INTERNSHIP

ON

REPORT

LOAN

AND ADVANCE OF

UTTARA BANK LTD

A STUDY ON UTTARA BRANCH

INTERNSHIP ON

REPORT

LOAN

AND ADVANCE OF

UTTAR BANK LTD

Submitted To:
Pof. M. Shahjahan Mina Adviser,
Daffodil International University

Submitted By:
Md. Lal Chand Pramanik
ID No: 072-11-1920 BBA 17th Batch Daffodil International University

Dated of Submission , 2011

44

DECLARATION FROM THE SUPERVISOR

I have pleasure to certify that the Report entitled Loan and Advance of Uttara Bank Ltd, submitted by Md. Lal Chand Pramanik, ID No: 072-111920, Student of BBA program, Daffodil International University Is the candidates own achievement and is not a conjoint work.

I also certify that I have gone through the draft Report thoroughly and found it satisfactory for submission to the Department of Finance in fulfillment of the requirements for the degree of Bachelor of Business Administration (BBA)

Pof. M. Shahjahan Mina Adviser, Daffodil International University

44

LETTER

OF

TRANSMITTAL

07th Oct, 2011 To Pof. M. Shahjahan Mina Adviser, Daffodil International University Subject: Submission of Internship Report. This is my pleasure to present my Internship Report entitled Loan and Advance of Uttara Bank Ltd, Uttara branch, I have conducted my internship program in Uttara Bank Limited, Uttara Branch, Singapore Plaza,(1st Floor), Plot-17,Mymensing Road,Sector-3,Uttara Model Town,Dhaka-1230. submitted by Md. Lal Chand Pramanik, ID No: 072-11-1920, Student of BBA program,, with your kind supervision. I have invested my every effort to depict the Loan and Advance, functions performed by the Uttara Bank Ltd. I believe that the knowledge and experience I gathered during the internship period, will be helpful in my future professional life. I will be grateful to you if you kindly accept this report.

Thanking you. Sincerely Yours,

Md. Lal Chand Pramanik ID No: 072-11-1920 BBA 17th Batch Daffodil International University

44

44

ACKNOWLEDGEMENT

To perform internship program successfully and report writing on it is not an easy task. It mainly requires help and co-operation from the respective person. At the time of internship, I also felt such and obtained cordially. So at the time of writing this report I am remembering those kind hearted person with best regard.

First of all, I am expressing my sincere gratefulness to almighty Allah enabling me to prepare this report.

I would like to give my heartiest gratitude to our pro. VC sir for issuing forwarding letter to Uttara Bank Limited, by which I was able to begin my internship.

Then I would like to express my gratitude to my advisor Prf. M. Shahjahan Mina, for his cordial help, advice and proper guideline that inspired me to perform my duty properly.

My pleasure turns blooming to offer thanks to Mr. Md. Rezaul Islam, DGM & Head of Branch, Uttara Bank Ltd., Uttara Branch for allowing me to show my practicability in an organizational area under his supervision. I like to convey something more than thanks and usual gratitude to Mr. Md. Shalauddin Dhali, Manager Operation. I am very greatful to Mr. Md. Yunus Khan, Principal Officer & Foreign Exchange In-charge.; Mr. Pravir Kumer Mitra, OG-II (General & Remittance); Mrs. Irin Sultana, P.O; Mr. Md. Abdus Sobahan, Senior Officer; Mr. Zishan Ahmed, A/O (Gen.); Mrs. Riana Rahman, A/O (Gen.); and Mr. Sayed Mohasin, Assistant Officer (Cash) for providing all information relevant to my study. Their delightful cooperation, benevolent patronage, intention to make other knowledgeable helped me to prepare this report.

Finally, I would like to extend my deepest thanks to my parents and other family members. Without their co-operation I would not able to complete my BBA program.

44

44

Executive Summary Banking sector is playing an important role into our national economy. Lots of banks are involved in this sector. They contribute highly to the GDP. The main motive of bank is giving services to the people and gain profit from that. Banks are collecting money from on party (as a deposit) lending them to another party. By that procedure they are mobilizing the money and help the country to develop.

I have completed my internship in Uttara branch of Uttara Bank Limited. My internship report is on Loan & Advanced of Uttara Bank Limited. I have worked in several departments like, Loan-advance and gain some knowledge which will help me in my future life.

Banking system of Bangladesh has gone through three phases of development Nationalization, Privatization and lastly Financial Sector Reform. Uttara Bank Limited (UBL) introduced its activities named as Eastern banking corporation limited in the year of January 28th,1965. After 1972 the bank is introduced as a nationalized bank. Uttara Bank Limited was formed as a private bank in 1983. The Uttara Bank Limited was incorporated as a banking company on June 29th, 1983 and obtained business commencement certificate on August 21st,1983. The Bank floated its shares in the year 1984. Now Uttara Bank Limited operates 211 branches around the country. The bank has more than 633 foreign correspondents worldwide. Total number of employee is about 3562. The bank is listed in the Dhaka stock exchange and Chittagong stock exchange limited as a publicly quoted company for trading of its shares. Till the year of 2010, total asset is TK 81,451,822,803 and total capital is TK 7,920,588,892.

The practical activities of different desks what I have done is outlined in this Report. Various rules and regulations, policies and procedures relating to different activities have also been enumerated here.

Though foreign remittance is one of the major parts of banks income but the loans and advances and other loan schemes play a vital role in success of Uttara Bank Ltd. Uttara Bank Ltd. has offered the clients deposit, loan, remittance service and the like.

44

From 1983 to 2011, it has made strong initiative in banking sector. It can be one of the best private banks in Bangladesh, if it matches the expectation of the clients through the best banking services.

CONTENTS
CHAPTER-ONE: INTRODUCTION 1.01. 1.02. 1.03. 1.04. 1.05. 1.06. 1.07. 1.08. 1.09. Background of the study Objective of the study Scope of the study Limitation of the study Methodology Used Sources of Information Data Collecting Method Reliability of collecting Data Model Used

CHAPTER-TWO: OVERVIEW OF BANKING SYSTEM 2.01. 2.02. 2.03. 2.04. Beginning of Banking Banking History of Bangladesh Number and Types of Banks Operating in Bangladesh Banking Laws and Practices in Bangladesh

CHAPTER-THREE: OVERVIEW OF UTTARA BANK LTD. 3.01. 3.02. 3.03. 3.04. 3.05. 3.06. Historical Background of UBL Vision, Mission, Goals & Objectives of UBL Organization Structure of UBL Performance of UBL Capital Management Hierarchy of UBL

CHAPTER-FOUR: Loan & Advances of UBL

44

4.01. 4.02. 4.03. 4.04. 4.05. 4.06. 4.07. 4.08. 4.09. 4.10.

Loan and Advances Loan and Advances of UBL Types of Loan of UBL Cash Credit (Hypothecation) Cash Credit (Pledge) SBL (Small Business Loan) Consumer Credit Scheme (CCS) Personal Loan Agricultural Loan Uttara House Repairing Loan (UHRL)

4.11. Inland Bill Purchase (IBP) 4.12. Loan against Trust Receipt (LTR) 4.13. Leasing Method 4.14. Procedure of preparing proposal for Loan 4.15. Apprisal Process of Loan/ Application 4.16. Procedure of Sanction of Loan 4.17. Loan Disbursement 4.18. 4.19. 4.20. 4.21. 4.21. 4.22. Recovery Activities Calculation of Overdue Payment of Uttara Branch Problem with Advances of Uttara Branch Different Interest Rate of UBL (Uttara Branch) Bad Loan Management Problems of Bank Loan & Customer Loan

CHAPTER-FIVE: Findings & Recommendation 5.01. Findings 5.02. Recommendation Conclusion Appendix Bibliography

44

44

Chapter

CHAPTER 1: INTRODUCTION

44

1.1. BACKGROUND OF THE STUDY

No knowledge is fully complete unless it is fully supported by events on ground. Whatever may be the quality of theoretical knowledge, it is not complete without practical implication on ground. This realization is more pronounced in the study of Business Administration where experience on ground plays a dominant role.

Bachelor of Business Administration (BBA) is designed with an excellent combination of practical and theoretical aspects. After completing the BBA, it is required for every student to complete the internship or dissertation program with a minimum duration of two months. As a student of BBA to fulfill the requirement of this Degree, I was assigned to pursue Internship in UBL, Uttara Branch, Dhaka.

I have tried my best to use this opportunity to enrich my knowledge on banking system. After observing thoroughly, I have prepared this report on the basis of my findings and observation relating to the topic.

1.2. OBJECTIVE OF THE STUDY

The prime objective of the report is to get practical exposure to organizational environment as well as to understand the system and methodology adopted in conducting day to day banking by Uttara Bank Ltd. Besides this report has been composed to obtain the following objectives:

To get an overall idea of banking operation of Uttara Bank Ltd. To Know the Foreign exchange activities of Uttara Bank Ltd at Uttara Branch. To know the import procedures of Uttara Bank Ltd at Uttara Branch. To identifying the problems of this Branch of To identifying the problems of the existing Uttara Bank Ltd. Foreign exchange operations system.

To recommend some guidelines to improve the effectiveness and efficiency of Foreign Exchange services.

44

1.3. SCOPE OF THE STUDY

As I was sent to the Uttara Branch, the scope of the study is only limited to this Branch. The report covers its overall department wise function, structure and performance. The report covers the topics Operational Activities of Foreign Exchange Division of Uttara Bank Limited I have gathered valuable information from Daffodil International University & I have also got some information from web site, annual performance report, news paper etc.

1.4. LIMITATION OF THE STUDY

In preparing the Report, I have experienced some acute problems that have, to some extent, affected the presentation of the report. The acute problems were

a) LACK OF INFORMATION OR DATA: Adequate and in-depth well-organized literature was not available because a few researchers endeavored to work on such project in the past. Though the officials tried to assist, sometimes their working pressure couldn't give me proper assistance what I needed. There is some information which needed special permission from top level, is not always achievable.

b) TIME CONSTRAINT: It is something like impossible to cover the entire Foreign Exchange banking and performance phenomena exploiting a three months time period while an employee or an officer is awarded with one or two year probationary period to do his or her particular job.

c) COMPARISON STATUS: I have had no opportunity to compare the Foreign Exchange banking system of the Uttara Bank Ltd. with that of other contemporary and common size banks. It was mainly because of the shortage of time and Internship nature. In spite of all the drawbacks faced, everything has been managed well at the end. I believe the report is a quality report on Foreign Exchange Banking of Uttara Bank Ltd.

44

1.5. METHODOLOGY USED

To meet the objectives of the study, I realized that a single method would not be effective. Formal & oral discussion, direct observation, questioning clients & printed papers of the Bank were found useful. To collect the necessary and meaningful information, the following methods were applied. Both primary and secondary sources were used here.

1.6. SOURCES OF INFORMATION

I have collected data from the two unique sources; one is primary sources and another is secondary sources.

Source of Data

Primary Sources

Secondary sources

Face to conversation with the respective officers and stuffs of the branch. Discussing with my supervising teacher and manager. Practical work experience in the different desk of the department of the branch. In-depth study of selected cases.

Annual Report of Uttara Bank Ltd. Website of the Uttara Bank Ltd. Several books and periodicals related to the banking sector. Bangladesh Bank Report Different circular sent by the head office of Uttara Bank Ltd. Various documentary file of Uttara Bank Ltd. Prior research report.

44

1.7. DATA COLLECTING METHOD

This internship report has been prepared on the basis of on the job experience with the Uttara Bank Ltd., Uttara Branch. In spite of the scarcity of published data, it has been tried to make the report informative and handy. The data used in the report have been complied through different complicated ways- direct questionnaire to executives, continuous search on the ongoing accountants, and interview with internal auditor and external auditors report. Working with the organization for a meager period of three months is the main aspect of acquiring data and information to evaluate the culture, working environment and similar sort of affair of the organization.

1.8. RELIABILITY OF COLLECTING DATA

The data collected are highly reliable in the sense that all data generated in the report are used exclusively by the Uttara Bank Ltd. The auditors report on the financial statements and the correspondence with different desks generate the reliable information to compose the report successfully.

1.9. MODEL USED

The performance evaluation of the Uttara Bank Ltd. has been conducted based on the SWOT Analysis and Ratio Analysis.

44

Chapter

CHAPTER 2: OVERVIEW OF BANKING SYSTEM

44

2.1. BEGINNING OF BANKING

The Jews in Jerusalem introduced a kind of banking in the form of money lending before the birth of Christ. The word 'Bank' was probably derived from the word 'bench' as during ancient time Jews used to do money - lending business sitting on long benches. First modern banking was introduced in 1668 in Stockholm as 'Svingss Pis Bank' which opened up a new era of banking activities throughout the European Mainland. In the South Asian region, early banking system was introduced by the Afghan traders popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afghanistan came to India and started money lending business in exchange of interest sometime in 1312 A.D. They were known as 'Kabuliwallas'.

2.2. BANKING HISTORY OF BANGLADESH

THE BANKING SYSTEM
The banking system at independence consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks. Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. Cooperative credit systems and postal savings offices handled service to small individual and rural accounts. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange.

SECTORAL FOCUS
The primary function of the credit system throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent of total advances. The government's encouragement during the late 1970s and early 1980s of agricultural development and private industry brought changes in lending strategies. Managed by the Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and fishermen dramatically expanded. The number of rural bank branches doubled between 1977 and 1985, to more than 3,330.

44

IMPROVEMENT
Denationalization and private industrial growth led the Bangladesh Bank and the World Bank to focus their lending on the emerging private manufacturing sector. Scheduled bank advances to private agriculture, as a percentage of sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987, while advances to private manufacturing rose from 13 percent to 53 percent.

PROBLEMS
The transformation of finance priorities has brought with it problems in administration. No sound project-appraisal system was in place to identify viable borrowers and projects. Lending institutions did not have adequate autonomy to choose borrowers and projects and were often instructed by the political authorities. In addition, the incentive system for the banks stressed disbursements rather than recoveries, and the accounting and debt collection systems were inadequate to deal with the problems of loan recovery. It became more common for borrowers to default on loans than to repay them; the lending system was simply disbursing grant assistance to private individuals who qualified for loans more for political than for economic reasons. The rate of recovery on agricultural loans was only 27 percent in FY 1986, and the rate on industrial loans was even worse. The problem of credit recovery remained a threat to monetary stability, responsible for serious resource misallocation and harsh inequities. Although the government had begun effective measures to improve financial discipline, the draconian contraction of credit availability contained the risk of inadvertently discouraging new economic activity.

OVERCOME
As a result of these poor showing, major donors applied pressure to induce the government and banks to take firmer action to strengthen internal bank management and credit discipline. As a consequence, recovery rates began to improve in 1987. The National Commission on Money, Credit, and Banking recommended broad structural changes in Bangladesh's system of financial intermediation early in 1987, many of which were built into a three-year compensatory financing facility signed by Bangladesh with the IMF in February 1987. Foreign exchange reserves at the end of FY 1986 were US$476 million, equivalent to slightly more than 2 months worth of imports. This represented a 20-percent increase of reserves over the previous year, largely the result of higher remittances by Bangladeshi workers abroad. The country also reduced imports by about 10 percent to US$2.4 billion. Because of Bangladesh's status as a least developed country receiving concession loans, private creditors accounted for only about 6 percent of outstanding public debt. The external public debt was US$6.4 billion, and annual debt service payments were US$467 million at the end of FY 1986.

44

2.3. NUMBER AND TYPES OF BANKS OPERATING IN BANGLADESH

The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The number of banks in all now stands at 52 in Bangladesh. Out of the 52 banks, 4 are Nationalized Commercial Banks (NCBs), 29 local Private Commercial Banks, 10 Foreign Banks and the rest 8 are Development Financial Institutions (DFIs) or Specialized Banks. My concentration of this report, Uttara Bank Limited, is categorized as Private Commercial Bank. Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones. Among the 10 foreign banks, Standard Chartered has become the largest in the country. The number of total branches of all scheduled banks is 6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and 60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private commercial banks 1,214, foreign banks 31 and specialized banks 1,177. Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now carrying out a reform program to ensure quality services by the banks.

2.4. BANKING LAWS AND PRACTICES IN BANGLADESH

In Bangladesh, especially in the Banking sector the following Acts have been practiced for years. The Acts are The Bangladesh Bank Order, 1972; The Bank Companies Act, 1991; The Companies Act, 1994; The Financial Loan Court Act, 1990; The Financial Institutions Act, 1993; Foreign Exchange Regulation Act, 1947; The Money Loan Court Act, 1990; The Contract Act, 1872; The Negotiable Instrument Act, 1881; The Partnership Act, 1932; Rules & Regulations issued by Bangladesh Bank; The Securities and Exchange Rules, 1987; The Securities and Exchange Ordinance, 1969; The Securities and Exchange Commission,1993; The Securities and Exchange Commission (Public Issue) Rules, 2006; Dhaka & Chittagong Stock Exchange listing regulations; The Income Tax Ordinance, 1984; The VAT Act, 1991;

44

Other Acts related to documentation of loans and advances, law of insurance relating to goods etc.

Chapter

CHAPTER 3: OVERVIEW OF UTTARA BANK LTD.

44

3.1.BACKGROUND OF UBL
Uttara bank Limited is one of the largest and oldest private-sector commercial bank in Bangladesh, with years of experience adaptation of modern technology both in terms of equipment and banking practice ensure efficient service to clients. 211 branches at home and 633 affiliates worldwide create networking and reach capability. Uttara bank Limited is a bank that serves both clients and country.

1 It operates through 211 fully computerized branches ensuring best possible and fastest service to its valued clients. 2 3 4 The board of director consists of 15 members. Total number of employs nearly 3,562. The bank is headed by the Managing Director who is the Chief Executive Officer.

Uttara bank Limited was initially introduced as eastern banking Corporation in the year of 1965. Its head office was situated in Dhaka. In the year of 1972 the bank was introduced as a nationalized bank (Order of 1972) named as Uttara Bank Limited. After that it was functioning its activities as a nationalized bank like other six nationalized bank of Bangladesh. As a part of government policy the bank was functioning its activities and contributes in the national economy. In the year of 1983-1984 the bank was privatized. In the regard Uttara Bank Limited was formed as a private bank in 1983. Since then the bank has been taking various steps that are very much effective in the context of the economy of Bangladesh. Than the bank has taken significant steps and contributed highly in the national economy. The Authorized Capital of the Bank as of 2010 is Tk. 5,000 million and the Paidup Capital is Tk. 2,396 million. According to the rules and regulation of Bangladesh bank, Uttara Bank Limited has taken all kinds of commercial Banking activities and made itself as a successful commercial bank of Bangladesh. The main motive is to capture the competitive environment in banking sector and gain profit. According to the year of 2010 the bank has total capital is TK. 792.06 crore by combining the entire brance (211 Branch). Total asset was TK. 8145.18 crore. In the year of 2010 the banks profit after tax provision was about Tk. 155.19 crore which about Tk. 110.52 crore in 2009. The growth rate of profit was about 40% net income per share is Tk. 6.48

44

The Bank provides a broad range of financial services to its customers and corporate clients. The Board of Directors consists of eminent personalities from the realm of commerce and industries of the country. The bank has set up a new standard in financing in the industrial trade and foreign exchange business. Its various deposits and credit products have also attracted the clients both corporate and individuals who feel comfort in doing business with the bank.

3.2. VISION, MISSION, GOAL & OBJECTIVES OF UBL

VISION STATEMENT
To be leading commercial bank in the country & contribute maximum to the welfare for the people of the country. Prime objective to deliver a quality that demonstrates a true reflection of our vision. Excellence in Banking.

MISSION STATEMENT
We shall be the forefront of national economic development by: Maintaining the maximum ethical standards and community accountability praiseworthy of a leading corporate citizen. Continuously improving productivity and profitability, and thereby enhancing shareholder value. Creating and maintaining a set of efficient and hard working employees.

GOALS

Short Term Goal: Increase financial services day by day. Earn satisfactory profit by giving services to the customer.

Long Term Goal: Maximize the wealth of shareholders and want to be a leading bank in the banking sector of Bangladesh.

44

OBJECTIVES
Strategic objectives

To achieve positive Economic Value Added (EVA) each year. To be market leader in product innovation. To increase services (backed by technology) by efficient employees. To increase deposit mobilization. For smooth functioning of foreign trade, establish large foreign network. Expand the credit facilities for the customers. To maintain a good position in competitive banking sector of Bangladesh. To increase the credit facilities for the corporate sector.

Financial objectives To achieve 15.69% return on shareholders equity or more, on average.

3.3. STRUCTURE OF THE UBL

Board of Directors:

Chairman Vice-Chairman Managing Director Directors

: Mr. Azharul Islam : Mr. Iftekharul Islam : Mr. Samsuddin Ahmad : Mr. Abul Barq Alvi Col. Engineer M.S. Kamal (Retd.) Independent Director Syed A. N. M. Wahed Sk. Amanullah Major General Prof. M. A. Mohaiemen (Retd.) Dr. Md. Rezaul Karim Mazumder Lt. Col. Dewan Zahedur Rahman (Retd.) (Died on 01.02.2011)
44

Engineer Tofazzal Hossain Mohammed Farooq Muhammad Quamrul Ahsan Mr. Md. Asif Rahman Secretary : Mr. Md. Fazlur Rahman

Executive Committee:
Chairman Vice-Chairman Directors : Mr. Azharul Islam : Mr. Iftekharul Islam : Mr. Abul Barq Alvi Col. Engineer M.S. Kamal (Retd.) Independent Director Dr. Md. Rezaul Karim Mazumder Lt. Col. Dewan Zahedur Rahman (Retd.) Managing Director : Mr. Shamsuddin Ahmad

Fig : Structure of UBL

3.4. PERFORMANCE OF UBL

The Bank has made a significant progress in all sectors of business in 2010. Banks operation has achieved the confidence of its customers with sound fundamentals in respect of deposit accumulation, import and export business, remittances, loans and advances and profitability. As a result the bank has been able to earn remarkable profit in business.

44

3.5. CAPITAL
The Authorized Capital of the Bank was TK. 5,000.00 million of 500,000,000 Ordinary Shares of TK. 10 each as of December 31, 2010. Issued, Subscribed and Paid-up Capital of the Bank was TK. 1,597.31 million of 159,731,840 Ordinary Shares of TK. 10 each and TK. 798.66 million of 79,865,920 Ordinary Share of TK. 10 each issued as bonus shares and listed both in Dhaka and Chittagong Stock Exchanges. The total equity of shareholders of the Bank at the end of the year 2010 stood at TK. 8,610.8 million

3.6. HIERARCHY OF POSITION

44

Chapter

CHAPTER 4: LOAN & ADVANCE OF UTTARA BANK LIMITED

UTTARA BRANCH, DHAKA

44

4.1. LOAN & ADVANCES

Loan and Advances comprise the most important asset as well as the primary sources of earning of the bank .On the other hand .loan is also the major sources of risk for the bank management A prudent bank management should always try to make an appropriate balance between return and risk involved with the loan portfolio and unregulated bank might be fraught with unregulated risk for maximizing its potential return .In such a situation, bank might find itself in a serious financial distress instead of improving its financial health .Consequently not only the depositors but also the general shareholders will be deprived of getting back their money from the bank. Loans and advances mean lending made by the bank to weak clients for earning interest. Main objective of the loans and advances is to earn profit for the bank. On an average of 75%to 80% of the banks earning come from interest received against the loans and advances of a bank.

4.2. LOAN & ADVANCES OF UBL

The Bank continued to consolidate and diversify its portfolio in 2010 to have a diversified client base and portfolio distribution across the sectors to reduce client specific concentration and industry specific concentration and to reduce overall portfolio risk. In 201 Uttara Bank Ltd . registered a steady growth in the credit portfolio posting a growth of 23.37 percent. Total loans and advances of the bank stood at tk 48,672.7 million during the year 2010 as compared toTK 39,451.4 million of the previous year .Average loan per Branch stood at TK 230.7 million .Sector wise allocation of advances revealed a well- diversified portfolio of the bank with balanced exposure in different sectors. Uttara Bank Limited Uttara branch is situated in Uttara, Dhaka which is very imported place of Dhaka city.It is a very big and important branch of UBL. The Branch give various Kinds of Loan to the borrower like CC Hypo ( Cash Credit Hypo), CC Pledge ( Cash Credit Pledge),Overdraft (Second Overdraft),UHRL (Uttara House Repairing Loan),SBL (small Business Loan),PLS (Personal). As per the closing entries of 2011, the amount of total Deposit of Uttara Branch is taka 277644422.49,Loan and advance is taka 135786606.10

44

4.3. TYPES OF LOAN

44

4.4. CASH CREDIT (HYPOTHECATION)

Cash Credit allowed against hypothecation of good is known as Cash Credit (HYPO) limit. Incase of hypothecation, the borrower retains the ownership and possession of goods on which charge of the lending bank is created. Charge of Uttara bank limited is 14%. The bank should take the following precaution.

The banker should carefully verify the stocks of hypothecated goods and their market price. Periodical statement of stock duly signed by the borrower should be obtained. Stocks should be duly insured against fired , burglary. Bank should try obtaining sufficient collateral security The goods are readily saleable and have good demand in the market. The borrower should be trustworthy and prudent customer. The price of the goods, offered as security, is to be calculated as per purchase price or market price whichever is lower. The price of goods is steady etc.

4.5. CASH CREDIT (PLEDGE)

Cash credit allowed against pledge of good is known as Cash Credit (Pledge).In case of Cash credit (Pledge), the borrower pledge his goods to the bank as security against the Credit facility. Banks retain the effective control of the pledged goods. Pledge goods may be stored in a go down of the borrower but under lock and key of the bank. Banks guards are posted to protect the go down sometimes; pledges goods are in Banks go down

4.6. SMALL BUSINESS LOAN (SBL)

In case of SBL the borrower will get loan from the bank against his business. Here the bank will charge against the amount of loan. Maximum limit of the loan is TK 5 lac. Uttara bank Ltd Charges 15% interest against the amount. Bank will obtain following documentation from the borrower:

Photographs of borrower.
44

 Commissioner Certificate/ ID card/ Passport/ Photocopy as the identify of the borrower. Photographs of the mortgage property. Documentation of property (Dalil,Parcha,Khajna rasit etc. Valuation of the property. Audit report of the property. Six months bank statement. Report of CIB.

4.7. CONSUMER CREDIT SCHEMES (CCS)

The Bank distributed loan of Tk.6.4 million and 886.7 million during the year 2010 under two special project namely Uttara Consumer Loan Scheme and Uttaran House Repairing and Renovation Scheme respectively . The outstanding balance of the same stood at Tk. 84.1 million and Tk 4,315.5 million respectively at the end of the year 2010.It may be mentioned here that the recovery rate in these scheme is satisfactor Prudential Regulations for Consumer Financing Regarding financing the purchase of used vehicles Bangladesh Bank, Banking Regulation & policy Department, Head office, Dhaka issued a BRPD Circular letter No. 15 dated 20/12/2010 in relation with financing on Auto vehicles loan which is respected below, for meticulous compliance, Banking Regulation & policy Department Bangladesh Bank, Head Office, Dhaka-1000. Prudential Regulation for consumer Financing please refers to Regulation 21 of Guideline for Regulation for Auto (Loan) Circular vides BRPD Circular No.33 dated November 2010.

4.8. PERSONAL LOAN

The banks desirous of financing the purchase of used vehicles shall prepare uniform guidelines for determining value of the used vehicles, however, the bank shall only finance the vehicles imported as described in the existing import policy order, to cater the urgent financial need of the service holders having limited income bank introduced loan scheme. The outstanding balance of the same stood at Tk2.0 million at the end of the year 2010.

44

4.9. AGRICULTURAL LOAN

At present the bank is disbursing Agriculture Loan to the farmers directly through its all branches with simple terms and conditions. The persons interested in agriculture works , including men and women, landless, marginal farmers and shared croppers are eligible for receiving Agriculture Loan from the bank .The Agriculture credit sectors of banks are crops, irrigation, equipments, agriculture machineries ,livestock, fisheries (including Shrimp) and poverty alleviation etc.The outstanding balance in this sector stood at TK.1,088.0 million at the end of the year 2010as against TK.348.1million of the previous year .

4.10. UTTARAN HOUSING REPAIRING LOAN

In case of UHRL the borrower will get loan from the bank by giving mortgage of his property. Here the bank will charge against the amount of Loan. Maximum limit of the loan is TK.25 lac. Uttara bank Ltd charges 15% interest against the amount. Bank will obtain following documentation from the borrower: Photographs of Borrower. Commissioner Certificat/ ID card/ Passport photocopy as the identity of the borrower. Photographs of the mortgage property. Documentation of property (Dalil, Parcha, Khajna, Rasid etc.) Valuation of property Audit report of the property Six months bank statements Report of CIB.

PURPOSE
To help genuine House/ Building/ Flat owners to undertake repairing, renovation works for better living or increasing rental income. To help the owners of House/ Building/ Flat to get loans at a minimum time & without any hurdles. To contribute towards development of socio-economic condition of the society.

44

To improve the standard of service holders and self employed persons or Retired Government Officers, excluding Businessmen, developer.

INTEREST AND OTHER CHARGES

Interest: 14.00% per annum with yearly rest subject to change that may be made by the Bank from time to time.

Processing Fees: @TK 1000.00 (Taka One Thousand) only per lac to be realized before processing of loan. Processing fee to be refunded deducting TK.5oo.00 (Taka Five Hundred) only as service Charge per proposal in case of it is rejected Cost of Application form & Prospectus: TK 200.00 (Taka Two Hundred) only.

If loan installments are regularly & timely paid without any default, the borrower will be allowed incentive at the rate of 5% of the total interest charged which will be refunded on full adjustment of the account.

REPAYMENT PERIOD
The loan is to be repaid by equal by monthly installments including interest maximum within 8 (Eight) years for loan above TK 5.00 lac (Taka Five Lac) only.
Repayment will start after 3 (Three) months of availing 1st installment of the

loan.
Loan installments will have to be paid within 10th bay of every month. If any

installment is not paid within 10th day of the month, the borrower will be treated as defaulter and penal interest @ 2% per month will be charged on the defaulted amount.

SECURITY
Registered Mortgage of the property where against loan is to be availed by deposit of original Title Deed with chain of documents. Registered Irrecoverable General Power of Attorney empowering the Bank to sell the mortgaged property as and when required.

44

 An undertaking by the borrower in banks prescribed form to pay monthly

installments regularly in time.

Post dated cheque for all installments to be deposited in advance.

Personal Guarantee of Spouse or any other person acceptable to the bank is to be obtained.

The following papers will have to be submitted while applying for loan: Application in prescribed form duly filled in all the columns and signed by the applicant. Personal Net Worth statement of the client.
Lawyer's opinion on the documents of the properties.

BENEFIT OF THE SCHEME

The genuine House/ Building/ Flat owners of small and fixed income group or retired persons may avail of the opportunity to repair, renovate their own house according to their need and repayment capacity.

ELIGIBILITY OF THE CLIENT

o

Any owner of House/ Building/ Flat aged between 30 to 55 years will be eligible to get loan under this scheme who are financially capable to repay the loan having income or additional income from own source and added rental income to be guaranteed after utilization of the proposed loan. In case of age bar of applicants the proposals may be considered for sanction if the guarantor is found good or other source of income of the applicant covers the installment of the loan.

o The House/ Building/ Flat to be repaired and / or renovated by the loanee should not be older than 20 years.

o The monthly income will be certified by the employer of the concerned loanee in case he is a service holder.
44

o The employees or their dependent of Uttara Bank Ltd. Are not eligible to get loan under this scheme.
o

The applicant must have a saving Account with the branch of the Bank from where he / she want to avail of the loan.

o Bank reserves the right to accept or reject any application without assigning any reason whatsoever.

44

CREDIT CEILING
Maximum loan under the scheme are being allowed ranging from TK. 7.50 lac (Taka Seven Lac and Fifty Thousand) only to TK. 25.00 lac (Taka Twenty Five Lac) only categorizing on area basis as under for any individual excluding business, developer for repair and / or renovation works commensuration the monthly income. Sl .no Area Maximum Ceiling

O1

Branches of Dhaka-Chittagong Metropolitan areas, Tongi- SavarNarayanangonj Pourasava areas,

1. Tk.25.00 lac (Taka Twenty Five Lac) only

02

Branch of District Head Quarters (other than areas mentioned at Sl. NO.01 Branch of all other places (other than areas mentioned at Sl NO. 01 &02)

Tk.15.00 lac only. Tk .7.50 lac (taka Seven lac fifty Thousand)only

03

Purpose of Lending
More emphasis is to be given on the applicants business potentiality and feasibility. While appraising proposals, study is to be made on the following issues: Purpose of the loan. Account of loan sought.
Present position of the business.

Marketability. Security against the loan. Source of repayment etc. After thorough examination of these issues and when satisfied, loan proposal is to be processed.
44

44

End-use Supervision
Bank is to ensured-use of the fund lent so that fund is not diverted else where. The following steps are to be taken in order to stop diversion of fund: Drawing in the account is to be allowed purpose wise. Storage arrangement is to be inspected before disbursement. Periodic inspection is to be made to verify the correctness of quality and quantity stated in the stock statement. Drawing power Register (where applicable)is to be maintained. Regular rotation of stocks are to be ensured. Sale proceeds are required to be deposited in the respective loan accounts regularly. Loanee is required to follow agreed schedule of repayment.

Watch on CustomersAccount
Branch officials are to keep watch on each loan account. irregularity in the account is to be monitored

Any symptom very closely.

Special care is to be taken where operation of the account (turnover)is minimum and also where the balance in the account remains near the drawing limit. It is to be ensured that no window dressing is there in the account like depositing money on a particular day and taking it out the same day or the following day keeping the balance stationary.
The Branches, Zonal Offices, Departments of Head Office have to comply the instructions meticulously in addition to all other Instructions. Policies &Guidelines under the purview of laws ,rules and regulations on credit risk management.

4.11. INLAND BILL PURCHASE (IBP)

Uttara Bank Limited started granting of credit facility against Inland Bill Purchase by issuing the Instruction Circular No.243 dt. 17-01-99. Subsequently certain amendments have also been made thereto vide Credit Division .
44

All concerned are hereby instructed to observe the following procedure for granting of credit facility against Inland Bill Purchase (IBP): Only those bills will be purchased which arise out of genuine business transactions of manufacturing units/concerned. The concerned branch allowing IBP facility must see that the bill has been drawn by the party himself and he is not the purchaser of goods/services or endorser of the bill. The applicant requesting for IBP facility will have to submit all the shipping documents as required in the ILC opened by buyer's bank.
On receipt of acceptance and maturity date for payment of the bill from ILC opening

bank, our concerned branch will invariably verify, by physical contact with concerned ILC issuing bank, the genuineness of the said acceptance letter by relationship Manager/ second Officer/ Dealing officer (not bellow Principal Officer) with authorized signature to be counter signed by the branch incumbent. The branches must not purchase Bill against ILC opened by any of our Bank branches. In case of any need for purchasing against ILC of our bank, prior permission from Head Office is to be obtained. The loans under IBP will be allowed by the concerned Branch Manager as per his above discretionary power. The loans falling beyond his discretionary power will be allowed only on sanction from the concerned Zonal Head or Head Office as the case may by. In case the liability against any IBP is not adjusted even within 30 days after due date of payment, the matter shall be referred to Head Office, International Division giving full particulars of bills/LCs for taking up the issue by them for settlement. The following charges and interest are to be realized: a. Handing Charge: 0.25% of bill value with minimum TK.25.00 and maximum TK.2000.00 b. Rate of interest: 13.00% per annum with quarterly rest subject to change that may be made by the bank from time to time. The following papers and change documents are to be obtained/ executed by the party before allowing IBP. a. Loan application ( as per format in annexure 'A') b. Single/ Double Party DP note (AS applicable) c. DP Note delivery Letter (where guarantor exists) d. Letter of continuity e. Revival Letter Form-I
44

f. Revival Letter Form-II (where guarantor exists) All concerned must comply the instructions of this circular meticulously while granting credit facility against IBP. (M.A Matin) Deputy Managing Director (Shajkh Abdul Aziz) Additional Managing Director

Distribution
The Managing Director's Secretariat, Uttara Bank Limited, Head Office, Dhaka

The Addl. Managing Director's Secretariat, Uttara Bank Limited, Head Office, Dhaka

The Deputy Managing Directors Secretariat, Uttara Bank Limited, Head Office, Dhaka The Executive General Managing' Secretariat, Uttara Bank Limited, Head Office, Dhaka The Divisional/ Department Heads, Uttara Bank Limited, Head Office, Dhaka The Principal, Uttara Bank Limimed, Training Institute, Dhaka All Zonal Heads, Uttara Bank Limited, Bangladesh All Branch Managers, Uttara Bank Limited.Bangladesh.

4.12. LOAN AGAINST TRUST RECEIPT (LTR)

On the arrival of goods and lodgment of import documents, importer may request the bank for clearance of goods from the port (custom) and keep the same to bank go down. Proper sanction from the competent authority is to be obtained before clearance of consignment. For giving these types of loan, officer makes loan proposal and sends it to H/O for approval. After getting approval from H/O, bank grants loan in the form of LTR. Advance against a Trust Receipt obtained from the Customers are allowed to only first class tested parties when the documents covering an import shipment or other goods pledged to the Bank as security are given without payment. However, for such advances prior permission/sanction from Head Office must be obtained.

44

 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 Bankers lien on the goods and practically amounts to hypothecation of the proceeds of sale in discharge of the lien.

4.13. LEASING METHOD

Leasing is a method of financing the acquisition of capital machinery, equipments medical instruments. Automobiles etc .It involves a contractual relationship between the Lessor and the Lessee in whice the Lessor grants to a firm or person the use of an assets As part of its diversification of credit products Uttara Bank continued lease financing scheme. The outstanding balance stood at TK.487.8 million on December 31, 2010. Major sectors where the bank has extended its business are mainly Imports and Exports, Commercial Enterprise, Steel Re-rolling Mills, Readymade Garments, Textiles, Edible oil, Cement Factory etc. Services for a specified period of time, usually for an agreed sum of rent, leasing, therefore, enables a firm or an individual to avail the services of machinery and equipments without making the investment. UBL deals in Finance Lease only.

Bank management may include any other branch/branches for lease financing as and when required .We shall offer lease finance on lease rental basis for acquisition of the following article a) Capital machinery for BMRE purpose. b) Heavy construction equipments.
c) Elevators/Lifts.

d) Air conditioner
e) Vehicles like Luxury Bus, Mini Bus, Taxi Cab, Cars, Truck, and Pick-up etc.

f) Medical equipments.
g) Generators, Computers and any other item as may deem fit by the bank.

Bank will extend lease facility against brand new machinery / equipment & new / reconditioned vehicle.

44

Eligibility for availing Lease Finance

Assistance under lease finance will be available to genuine entrepreneurs and existing industrial concerns. Customer Analysis, Industrial Analysis ,Buyer Analysis, Financial Analysis ,Projected Financial Performance, account Performance of existing customer , adherence to banks own Lending Guidelines (Global Guidelines ) Should be followed when processing lease proposal.

Factors to be considered for assessment

The debt Equity Ratio and Debt Service Coverage Ratio must be reasonable satisfactory. Credit Risk grading (CRG) of the client must be acceptable and clean CIB report must be obtained from Bangladesh Bank before sanction. Lease amount must not exceed 50% of the clients net worth. Prospective Lessee must have capacity to repay monthly Lease rental from his existing business. Lease finance facility will be extended only to the (Proprietorship/Partnership/Limited company) running profitably. business

Notwithstanding the above, Bank reserve the right to accept or reject any Lease proposal assigning any reason, what solved.

44

Primary Expenses of the Lessee

Application fee TK.200/= Service charge wiil be o.25% on total acquisition cost (Minimum TK.5,000/-and maximum TK.25,000/-) Interest during construction Period (IDCP) is chargeable for the period from the date of disbursement of fund by UBL till the date of execution (where applicable)at rate of interest applicable for the Lease Finance. Supervision and Monitoring Charge @1% on acquisition cost to be realised before disbursement. Commitment charge will be 1% on the acquisition cost for the period from the date of sanction of lease to the date of placement of purchase order/ opening of L/C.

VAT is applicable as per prevailing rule

After sanction of a proposal for Lease Finance , a Lease Agreement will be signed between the client (Lessee) and bank (Lessor).The Lessee will be required to make advance payment of 2(two) month lease rentals to the bank on the date of signing the lease agreement , which shall be refunded at the expiry of the lease term . The lease rental shall be calculated on the basis of total estimated acquisition cost of the lease items including all other charges up to the time of execution.

Procurement of lease item(s)

In case of purchase of machinery / equipment /vehicles from Local source, bank will place purchase4 order directly to the manufacturer / supplier on the basis of terms and conditions embodied in the Lease agreement. In case of lease item(s) to be imported, bank will open Letter of Credit in its name. The custom clearance and inland transportation of the equipment shall be handled by the banks approved clearing agent with the co-operation of the client (Lessee).

44

Lease Execution &Payment of Lease Rental

The date of Lease Execution is the date on which the lessee takes delivery of the Leased item. An amended Lease Agreement is to be executed between the bank and the client reflecting the actual acquisition cost .At the same time the lessee will issue the certificate of acceptance of the lease item(s). The Lessee will pay the 1ST month lease rental, Insurance Premium of the 1ST lease year as well as any other charges to the bank on the date of execution either in cash or through Pay Order. The Lessee will thus pay the monthly rental starting from the date of execution of the amended Lease agreement till the expiry of the Lease period /term though advances cheques.

Acquisition Cost
The acquisition cost of an item shall be the purchase price ,IDCP and all other incidental charges and financial expenses incurred by the bank .

Term/Terms of Lease
Terms of Lease may be for a period of maximum 5(Five) years in case of capital machinery, equipments or medical instruments and 4(Four) years in case of automobiles. The term of lease must not exceed the estimated economic life of the Leased asset The Lease agreement cannot be cancelled unilaterally during the Lease period under normal circumstances.

Grace Period

Incase of local purchase: Maximum 4(Four) weeks from the date of delivery of the equipment. Incase of Import: Maximum 3(three) months from the date of arrival of consignment/leased item at Bangladesh.

Mode of Disbursement
1) In case of Local procurement value of lease item will be paid by pay order in

favor of supplier. 2) In case of foreign procurement by import , PAD liability will be adjusted by creating Lease finance .

44

Risk Fund
A risk fund @1% shall be realised against each lease on the acquisition cost of lease item before disbursement.

Lease Rental
Monthly Lease Rental shall be calculated comprising Depreciation Interest. Lease rental will be calculated in amortized even repayment system.

4.14. PROCEDURE OF PREPARING PROPOSAL FOR LOAN

The following procedure is followed by Uttara branch while preparing proposal for loan. First, borrower has to apply to UBL for their loan by filling up of a specific application form given by the bank in respect of their own status (individual/proprietorship/public/private ltd.etc.).A very efficient team of employee is working under the supervision of sales manages to help the borrower in this regard.

Incase of individual loan, an applicant has to submit at least 6 month latest financial statement of their own bank account along with his photocopy of passport or ID card or any other documentation, as his personal identification. If the loan is for house repairing then the borrower has to submit various documents of existing house as an evidence of house owner. Thereafter, he has to submit price quotation accepted and signed by the borrower, a salary certificate given by the organization (if borrower is a service holder) and with all other necessary documents. But in the case of business person, some excess documents are required. Borrower has to submit at least 12 months latest financial statement of their own bank account. They are also required to submit the names of all board of direct of the organization. The following papers will have to be submitted while applying for loan: Application in prescribed form duly filled in all the columns and signed by the applicant. Two passport size photographs of the applicant duly attested by manager/ relationship manager of the branch. A photograph of the house/ building/ flat is to be sent with the proposal.
44

 Estimate of the proposed expenditure to be incurred for the repairing and or renovation of the house/ building/ flat to be submitted of the application. Personal Net Worth statement of the client. Banks Statement for minimum last 6 (six) months of the account of the client. Contact Point Verification Report by banks authorized officer. Lawyer's opinion on the documents of the properties.

Others

The repairing and/ or renovation work must be done within the premises as per estimate submitted by the party with the application. Since there is no provision for insurance cover against the loan, the borrower will furnish an under taking to the effect that he/she will repay the banks loan even if there is any loss of property due to natural calamity. The borrower will allow the bank official to inspect the side at any time. The borrower will immediately inform the bank if he /she or his /her grantor changes residential address or professional. The borrower will not sell, gift or transfer the possession/owner ship of the house/building /flat before full adjustment of the loan without prior permission from the bank. Existing rent of the house /building /flat and other source of income of the applicant are to be mentioned in loan application form.

After that, the applicants for loan has to fill up a CIB (Credit Information Bureau) form and must be verified by Bangladesh Bank whether the applicant has any irregularities in repayment of loan or any other credit records. After that the employee o Uttara branch cheeks all documents provided by the borrower .the following documents is checked:
Application and passport size photograph: The employees of Uttara branch cheeks

application and 2 or 3 copies of recent passport size photographs.

Price quotation: A quotation accepted by the applicant should also be submitted to Uttara Bank Limited. And this quotation must be real, because this is also be verified ,it is genuine or not .
44

 Passport /voter ID / office ID/ other ID: Passport, voter ID, office ID, or any other

Kinds of are ID are also required as and evidence of the applicants ID and should be submitted by the prescribed application form.
Salary Certificate: If the applicant is a service holder, then a real salary certificate,

signed by his superior is also needed.

Photocopy of latest trade license: if the applicant is a business person and the

business is a proprietorship business, then a photocopy of latest trade license of his organization is also required,
Photocopy of registered/Notarized partnership deed: if the business is a

partnership business, then the applicant has to submit a photocopy of registered or notarized partnership deed to UTTARA BANK LTD. these deeds of the applicant business are also be verified carefully.
Tax documents: sometimes personal relevant income tax documents are also needed

and should be submitted to UTTARA BANK LTD.

Bank statement: bank statement of the applicants account is very much important.

The applicant has to submit latest 6 months transactions.

Checking duplicity and regular liabilities with UTTARA BANK LTD: in this part

of verification duplicity and regular liabilities of an applicant UBL are also be checked.
Checking proper filling up of the application: filling up of the application is also an

important requirement.
After that, UTTARA BRANCH sent a very efficient team for the verification. If the

team is satisfied by all aspects, then they report to the branch manager. If the branch manager agrees, then he gives order for preparing proposal for loan. After getting the permission from manager the employees team prepares loan statement of UTTARA BRANCH. By adding all the documents, submit it to head office and zonal office.

4.15. APPRAISAL PROCESS OF LOAN/APPLICATION

A potential customer to interested to avail Lease Finance from our bank will apply in standard application Form design by the bank along with a brief write-up on the proposal/equipment expected returns/benefits for the use of such equipment or automobile as the case may be. A competitive quotation of the lease item issued in favor of Uttara Bank Ltd. shall have to be submitted. After examination of the various aspects of the project, if the branch manager /relationship manager fully satisfied about the financial standing, credit worthiness, management set up , professional
44

integrity , technical feasibility , repayment capacity etc, of the provost lessee and business viability of the project ,the proposal may be forward to head office through the zonal office with necessary comments ,view and recommendation for approval.

44

4.16. PROCEDURE OF SANCTION OF LOAN

i.

The branch Relationship Manager will process the loan applications and the Zonal Head will sanction the loan within his discretionary power on inspection of the House/ Building/ Flat and on verification of possible rental income and the branch Manager will disburse the loan on completion of all formalities against the allocation.

ii.

Ceiling of the loan for individual party will be considered based on 50% to 60% of the Forced Sale Value (FSV) of the properties (Land+ building).

iii.

On receipt of application with all the required papers, the Relationship Manager (RM) will verify the genuineness of the information & particular of the application by deputing an inspecting official of the bank. He will also ensure geniuses of the same by applying his dust prudence. If all the paper are found all right and genuine and he is fully satisfied about the geniuses of the applicant, the RM will process the loan and get the same sanctioned by Zonal Head within 15 days from the receipt of the application complete in all respect. If it exceeds discretionary power of Zonal Head he will immediately forward it through respective Zonal Office to Head Office for consideration. A copy of sanction letter to be sent to the UTTARAN CONSUMERS CREDIT CELL, CRM Division, Head Office immediately after sanction by the Zonal Head to Zonal Head to Record the same in the computer.

1. The following delegation of powers is granted to the concerned Zonal Head and Head Office: Zonal Head : Up to TK.2,00,000.00 UP to TK. 3,00,000.00 Up to TK.7,00,000.00 Up to TK. 10,00,000.00

GM(CRM),Head Office (Without recommendation : of the Credit Committee) Head of Credit (Without recommendation of the : Credit Committee) Additional Managing Director(On recommendation : of the Credit Committee)

44

 Managing Director( on recommendation of the : Credit Committee)

Up to TK. 25,00,000.00

44

4.17. LOAN DISBURSEMENT

Having permission from head office and completed accurately prepare the necessary loan documents; the employee team disburses the loan to the borrowers accounts. if the borrower has no account in UTTARA BRANCH, then the team opens and account (current/savings)for the borrower. then bank start to collect installment with regular basis and monitoring weather client it or not if client tend to be defaulter ,bank remind frequently by phone ,sending letter and communicate directly. Having permission from head office and completed accurately prepare the necessary loan documents; the employee team disburses the loan to the borrowers accounts. If the borrower has no account in UTTARA BRANCH, then the team opens and account (current/savings) for the borrower. then bank start to collect installment with regular basis and monitoring weather client it or not if client tend to be defaulter ,bank remind frequently by phone ,sending letter and communicate directly.

Pre Disbursement Activities

Prepare loan file: Receiving all documents, Loan Administration Division prepare a loan file with all documents received from the unit office. Charge documents checking: The loan administration division checks all charge documents. Following charge documents are checked: -Money receipt (Risk fund) -Sanction letter -Demand promising note (With stamp of Tk 20/=) -Letter of arrangement (With stamp of Tk 150/=) -General loan agreement (With stamp of Tk 150/=) -Letter of undertaken (With stamp of Tk 150/=) -Letter of stocks and goods (With stamp of Tk 150/=) -Letter of hypothecation book debt and receivable (With stamp of Tk 150/=) -Letter of disbursement -Photocopy of trade license (attested by CRO) -Insurance (Original copy) -Blank cheque with signature (one cheque for full amount and others same as no of installment on Favor of Dhaka Bank, no date, no amount) -Two guarantors (one must be Spouse/parents) -If the loan provide for purchase of fixed assets or machineries and if the loan amount is over Tk 50,000/= then the stamp of a certain amount is require)

44

Post Disbursement Activities

- Repayment Schedule Sent to Business Unit - Loan details MIS entry - Loan files sent to Central Archive

4.18. RECOVERY ACTIVITIES

Receive & print SMS/ Fax for installment deposits (SME) Check SMS data in MYSIS & resolve problems Post recovery checking with unit office/ branch statement Repayment schedule checking Inter branch Account- Other Banks Cheque clearing (for corporate)

Completing the disbursement, loan administration division sent to the respective Customer Relationship Officer informing the disbursement of the sectioned loan.

4.19. CALCULATION OF OVERDUE PAYMENT OF UTTARA BRANCH

The main problem of Uttara branch is overdue payment. Most of the clients are not paying their payment timely. So the branch needs to calculate payment as the requirement of head office. Normally the installment of payment is started after three months of loan disbursement. After three months the installment of payment is due. By that time the due payment is calculated. If client do not pay their installment, bank remain frequently by phone, Sending letter and communicate with directly. After that Uttara branch calculate the over due payment and sent to the head office. Then head office takes necessary actions.

44

4.20. PROBLEM WITH ADVANCES OF UTTARA BRANCH

In case of advance in different project, the interest rate is too high Maximum parties have no financial strength In terms of law and order situation sometime it is very difficult for the bank to liquidate the collateral when the party is unable to pay the debt. Most of the parties are creating some sort of pressure to get the loan. There are some mortgage problem such as, acquisition and proprietorship, problem of asset. In the advance department they have the mortgage of skilled manpower.

4.21. DIFFERENT INTEREST RATE OF UBL (UTTARA BRANCH)

Sl. No 01 02 03 04 05 Loans Cash Credit (CC) Personal Loan Small Business Loan Over Draft:Loan against DPS,MDS. Loan against FDR(our bank) Interest rate % 12% 16% 15% 15% 2%pius concerned rate. 15% 15% 15% 16% 15%
44

FDR

06 O7 08 09 10

Loan against DBDS Loan against share/securities Loan against wage Earners Development Bond Loan against work order Uttaran House Repairing Loan

11 12 13 14 15 16

Import(PAD.LTR,&LIM)For importing essential items (rice, 12% wheat, Edible oil, dal, Chola, Onion, Dates, and Suger etc,) Lease Financing For importing all other items. Consumer (Household Durables) IBP(Inland Bill Purchase) Nari Swanirbhor Rin Prokalpa 15% 15% 13% 15% 10%

4.22. BAD LOAN MANAGEMENT

The Bank continued its efforts to maintain high quality assets. Besides giving emphasis on the satisfactory business performance of the customers and collateral support ,the Bank geared up loan monitoring and follow up systems through Monitoring Department to check the loans from becoming non performing loans of the Bank stood at TK .2,678.7 million at the end of 2010 compared to TK.2,842.0 million in 2009.S

9% 10% 1% 11% 3%

6%

2%

58%

Agriculture Industrial Lending Bill Purchased & Discount

Comercial Lending Lease Financing Others

Housing Special Program

44

4.23. PROBLEMS OF BANK LOAN

Want of Guarantor. Lengthy Process of CIB Clearing from Bangladesh Bank. Problem of Borrower Selection. Want of Property to be mortgage to the Bank. Problem of Loan Limitation of the branch /manager.
Want of deposit.

4.24. PROBLEMS OF CUSTOMER LOAN

Trade License (Valid). Income Tax Certificate with return, Partnership business------ Partnership deed (Registered) Certificate from Join Stock Company.

Private/Public Limited company----- Certificate of Incorporation. Memorandum of Association. Articles of Association.

44

Chapter

CHAPTER 5:
FINDINGS & RECOMMENDATION

44

5.1. FINDINGS
From overall study some problems have been identified. Those are as follows:

Uttara Bank Limited is not offering technology based services (ATM, SMS Banking, Internet Banking etc) which are very much popular in recent time. UBL follows traditional (manual) banking system general banking. The banking sector is partly computerized. Lack of promotional activities. Since Loan &Advance department is not fully automated there is a high risk of losing documents of disbursed loans. UBL Uttara, Branch mainly depends on UHRL(Uttaran house repairing Loan) Some borrowers do not pay their payment timely (according to the ledger). The loans and advance department takes a long time to process a loan because the process of sanctioning loan is done manually. Uttara Bank limited do not update its websites regularly, as a result the clients are unable to gather information.

5.2. RECOMMENDATION
UBL should introduce modern banking system like Internet Banking, ATM. SMS

banking, debit /credit cards etc. UBL should follow computerized banking system. Website should update regularly. Promotional activities should take place.
Loan & Advance department should be automated; as a result sectioning of loan will

be less time consuming.

UBL, Uttara Branch should reduce its dependency on UHRL.The branch should

encourage clients to take loans to other sectors.

44

 The procedure should be automated; as a result sectioning of loan will be less time

consuming.
The loan management should very much sincere; as a result the bank can minimize

its bad debt

Documentation about loans should maintain propert.

Highly efficient employee should take responsibility for loan and advance section. The bank should give reminder to the borrower to pay their payment timely.

CONCLUSION
Banking sector of Bangladesh consists of several nationalized and Private Bank .They are doing their activities and highly contribute to the national economy. Among them Uttara Bank Limited also makes significant contribution to the economy. They are performing their activities, as a result not only the bank but also the economy is benefited. The bank is performing Loan advance, foreign exchange, general banking activities etc, as a result they are mobilizing the money and do well for the economy. Although they have some limitation in their service, they are doing job for the economy. If they can reduce their limitation and introduce new ideas, they can do better in the banking sector of Bangladesh.

44

APPENDIX
A/C ATM ALCO B/L BB BIC BR C&F CC CCI & E CFR CRF CIB DD DBDS EDF EPB EPZ ERC EXP FC FDD FDR FOB IBCA IBDA IMP IRC Account Automatic Teller Machine Asset Liability Committee Bill of Lading Bangladesh Bank Bank Identifier Code Branch Clearing And Forwarding Cash Credit Chief Controller of Import & Exporter Cost And Freight Clean Report Findings Credit information Bureau Demand Draft Double Benefit Deposit Scheme Export Development Fund Export promotion Bureau Export processing Zone Export Registration Certificate Export Form Foreign Currency Foreign Demand Draft Fixed Deposit Receipt Free On Board Inter Branch Credit Advice Inter Branch Debit Advice Import Form Import Registration Certificate
44

IBC KYC L/C LCAF LIM LTR LSC MT MDS OD OBC PAD PO PSI PL SOD STD SWIFT SND SDR SBL SC TC TIN TR TT TS UHRL USBL

Inward Bills For Collection Know Your Customers Letter Of Credit Letter Of Credit Authorization Form Loan Against Imported Merchandise Loan Against Trust Receipt Local Short Collection Mail Transfer Monthly Deposit Scheme Over Draft Outward Bills For Collection Payment Against Document Pay Order Pre Shipment Inspection Personal Loan Secured Overdraft Short Term Deposit Society For Worldwide Telecommunication Special Notice Deposit Special Drawing Right Small Business Loan Short Collection Travelers Cheque Tax Identification Number Truck Receipt Telegraphic Transfer Transfer Scroll Uttaran House Repairing Loan Uttaran Small Business Loan Inter Bank Financial

44

UCPDC

Uniform Custom & Practice For Documentary Credit

44

BIBLIOGRAPHY:
1)Websites: www.google.com www.uttarabank-bd.com Instruction Circular of Uttara bank.

2)

Shekhar k.c & Shekhar L. Banking theory and Practice 18th Edition, Bikash Publication house Pvt Ltd (New Delhi)

3)
4)

Bad Loan management of Limited, Uttara Branch 2010 Annual Report of Uttara Bank ltd.

Uttara Bank

44