND CAPITAL/SHARE HOLDERS' EQUITY 58,444,332,118 52,860,332,730
CONTINGENT LIABILITIES 17.0 8,806,887,103 8,830,513,784
Acceptances & endorsements - -
Letter of guarantees 17.1 1,826,856,510 1,474,352,134
Irrevocable letter of credit 17.2 4,517,171,591 5,382,511,516
Bills for collection 17.3 3,156,536 3,140,634
Other contingent liabilities 17.4 2,459,702,466 1,970,509,500
Foreign Exchange Trading of Uttara Bank Limited
OTHER COMMITMENTS - -
Documentary credits and short term - -
trade related transactions - -
Forward assets purchased and forward - -
deposits placed - -
Undrawn note issuance and revolving - -
underwriting facilities - -
Undrawn formal standby facilities, - -
credit lines and other commitments - -
Liabilities against forward purchase & sale - -
Litigation filed by the Bank - -
TOTAL OTHER COMMITMENTS - -
TOTAL OFF- BALANCE SHEET ITEMS
INCLUDING CONTINGENT LIABILITIES 8,806,887,103 8,830,513,784
Accompanying notes 1 to 44 form an integral part of these financial statements.
Now I provide five years shareholders equity position of UBL and here clearly seen that the
equity are dramatically increased from 2005 to 2009. Now I provide a line chart of five years
shareholders equity position of UBL, which are given below:
Foreign Exchange Trading of Uttara Bank Limited
Sharehoders Equity
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
2005 2006 2007 2008 2009
Sharehoders Equity
About the department I workedUttara bank limited had been a nationalized bank in the name of Uttara bank Limited under the
Bangladesh bank (nationalized) order 1972, formerly known as the Eastern banking Corporation
Limited which has started function on and from 28.1.1965. Consequent upon the amendment of
Bangladesh bank (nationalized) order 1972; the Uttara bank was converted into Uttara Bank
Limited as a public Limited company in the year 1983. The Uttara Bank Limited was
incorporated as a banking company on 29.6.1983 and obtained business commencement
certificate on 21.8.1983. The bank floated its shares in the year 1984. It has 211 branches all over
Bangladesh through which it carries out all its banking activities. One of the Branch name is
Jatrabari Branch where I accomplished my three months Internship period. In here actually I
worked in T.T, M.T, Foreign remittance & scheduling.
First of all, I worked on T.T (Telegraphic transfer), M.T (mail transfer) department. This
department basically helps its clients to transact money within the country as early as possible
where their branch is exists. For doing this service bank take a fixed charge from the clients.
Therefore, client s has to fill up a T.T form. After fill up this form officer send this massage
through phone call according to the address given by clients. Now I provide details of T.T which
are given below:
Foreign Exchange Trading of Uttara Bank Limited
Telegraphic Transfer (TT):
UBL provides the opportunity to transfer money through TT within few minutes in any parts of
BD where it has the branch. It also receives TT massage from HO ID to remit foreign currency
via. To remit money from branch to branch within BD, customers need to fill up the request form
mentioning the following:
● Date & amount of BDT to be remitted with exchange or commission & telephone charge.
Exchange is BDT 25 for 1 to25,000 taka
Above BDT 25,000, one Taka per thousand
Telephone charge is BDT 35 per TT
● Account name & account number of the favoring Party
● responding branch name
● Details of the applicant enclosing-
Full name & detailed/Contact address
Phone number & applicants signature
After that required amount of cash needs to be deposited in the cash counter with 15% vat on it.
Getting the complete request form the authorized officer takes the real tasks to remit money in
the mentioned favoring branch & following things are done-
● Find out the ultimate TT number from TT payable register
● TT numbers enclosed in the request form
● Proper authorization from few departments
● Phone call to the responding branch
● Identify both branch through secret identification name & number
● Secret test number is matched in both branch & Phone call is done
● Query from responding branch if the test does matches
● Giving entry in the TT payable register
Accounting practice for TT in the originating branch:
Foreign Exchange Trading of Uttara Bank Limited
To record such payment by originating branch, request slip acts as credit voucher as because
that money is received against this request slip. To realize 15% vat, another credit voucher is
used in the originating branch.
GRAPH
The mentioned credit voucher of TT is enclosed with the credit voucher for Vat A/C so, journal
of such financial transaction will be.
● Cash A/C--------------------------------------Dr.
TT A/C-----------------------------------------Cr.
Vat A/C-----------------------------------------Cr.
Accounting practice of TT in the Responding branch:
After getting the TT message from the Ho ID, in case of foreign TT, a debit voucher is prepared
quickly. Suppose, Mr. A.T.M. Nayaz Murshed bearing SB account no 12356 has an account in
the Tongi branch of UBL. His father sent BDT 100,000 from Dubai through ALFARDAN (Al
Fardan Exchange, Dubai) to his account in the UBL. Now after getting the TT message with an
advice no 13113458, the official of tongi branch will do the following accounting:
● UBL General A/C HO ID A/C-----------------------------Dr. 100,000
SB 12356, A.T.M. Neyaz Murshed A/C--------------------------Cr. 100,000
Instead of the above accounting, UBL do the same but indifferent shown below;
Foreign Exchange Trading of Uttara Bank Limited
Voucher No.1
GRAPH
Voucher No.2
GRAPH
After preparing the above two vouchers, these are enclosed with the TT originating message.
Sometimes customers wait for collecting money of TT & the officials try to prepare all the
documents quickly. Now the three documents are sent to another table to give the entry in the
transfer scroll. For clear understanding, a sample of transfer scroll is mentioned;
● Transfer scroll:
Dr. Cr.
Scroll No. Description BDT Scroll Description BDT
85 SB 12356 100,000 97 UBL
General
A/C HO ID
100,000
Now the scroll number is written in the debit & credit vouchers. At the same time ‘TRANSFER’
seal is required in the vouchers like the previous example. When all these are done properly, the
Foreign Exchange Trading of Uttara Bank Limited
vouchers are sent to the computer to do the adjustment & to deposit in the party account. Lastly,
cash is paid against Cheque.
To pay against Cheque, entry in the book of responding branch is:
SB 12356 A.T.M Nayaz Murshed A/C ------------Dr. 100000
Cash A/C---------------------------------------Cr. 100000
Responding Advice for TT:
With the voucher used in the responding branch, responding advices also used for further
procedure. Responding Advice of TT Transaction containing 3 (Three) copies have the following
parts that must be filled up correctly by the authorized officer that includes:
Originating Branch Name
Originating TT Transaction No. of 8 (Eight ) Digit
Originating Branch Code
Responding Branch Name
Branch Code
Transaction Code
TT Number
Original Date
Name of payee
Amount in figure & words
Signature of the Manager & authorized Officer
Three copies of responding advice are normally filled up through using the carbon paper & three
copies are sent to different branch & departments mentioned below;
The Originating copy is to be mailed with responding schedule F-89 (Revised) to
head office-reconciliation department.
Duplicate copy is to be mailed to originating branch as confirming of payment of
mentioned TT.
The Triplicate copy is to be retained by the branch has official record.
Hard copy of TT from originating branch:
Foreign Exchange Trading of Uttara Bank Limited
Hard copies of TT are received from the originating branch within few days & after getting the
hard copy, the responding branches adjust it in the TT payable register. To that adjustment, red
pen is used to cross the hard copy after checking the TT advice number, amount of money,
account name & account number who received money etc. But if the hard copy is not received
from the originating branch, the responding branch sends a letter to the originating branch like
the following;
Graph
Mail Transfer (MT):M.T is as like as T.T, but here have some difference because M.T form and its sending technique
are difference. Its name is mail transfer but actually it sends by the phone and M.T form written
is very easy than T.T. because here eliminating most of rules and regulation than T.T form. Now
I provide a M.T hard copy form for better understanding, which is given below:
Graph
Remittance Department of UBL
Foreign Exchange Trading of Uttara Bank Limited
UBL has the outstanding performance to provided remittance service. With all of the Middle
East countries, it also provides money to the responding parities from Malaysia, Brunei,
Indonesia, South Korea, Australia, Canada, Spain, Maldives, Germany, Japan, Singapore, United
States of America, United Kingdom, Greece, Cyprus, Italy, France, south Africa & all countries
of Africa, North America, South America and all of the countries of the world within the shortest
possible time. The most commonbanking corporations & exchange companies who work as
intermediaries to transfer money are BFEC, AN EXP, WSIC, DALIL, KWTASIA, HAMDAN,
KSIC, OEXKT, H.EX, AEC, ALFARDAN, SLNIC, CTY, ANB, ALMOUDI, ALRAJHI,
ALRAJHIC etc.. It takes only several hours to deposit the remittance in the account of clients as
per request.
UBL provides money also to them, who don’t have any account in any branch of the bank
against remittance from the organization like Money gram, Express Money, Wall street etc. In
this case, clients can withdraw money just after receiving remittance message in any working
day of bank. To get the cash taka, National ID card with photograph is required. But if these are
not available, clients can withdraw money showing the Cheque book maintained by them in any
other bank. But bank will very the address & other information enclosed in the remittance
message.
Money Gram (MGRM) Money Transfer:
UBL has the agreement of MGRM system. Through this system the customers who have not any
account in the bank can also collect money from any branch of UBL in Bangladesh. The
computer generated system allows the bank to pay the money within the earliest possible time to
provide better service for the clients. This system has the ability to remove any corruption as
bank provides the money only getting a secret reference number. If the reference number
matches with the original message sent from the HO ID (Head Office International Division),
money is paid to the clients. Once the message is printed in any branch, such computer generated
system will not show the message elsewhere in any branch of BD.
On the other hand. UBL takes the attested copy of National ID card or passport or any other
valid ID card against payment & customers are to fill up the MGRM form correctly. Clients can
take the money in cash or can deposit the amount in the account number of the bank. But, to do
that the account holder needs to write an application mentioning all of his/her account
Foreign Exchange Trading of Uttara Bank Limited
information to the manager of that branch. The manager checks the application and allows
depositing the money of MGRM to the applied account number. Now, to deposit the money to
the applied account numbers, following accounting procedure are followed;
● Preparing the debit & credit vouchers
● Keeping the proper entries in the transfer scroll
● Making proper transfer seal with date in the vouchers.
● Providing all authorized signature
● And finally, updating such transfer in the computer.
Scheduling WorkScheduling work is totally doing by the computer. Here daily Foreign remittance, T.T, M.T,
which are doing as hard copy but these hard copy keep in the computer basis on soft copy. But
keep this document very safely; because this soft copy goes to the Head office, if any short
mistake occurred then it will be hampered of daily work until it doing correctly.
Chapter: 03
Foreign Exchange Trading of Uttara Bank Limited
Foreign Exchange Trading
Foreign Exchange Operation
One of the large businesses carried out by the commercial bank is foreign trading. The trade
among various countries falls for close link between the parties dealing in trade. The situation
calls for expertise in the field foreign exchange operations. The bank, which provides such
operation, is refereed to as rending international banking operation. Mainly transactions with
overseas countries are respects of Import, Export and foreign remittance come under the preview
of foreign exchange transaction. International trade demands a flow of goods from seller to buyer
and payment from buyer to seller. In this case the bank plays a vital role to bridge between the
buyer and seller.
About Foreign Trade In Bangladesh
Foreign Trade in Bangladesh is still dominated by imports resulting in adverse balance of trade.
Export has registered a significant volume of growth over the past years and the export import
gap is reducing every years. In early seventies the export of Bangladesh was dominated by jute
items only. In fact 90% of the export earnings at that time were from Jute section and the rest
10% from Leather and Tea sector. The situation however started changing with the introduction
Foreign Exchange Trading of Uttara Bank Limited
of non – traditional items like shrimps, fish, readymade garments, finished leather, newsprint,
handicrafts etc.
Authorized Dealers (AD) And Money Changers
As per section 2 of Foreign Exchange Regulation Act 1947, AD means a person, for the time
being authorized under section 3 to deal in Foreign Exchange, in other word AD means a bank,
authorized by Bangladesh Bank to deal in Foreign Exchange under the
Foreign Exchange Regulation Act 1947. There are some persons or firms, authorized by
Bangladesh Bank to deal with limited scope, are called Authorized Money Changers.
Functions of Authorized Dealers:
Authorized Dealer can handle all kinds of foreign exchange transaction as per Foreign Exchange
Regulation Act 1947 under the instruction of Bangladesh Bank. The functions of an AD Bank
are:
Exchange of Foreign Currencies.
To make arrangement with foreign correspondent.
Buying and selling foreign currencies
Handling of Inward and Outward remittance.
Opening of L/C and settlement of payment.
Investment in foreign trade
Opening and maintenance of accounts with foreign banks under intimation of
Bangladesh Bank.
Export Documents handling.
Major Section In Uttara Bank
Foreign exchange is the means and methods by which rights to wealth in a country’s currency
are converted into rights to wealth in another country’s currency. In banks when we talk of
foreign exchange, 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
Foreign Exchange Trading of Uttara Bank Limited
Bangladesh Bank issues license to scheduled banks to deal with foreign exchange’s these bank
card known as Authorized Dealers. If the branch is authorized dealer in countries. So UTTARA
Bank Ltd, Principal branch is an authorized dealer.
There are three kind so foreign exchange transactions:
A) Import
B) Export
C) Remittance.
First of I give you general idea of above three kinds of foreign exchange transaction then we go
details about the foreign transaction, which are exhibited below with figure:
Import Business:
In 2009 import business stood at Tk. 29,129.3 million as compared to the volume of Tk. 31,146.9
million in 2008.
Export Business:
Export business of the bank increased a little bit during the year 2009. Export business handled
by the bank during the year 2009 amounted to Tk. 15,096.9 million as against Tk. million of the
preceding year.
Foreign Remittance
Extensive use of the technology along with large delivery has significantly fostered the growth of
UBL remittance business. Uttara bank limited has seen a successful year in 2009 in terms of
expansion to extend special importance on through its foreign correspondent and exchange
houses. The bank has been continuing to extend special importance on foreign remittances from
the last couple of years. This bank has drawing arrangement with the banks and exchange
companies of the different important countries of the world. In the mean time the bank has been
able to draw confidence of the Bangladeshi expatriates by easy and quick delivery of their hard-
earned foreign remittance to the beneficiaries at home. The volume of foreign remittance in the
year 2009 stood at Tk, 635.3 million as compared to TK. 36,073.2 million in the preceding year
registering an increase of 23.74 percent. In order to keep pace with the time a scheme namely
“Express Payment Scheme” has been introduced for inward remittance by using modern
Foreign Exchange Trading of Uttara Bank Limited
technology. Under this scheme a payee having his account with any branch of Uttara Bank
Limited gets the proceeds of remittance sent from any part of the world within 2(Two) hoarse. In
the event of his account being maintained with other banks the proceeds are placed into payee’s
account within next working day in the Metropolitan Cities and Division Head Quarters and
within only 3 working days at other places of the country. Moreover, in order to ensure speedy
and improved service, the bank has also introduced “Instant Cash Scheme” for payment of
foreign remittance in cash to the customers who have no accounts with the bank on submission
of photo ID as identity. Under the scheme the bank will make payment of the proceeds in cash if
the Bangladeshi expatriates send their money furnishing the passport /card holders name and
number of the passport /card and for this the payees need not have any account in the bank.
Besides there is a scheme named ‘Instant Draft’ which is printed in computer under prior
arrangement of remittance companies, remitted y the same and received here through website is
delivered by the International Division of the bank to the beneficiaries at their home address for
payment of money equivalent to foreign currency. Besides, expatriates can remit their money
with low cost, allegiance and instantly to home country with its more than 700 correspondent
bank worldwide under Swift system.
0
10000
20000
30000
40000
50000
2005 2006 2007 2008 2009
Foreign Trade (Taka in Million)
Foreign Remittance Export Import
Now I give details about foreign exchange transaction of Import, Export and Foreign remittance
of the Uttara Bank limited, which exhibited below one after another in a chronological manner:
Foreign Exchange Trading of Uttara Bank Limited
Import Section
The total import handled by the bank in 2009 was Tk. 29,129.3 million compared to Tk. 31,146.9
million in the preceding year registering a rise Tk. 8119.87 million being 36.59 percent. A
sizeable L/C’s were also opened by the bank in the year under review. The import items included
industrial raw materials, machinery, consumer goods, fabrics, accessories etc. Now I give five
years import business position of UBL, which are given below:
Import Business
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
2005 2006 2007 2008 2009
Import Business
To import, a person should be competent to be and importer. According to Import and Export
Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration
(IRC) to the importer. In an international business environment, buyers and sellers are generally
unknown to each other. So seller of goods always seeks security for the payment of his exported
goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the
Foreign Exchange Trading of Uttara Bank Limited
buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer
and exporter is given a legal shape by the banker by Letter of Credit.
Import Registration Certificate (IRC)
The first thing one need to carry one business of import is called Import Registration Certificate.
But registration is not required for import goods, which do not involved remittance of foreign
exchange like medicine; reading materials etc. can be importe4d without registration by the users
within monetary limit. Documents to be required for Import Registration Certificate are as
follows-
Income Registration Certificate
Nationality Certificate
Certificate from Chambers of Commerce and Industry Registered Trade
Association
Bank Solvency Certificate
Copy of Trade License
Requisite fees
Function of Import Section
The Form IMP contains the followings-
Name and address of the Authorized dealers.
Amount of remittance to be permitted (i.e./C amount)
LCA form no. Date and value in Taka.
Foreign Exchange Trading of Uttara Bank Limited
Description of goods.
Invoice value in foreign currency, (i.e./C amount)
Country of origin.
Port of shipment.
Name of steamer/Airline
Port of importation.
Indenter’s name and address.
Indenter’s registration number with CCI & E and Bangladesh Bank.
Full name and address of the applicant
Letter of Credit
A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the
instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking
that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain
conditions mentioned in the letter gave been complied with.
Parties to the L/C
Importer Who applies for L/C
Issuing Bank It is the bank which opens/issues a L/C on behalf of the
importer.
Confirming Bank It is the bank, which adds its confirmation to the credit and
it, is done at the request of issuing bank. Confirming bank
may or may not be advising bank
Advising or Notifying
Bank
It is the bank through which the L/C is advised to the
exporters. This bank is actually situated in exporter’s
country. It may also assume the role of confirming and /or
negotiating bank depending upon the condition of the credit.
Negotiating Bank It is the bank, which negotiates the bill and pays the amount
Foreign Exchange Trading of Uttara Bank Limited
of the beneficiary- The advising bank and the negotiating
bank may or may not be the same. Sometimes it can also
be confirming bank.
Accepting Bank It is the bank on which the bill will be drawn (as per
condition of the credit). Usually it is the issuing bank
Reimbursing Bank It is the bank, which would reimburse the negotiating bank
after getting payment-instructions from issuing bank.
MECHANISM OF L/C OPERATION
GRAPH
STEPS FOR IMPORT L/COPERATION
Step 1- Registration with CCI&E
For engaging in international trade, even trader must be first registered with the
Chief Controller of Import and Export.
By paying specified registration fees to the CCI&E the trader will get IRC/ERC
(Import/Export Registration Certificate), to open L/C with bank, this IRC is must.
Step 2 Determination terms of credit
The terms of the letter of credit are depending upon the contract between the
importer and exporter. The terms of the credit specify the amount of credit, name
Foreign Exchange Trading of Uttara Bank Limited
and address of the beneficiary and opener, tenor of the bill of exchange-period
and mode of shipment and of destination, nature of credit, expiry date name and
number of sets of shipping documents etc.
Step 3- Proposal for Opening of L/C
To have an import LC limit an importer submits an application to department to
UTTARA Bank Ltd. The proposal contains the following particulars:
Full particulars of the bank account
Nature of business
Required amount of limit
Payment terms and conditions
Goods to be imported
Officered security
Repayment schedule
Step 4- Application by importer to the banker to open letter of credit
For opening L/C the importer is required to fill up a prescribed application form
provided by the banker along with the following documents:
1. L/C Application form 7. Authority to debit account
2. Filled up LCA form 8. Filled up amendment request form
3. Demand Promissory Note 9. IMP form
4. pro-forma invoice 10. Insurance cover note and money
receipt
5. Tax Identification number 11. Membership certificate
Foreign Exchange Trading of Uttara Bank Limited
6. Import registration certificate 12. Rate fluctuation undertaking
Step 5- Opening of L/C by the bank for the opener:
Taking filled up application form from the importer.
Collects credit report of exporter from exporter’s country through his foreign
correspondence there.
Opening bank then issues credit by air mail/TELEX/SWIFT followed by L/C
advice as asked by the opener through his foreign correspondent or branch has the
case may be, at the place of beneficiary. The advising bank advises the L/C to the
beneficiary on his own form where it is addressed to him or merely hand over the
original L/C to the beneficiary if it is so addressed.
Step 6- Shipment of goods and lodgment of documents by exporter:
Then exporter shops the goods to the destination of the imported country and sends the
documents to the L/C opening bank through his negotiating bank. Generally the following
documents are sent to the Opening banker with L/C:
1. Bill of Exchange 6. Packing list
2. Bill of Lading 7. Advice Details of Shipment
3. Commercial Invoice 8. Pre-shipment Inspection Certificate
4. Certificate of origin 9. Vessel Particular
5. A certificate stating that each packet
contains the description of goods over the
packet.
10. Shipment Certificate
Foreign Exchange Trading of Uttara Bank Limited
Step 7-Lodgmentof Documents by opening Bank from the negotiating bank:
After receiving the documents, the opening bankers scrutinize the documents. If any discrepancy
found, it informs the importer. If importer accepts the fault, then opening bankers call importer
retiring the document. At this time any thing can happen. These are indicated in the following:
* Discrepancy found but the importer accepts- No problem occurs in lodgment.
Discrepancy found and importer not agreed to accept- In this case, importer
protest and send back all the documents to the exporter and request his to make in the
specified manner. Here banker is not bound to pay because the documents send by
exporter is not in accordance with the terms of L/C.
Everything is O.K. but importer fails to clear goods from the port and
request bank to clear- In this case banks clear the goods and takes delivery of the same
by paying customs duty and sales tax etc. So, this expenditure is debited to the importer’s
account and in banking it is called LIM.
Step 8- Retirement
The importer receives the intimation and gives necessary instruction to the bank for retirement of
he import bills or for the disposal of the shipping document to clear the imported goods from the
customs authority. The importer may instruct the bank to retire the documents by debiting his
account with the bank or may ask for LTR (Loan against Trust Receipt).
ACCOUNTING PROCEDURE IN CASE OF L/C OPENING
When the officer thinks fit the application to open a L/C, giving the following entries-creates the
following charges-
Particulars Debit/ Credit Charges in taka
Customers A/C Debit
Foreign Exchange Trading of Uttara Bank Limited
L/C Margin A/C Credit
Commission A/c on L/C Credit 50%
VAT Credit 15% on commission
SWIFT charge Credit 3000/=
Datamax Credit 1000/=
Stamp Credit 150/=
Postage Credit 350/=
DHL/ Courier Credit 1500/=
AMENDMENT OF L/C
After opening of L/C some times alteration to the original terms and conditions become
necessary. These amendments involve changes in:
a. Unit pricing
b. Documentary requirements
c. Extension of validity of the L/C
Such documents can be affected only if all the concerned parties agree i.e. the beneficiary, the
importer, the issuing bank and the advising bank.
For any amendment the importer must request the issuing bank in writing duly supported by
revised indent/ Performa invoice. The issuing bank then advises the required amendment to the
advising bank. L/C amendment commission including postage is charged to the clients A/C.
♦ Loan against Trust Receipts (LTR)
● Advance against a Trust receipts obtained from the customers are allowed to only
first class tested parties when the document covering an import shipment or other
goods pledged to the Bank as security are given
Foreign Exchange Trading of Uttara Bank Limited
● Without payment. However, for such advances prior permission/sanction from
Head Office must be obtained.
● The customer holds the goods or their sale-proceeds in trust for the Bank till such
time, the loan allowed against the Trust Receipts is fully paid off.
● The Trust Receipt is a document that creates the Banker’s Hen on the goods and
practically amounts to hypothecation of the proceeds of sale in discharge of the
lien.
♦ Loan against Imported Merchandise (LIM)
Advance (Loan) against the security of merchandise imported through the Bank may be
allowed either on pledge or hypothecation, of goods, retaining margin prescribed or their landed
Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank.
Bank shall also obtain a letter of undertaking and indemnity from the parties before getting the
goods cleared through LIM account.
PAYMENT PROCEDURE OF IMPORT DOCUMERNTS:
This is the most sensitive task of the Import Department the officials have to be very much
careful while making payment. This task constitutes the following:
Data of Payment
Usually payment is made within seven days after the documents have been received. If the
payment is become deferred, the negotiating bank may claim interest for making delay.
Preparing Sale Memo
Foreign Exchange Trading of Uttara Bank Limited
A sale memo Is made at B.C rate to the customer. As the T.T. & O.D rate is paid to the Id, the
difference between these two rates is exchange trading. Finally, an Inter Branch Exchange
Trading Credit Advice is sent to ID.
Requisition for the Foreign Currency
For arranging necessary fund for payment a requisition is sent to the International Department
Transmission of Message
Message is transmitted to the correspondent bank ensuring that payment is being made.
4.5.1 Letter Of Credit (L/C) Or Documentary Credit
4.5.1.1 Definition
A Letter of Credit (L/C) can be defined as “An arrangement where in a bank guarantees on
behalf of his customers to make payment to the beneficiary upon presentation of documents
specified in the credit”. L/C can be defined as a Credit contact whereby the buyers bank is
committed (on behalf of buyer) to placeman agreed amount of money at the sellers disposal
under some agreed conditions.
4.5.1.2 Parties Involved in L/C
There are number of parties involved in a letter of credit, such as:
Importer/Buyer
Opening/ Issuing Bank
Exporter/Seller/Beneficiary
Advising bank/Notifying Bank
Confirming Bank
Negotiation Bank
Foreign Exchange Trading of Uttara Bank Limited
Paying/Reimbursing Bank.
Opener/Buyer/Importer
The person who opens the L/C is known as opener/buyer/importer of the L/C. The buyer and
seller conclude a sales contract providing for payment by documentary credit.
Opening Bank
The bank issuing the L/C in favor of exporter is known as opening bank. The opening bank L/C
on request of importer according to the application of the importer.
Advising Bank
The bank through L/C is advised. L/C will be sent to the beneficiary through their agent
(corresponded bank) abroad. The duty of the advising bank is to authenticate the message so that
the seller can act on it without any fear of forgery etc.
Beneficiary
Seller and exporter in whose favor the L/C are opened. The beneficiary is normally the seller of
goods who receive payment under documentary credit if he has complied with term and
conditions there of.
Negotiating Bank
The bank that is authorized to handle (purchase) the documents under L/C in the exporting
country is known as negotiating bank. L/C will stipulate either a notified bank to negotiating in
the seller’s country (unrestricted L/C).
Reimbursing Bank
The bank that is (by the L/C issuing bank) to effect reimbursement is known as reimbursing
bank. Reimbursing bank is authorized to honor the reimbursement claims in settlement of
negotiation/acceptance/payments lodged with it by the paying/negotiation/accepting bank.
Confirming Bank
A confirming bank is one which adds the guarantee to the open by another bank, thereby
undertaking the responsibility of paying/negotiation/ acceptance under the credit in addition to
that of the issuing bank. A confirming bank normally does so requested by the issuing bank.
Foreign Exchange Trading of Uttara Bank Limited
Types of L/C
Revocable/Irrevocable L/C.
Confirmed/Unconfirmed L/C.
Back to back L/C.
Acceptance L/C.
Red clause L/C.
Green clause L/C.
The Uttara Bank basically deals with Irrevocable L/C, which cannot be amended or cancelled by
the issuing bank at any moment and without prior notice to the beneficiary. It also deals back to
back L/C, which is the Letter of Credit, provided by the bank to bank exporter to the importer to
the importer the raw materials from abroad in order to produce the exportable commodity for the
importer.
Procedures for opening L/C
Application for opening L/C
An importer who is desirous to import goods from country will apply issuing bank for opening a
L/C. The importer will provide an application mentioning the following aspects:
Full particulars of application’s bank accounts.
Types of business.
Historical background.
Amount of required L/C limit.
Terms of payments.
Name of importers goods.
Repayments schedule and source of fund.
Documents Required For Opening L/C
An importer or L/C opener has to submit the following documents:
Application form (provided by the bank)
Import registration certificate
Tex identification number (TIN) Certificate.
Foreign Exchange Trading of Uttara Bank Limited
Performa Invoice
Pour set of IMP form
Insurance cover note
VAT registration number
Letter of Credit authorization form
Necessary charges Document duly stamped & signed.
Examination for opening L/C
Application must be carefully checked by the concern officer considering the facts mentioning
bellow:
The term and condition of L/C applications are consistence with exchange control and
import trade regulation UCPDC – 600
Illegibility of imported goods.
The L/C must be opened in favor of importer.
That is signed by the importer and agreed with the terms and conditions.
Indenting registration number.
Goods are not of Israel and vassals to be used are not of Israel.
Insurance cover note with date of shipment.
Where IRC is up to date or not.
Whether IMP form is dully filled up and signed.
The imported goods are marketable.
After scrutinizing all these legal aspects necessary entry is given to the margin register
and charges, commission and margin is realized.
Shipment Date
Delivery clause
Documents required at the time of Payment
The documents shown this category are known as export documents from the exporter’s side and
import documents from importers side. These are:
Performa Invoice/Purchase-Sell Agreement
Bill of Exchange/Drafts
Bill of Landing
Commercial invoice/Invoice
Foreign Exchange Trading of Uttara Bank Limited
Consular Invoice
Marine Insurance Policy
Certificate of origin
Packing list or mills specification
Inspection Certificate/Survey Report
Certificate of segment and measurement
Bill of entry
Certificate invoice
Proforma Invoice (P/I)
At the negotiating stage of a deal the buyer may require the seller the quota the goods showing
their detailed particulars of order to enable him examine the competitive position.
It is offer by the seller to sell the goods and is exactly similar to customary invoice except that it
is marked ‘Proforma’.
Sometimes it server the purpose of indent when there is no indenting agent as middle man in
between the seller and buyer and L/C is opened in the basic of ‘proforma invoice’. It may
however be noted that proforma invoice is accepted while opening L/C only special
circumstances and allowed under import policy.
Bill of exchange
The bill of exchange is particular instrument through which payment is effected in trade deals
both internal and international.
The payment for the goods is received by the seller through the medium of a bill of exchange
(commonly called or bill) drown on the buyer for the amount depending on the contract. It is a
negotiable instrument. Negotiable instrument act.1881 (section -5) defines the bill of exchange as
“an instrument in writing containing an unconditional order”. Signed by the mark, directing a
Foreign Exchange Trading of Uttara Bank Limited
certain person to pay a certain sum of money only to, or to the order of a certain person, or to
the instruments.
Parties involved in a bill of exchange are normally three: drawer, drawer and payee. But in case
the B/E is endorsed the number of parties may be five drawers, payee, endorser and endorsee.
In respect of tenor of payment B/E are of two types:
Demand / Sight bill payable on demand or at sight or on presentation
Time / Usance bill payable at a determinable future tin
In respect of type of documents, B/E are
Clean Bill where is no other document.
Documentary Bill which is accompanied by stipulated documents.
Bill of Lading (B/L)
It is a document issued by the shipping company or its agent acknowledging the goods
mentioned therein on board the carrying vessel in apparent good order and condition unless
otherwise indicated therein, for shipment to the consignee on terms and conditions as agreed
upon as to their carriage.
A bill of lading is a document of title to goods entitling the holder to receive the goods as
beneficiary or endorsee and it is with the help of this document on receipt from the exporter that
the importer takes possession of the goods from the carrying vessel at the port of destination.
Commercial Invoice/Invoice
It is the seller’s bill for the merchandise. It contains a description of the goods the price per unit
at a particular location, total value of the goods packing specifications teems of sale letter of
credit, bill of lading number, etc.
There is no standard form for a commercial invoice. Each exporter designs his own commercial
invoice forms. The invoice is made out by the seller under his signature in the name of the buyer
and must be submitted in a of at least 3 copies. Its main purpose is to cheek whether the
appropriate goods have been shipped and also that their unit price, total value, making on the
package etc. are consistent with those given in other documents.
Foreign Exchange Trading of Uttara Bank Limited
Marine Insurance Policy
In the international trade marine insurance policy is a must to cover the risk of loss on
consignments while they are on seas. The marine insurance is the responsibility of the buyers
(consignee) under FAS, FOB and C F R contracts and the seller (consignor/shipper) under CIF
contract. The policy must be of the type as specified in the relative contract/credit. The policy
must would be for the value of CIF price plus 10(ten) percent of over the expenses and that is
required to be obtained in the same currency as that of the credit unless otherwise specified in the
credit and dated not later than the date of shipment with claims being payable at the destination.
It must be properly stamped. Like a bill of lading a bill of lading it must be negotiable and be
endorsed where it is payable to order.
Certificate of Origin (C/O)
This is a certificate issue by a recognized authority exporting country of origin of the goods. It is
usually by the chambers of commerce. Sometimes it is certified by local or Trade Representative
of the importing country as per terms of the credit.
Packing List (P/L) / Mills Specifications
The exporters must prepare an accurate packing list showing item by item, the contents of the
consignment to enable the receiver of the shipment to check ht contents of the goods, number
and makes of the packages, quantity, per package net weigh, gross weigh, measurement etc.
Inspection Certificate/Survey Report
Inspection certificate by an established inspection authority is needed under some contracts or by
some countries.
Certificate of Wightman and Measurement
Issued by recognized authorities (like chamber of commerce and industry) in exporting certifying
correct segment and measurement of the goods exported.
Bill of Entry
A bill of entry is a document which contains the particulars of the imported goods as well as the
amount customs duty payable.
Foreign Exchange Trading of Uttara Bank Limited
Certificated Invoice
Is an invoice bearing a signed statement by someone in the importer’s country who has inspected
the goods founds that the goods are in accordance with the specific contract of the proforma and
the goods are of a specific country of origin.
L/C Amendment
L/C to be amendment before its expiry date only, dispatch or transmission of the amendment is
not sufficient is not to become the amendment effective. Beneficiary’s acceptance of the
amendment becomes effective upon his express communication accepting such Nominated
Bank. Shipment date and expiry date of the L/Cs may be amended if relevant LCA, permit
remains valid up to that period. L/C amount may be decreased with consent of the beneficiary.
Numbering amendments may be done but it is not mandatory.
Payment Against Documents (PAD):
PAD is associated with import and import financing. The importers are to open letter of credit
thorough any bank for importing goods. Most of the banks are to extend credit to the importers if
not prohibited by Bangladesh Bank for buying required foreign
Exchange. This loan on receipt of shipping documents from the negotiating bank is transferred
and lodged to MIB/PAD. PAD procedure is started by the issuing bank after getting all the
documents from the exporter as evidence of exporting goods. Document requited for PAD is
mentioned below:
Original (Non-Negotiable) bill of lading
Commercial invoice
Certificate of insurance
Bill of Exchange
Pre-shipment inspection certificate
Packing list
Clean report of finings (CRF).
Foreign Exchange Trading of Uttara Bank Limited
Scrutinizing documents is very important for the issuing bank. As after examining all the
documents the issuing bank will make payment to the negotiating bank. So any mistake in the
examination process may cast issuing bank.
Loan Against Trust Receipt (LTR)
There may be situation where storage collateral in an independently controlled field warehouse is
impractical. An improper may require the goods for further processing or for displaying the
merchandise in order to make the final sale. In such cases a financial institution that has a great
degree of trust in the importer may be willing to release the negotiable Bill of Lading and
thereby also the goods to the importer against the signing of trust receipt. After the importer has
made his/her final sale and received the proceeds, he/her can pay the financial institutional that
he/she receive as advance.
Loan Against Imported Merchandise (LIM)
In many cases a bank had to clear the goods imported under L/C at the request of the borrower
when the imported does not come forward to retire the documents in spite of repeated reminders
bank has on forced circumstances to clear the imported consignment on arrival of the same to
avoid heavy demurrage at the port which adds to the burden of commitment.
Security, Lodgment And Retirement Of Import Letter Of Credit
Security of Documents:
The L/C opening bank being received the documents from the negotiating bank will scrutinize
the documents with the respective L/C terms and conditions:
Whether the documents negotiated within the period.
Whether bill of exchange presented term and condition of L/C.
Whether draft amount should be equal or less then the L/C amount.
Whether negotiable commission realized by the negotiable banks as per L/C.
Whether the B/L is clean i.e. there is clause like, some cartons are broken or any other
clause.
Whether there is signature of shipping authority.
Foreign Exchange Trading of Uttara Bank Limited
Whether the date of B/L is within the date of shipment as per L/C.
Whether the port of shipment and port of destination are similar as per L/C.
Whether the foreign prepaid.
Whether the title if B/L being to L/C opening bank.
Whether the full sets of B/L dispatched by negotiable bank as per L/C.
Whether the full particulars of goods have been incorporated in commercial invoices.
Whether IRC, LAC no. Bangladesh Bank registration no. etc have been incorporated in
commercial invoices.
Whether commercial invoice is signed by the beneficiary.
Whether insurance policy has been taken from a reputed insurance company as per L/C.
Whether the date of insurance policy is after the date of bill of lading.
Whether the bill of lading is stale.
Whether on notification is mentioned on bill if lading.
Whether all the documents presented as per L/C.
Lodgment
If import documents found in order, it to be made entry in the bill register and necessary voucher
to be passed, putting bill number on the documents, these processes is called Lodgment of the
bill. The word lodgment means temporary stay. Since the documents, stay at this stage for a
temporary period ie up to retirement of the documents, the process is called Lodgments. Bank
must lodge the documents immediately after receipt of the same, not exceeding 7 banking
Lodgment:
Bill register: Bank will entry the documents in the bill register. Bill register must include
date Lodgment, Bill No, Bill of Exchange No, Amount Name of the Negotiating Bank,
B/L No and date merchandise retirement date and other particulars.
Application of rate: Foreign currency would be converted at B.C. rate ruling on the date
of Lodgment.
Exchange Control From: IMP and TM from must be filled in and singed by the importer
at the time of Lodgment.
Endorsement of LCAF: LCA from must be endorsed showing utilized so shipment.
Foreign Exchange Trading of Uttara Bank Limited
Nothing no the File: Utilized-amount showing bill no to me noted on the printed format
of L/C file.
Export
The bank handled export business worth Tk. 18617.43 million in the year under report. In 2007
total export business handled by the bank was Tk. 13990.33 million. Thus there was an increase
of Tk. 4627.10 million in export business handled by the bank, being 33.07 percent over the
preceding year. The major export item was Readymade Garments. Here the last 5 years export
business of UBL is presented by a graph:
Foreign Exchange Trading of Uttara Bank Limited
Export Business
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
2005 2006 2007 2008 2009
Export Business
Understanding
The goods and services sold by Bangladesh to foreign households, businessmen and Government
are called export. The export trade of the country is regulated by the Imports and Exports
(control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before
and after shipment of goods. The exports from Bangladesh are subject to export trade control
exercised by the Ministry of Commerce through Chief Controller of Imports and Exports (CC &
E). No exporter is allowed to export any commodity permissible for export from Bangladesh
unless he is registered with CC & E and holds valid Export Registration Certificate (ERC). The
ERC is required to be renewed ever year. The ERC number is to be incorporated on EXP forms
and other documents connected with exports. The formalities and procedure are enumerated as
follows:
1. Obtaining exports LC: To get export LC form exporter issued by the importer.
2. Submission of export documents: Exporter has to submit all necessary documents
to the collecting bank after shipping of goods
Foreign Exchange Trading of Uttara Bank Limited
3. Checking of export documents: After getting the documents banker used to check
the documents as per LC terms
4. Negotiation of export documents: If the bank accepts the document and pays the
value draft to the exporter and forward the document to issuing bank that is called a
negotiating bank. If the bank does buy the LC then the bank normally acts as
collecting bank.
5. Realization of proceeds: This is the periods when the issuing bank has realized the
payment.
6. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank
is to report to respective department of Bangladesh bank by mentioning latest
payment.
7. Issue to proceeds realization certificate (PRC): Bank has to issue proceeds
realization certificate of export LC to the supplier/exporter for getting cash assistance
Export Operation
Bangladesh exports a large quantity of goods and services to foreign households. Ready made
Textile garments (both knitted and woven), Jute, Jute made products, frozen shrimps, tea are the
main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the
largest sector that exports the lion share of the country’s export; Bangladesh Exports most of its
readymade garments products to U.S.A and European Community (EC) countries, Bangladesh
exports about 40% of its ready made garments products to U.S.A Most of the exporters who
Foreign Exchange Trading of Uttara Bank Limited
export through UTTARA BANK LTD. Are readymade garment exporters. They one export
L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign
importers.
Export L/C operation is just reverse of the import L/C operation for exporting goods by the local
exporter, bank may act as advising banks and collecting bank (negotiable bank) for the
exporter.
As an advising bank
It receives documents from the foreign importer and hands it over to the exporter; sometimes it
adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it
assumes the responsibility to make payment to the exporter.
As Negotiating Bank
It negotiates the bills and other shipping documents in favor of the exporter. That is, it collects
the proceeds of the export-bill from the drawer and credits the exporter’s account for the same.
Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the
importers country. Sometimes the bank purchases the bills at discount and waits till maturity of
the bill. When the bill matures, bank presents it to the drawer to encase it.
In our country export and import operation of bank is very much related with one another
because of use of bank to bank and maturity of payment for back-to-back L/C is set in such that
it can be paid out of export proceeds.
BACK-TO-BACK L/C
It is simply issued to the clients against an import L/C. Back-to-Back mechanism involves two
separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of
Foreign Exchange Trading of Uttara Bank Limited
master export L/C Bank issues bank to Back L/C. Back-to-Back L/C is commonly known as
Buying L/C. On the country, Master export L/C is known as selling L/C.
FEATIRES OF BACK-TO-BACK L/C
An important L/C to procure goods / raw materials for further processing.
It is opened based on Export L/C,
It is a kind of export finance.
Export L/C is at sight but back to back L/C is at usage.
No margin is required to open Back-to-Back L/C
Application is registered with CCI&E.
Applicant has bonded warehouse license.
L/C value shall not exceed the admissible percentage of net FOB value of relative Master
L/C.
Usage period will be up to 180 days.
The important L/C is opened for 75% of the value of export L/C.
Here L/C issued against the lien of export L/C.
Arrangements are such that export L/C matures first then out of this export profit import
L/C is paid out.
Documents Required For Opening a Back-to-Back L/C
In UTTARA BANK Ltd. Principle branch, following papers/ documents are required for opening
a back-to-back L/C-
1. Master L/C
2. Valid important registration certificate (IRC) and export registration certification (ERC).
3. L/C Application and LCAF duly filled in and signed
Foreign Exchange Trading of Uttara Bank Limited
4. Proforma invoice or indent
5. Insurance cover note with money receipt
6. IMP form duly signed
In addition to the above documents, the following are also required to export oriented
garment while requesting for opening a Back-to-Back L/C-
1. Textile permission
2. Valid bonded warehouse license
3. Quota allocation letter issued by the export promotion Bureau (EPB) in favor of the
applicant for quota items.
Check List of Export L/C
Following defective pints are usually found in the master L/C. So, these points are so much
carefully checked by the bank officials. These are;
1. Name of the Advising Bank.
2. Name of Transferring Bank
3. Form of Doc. Credit:
Name of issuing bank
Documentary credit no. And issuing data
Data of shipment
Expiry data and place
4. Applicant / for order of/ On Account
5. Beneficiary/ Favoring
6. Amount
7. Availability of Credit
Foreign Exchange Trading of Uttara Bank Limited
8. Partial shipment / Transshipment
9. Category.
10. Description of goods:
a) Item
b) Total Qty
c) Unit price
11. B/L Clause
12. Reimbursement clause.
13. UCPDC Clause
14. Net FOB value.
Payment of back to back L/C:
In case back to back as 60-90-120-180 days of maturity period, deferred payment is made,
Payment is given after realizing export proceeds from the L/C issuing bank.
L/C under EOF:
Export development Fund is created by Bangladesh bank to give encourage to the
Exporter in Bangladesh.
Generally Back-to-Back L/C is stance L/C that is here bill of exchange is payable after
some maturity date say 90 or 120 days the date of acceptance/ negotiation. But some
foreign seller may required sight payment. Here import L/C matures first. In the case
Foreign Exchange Trading of Uttara Bank Limited
Bangladesh Bank gives the fund to the bank to pay the price of imported goods in favor
of the local purchaser of raw materials. When exporter proceeds come, first Bangladesh
bank loan to the importer is adjusted and reaming part goes to the importer of raw
materials.
Negotiation of Export Documents:
The most common method of financing exporters is negotiation of documents under L/C. It is a
post-shipment credit. Here the bank acts as a negotiating bank. After the shipment of the goods,
the exporter submits the relative documents to the branch for negotiation. The documents are to
submit within the period mentioned in the L/C. after approval of negotiation of the bill the full
particulars of the documents are branch with a forwarding letter. The branch claim
reimbursement from the issuing bank or from the reimbursing bank, giving clear instructions to
credit the proceeds of the bill to the UTTARA Bank Ltd, head office NOSTRO A/C maintained
with the named correspondent bank abroad under telex intimation to the principal branch and
head office (International Division).
Negotiation stands for payment of value to the export against “the documents stipulated in the
LAC. If documents are in order, UTTARA Bank purchases (negotiations) the same on the basis
of banker-customer relationship. This is known as Foreign Documents Bill purchase (FDBP).
If the bank is not satisfied with the documents submitted to UTTARA Bank gives the exporter
reasonable time to remove the discrepancies or sends the documents to L/C opening bank for
collection. This is known as foreign documents bill for collection (FDBC) entered into the
foreign, bill purchased (F.B.P) register. The documents are sent to the L/C opening.
Foreign Exchange Trading of Uttara Bank Limited
Presentation of export documents for negotiation/Purchase
After shipment exporter submits the following documents to UTTARA Bank for
negotiation.
Bill of exchange
Bill of lading
Invoice
Insurance
Certificate of Origin
Inspection certificate
Consular Invoice
Packing List
Quality Control Certificate
G.S.P. certificate.
Foreign Documentary Bills For Collection (FDBC)
UTTRARA Bank forwards the documents for collection due to the following reasons,
If the documents have discrepancies.
If the exporter is a new client.
FDBC signifies that the export will receive payment only when the issuing bank gives payment
UTTARA Bank make regular follow-up with the L/C opening bank in case of any delay in
getting payment.
Settlement of Local Bills
Foreign Exchange Trading of Uttara Bank Limited
1. The settlement of local bills is done in the following ways-
2. The customer submits the L/C to UTTARA bank along with the documents ton negotiate
3. UTTARA Bank official scrutinizes the documents to ensure the conformity / in the terms
and conditions.
4. The documents are then forwarded to the L/C opening bank.
5. Payment is given to the customer on either by collection basis or by purchasing the
document.
Mode of payment of export bill under L/C:
As per UCPDC 500, 1993 revision there are four types of credit. These are as follows:
Sight Payment Credit: In a sight payment credit the bank pays the stipulated sum immediately
against the exporter’s presentation of the documents.
Deferred payment Credit: In deferred payment, the bank agrees to pay on a specified future
date or event, after presentation of the export documents. No bill of exchanges is involved.
Payment is given to the party at the rate of D. A 60-90-120-180 as the case may be. But the head
office is paid at T.T clean rate. The difference between the two rates us the exchange trading for
the branch.
Acceptance credit: In acceptance credit, the exporter presents a bill of exchange payment to him
and drawn at the agreed tenor (that is, on a specified future date or event on the bank that is to
accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can
then represent it for payment on maturity. Alternatively he can discount it in order to obtain
immediate payment.
Negotiation Credit: In negotiation credit, the export has to present a bill of exchange payable to
him in addition to other documents that the bank negotiates.
Foreign Exchange Trading of Uttara Bank Limited
A Performance Report Of Foreign Exchange Department Of Uttara Bank Limited, Jatrabari Branch
Month wise Import Position of 2009:
Uttara Bank LimitedJatrabari Branch
Month Wise Import Position of 2009 (Figure in Lac Tk.)
Month L/C open USDAverage Monthly
Exchange RateBDT
January 32 7.5 75.78 568.35
February 28 6.41 34.14 218.83
March 29 5.70 37.04 211.12
April 45 7.27 132.78 960.5
May 43 7.11 131.13 932.33
June 58 6.52 365.24 2379.8
July 49 8.01 200.17 1602.56
August 45 7.907 189.07 1494.97
September 37 6.16 111.66 687.82
October 36 6.74 137.4 926.07
November 39 7.057 120.57 850.892
December 60 7.05 315.00 2220.75
Total 501 85.434 1849.98 13053.992
Source: Foreign Exchange Department of Uttara Bank Ltd Jatrabari Branch. As per 31st December 2009.
Foreign Exchange Trading of Uttara Bank Limited
Month wise Import Position of 2009
Uttara Bank LimitedJatrabari Branch
Month Wise Export Position of 2009(Figure in Lac Tk.)
MonthDocumentDelivered
USDAverage Monthly
Exchange RateBDT
January 39 6.317 175.52 1108.75February 45 7.12 222.59 1584.84March 38 6.05 126.55 765.62April 48 7.3 249.28 1820.98May 51 6.523 259.45 1692.39June 59 7.03 301.32 2118.27July 50 6.83 254.28 1736.73August 63 8.656 329.44 583.313September 73 9.748 492.17 4797.67October 43 6.12 138.33 846.57November 69 11.35 456.84 5185.134December 53 7.23 303.73 2195.97Total 631 90.2749 3309.5 24436.237Source: Foreign Exchange Department of Uttara Bank Ltd. Jatrabari Branch. As per 31st December
2009.
Import Export Position Of Uttara Bank Limited, Jatrabari Branch In Graphical Format
Foreign Exchange Trading of Uttara Bank Limited
Import Export Position through the Year
Exchange Rate Variation for Foreign Trade
Average Exchange Rate Variation for Foreign Trade:
Uttara Bank LimitedJatrabari Branch
Average Exchange Rate Variation for Foreign TradeFor the year 2009
Figure in LacMonth Import Export
January 75.78 175.52February 34.14 222.59March 37.4 126.55April 132.78 249.28May 131.13 259.45June 365.24 301.32July 200.17 254.28August 189.07 329.44September 111.66 492.17October 137.4 138.33November 120.57 456.84December 315 303.73Source: Foreign Exchange Department of Uttara Bank Ltd Jatrabari Branch. As per 1 December 2009.
Exchange Rate Variation for Foreign Trade in Graphical Format:
Foreign Exchange Trading of Uttara Bank Limited
Period: January’09 – November’09
Foreign Remittance
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a
bank must provide some service to the clients regarding foreign exchange and this department
provides these services.
The basic function of this department are outward and inward remittance of foreign exchange
from one country to another country. In the process of providing this remittance service, it sells
and buys foreign currency. In conversion of one currency into another takes place an agreed rate
of exchange, which the banker quotes, one for buying and another for selling. In such transitions
the foreign currencies are like am other commodities offered for sales and purchase, the cost
(convention value) being paid by the buyer in home currency, the legal tender.
Remittance Procedures of Foreign Currency
There are two type of remittance
Outward Remittance
Inward Remittance
Foreign Exchange Trading of Uttara Bank Limited
Outward Remittance
On March 24, 1994 Bangladesh Taka was declared convertible for current account international
transaction. As a result remittance becomes more liberalized. Outward remittance include sale of
foreign currency by T.T., M.T., Draft, and T.C or in cash for private, official and commercial
purpose.
Inward Remittance
The term inward remittances include not purchase of Foreign Currency by T. T., M. T. and Draft
etc. but also purchase of bills purchase of T. C. Utmost care should be taken while purchasing
currency. Notes T. C., D. D., & similar instrument for protection the Bank from probable loss as
well as safety of the Bank officials concerned.
Working of this department
1. Issuance of TC, cash dollar/ pound
2. Issuance of FDD, FTT & purchasing, payment of the same.
3. Passport endorsement.
4. Encasement certificate-
5. F/C Account opening & filling.
6. Opening of export FC retention quota A/C & maintain.
7. Maintenance of ledger of cash dollar, FC deposits A/C & TC.
8. Maintain FBC register & follow up FBC.
9. Opening of student file & maintain.
10. Preparation of all related statement, Voucher & posting.
11. Preparation of weekly, Monthly, Yearly Statement for Bangladesh bank return timely.
12. Attending all related correspondence to other bank or institutions.
The remittance process involves the following four modes:
Foreign Exchange Trading of Uttara Bank Limited
(1)CashRemittanceDollar/ Pound
Sell
Purchase
Bank sells Dollar/ Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank. Publication of Convertibility of taka for Currency Transitions in Bangladesh.
Bank can purchase dollar from resident and non-resident Bangladesh and Foreigner. Most dollars purchased come form realization of Export Bill of Exchange
(2)
Traveler’s Cheque
Issue of TC
Buying of TC
TC is useful to traveler abroad. Customer can encase the TC in abroad the drawee bank. TC is alternative to holding cash and it provides better security than holding cash in hand.
If any unused leaf of TC is surrendered bank buys it from the customer. All payment is made in local.Currency. Banks generally buy only those TC
(3)
Telex Transfer
Outward of TT
It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.
It also makes payment according to telegraphic message of its incoming foreign
correspondence bank from the corresponding NOSTRO Account.
Foreign Exchange Trading of Uttara Bank Limited
(4)
Foreign Demand
Draft
Bank issue Demand Draft in favor of any other according to,
instruction of purchaser. The payee can collect it for the drawer
bank in which the issuing bank of demand draft holds its
NOSTRO Account bank also makes payment on DD drawn on
this by its foreign correspondence bank through the VOSTRO
Account.
In these processes of remittance, bank must have to make profit as a business Institution. Profit
is made in two ways:
1. Commission charged.
2. Difference in the buying and selling rate.
Foreign Remittance
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
2005 2006 2007 2008 2009
Foreign Remittance
Total Foreign Exchange of UBL of last five years
Foreign Exchange Trading of Uttara Bank Limited
Miscellaneous Services by this Department
Student File: Student who is desirous to study abroad can open file in the Bank. By opening
this file, bank assures the remittance of funds in abroad for study.
F.C Accounts: Foreign currency accounts opened in the names of Bangladeshi nationals or
persons of Bangladeshi origin working or self – employed abroad can now are maintained as
long as the account holders desires.
RFCD: Stands for resident foreign currency accounts. Person’s ordinary resident in Bangladesh
may maintain foreign currency accounts with foreign exchange brought in at abroad. Balance of
such accounts is freely remittable abroad.
Formalities for opening Foreign Currency (FC) Account:
The AD may without prior approval of the Bangladesh Bank open Foreign Currency (FC)
account in the name of:
1. Bangladesh national residing abroad.
2. Foreign nationals residing abroad/in Bangladesh and also foreign firms.
3. Registered abroad and operating in Bangladesh and abstract foreign missions and their
expatriate employees.
4. Resident of Bangladesh nationals working with the foreign / international organization
operating in Bangladesh provided their salary in paid in foreign currency.
Foreign exchange earned through business doves or service rendered in Bangladesh cannot be
put into these accounts.
Foreign Exchange Trading of Uttara Bank Limited
No payment in foreign currency (FC) may be made to any resident in Bangladesh out of the
foreign currency (FC) account.
All citizens of Bangladesh and other persons are residing to Bangladesh who became the owner
of any foreign currency (FC).
Papers required:
o Application duly billed in and signed.
o Photography (two copies).
o Passport photocopy.
o Work permit from board investment. (in case of foreign nationals)
Risk in Foreign Exchange Business
Foreign exchange business involves the following risks:
Risk of non-delivery of goods: May not be delivered to the buyer due to some mishaps frauds
or any other reason.
Risk of receiving sub-standard goods: Till the time the goods are received under a shipment
none can be sure of the quality of the goods involved.
Risk of nonpayment: Buyer may fail to honor his commitments.
Risk of frauds in goods: Contracted to buy cement but got sand. The above risks trade common
to inland trade as also the foreign trade. There are some risk which are peculiar to foreign
exchange business.
Exchange risk: Exchange of currencies can cause loss to some parties- seller or buyer due to the
inherent risk of exchange rate fluctuation.
Foreign Exchange Trading of Uttara Bank Limited
Failure of foreign banks: It may be possible that the foreign bank may not be able to pay the
equivalent due to bank failures.
Sudden change in policies: This is referred to as political risk. Exchange control regulation,
import export policies and trade regulation are change overnight which will put the parties in
difficulties.
Chapter: 4Assessment of Internship
Foreign Exchange Trading of Uttara Bank Limited
4.1 Learning through my task
I have learned many things while working on General Banking & Loan & Advance department. Some of them are stated below:
4.1.1 General Banking
General banking activities are divided into several parts—Customer service, cash, clearing and locker services.General banking does following activities:
Opening an account Closing account Cheque received Cash received Cash paid Pay order Demand draft Telegraphic Transfer Send clearing to Bangladesh Bank Clean cash, etc
4.1.2 Loan and Advance Department:
Loan & advance department is one of the main sources to earn profit of Uttara Bank Limited. In 2008 Uttara Bank Ltd. Registered a steady growth in the credit portfolio posting a growth of 30.42 percent. Total loan and advances of the bank stood at Tk. 37,141.3 million during the year. Uttara Bank Limited provided Loans & Advances on the following sectors:
01. Sector wise Loan & Advancesa. Agricultureb. Industrial Lending (Term)c. Industrial lending (Working capital)d. Commercial Lendinge. Special Programf. Housingg. Lease Financing
Foreign Exchange Trading of Uttara Bank Limited
02. Special loan schemea. Personal loan schemeb. Uttara Housing Building repairing and renovation schemec. Consumer Credit Scheme (Uttara)d. Small Business Loan Scheme
Chapter: 5Analysis & Findings
Foreign Exchange Trading of Uttara Bank Limited
5.1 Analysis
SWOT Analysis:
Strength:
Own Website
Skilled employees
Available branches
Huge Number of account Holder
Available product & services
Competitive price
Wide operational area
Own internet server
Own Website
Good co-operation among the employees
Traditional Bank. As a result earned public faith
Weakness:
Lack of employees
No online service
Less ATM Booth
Very poor Website
The bank is performing in the bottom line compared to its competitors
The employees of the bank lack of skills & excellence because of recruiting system’s
instability & lack of transparency
The bank is heavily depended on deposit scheme for doing business
Foreign Exchange Trading of Uttara Bank Limited
The IT infrastructure is not so good
Unable to provide Cheque book &share’s clearing Cheque within customers desired
time
Foreign remittance inflow & outflow are very poor
The software that the bank is using is very unsophisticated & hampers operations
very often.
Opportunity:
Start of good ATM service can changed it’s image
Start of online banking service can also changed it’s image
Have to increase no of employees
Use of latest technology
Well trained up employees
Developing the recruiting system
Integrating software
Developing website
Threats:
Existing strong competitor
Internal control system of the bank is not quite satisfactory
The Bank is only focusing on some common analysis of its financial statements like
price earning ratio, advance deposit ratio, return on assets, return on equity etc.
The bank normally target the lower segment of the market &those who are not used to
sophisticated banking service because of illiteracy
UBL has not yet provided modern and advanced banking service all over the country.
Findings & analysis
Foreign Exchange Trading of Uttara Bank Limited
UBL has not yet provided modern and advanced banking service all over the country.
While competitors are expanding their operation with a wide range of technology, UBL is
providing the banking service on a traditional basis. Even the bank has not yet introduced
the online banking services. Customers are not getting the opportunity of using ATM to
deposit & withdraw money. As a result, the services like 24 hours banking stands out of
reach.
Internal control system of the bank is not quit satisfactory. The employees of one
department frequently work or are called to work in another department. Even,
sometimes they are seen to change their tables to work in other tables. But they are not
actually responsible to do the task of others. Consequently, they blame another employee
when any problem exists. Besides, fourth class employees are seen to prepare some
vouchers of charges account for entertainment, stationary items, conveyance etc. for
which they were sent outside. As a result, it is obvious to create fraud and error.
Completeness of daily records is sometimes dependent on the willingness of the
employees.
Employee behavior with the customer sometimes reaches out of acceptance. In every
week, it is obvious that some customers are raising their voice loudly for
misunderstanding with some employees or such event occurs because of making delay to
provide services.
The bank is only focusing on some common analysis of its financial statement like price
earning ratio, advance deposit ratio, return on assets, return on equity etc. But, making
strategies focusing on some few analyses is not enough in the present market place. The
bank is operating in Bangladesh for about 45 years since its origin. So, it had the
opportunity to establish its image as a star.
HR practice of the bank allows recruiting some of the employees who are not sometimes
fit for the organization. Employees are not properly trained to speak in formal language
& hence some of them forget that they are in the office while speaking. Some employees
in each of the branches are employed in the accounting department but they have not the
background of accounting. As a result, their basic knowledge is not that much strong in
the relevant areas though they can solve all of their problems because of training.
Foreign Exchange Trading of Uttara Bank Limited
The study of UTTARA Bank Ltd foreign exchange activities has revealed the following about
the bank-
The bank is performing in the bottom-line compared to its competitors
They haven’t developed any ATM & online services which is the main reason for
customers dissatisfactions to the bank
Foreign remittance inflows & outflows are very poor compared to other selected banks
The bank has a biasness in HRD which unwelcome female workforce in the bank
The employees of the bank lack of skills & excellence because of recruiting systems
instability & lack of transparency
The software that the bank is using is very unsophisticated & hampers operations very
often
The bank normally target the lower segment of the market & those who are not used to
sophisticated banking service because of illiteracy
The bank is heavily depended on deposit schemes for doing business
The IT infrastructure is not satisfactory, they don’t have a usable website
In foreign exchange department it is required to communicate with foreign banks
frequently and quickly. To make the process easy modem communication media for
example e-mail, Fax and win fax, Internet etc. should be used more frequently. But the
bank doesn’t have mass use of his medium of communication.
In some cases the number of employee engaged in rendering specific services is
insufficient.
Employees are exposed to customer excessively which is an obstacle in systematic and
prompt service.
Foreign Exchange Trading of Uttara Bank Limited
Chapter: 6Recommendation
&Conclusion
6.1 Recommendation
In accordance with my practical experience & knowledge gained from working in Loan &
Advances and Foreign Exchange activities, I would like to recommend the followings:
Foreign Exchange Trading of Uttara Bank Limited
UBL should develop the modern & advanced banking all over the country that can
impress its clients. If the Bank cannot implement the modern banking system, it would
not be possible for the bank to make competition with other banks in the most
competitive marketplace.
Customers want the facilities of online banking. But the bank has not yet introduced the
online banking & that’s why the service ought to be introduced as early as possible.
Behaviors with the client’s made by the employees are not enough to satisfy the clients &
hence the bank should increase the customer’s satisfaction level with smiling face. The
employees ought to be careful that if the customers are behaved well, they will come
again to take services.
Accounting procedure if the bank is based on traditional system though accounting
software has been introduced in all of the branches. It takes time to write & to prepare
different vouchers & to give entry in different registers by hand. So, bank should develop
the accounting process from the manual to computerize in all aspects. Bank should also
focus on more analysis of its financial statements.
Customers want to get the money of their clearing cheques quickly. But if the bank
makes delay of several days, it will create a bad impression against the bank. So, clearing
cheques ought to be sent to the local office to collection in proper time without making
any delay.
If an employee of one department works in another department frequently, internal
control system of the bank will be hampered. So, segregation of duties & responsibilities
in all departments should be properly ensured in all aspects.
Website of UBL is not that much rich to know about different value added services &
hence the site should be enriched & updated time to time. UBL should make decision
considering that it can work as an advertisement tools for the Bank.
UBL should take care of its head office to make people impressed at the first sight. If the
outlook of the bank cannot be changed, customer will recognize it as a backward bank.
Human Resource is the life of any organization. The success of any organization depends
on its employees. But, if the employees are not that much qualified, success will no
longer exist. Keeping the thought in mind, UBL should reform the HR policy & recruit
new young qualified HR personals.
Foreign Exchange Trading of Uttara Bank Limited
6.2 Conclusion
UBL is a traditional banking & financial services organization operating in Bangladesh for about
45 years since origin. The total number of correspondents & agents of the Bank was 686 as on
Foreign Exchange Trading of Uttara Bank Limited
31.12.2009 which was increased by 38 over that of the previous year. At the same time the bank
is handling foreign remittance business through 55 exchange houses & operating local operation
through 207 branches. I had the opportunity to work for this bank during my internship program.
I was placed at different departments of UBL at Jatrabari branch, Jatrabari. During this time I got
the chance to observe the overall activities of a branch commencing from account opening to
account closing. I also got the scope to act together with high officials and was informed about
their prospects & customers; I understand that there is the existence of customer dissatisfaction
in some cases. The bank is developing its Foreign Exchange activities, Risk management, Loan
& Advance & accounting system day by day with changing industry situation but the rate of
change of such speed needs to be increased. The bank has the opportunity to develop a
leadership position in the industry but new significant strategy ought to be made.
Finally, I would like to say that this internship at UBL has developed my practical knowledge of
Business Administration & made my BBA education more realistic. I got the scope to apply
various tools & concepts in this report that I learned in my education of last four years. The
concepts & tools used in this report were not only from accounting & finance related courses but
also from Management, Marketing, Human resources & other curses. I desire all the best for the
Uttara Bank Limited.
Bibliography
Books:
Saunders, Anthony, Cornett, Marcia Millon. , (Eds.) Financial Institutions Management. Singapore: McGraw-Hill, PP.138-153, 323- 341
Foreign Exchange Trading of Uttara Bank Limited
Ross, Stephen A., Westerfield, Randolph W., Jeffe, Jeffrey, (Eds) Corporate Finance, New Delhi: Tata McGraw-Hill Publishing Company Limited, 2004, PP. 26-31.
Report and Magazines: Uttara Bank Limited. Annual Report (2009). General Banking Manual- Uttara Bank Limited. Marketing Management by Bangladesh Bank.
Website: http://www.uttarabank-bd.com/ http://www.google.com http://www.wikipedia.com
Foreign Exchange Trading of Uttara Bank Limited