Credit Management Practice of UCBL Bank PDF

“An Analysis of Credit Management practices of United
Commercial Bank Ltd.- A study on Chowdhury Hat Branch,

Chattogram.”
[ This internship report is submitted for the partial fulfillment of the degree of Bachelor
of Business Administration with a Major in Accounting ]
Submitted By
Mohammad Abu Akbar
ID No- B161020
Program-MBA
Semester - Autumn- 2019
Major in Accounting
Internship Duration:
Date of Submission:
____________________________
Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong
“An Analysis of Credit Management practices of United
Commercial Bank Ltd.- A study on Chowdhury Hat Branch,
Chattogram.”
[ This internship report is submitted for the partial fulfillment of the degree of Bachelor
of Business Administration with a Major in Finance and Banking ]
Submitted By
Mohammad Abu Akbar
ID No- B161020
Program-BBA
Semester - Autumn- 2019
Major in Accounting
Supervised By
Basharat Hossain
Assistant Professor
Date of Submission:
Department of Business Administration

LETTER OF TRANSMITTAL
Date:
To
The Dean

Chittagong
Subject: Submission of Internship Report
Dear Sir,
I am grateful to you for the submission of the report on “An Analysis of Credit
Management practices of United Commercial Bank Ltd.- A study on Chowdhury Hat
Branch, Chattogram.” in the completion of the requirement for internship. This is an
excellent opportunity for me to acquaint more closely with the Organization. The
association and coordination of all respective officers & staffs with me are full of
exciting, re-discovering and entertainment. During the period of doing this report I have
discovered and gained new & practical feelings, observations and Learning. I have my
utmost effort to reflect experience, skill and knowledge, which I acquired at the time of
working at United Commercial Bank. All of my efforts will be successful if the
thesis paper can serve its purpose. I have tried my best to explain everything related
with the Credit Management in this report.
Yours faithfully
------------------------------
Mohammad Abu Akbar
ID: B161020
MBA
Major: Accounting
Acknowledgement
At the very beginning, I am gratitude to the Almighty Allah, the most merciful, the most
benevolent who has enabled me to successfully complete the report through many of
my limitations. To prepare this report I have received benevolent help from many
people. I would like to add few heartfelt words and record profound appreciation for
those people who gave me unending support right from the stage when this internship
report was conceived.
First and foremost, I must convey my cordial gratitude to my honorable supervisor
Basharat Hossain for his sublime guidelines, valuable suggestions and close
supervision regarding the preparation of the report within his most busy and valuable
working hours.
I would like to express my indebtedness to ………………… A.V.P of UCBL,
Chowdhury Hat Branch allowing me to work in this branch and ensuring friendly work
environment.
I shall be remiss if I don’t give thanks all the personnel of Chowdhury Hat Branch for
providing sufficient data & information. Without their cordial cooperation it was not
possible to prepare such a realistic business illustration.
I must mention the admirable working environment and the positive group behavior in
the bank, which helped me enormously to observe & work with the officers, staffs and
stay without any hesitation. I wish all of them a great success in their professional
attainments.
I am also thankful to my family who assisted me by providing sufficient help and who
have shown keen interest and constant source of inspiration to make my report
successful.
Executive Summary
Credit management is an essential factor that needs to be managed. Credit management needs
to be a robust process that enables banks to proactively manage credit portfolio in order to
minimize losses and earn an acceptable level of return for shareholders. “Credit
Management” has become an important topic in banking and financial sectors. Credit is
inherent in all aspects of a commercial operation. However, for banks and financial institutions,
credit management is an essential factor that needs to be properly managed.
Chapter one include Prelude, Statement of the Problem, Objective of the study, Scope of the
Study, Methodology of the study, Data Collection, Collection of Primary data, Collection of
Secondary Data, Analysis of Data, Organization of the Study, Limitations of the study.
Chapter two covered with Introduction, Historical Background of the UCBL, Characteristics
of UCBL, Vision of UCBL, Mission of UCBL, Strategies of UCBL, Organizational Structure
of UCBL., Products of UCBL., Objective of Internship, Internship Working Experience,
Market Scenario of United Commercial Bank Ltd.
Chapter three include Credit Policies, Loan application letter, Credits & Character Review of
Credit References, Analysis of Credit risk, Financial information & presentation, Financial
Analysis, Credit Products & Services of the United Commercial Bank Ltd, Services of United
Commercial Bank, Loan Products., Procedure of Managing Credit, Approval Process, Credit
Administration, Credit Monitoring, Credit Recovery, Branch Organogram of Credit
Department.
Chapter four take in Credit performance of credit management, Loans & Advances
performance of UCBL & Station road Branch of UCBL, Investments performance of UCBL
& Station road Branch of UCBL, Amount of non-performing loans & Advances, Interest
income on loans & advances, Percentage of Non-Performing Loan to Total loan, Net Interest
Margin, Earnings Per Share (EPS), Return on Investment, Source of Fund.
Chapter five contain Introduction, Summary of the findings, Policy Implication, Conclusion
and References.
Table of Contents
Title Page Page
Chapter-01
Introduction
1.1 1.1 Introduction 02
1.2 Statement of the Problem 02
1.3 Objective of the study 03
1.4 Scope of the Study 03
1.5 Methodology of the study 03
1.5.1 Data Collection 03
1.5.1.1 Collection of Primary data 03
1.5.1.2 Collection of Secondary Data 04
1.5.2 Analysis of Data 04
1.6 Organization of the Study 05
1.7 Limitations of the study 06
Chapter-02
Overview of United Commercial Bank Limited
2.1 Introduction 8
2.2 Historical Background of the UCBL 8
2.3 Characteristics of UCBL 9
2.3.1 Vision of UCBL 9
2.3.2 Mission of UCBL 9
2.3.3 Strategies of UCBL 9
2.4 Organizational Structure of UCBL. 10
2.5 Products of UCBL. 13
2.6 Objective of Internship 14
2.7 Internship Working Experience 14
2.8 Market Scenario of United Commercial Bank Ltd. 15
Chapter-03
Credit Management: Theoretical Perspective.
3.1.2 Credit Policies 16
3.1.1 Loan application letter 16
3.1.2 Credits & Character Review of Credit References 16
3.1.3 Analysis of Credit risk 17
3.1.4 Financial information & presentation 18
3.1.5 Financial Analysis 18
3.1.6 Credit Products & Services of the United Commercial Bank Ltd 19
3.1.7 Services of United Commercial Bank 20
3.1.8 Loan Products. 21
3.2 Procedure of Managing Credit 31
3.2.1 Approval Process 34
3.2.2 Credit Administration 34
3.2.3 Credit Monitoring 34
3.2.4 Credit Recovery 35
3.2.5 Branch Organogram of Credit Department 36
37
Chapter- 04
Credit Management of United Commercial Bank Ltd
4.1 Credit performance of credit management 39
4.2 Loans & Advances performance of UCBL & Station road Branch of 39
UCBL
4.3 Investments performance of UCBL & Station road Branch of UCBL 41
4.4 Amount of non-performing loans & Advances
4.5 Interest income on loans & advances 43
4.6 Percentage of Non-Performing Loan to Total loan 44
4.7 Net Interest Margin 46
4.8 Earnings Per Share (EPS) 47
4.9 Return on Investment 48
4.10 Source of Fund 49
50
Chapter-5
Findings, Recommendations & Conclusion
5.1 Introduction 53
5.2 Summary of the findings 53
5.3 Policy Implication 55
5.4 Conclusion 57
References 58
Chapter-1
Introduction
1
1.1 Introduction:
United Commercial Bank Ltd. bears a unique history of its own. The organization started its
journey in the financial sector of the country as an investment company back in 1985. The aim of
the company was to mobilize resources from within and invest them in such way so as to develop
country's Industrial and Trade Sector and playing a catalyst role in the formation of capital market
as well. Its membership with the browse helped the company to a great extent in these regards.
The company operated up to 1992 with 16 branches and thereafter with the permission of the
Central Bank converted into a full-fledged private commercial Bank in 1993 with paid up capital
of Tk. 39.00 crore to serve the nation from a broader platform. Since its inception United
Commercial Bank Ltd. has acquired commendable reputation by providing sincere personalized
service to its customers in a technology-based environment. The Bank has set up a new standard
in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit
products have also attracted the clients-both corporate and individuals who feel comfort in doing
business with the Bank.
1.2 Statement of the Problem:

The study carries much importance in view of the face that the credit management practice in
United Commercial Bank Ltd.is closely links with the strong and healthy financial organization,
which facilitate mobilization of domestic and foreign funds on a large scale. Credit management
consists of acquisitions of stable and low-cost finance for the banking business. Banking
organizations are doing their jobs more competitively now a day. Attracting the people to save
their money by developing various product and schemes, investing the funds in different profitable
sectors, helping in export and import business, providing services in case of inward and out ward
remittance etc. are the main focus of the banking institutions. As the topic credit management is a
part to learn credit system of United Commercial Bank Ltd.: A few research works have been
made to highlight the banking system, the problems and the prospects in this regard of the study
will be useful for the readers and young learners to get knowledge about the topic.
2
1.3 Objective of the Study:
The principal objective of the study is to evaluate the Credit Management practices of United
Commercial Bank Ltd.- A study on Chowdhury Hat Branch, Chattogram. To accomplish the
principal objective following specific objectives have been covered.
1. To highlight the overview of United Commercial Bank Ltd. Chowdhury Hat Branch.
2. To analyze credit policies, procedures & services of the United Commercial Bank Ltd.
Chowdhury Hat Branch.
3. To examine the procedure of managing credit of United Commercial Bank Ltd. Chowdhury
Hat Branch.
4. To examine the credit performance of the United Commercial Bank Ltd.
5. To suggest some important policy measures for making Credit Management most effective.
1.4 Scope of the Study:

At the time of preparing this report, I had a great opportunity to acquire knowledge of all general
activities practiced by United Commercial Bank of Bangladesh Limited which help me to gain
practical knowledge of that leading bank.
The scope of the study is to have an idea about Credit Management of United Commercial Bank
of Bangladesh Limited .The study starts with the outline of the organization in focus, presenting
the mission and vision of organization. It accompanied by the global perspective and look into the
future. The researcher provides information about the strengths, weakness, opportunities and
threats of the organization. Those who looking for the information about Credit Management of
United Commercial Bank of Bangladesh Limited they might get help from this study. The study
explores the present market scenario of United Commercial bank of Bangladesh and Future market
growth prospects in Bangladesh.
1.5 Methodology of the Study:

The study requires a systematic procedure from selection of the topic to final preparation. To
perform the study, the data sources are identified and collected, these are classified, analyzed,
interpreted and presented in a systematic manner and key points have been found out. The overall
processes of methodology are given below researcher both primary and secondary data to complete
researcher report.
3
To attain the objectives of the report a combination of primary and secondary data is used.
Primary sources
 Face to Face conversation with the respective officers and staffs.

 Interview with the Clients.
 Practical desk task.
Secondary Sources
 Annual Report of UCBL.
 UCBL training material and officer's guidebook.
 Periodicals, Bulletins, Circular.
 Monthly transaction record of the bank.
 Banks financial statement.
 Bangladesh Bank Guide Lines of CRG.
 Official Website of UCBL.
The collected data and information have been tabulated, processed, analyzed and graphically
presented in order to make the study more informative, useful and purposeful.
Analysis of Data
The study has used descriptive statistics and different statistical tools like Mean, Maximum,
Minimum and Standard deviation for the analysis data. The study has also used graph for
absolute Trend Analysis.
1.7 Limitation of the Study:

From the beginning to end, the study has been conducted with the intention of making it as a
complete and truthful one. However, many problems appeared in the way of conducting the
study. The study considers following limitations:
 The Bank was a busy one having heavy rush of people, whom officers need to deal with.
So allocation of time for an internee is very much tough for the officers of the bank.
 Lack of Collecting Elaborate Data due to Bank’s privacy.
 Lack of in-depth knowledge and analytical ability for writing such report.
 The time period for this study was short.
4
Chapter-2
Overview of United
Commercial Bank Ltd.
5
2.1 Introduction:
This chapter covers the profit Historical Background of United Commercial Bank Ltd.
Here we discuss the differ Characteristics, mission, vision, organizational structure, officer
level, products in the bank.
2.2 Historical Background of the United Commercial Bank Ltd.:

United Commercial Bank Ltd. bears a unique history of its own. The organization started its
journey in the financial sector of the country as an investment company back in 1985. The aim of
the company was to mobilize resources from within and invest them in such way so as to develop
country's Industrial and Trade Sector and playing a catalyst role in the formation of capital market
as well. Its membership with the browse helped the company to a great extent in these regards.
The company operated up to 1992 with 16 branches and thereafter with the permission of the
Central Bank converted into a full-fledged private commercial Bank in 1993 with paid up capital
of Tk. 39.00 crore to serve the nation from a broader platform.
Since its inception United Commercial Bank Ltd. has acquired commendable reputation by
providing sincere personalized service to its customers in a technology-based environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange
business. Its various deposit & credit products have also attracted the clients-both corporate and
individuals who feel comfort in doing business with the Bank.
No. of branches 187
No. of ATM booth 398
No. of SME centers 34
Off-shore Banking Unit 8
No. of Employees 7496
6
2.3 Characteristics of United Commercial Bank Ltd.:
2.3.1 Vision of United Commercial Bank Ltd.
Corporate Vision
“To become the Bank of choice in serving the Nation as a progressive and Socially
Responsible financial institution by bringing credit & commerce together for profit and
sustainable growth.”
2.3.2 Mission of United Commercial Bank Ltd.
Corporate Mission
“To mobilize financial resources from within and abroad to contribute in Agriculture’s,
Industry & Socio-economic development of the country and to play a catalytic role in the
formation of capital market.”
2.3.3 Strategies of United Commercial Bank Ltd.
Strategies:
United Commercial Bank Ltd. aims at excellence and is committed to explore a new horizon of
banking and providing a wide range of quality products and services to its clients. There are some
strategies that United Commercial Bank Ltd. follows to make its operations smooth for making
easier for customers.
7
2.4 Organizational Structure of United Commercial
Bank Ltd. :
Executive level of United Commercial Bank Ltd.:
President and
Managing
Director
Deputy
First Assistant Managing
Vice President Director (DMD)
(FAVP)
Senior
Assistant Vice Executive Vice
President (AVP) President
(SEVP)
Executive
Level
Executive Vice
First Vice President (EVP)
President (FVP)
Senior Vice
Vice President
President
(VP)
(SVP)
Source: Annual report of United Commercial Bank Ltd.
8
Officer Level of United Commercial Bank Ltd.
9
Officer Level of United Commercial Bank Ltd. Chowdhury Hat
Branch, Chittagong
First Vice Precident
Asistant Vice President
Senior Executive Officer
Principal Officer
Senior Officer
Junior Officer
Asistant Officer
Others
10
2.5 Products of United Commercial Bank Ltd.:
Deposit Products
 Current A/C
 Savings Bank Deposit A/C
 Special Notice deposit A/C
 Special Savings Scheme
 Special Deposit Scheme
 Instant Earnings Term Deposit
 Money Double Program
 Youngster Account
 Youngster Maximus Account
 Youngster Money plant Scheme
Loan Products
 Personal Loan
 Education Loan
 Car Loan Scheme
 House Building Financing
 House Repairing & Renovation Loan
 Home Improvement Loan
 Consumer Finance Scheme
SME Banking
 Small Business Loan

 Lease Finance
 Working Capital Loan
 Festival Business Loan
 Festival Personal Loan
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Cards
 Credit Cards
 Debit cards
Remittance products
 Wage Earners Welfare Deposit Pension Scheme

 Overseas Employment Loan Scheme
 Special Interest rate on Deposit and Loan
Service Products:
 ATM Services
 Remittance Service
 Locker Service
 Online Banking
 Internet Banking
2.6 Objective of Internship:

The objective of Internship is too familiar with the working environment of present institutions
and also fulfill the requirement of BBA theoretical knowledge gained from the coursework of the
BBA program in a specific field.
2.7 Internship Working Experience:

Researcher worked as an intern at United Commercial Bank Ltd.in the Chowdhury Hat Branch
from January to March. This three-month internship program gives me the broad scopes to learn
and get the real insight of practical banking works which will help me in developing my future
career. Through this three-month Researcher have an opportunity to learn regular banking
activities as well as corporate work activities which Researcher I never learnt in the classroom.
Moreover, besides the regular office work Researcher have learned to deal with different
challenges, observing different customer behavior, different documentation which helps me to
learn practical banking experience. Since, my first day Researcher had the chance to handle
multiple task. Mainly Researcher worked in Credit department but sometimes, Researcher also
worked in financial department throughout my three-month internship program.
12
2.8 Market Scenario of United Commercial Bank Ltd.:
Credit Management is a branch of accountancy, and is a function that falls under the label of
“Credit and Collection’ or ‘Accounts Receivable’ as a department in many companies, institutions
& banks. In 2018 Authorized capital of United Commercial Bank Ltd. is 10,000.00, paid up capital
is 8832.18, Statutory reserve is 6545.22, Other reserve (including general & assets revaluation
reserve) is 545.54 , Retained earnings (Profit & Loss Account) is 1151.05, Shareholder’s equity is
17073.99, Deposits 159988.45, Loans and advances is 146633.84, Investments is 29403.28, Fixed
assets is 2486.89, Total assets (excluding contra loans) is 202309.46, Total assets (including contra
items) is 256665.41. In 2017 Capital of United Commercial Bank Ltd.: Total risk weighted assets
(RWA) is 158051.15, Tier-I capital is 16431.92, Tier-II capital is 1763.50, Total capital is
18195.41, Core capital (Tier-I) to RWA is 10.40%, Supplementary capital (Tier-II) to RWA is
1.11%, Capital to Risk Weighted Assets Ratio (CRAR) is 11.51%. In 2017 Asset Quality of United
Commercial Bank Ltd.: Amount of non-performing loans & advances is 8490.07, Non-performing
loans & advances as % of total loans & advances is 5.79, Specific provision against classified
loans & advances is 3853.44, General provision against un-classified loans and advances is
1143.07, General provision against off-balance sheet items 543.56, Percentage (%) of net
classified loan is 3.16%, Interest suspense balance is 1710.94. In 2017 Foreign Exchange Business
of United Commercial Bank Ltd.: Import is 83722.55, Export is 25893.60, Remittance is 27012.09.
In 2017 Financial Performance of United Commercial Bank Ltd.: Interest income on loans and
advances is 12714.10, Interest paid deposits and borrowings is 8102.79, Net Interest Margin (NIM)
is 4611.32, Net Interest Margin (NIM) % is 2.85%, Income from investments is 2024.94, Total
income is 16805.55, Total expenses is 11882.93, Operating profit is 4922.62, Provision for loans
& advances and other provisions made during the year 1834.25, Profit before tax is 3088.38,
Provision for tax is 1324.92, Profit after tax is 1763.45, Profit available for distribution is 1151.05.
In 2017 Shareholder’s Information of United Commercial Bank Ltd.: Earnings per share (EPS) is
2.00, Price earnings (PE) ratio (times) is 8.85, Net asset value (NAV) per share is 19.33, Net
operating cash flow per share is 1.72, Market value of share is 17.70, Market capitalization is
15632.96, Number of shares (Nos.) is 883218003, Number of shareholders (Nos.) is 51223. In
2017 Financial Ratios of United Commercial Bank Ltd.: Credit Deposit Ratio (CDR) (%) is
13
83.56%, Return on equity (ROE) (%) is 10.49%, Return on assets (ROA) (%) is 0.94%, Cost of
fund (%) is 7.83%, Coast income ratio (%) 43.44%,
In 2017 Other Information of United Commercial Bank Ltd.: Number of branches is 109, Number
of ATM is 74, Number of employees is 2146, Number of foreign correspondents is 377. In 2017
Credit Ratings of United Commercial Bank Ltd.: Long term is AA, Short term is ST-1 (AR-1)
14
Chapter-3
Credit Management:
Theoretical Perspective.
15
3.1 Credit Policies:
The Credit portfolio of United Commercial Bank Ltd. shall be managed to maximized portfolio
yield over the long term in a manner that is consistent with liquidity needs, pledging requirements,
asset/liability management strategies and safety of principal. Portfolio strategies will be utilized to
assist the bank, through mean established in this policy and the credit portfolio strategy, in the
attainment of a level of interest rate sensitivity consistent with the goals of the asset/liability
management policy.
As a general bank policy advances are discouraged for the business of video, Garage, and studio
and for purchase of land or machinery. Further, lending of commercial loans is also discouraged,
unless the bank is fully satisfied and the loan is 100% backed by tangible security. When
approached by a party for a loan, as a general rule & regular procedure adopted by the bank, our
first inquiries should be directed to the purpose & period for which it is required and the source of
repayments.
3.1.1 Loan application letter:

The client completes the Credit Application with the assistance of the branch manager or his/her
delegated loan officer. This form will help insure that adequate information about the financial
condition of the borrower is obtained. The application should be filled out as completely possible
to provide sufficient information with which to begin the Analytical process, form the basis for an
initial site visit and understand proposed collateral. One of the objectives of through initial visits
with the client is to determine the client’s character, business condition, prospects and to gather
supplemental financial; information. Identification and appraisal of collateral is also essential
during initial visits. As an aid to gathering this additional information and supplementing the
material provided by the client on the application form, the loan officer’s transection summary
section of the approval form should be used as a guide.
3.1.2 Credits & Character Review of Credit References:

The way a potential borrower handles its obligations with other credits, such as lands and suppliers,
is a strong indication of how it will handle its obligations with the bank. Therefore, we ask
questions of other creditors concerning their experience with our potential borrower. Answers to
these questions increase understanding of the credit and make loan officers more confident about
16
proposing sound loan recommendations. What kind of questions should be asked? The basic one
is: does the potential borrower honor its obligations on a timely basis. Additional questions, which
provide more in-depth information, might include:
 When did you first deliver goods to this client?

 When did you established credit terms (or lend money) to this client?
 What is the highest amount of credit approved for this client?
 What is the current outstanding United Commercial Bank Ltd.?
 Will you continue to grant credit terms to this client?
 How often is payment received? When was the last payment received?
 Is payment received on a timely basis?
 Do you consider the client a safe Credit risk? Why?
When checking with another bank, try to obtain information collateral, interest rate, tenor,
maturity date, and payment amount, and outstanding United Commercial Bank Ltd., status of
payments & past repayment history. The goal here is to obtain as much pertinent information as
its possible while providing only a minimal summary of the bank relationship or reason for
inquiring as is possible. Written confirmation of credit information is not reliable. When written
confirmation received, it should go into the credit file.
3.1.3 Analysis of Credit risk:

The objective of Credit risk analysis is to look at both the borrower and the lending facility being
proposed and to assign a risk rating. The risk rating is derived by estimating the probability of
default by the borrower at a given confidence level over the life of the facility, and by estimating
the amount of loss that the lender (bank) would suffer in the event of default. In Bank there are
five type of risk analysis is done. They are-
1. Financial Risk: To calculate the financial risk, bank checks the customer’s stock market
condition, the customer’s suppliers and buyers, Importers, yearly business turnover.
2. Business Risk: Bank want to know client’s current business condition, business will be
running well or not, client’s business is how much risky for bank to invest it in.
17
3. Security Risk: Bank always tries to be in safe guard when they give loan. So, they verify
the collateral which against client takes loan. They also verify that, if the client is default to pay
back bank can easily sell the collateral and get the money back.
4. Management Risk: Here Bank see client’s social value, how well he related with this
business and do his reputation analysis. Bank want to know actually how well the client can handle
the business.
5. Relationship Risk: Here bank investigate that the client’s relation with their exporter and
importer. The client’s better relation with their exporter and importers, it makes client less risky
for bank.
After all this credit risk analysis bank give three risk rating, they are high risk, medium risk and
low risk.
3.1.4 Financial information & presentation:

Borrower presentation:
The transection summary should state the latest sale and net income information debt service ratios
may also be included.
In the write up the financial analysis should include the borrowers of income and cash flow and its
underlying financial condition, as demonstrated by reliable financial statements.
A. Financial statements:
1. It is normally desirable that all loan recommendation be accompanied by three years of

historical financial statement and at a minimum must include a current United Commercial
Bank Ltd. sheet and income statement. Cash flow statement for prior years for medium term
loans would be also desirable. If a company has been existence less than three years, the most
recent years’ end statement requires plus any other available information. Depending on the
time of the year, reference to six or nine-month interim financial statement may be
appropriate. The analyst expected to verify historical financial data by inspecting tax
statements, invoices, contracts, and other financial statements for at least the prior year along
with projections for the current year and at least the next, showing the impact of the requested
18
financing. In many instances, the analyst will find in informative to examine sales levels
since the war on a month basis.
2. For medium long terms loans, presentations must show annual for the income statement,
United Commercial Bank Ltd. sheet and cash flow information going out one to three years.
For loan maturities longer than three years, the number of annual projections must watch the
final loan maturity.
3. It is preferable that the borrower presents monthly cash budget projection for the first year.
This demonstrates that the borrower is reasonably anticipating his cash flows and outflows
in a detailed manner.
3.1.5 Financial Analysis:

Historical performance:
Start with the income statement. Use trend and ratio analyst to identify financial changes. Explain
year-to-year material changes in sales, direct cost, general & administrative expenses, and net
income. Margins should be studied and discussed. References to sales must be consistent with
prior analysis of the market and customer preferences.
Then, go to the United Commercial Bank Ltd. sheet and focus on current assets, fixed assets,
current liabilities, long-term liabilities, capital accounts. Use trend and ratio analysis to financial
changes year to year.
Future performances:
1. The main focus is to determine if projected cash flow, using realistic assumptions, is sufficient
reply to all liabilities in a timely fashion.
Other consideration:
1. Record keeping: A company’s record and accounting methods are important for accurate
financial and tax reporting and should be accessed by the analyst.
2. Accounting Standard: Bank borrowers will have to present financial statement in
accordance with IAS, when they are in place.
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3.1.6 Credit Products & Services of the United Commercial Bank
Ltd.:
Deposit Products
 Current A/C
 Savings Bank Deposit A/C
 Special Notice deposit A/C
 Special Savings Scheme
 Special Deposit Scheme
 Instant Earnings Term Deposit
 Money Double Program
 Youngster Account
 Youngster Maximus Account
 Youngster Money plant Scheme
Loan Products
 Personal Loan
 Education Loan
 Car Loan Scheme
 House Building Financing
 House Repairing & Renovation Loan
 Home Improvement Loan
 Consumer Finance Scheme
SME Banking
 Small Business Loan

 Lease Finance
 Working Capital Loan
 Festival Business Loan
 Festival Personal Loan
20
Cards
 Credit Cards
 Debit cards
Remittance products
 Wage Earners Welfare Deposit Pension Scheme

 Overseas Employment Loan Scheme
 Special Interest rate on Deposit and Loan
Service Products:
 ATM Services
 Remittance Service
 Locker Service
 Online Banking
 Internet Banking
3.1.7 Services of United Commercial Bank:
United Commercial Bank Ltd. Current Account
Any businessman, firm, limited companies, local bodies, corporate bodies etc. can open a Current
A/c with United Commercial Bank Ltd. Limited. Current deposit is 100% demand deposit and
account holder can deposit/withdraw his/their deposits frequently without any limit.
CD A/c is non-interest-bearing deposit account.
Required Documents
Prescribe A/c opening form to be filled in properly.

A/c to be introduced properly.
2 (Two) copies of recent passport size photograph of each person to be attested by the
introducer.
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Nationality Certificate (Photocopy of valid passport/ Voter ID/ Certificate from union parisad
chairman/ ward commissioner/
valid driving license) to be submitted.
Photocopy of TIN certificate (If any).
1 (One) copy of passport size photograph of nominee to be attested by the account holder.
Additional Documents (Proprietorship Firm)
Photocopy of valid Trade license to be submitted.

Additional Documents (Partnership Firm)
Photocopy of partnership deed (registered) to be submitted.

Additional Documents (Limited Company Private or Public)
valid driving license) of all the directors to be submitted.

Photocopy of Certificate of incorporation, memorandum and articles of association to be
submitted.
Board resolution for opening and operation of bank A/c as per articles of association to be
submitted.
TIN certificate of the company (Photocopy) to be submitted.
TIN certificate of all the directors (Photocopy) to be submitted.
In case of public limited company certificate of commencement of business to be
submitted (Photocopy).
United Commercial Bank Ltd. Savings Bank Deposit
Any individual person, local bodies, club, society, association, house wife, student, non-profitable
organization etc. can open a Savings Bank Deposit A/c with United Commercial Bank Ltd.
22
Limited. Saving Bank Deposit is both and demand deposit, of which 10% is demand and 90% is
time deposit and account holder can withdraw his/their deposits twice in a week upto a certain
limit.
SB A/c is interest bearing deposit account.
Required Documents

introducer.
United Commercial Bank Ltd. Special Notice Deposit
Any businessman, firm, limited companies, local bodies, corporation, corporate bodies etc. can
open a Special Notice Deposit A/c with United Commercial Bank Ltd. Limited. Special Notice
Deposit is 100% Time deposit and account holder can withdraw his/their deposits with prior
notice to the bank.
SND A/c is interest bearing deposit account.
Required Documents
 Prescribe A/c opening form to be filled in properly.

 A/c to be introduced properly.
 2 (Two) copies of recent passport size photograph of each person to be attested by the
introducer.
 Nationality Certificate (Photocopy of valid passport/ Voter ID/ Certificate from union parisad
23
 valid driving license) to be submitted.
 Photocopy of TIN certificate (If any).
 1 (One) copy of passport size photograph of nominee to be attested by the account holder.
United Commercial Bank Ltd. Special Deposit Scheme
Any individual person, businessman, firm, limited companies, local bodies, corporation, corporate
bodies etc. can open a Special Deposit Scheme A/c with United Commercial Bank Ltd. Limited.
Special Deposit Scheme A/c is a term deposit of 3 (Three) years and interest is payable on monthly
basis. Special Deposit Scheme is 100% term deposit and account holder can withdraw his/their
deposits (Principle amount) after expiry of maturity of deposit.
Upon enhancement of rate of interest to 9.00% the fresh depositor will get monthly
dividend/interest against Special Deposit Scheme (SDS) as per following break up :
Amount of Deposit Monthly Dividend Amount of Deposit Monthly Dividend
Tk. 1,00,000.00 Tk. 750.00 Tk. 6,00,000.00 Tk. 4,500.00
Tk. 2,00,000.00 Tk. 1,500.00 Tk. 7,00,000.00 Tk. 5,250.00
Tk. 3,00,000.00 Tk. 2,250.00 Tk. 8,00,000.00 Tk. 6,000.00
Tk. 4,00,000.00 Tk. 3,000.00 Tk. 9,00,000.00 Tk. 6,750.00
Tk. 5,00,000.00 Tk. 3,750.00 Tk. 10,00,000.00 Tk. 7,500.00
Source: Annual Report of UCBL (2014-2018)
The following criteria should be applied to the product:
1. The duration of time between deposit and payment of first dividend/interest must be minimum
30 (Thirty) days
24
2. Income Tax levied by the government on interest against bank deposit shall have to be borne by
the depositor and that amount
to be realized from the monthly dividend.
3. In case of premature encashment of Deposit before completion of one year, depositor will not be
entitled to get dividend/interest,
so amount of dividend /interest paid earlier shall have to be realized from the principal amount.
4. In case of premature encashment of Deposit before 03 (Three) years but after one year the
depositor shall be entitled for interest
as per following schedule and amount of dividend paid earlier shall have to be adjusted from the net
amount payable.
After 1 (One) year but before 2 (Two) years - Prevailing interest Rate of SB a/c
After 2 (Two) years but before 3 (Three) years - Prevailing interest Rate of SB a/c + 0.50%
5. In case of Lending against pledge of SDS Receipt, interests at the rate of 15.60% have to be
charged against loan outstanding.
This interest rate is fixed and applicable in all cases without further consideration
6. Monthly dividend may be paid in cash or transferred to SB/CD a/c of the depositor as per
instruction.
United Commercial Bank Ltd. Instant Earning Term Deposit
Any individuals, retired personnel, housewives, widow and wage earners can open Instant
Earning Term Deposit A/c with United Commercial Bank Ltd. for Tk.1.00 lac and above but
multiple of Tk.1.00 lac. Instant Earning Term Deposit A/c is a term deposit of 1 (one) year
against which interest is payable below 1% of the existing rate interest applicable on fixed
deposit for 12 months and interest for one year is payable instantly at the time of opening of the
account.
Instant earning Term Deposit is 100% term deposit and account holder can withdraw his/their
deposits (Principle amount) after expiry of one year.
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Required Documents

introducer.
United Commercial Bank Ltd. Money Double Program
It is a new product of deposit. It is a deposit product for a specific period. On completion of term,
the deposit amount will make the principal amount double and depositor will get double of
deposited amount.
Who can apply?
Any person can open Money Double Program Deposit (MDPD) A/c with United Commercial
Bank Ltd. for Tk. 1.00 Lac and it's multiple.
Premature encashment of MDPD will be discouraged. However, if the depositor insisted to Ancash
the same before maturity then the following procedure will be applicable for premature
encashment.
For less than 12 months: No interest will be paid other than principal amount, but charges to be
realized from the principal amount of deposit.
For more than 12 months: Interest will be paid at existing rate applicable to Savings Bank
Deposit A/c and charges to be realized from the proceeds.
26
In case of post mature encashment i.e. encashment after maturity, no extra benefit will be
applicable and no auto renewal is applicable against the Money Double Program Deposit (MDPD).
Separate printed receipt (Money Double Deposit Receipt) for this type of deposit has been
designed and supplied to the branches.
For details please contact with any branches of United Commercial Bank Ltd. Limited.
UCB Youngster Account
United Commercial Bank Ltd. Youngster Banking is the product of School Banking program.
School Banking is all about learning regarding the importance of saving and smart money
management. We passionately believe that when it comes to your education, knowing how to
manage money is as essential as English, Math’s, Science or Arts. Our School Banking program
gives you an easy, fun and interactive way to learn money management skills you will use for the
rest of your life. Through the program, you can bank at school, giving you an opportunity to have
hands-on banking experience in a fun and interactive environment.
Account Features:
Account Opening Age: If you are a Bangladeshi student enrolled in a school or high school and
you are within the age of 18 years, you can open the UCB Youngster Account.
Parent's Approval: to open the account you need to get the account opening Application Form
signed by both of your Parents or Legal Guardian with passport size photograph duly attested by
the School Authority.
Account Opening Deposit: You need to deposit at least Taka 100 to open the account.
Minimum Deposit: Weekly not less than Taka 50 and maximum deposit any amount.
Annual Service Charge: 100% free of charges under any circumstances.
Withdrawal Frequency Limit: Any number of withdrawal and fund transfer allowed.
Cheque Endorsement: For withdrawal of any amount joint signature of you and either any of
your parents or the legal guardian is mandatory.
Nomination of Legal Guardian: Parents of the Accountholder may nominate a legal guardian
by attesting guardian's name and signature on BDT 150 judicial stamp paper. Legal guardian has
to be nominated by both parents and notarized by a Notary Public.
27
Selection of Account Nominee: Selection of Nominee for this account is mandatory and
nominee will only be selected by the Parents or Legal Guardian.
Free Debit Card & Card Expenditure Limit: UCB VISA Debit Card options with 100%
Discount on Annual Service Charge having daily and monthly expenditure limit. Both the Limit
must be mentioned at the card application form. Daily expenditure limit must be 1/10 of the said
monthly limit and limits only be fixed by the either parents or legal guardian.
Free Online Banking: Free Online Banking only for making deposit any amount from any of
UCBL Branches.
Account Statement: Parents or Legal Guardians shall receive monthly account statement of this
account.
For more information, please contact with any branches of United Commercial Bank Ltd. Limited.
UCB Youngster Maximus Account
Round the year you get the opportunity to receive cash gifts in different religious celebrations, on
English & Bengali New Year (Pahela Boishakh), on your Birthday or on Special Family Event.
But all these special days donation even come at a time or nevertheless in sequel. Yes, you want
to spend this treasure-trove on many things but you are wishing for spending it on a big longing.
Youngster Maximus shall help you to accumulate your cash to a substantial amount. Youngster
Maximus is a great investment option for you whenever you have enough cash to avail this
opportunity. The Youngster Maximus has the ability to earn for you a higher rate of return than a
regular transactional account or traditional fixed deposit account. The rate of return is fixed for the
duration of the term selected, so you know exactly how much return you will earn at maturity. The
Youngster Maximus is zero risk investment than traditional similar account. You only need a small
amount to get started. This is the best option that best suits your savings goals. Finally, if you
continue to roll your Youngster Maximus account over a longer period of time, you can get the
additional benefit or compound return on your investment
Account Features:
Prerequisite to Open the Account: Applicant must have an UCB Youngster Account.
28
signed by both of your Parents or Legal Guardian with passport size photograph.
Deposit Amount: Minimum BDT 5,000 and Maximum BDT 1,000,000.
Deposit Maturity Tenure: Minimum 3 years.
Rate of Return: published UCB 1-year FDR rate plus 0.25%.
Annual Service Charge: Free of charges.
Number of Accounts: One can open maximum 5 Youngster Maximus Account of different or
same amount (but aggregate amount not exceeding BDT 1,000,000) in Youngster Account Name
or with a Joint Name.
by attesting guardian’s name and signature on BDT 150 judicial stamp paper. Legal guardian has
Premature Encashment: Free of Charge.
Account Statement: Parents or Legal Guardians shall receive Yearly account statement of this
account.
Documents required for opening above Accounts:
Duly filled and signed Bank's prescribed account opening application form and KYC Form.
Two passport size Photographs of the Student and both Parents or Legal Guardian attested by the
school authority. Every two year the student's photograph shall be replaced by the recent
photograph duly attested by the School authority.
Specimen Signature Card to be signed by the applicant and both parents or legal guardian in
front of respective bank official.
One passport size Photographs of the Nominee attested by the Parents or Legal Guardian. Only
Parents will attest one passport size Photographs of the nominated legal guardian.
Enrolment Proof of the student with photo attested by the School authority or School ID Card.
Photocopy of National ID Card of the both Parents or Legal Guardian.
Birth Registration Certificate of the Applicant.
29
UCB Youngster Money plant Scheme
Nowadays you have access to more money than ever before, thanks to allowances, gifts and for
many, income from artistic presentation of your talents. Having more money makes you more
responsible for managing money and making decisions for everything from small everyday
purchases to bigger-ticket items (such as a bike or a camera) to saving for your higher education.
What I am telling now is about managing your pocket money in a Smart Way by understanding
money.
The True Value of Money
Knowing in advance the true cost and value of lifestyle and purchasing decisions can allow you to
have financial and personal freedom. The key for you is to handle (and not too often mishandle)
money in ways that are right for you. Understand the value of money and then use your money
wisely.
Needs vs. wants--what you need to know
There is no one right answer for everyone. The choice is yours. Just make sure you're aware of the
consequences before you satisfy your wants.
Time is money
If you're spending your time wisely, you'll be a resourceful person by having more time to do what
is really important to you.
Short- and long-term goals
Meeting short-term as compared to long-term goals is a constant battle when it comes to money.
Very often, it's a question of satisfying many short-term goals (e.g., to get the latest CDs or DVDs)
or putting all or most of them on hold to save up for a more expensive goal (e.g., ipod, video games
or higher education expenses). You can develop your skills in saving and investing to meet your
long-term goals. See the big picture to get the willpower to work towards your long-term goals.
“Little drops of water make the mighty ocean” an English proverb you might have heard from your
30
seniors. If one goes by this saying, small but periodic investments can grow to a large sum at
maturity. This is the basic investment logic behind the Youngster Money-plant schemes.
Account Features:
Prerequisite to Open the Account: You must have an UCB Youngster Account to open a
Youngster Money-plant account.
signed by both of your Parents or Legal Guardian.
Size of Installment: Minimum monthly installment is Taka 250 and Maximum is Taka 10,000.
Tenure: Maturity periods are 5 years, 8 years and 10 years.
Number of Accounts: You can open maximum 5 Youngster Money-plant Account of different
or same installment amount in your or jointly with your sibling's name.
Annual Service Charge: Free of charges.
Account Reactivation: Account reactivation is allowed up to the 6th month after consecutive
failure of depositing monthly installment of 6 months.
by attesting guardian's name and signature on BDT 150 judicial stamp paper. Legal guardian has
Online Monthly Installment Deposit Charges: Free from any of UCBL Branches.
Standing Instruction for depositing monthly installment: Free from any UCB Deposit
Account of account holder or the Parents/Legal Guardian.
Premature Encashment: Free of Charge.
Account Statement: Parents or Legal Guardians shall receive yearly account statement of this
account.
3.1.8 Loan Products
Loan is the essential part of bank’s profit. All the deposit that Bank collect from its customer,
invest on loans which other customers demand for. The difference between this two-interest rate
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is their profit. Usually banks do business by savings or deposits which are collected from local
people. Therefore, banks have to ensure not only about the security of the loan but also about the
repayment of the loan while settling down loan. United Commercial Bank Ltd. offers different
types of loans for settling various needs of customers.
 General loan: General loan means a lump sum repayable loan either in fixed monthly
installments or in lump sum amount. In this case, no subsequent debit is normally allowed
except interest and incidental charges. When the entire loan amount will be paid, there will be
only reimbursement by the debtor. United Commercial Bank Ltd. offers this type of loan in
three categories. Short-term loan (for 1 year or less), Mid-term loan (not more than 3 years)
and Long- term loan (5years or more).
 House Building finance: United Commercial Bank Ltd. offers house building loan in order to
solve the residential problem of middle-class people. The purpose for this loan can be purchase
of Flat\House, construction of building or extension of building or floors. Period of loan is 5
to 15 years. It depends upon customer-banker relationship. Interest rate of this loan is 15.5%
compounded monthly. The amount of the loan depends on customer and banker relationship,
but mostly it around BDT 500,000 to BDT 7,500,000.
 House improvement loan: along with house building finance, United Commercial Bank Ltd.
offers house improvement loan. House owner can take this loan for further renovation or
improvements for 24 months to 180 months. The loan amount is around BDT 500,000 to BDT
5,000,000. The most important thing, interest rate is decided upon the relationship between
customer and banker relationship; however, it is kind of around 15%.
 Car loan: In this present era, car is an essential need for every class of people. Mostly, middle
class have the less ability to buy a car by doing all the payment at once, so they take loan from
bank. United Commercial Bank Ltd. gives car loan for 3 years after analyzing the repayment
ability of customer. They give up to BDT 4,000,000 as loan.
 Small Business loan: United Commercial Bank Ltd. grant loan for the new entrepreneur to
encourage their efficiency to do something for betterment. Entrepreneurs get around BDT
800,000 as loan for maximum 5 years without give anything as security.
 Education loan: To make each and every citizen of our country worthy enough to fight for their
own and get ability to work for them, United Commercial Bank Ltd. provide education loan to
those who need it. Mostly, they give loan for student who want to go abroad for higher studies,
32
but in some special cases, United Commercial Bank Ltd. provide loan to the poor student who
have that love for education.
 Loan against Trust Receipt (LTR): Loan against Trust Receipt (LTR) is a temporary loan and
is permitted to the customer against their application on the basis of trusts. This loan is call
loan against trust receive. Though maturity of this loan will be allowed as per sanction letter,
it may be allowed for thirty, sixty, ninety or one hundred and twenty days. The loan can be
adjusted 23 | P a g e partially or fully. Interest rate of this loan is higher and charged on monthly
basis. The loan is backed up by securities and monthly interest charge is 15.5%.
 Loan against Imported Merchandise (LIM): Loan against imported merchandise (LIM) is a
temporary loan which is allowed to the importer against their imported goods. Maturity of the
loan is allowable as per sanction letter. The loan is generally paid once. Interest rate for this
loan is higher and is charged on monthly basis. Controls over the imported goods are
completely maintained by the bank. These loans are backed by security.
 Cash credit (Hypothecation): Hypothecation is a charge on company for a debt where the
charge is created by the debtor to the lender on his execution of a document in the said
document, the debtor hinds himself to give custody of the hypothecated stock to the lender, if
the lender so requires. In this process ownership and possession do not pass to the creditors.
Rather, both ownership and possession remain with the borrower. As the goods remain in the
possession of the borrower, banks grant hypothecation facility normally to first parties
depending on the trustworthiness of the party.
 Cash credit (Pledge): Pledge is bailment of goods or securities. It is allowed against pledge of
goods. The bailment must be by the debtor of intending debtor or his duly authorized attorney.
In this case, the goods have to be in the control of the pledge.
 Secured over Draft (SOD): This is a kind of loan which is permitted on a current account
operated upon by cheque. Customers can choose any number of limits according to their
suitability, if the total amount in debt does not exceed the agreed limit. Interest is calculated
on the actual debit balances. Secured overdrafts (SOD) are four types on the basis of securities:
SOD against FD, SOD against PSP, SOD against scheme and SOD general.
 Payment against Document (PAD): In this loan agreement process, at first, issuing bank gets
the original shipping documents from Negotiation bank according to a letter of credit (L/C);
then issuing bank checks the shipping documents for scrutiny. After examining the shipping
33
documents issuing bank open a loan account on account importer. These are some example of
loans that United Commercial Bank Ltd. offers, however, there are lot more other loans that
they provide for their customers.
3.2 Procedure of Managing Credit:
3.2.1 Approval Process
The following diagram illustrated the approval process-
Credit application/proposal recommended by RM

as well as branch manager
Head of Credit (CRM Unit)
President & Managing Director through Credit

Committee
Board of Directors
Figure : Approval process
3.2.2 Credit Administration
The credit administration function is critical in ensuring that proper documentation and approvals
are in place prior to the disbursement of loan facilities. For this reason, it is essential that the
functions of credit administration be strictly segregate from the CRM Unit in order to avoid the
possibility of controls being compromised or issue not being highlighted at the appropriate level.
Disbursement
Security documents are prepared in accordance with approval terms and are legally enforceable.
Standard loan facility documentation that has been reviewed by legal counsel should be used.
34
Disbursement under loan facilities are only be made when all security documentation is in place.
An updated clean CIB report must be obtained before any disbursement of facility favoring the
borrower.
Custodial Duties
Security documentation is held under strict control, preferably in a fireproof cabinet in the strong
room. Storage of security documents should be under dual custodian’s control and their
alternatives in writing at branch level till such time as this function is centralized at corporate
office. The documents should be recorded in the Security Document Register and the Safe in
Safe Out Register.
Compliance Requirements
All required BB returns are submitted in the correct format in a timely manner
BB circulars/regulations are maintained properly and advised to all relevant department
to ensure compliance
All third-party service provider (valuers and lawyers) are approved and performance
reviewed on regular interval basis
3.2.3 Credit Monitoring
To minimize credit losses, monitoring procedures and systems should be in place that provides an
early indication of the deterioration financial health of a borrower. At minimum, systems should
be in place to report the following exceptions to relevant executives in CRM and RM team-
Past due principal or interest payments, account excesses and breach of loan covenants
Loan term and conditions are monitored, financial statements are received on a regular basis,
and any covenant breaches or exceptions are referred to CRM and the RN team for timely
follow up
Timely corrective action is taken to address findings of any internal, external or BBs’
inspection/audit
All borrower relationship/loan facilities are reviewed and approved though the submission
of a Credit Application/Proposal at least annually
35
Computer system- STELAR is able to produce the exceptions reports for branches or corporate
office review. All the exceptions should be followed up on and corrective action taken in a timely
manner before the account deteriorates further.
3.2.4 Credit Recovery
The recovery unit (RU) should directly manage accounts with sustained deterioration (substandard
or worse). CRM will transfer EXIT accounts graded 6-8 the RU for efficient exit.
Non-Performing Loan Account Management
All Non-Performing Loan should be assigned to an account manager within the recovery unit, who
is responsible for coordinating and administering the action plan/recovery of the account, and
should serve as the primary customer contact after the account is downgraded to sub-standard.
Account Transfer Procedures
Within the 7 days of an account being downgraded to sub-standard, a request for action with a
checklist for file handover should be completed by CRM unit and forwarded to recovery unit for
acknowledgement. The account should be assigned to an account manager within the recovery
unit, who should review all documentation, meet the customer and prepare a Classified Loan
Review Report within 15 days of the transfer. The CLR should be approved by the President and
MD and copied to the concerned branch where the loan was originally disbursed and the CRM
unit.
Non-Performing Loan Monitoring
On a quarterly basis, a CLR should be prepared by the RU account manager to update the status
of the action/recovery plan, to review and assess the adequacy of provisions and to modify the
banks’ strategy as appropriate. The CLR should be approved by the President and MD for Non-
Performing loans.
Non-Performing Loan Provisioning and write Off
The guidelines furnished by BB for CIB reporting, provisioning and write off of bad and doubtful
debts, and suspension of interest should be followed in all cases. The approval to take provisions
36
or release of provisions/upgrade of an account should be restricted to the President and MD of the
bank based on recommendation from the RU of credit department of corporate office. In case of
write off, approval of the board of directors of the bank is required.
3.2.5 Branch Organogram of Credit Department
With a view to mitigating the operational risk, the function o credit department of the branches has
been segregated into two units-
Relationship Management Unit

Credit Administration Unit
Branch
Manager
Credit
Credit in
Administration
Charge
Unit
Credit Officer-
Relationship Relationship Credit Officer- Credit Officer-
Monitoring &
Officer Officer Disbursement Custodian
Compliance
Figure : Branch Organogram of Credit Department
37
Chapter-4
Performance Analysis of Credit
Management of United Commercial
Bank Ltd. Chowdhury Hat Branch
38
4.1 Credit performance of credit management
It is needless to emphasize that one of the principal activities of the commercial banks in
is to grant loans to borrowers. Loans are among the highest yielding assets a bank can add
to its balance sheet, and they provide the largest portion of operating revenue. In this
respect, the banks are faced with liquidity risk since loans are advanced from funds
deposited by customers. However, the higher the volume of loans extended the higher the
interest income and hence the profit potentials for the commercial banks. At this point, it
is also worth noting that banks with a high volume of loans will also be faced with higher
liquidity risk. Thus, the commercial banks need to strike a balance between liquidity and
profitability. The recent financial crisis in East Asian countries like South Korea,
Indonesia, Thailand and Malaysia presents clear evidence of the importance of loan quality.
4.2 Loans & Advances performance of Chowdhury Hat Branch of UCBL:

The term ‘loan’ refers to the amount borrowed by one person from another. The amount is
in the nature of loan and refers to the sum paid to the borrower. Thus, from the view point
of borrower, it is ‘borrowing’ and from the View point of bank, it is ‘lending’. Loan may
be regarded as ‘credit’ granted where the money is disbursed and its recovery is made on
a later date. It is a debt for the borrower. While granting loans, credit is given for a definite
purpose and for a predetermined period. Interest is charged on the loan at agreed rate and
intervals of payment. ‘Advance’ on the other hand, is a ‘credit facility’ granted by the bank.
Banks grant advances largely for short-term purposes, such as purchase of goods traded in
and meeting other short-term trading liabilities. There is a sense of debt in loan, whereas an
advance is a facing being availed of by the borrower. However, like loans, advances are
also an advance are also to be repaid. Thus, credit facility repayable in installments over
period is termed as loan while a credit facility repayable within one year may be known as
advances. However, in the present lesson these two terms are used interchangeably.
39
Table: 4.1 Total Loans & Advances (In million Taka)
YEAR Loans & Advances of UCBL Chowdhury Growth Rate in (%)

Hat Branch
2015 310.25 100%
2016 330.32 106.46%
2017 378.13 121.87%
2018 442.74 142.70%
2019 524.21 167.96%
Source: Annual report of UCBL & Chowdhury Hat Branch UCBL Bank Ltd. (2015-2019)
Figure: 4.1 Total Loans & Advances of UCBL
Total Loans & Advances of Chowdhury Hat Branch UCBL

200%
168%
150% 143%
122%
100% 100% 106%
50%
0%
2015 2016 2017 2018 2019
Growth rate of Branch report
Analysis : The above Chowdhury Hat Branch Table & figure showing the Total Loans &
Advances measures during 2015 to 2019. In 2015 Total deposit measures was growth rate
100% and in 2016 it is increased to 117.14%. In 2019 it has been decreased to 116.67%.
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4.3 Investments performance of UCBL & Chowdhury Hat Branch of UCBL:
An investment is an asset intended to produce income or capital gains. Investments can be

stocks, bonds, mutual funds, interest-bearing accounts, land, derivatives, real estate,
artwork, old comic books, jewelry -anything an investor believes will produce income
(usually in the form of interest or rents) or become worth more.
Table: 4.2 Total Investments (In million Taka)
YEAR Total Investments of UCBL Chowdhury Growth Rate in (%)

Hat Branch
2015 190.24 100%
2016 211.78 111.32%
2017 206.58 108.58%
2018 209.92 110.34%
2019 213.19 112.06%
Source: Annual report of Chowdhury Hat Branch UCBL Bank Ltd. (2015-2019)
Figure: 4.2 Total Investments performance of Chowdhury Hat Branch of UCBL
Total Investments of Chowdhury Hat Branch UCBL

115%
111% 112%
110% 110%
109%
105%
100% 100%
95%
90%
2015 2016 2017 2018 2019
41
Analysis: The Chowdhury Hat Branch above Table & figure showing the Total
Investments during 2015 to 2019. In 2015 Total Investments was growth rate 100% and in
2016 it is increased to 124.45%. In 2019 it has been decreased to 77.35%.
4.4 Amount of non-performing loans & Advances:
Table: 4.3 Amount of non-performing loans & Advances (In million Taka)
YEAR Amount of non-performing loans & Advances of Growth Rate in (%)

UCBL Chowdhury Hat Branch
2015 156.35 100%
2016 246.87 157.89%
2017 321.47 205.60%
2018 300.12 191.19%
2019 421.25 269.42%
Figure: 4.3 Amount of non-performing loans & Advances of UCBL
amount of non performing loans & advances of

Chowdhury Hat Branch UCBL
300%
269%
250%
200% 206%
191%
150% 158%
100% 100%
50%
0%
2015 2016 2017 2018 2019
42
Analysis: The Chowdhury Hat Branch above Table & figure showing the Amount of non-
performing loans & Advances during 2015 to 2019. In 2015 Total Amount of non-
performing loans & Advances was growth rate 100% and in 2016 it is increased to 206%.
In 2019 it has been increased 269.42%
4.5 Interest income on loans & advances:

Table: 4.4 Interest income on loans & advances (In million Taka)
YEAR Interest income on loans & advances of UCBL Growth Rate in (%)
Chowdhury Hat Branch
2015 217.87 100%
2016 216.72 99.47%
2017 195.32 89.64%
2018 197.25 90.53%
2019 201.32 92.40%
Figure: 4.4 Interest income on loams & advances of UCBL
Interest income on loans & advances of Chowdhury Hat

Branch UCBL
102.00%
100.00% 100.00% 99.47%
98.00%
96.00%
94.00%
92.00% 92.40%
90.00% 90.53%
89.64%
88.00%
86.00%
84.00%
2015 2016 2017 2018 2019
43
Analysis: The above Table & figure showing the Amount of Interest Income on loans &
Advances during 2015 to 2019. In 2015 Total Interest Income on loans & Advances was
growth rate 100% and in 2016 it is decreased to 99.47%. In 2019 it has been decreased to
92.40%.
4.6 Mode Wise Loan & Advance: -

Mode Wise Loan & Advance from 2015 to 2019 is as under:
(Figure in million)
Particulars 2015 2016 2017 2018 2019

HBL 55.15 58.32 64.52 62.15 163.96
LTR 862.28 942.14 1077.94 3043.64 4385.31
Transport 454.87 510.68 680.19 814.61 2362.84
Loan
SOD(FO) 210.45 270.11 304.04 330.91 450.34
CC(Hypo) 745.98 892.23 988.61 1190.99 1370.01
SBLS 30.78 32.52 37.34 30.04 28.78
Mode Wise Loan & Advances

5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2015 2016 2017 2018 2019
HBL LTR Transport Loan SOD(FO) CC(Hypo) SBLS
44
Analysis: -
The graph shows that trend of House building loan is not satisfactory at all but HBL
Bears low risk because here loan provided as an installment basis. Full amount of sanctioned loan
is not providing at a time so that risk of default minimizes.
Trend of LTR was upward year by year from 2015 to 2019.Though the performance of LTR was
well but it contains high risk because bank Provide these loan without security. Bank provides it
only on the basis of trust so risk is high on LTR. Transport loan also shows well position year by
year. Transport loan bears low risk because bank collect security against the loan such as -land,
transport which purchase by taking loan, etc. The position of secured Overdraft (SOD) was not
satisfactory at all. The downbeat growth of SOD year by year doesn’t represent good performance
at all. SOD as a continuous loan put up with low risk because bank collect security as a collateral
such as-SSS, FDR, etc. Security against SOD minimizes the risk of default.
The amount of advance in ‘Cash credit’ was increasing year by year. Trend upward shows the
well-built ness of the branch in managing ‘cash credit’. When provide this loan bank collect
security as collateral such as- land, property, etc. so risk is low in these types of loan. Usually
bank provides CC to their corporate client so that risk of default also trims down. Small business
loan is also not working successfully. It is one of the challenging lending products of bank. Risk
is high in small business loan scheme because bank provides it without security. Client of this
loan is not corporate client so if they default in their business they cannot repay the borrowed
money which they borrow from the bank.
4.7 Sector Wise credit facilities:
(Taka in million)
Sector 2015 2016 2017 2018 2019
Agriculture,fishing, 18 26 56 110 176
Foresty, dairy firm
Industry 7020.28 8050.10 10410.02 15560.89 23375.40
45
Working capital 183278.5 201410.2 25,700.1 35,240.30 39,320.80
Finance 4 2 5
Export credit 775 803 1013 2025 2830
Commercial credit 12987.15 14659.30 23,898.8 38,734.29 45,625.93

4
Small and cottage 26 30 32 40 48

industry
Miscellaneous 392.78 467.71 532.21 1850.30 21,30.20
Sources: Annual Report of UCBL (2015-2019)
Sector Wise Credit Facilities

250000
200000
150000
100000
50000
0
2015 2016 2017 2018 2019
Agriculture,fishing,Foresty, dairy firm Industry

Working Capital Finance Export credit
Commercial credit Small and cottage industry
Miscellaneous
Analysis: In this table sector wise credit in 2015, 2016, 2017, 2018, 2019 gradually
increasing as gradually developed the bank in the banking world as well as total loans &
advance in the mentioned year the increasing trend in going up.
46
4.8 Loan Sanction, Disbursement, Recovery and Other Positions:
Amount of loan sanction, disbursement, recovery and other position from 2013 to 2015 is as under.
(Figure in thousand)
Particulars 2017 2018 2019
Loans Sanctioned 151025 37613 335000
Loan Disbursed 151025 37613 335000
Loan Recovered 150908 33648 330543
Loan Overdue 117 3731 609
Loan Due 151025 37613 335000
Loan Bad Debt 2013 3064 3906
350000
300000
250000
200000
150000
100000
50000
0
2017 2018 2019
Loans sanctioned Loans disbursed Loan recovered
Loan overdue Loan Due Loan Bad Debt
Analysis:
The following graph shows that the sanctioned, Disbursed, and Recovered amount of loans
of the branch have increased over the years. All the figures are in increasing trend except
loan overdue. The branch has done a very good job here. The overdue amount decreased
in 2018 which indicates satisfactory performance in 2018.
47
4.9 Position of Unclassified and Classified Loan of the Branch:
(Figure in Thousand)
Year Unclassified Classified
Standard SMA SS DF BL
2017 520977 ----- ----- 117 ---
2018 555488 205 573 211 3064
2019 889572 512 ---- 551 3906
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
Unclassifed Classified
2017 2018 2019
Analysis: -
The graph shows that the amount of unclassified loan in 2017 is 520977 and it increasing year by
year and in 2018 it was 889572 because the volume of total loans and advance provided by branch
also rising. Here risk increases but the branch keeps 1-5% provision to minimize the risk of
unclassified loan. Though the branch performs its operation till 16 years so that it has some
classified loan. The amount of classified loan in the in the branch is acceptable. The branch
maintains 20-100% provision against its classified loan to total loans and advances to minimize
risk. It is good indication for the branch.
48
Chapter-5
Findings, Recommendations &
Conclusion
49
5.1 Summary of Findings:-
 Loans are not properly diversified to different sectors for which credit risk increases.
 Some customers Hide information / not provide real information about them while taking
loan for which risk increases.
 Sometimes it is difficult to collect essential document so that risk increases.
 Loan takers are afraid to explore his real income it also indicates to credit risk.
 In spite of having strong procedures in association with advances, proper implementation
of those procedures is not seen.
 Sometimes Mortgage against loan is not available it also increases credit risk.
 Sometimes the bank can’t give loan according to client’s purpose as the bank’s loan
portfolio is not so wider.
 Some of clients do not utilize the ‘loan amount’ for the purpose which they
Didn’t acknowledge the bank before. It becomes the cause of classified loan.
 There is a lack of proper monitoring system after sanctioning loans and advances. And this
can be a cause of classified loan.
 One of the problems in advance is– ‘Interest Rate Gap’ which means the negative gap
between interest rate on deposit and interest rate on loans & advance. It indicates the bank
to credit risk.
 Sometimes Govt. policy for credit in banking business is not favorable for which risk
increases.
 Performance of LTR was well but Bank provides it only on the basis of trust without any
security as collateral so risk is high on LTR.
 Its main concern to short term loan then long term loan which also increase credit risk.
 When granting loan collateral is not correctly calculated according to market situation so
that it also increase credit risk.
 There is a lack of proper advertisement for different loan scheme of the bank. It makes the
customer ignorant about the bank’s credit service.
50
5.2 Recommendations:
 The bank may properly diversified loans to different sectors.
 The bank may encourage client to provide real information about them and income while
taking loan.
 It can heartfelt in collecting essential document when granting loan to minimize credit risk.
 It can try to decrease the interest rate on loan according to the declaration of the
Government so that risk of default may decrease.
 Proper and effective monitoring system can be developed in order to prevent loan default.
The bank may strictly follow the ‘principal of sound lending’.
 The performance of the long term loans is very much promising. The proportion of long
term loans is very low compared with the short term loans. The authority should consider
the factor and review there policy of lending in long term facilities
 It can have independent ongoing credit reports for the board of directors and senior
management to ensure that the bank’s risk exposures are maintained within the parameters
set by prudential standards and internal limits.
 Advance procedure should be strictly followed by the officers of this department to make
a remarkable standard.
 .It may accurately keep amount of provision for classified and unclassified loan guided by
Bangladesh Bank.
 A structured risk grading manual for every official of the credit department is needed in
order to maintain discipline in credit related work.
 It can introduce effective workout programs to manage risk in their portfolio.
 The procedure for borrower selection can be strictly followed.
 Provide continuous training programs for the employees for credit risk management, so
that their skills are developed and they become more efficient
 Small business loan scheme is the difficulty area of the credit portfolio of UCBL. Special
care can be taken to reduce the level of classified loans of these types.
51
 Banks may have internal controls to ensure that credit policies are adhered to. These may
include conducting periodic internal audits of the credit risk processes to identify the areas
of weakness in the credit administration process.
5.3 Conclusion:
United Commercial Bank Ltd. is today’s one of the leading private banks in our country.
After the establishment it brought lots of new product and services for its clients and the
progress of United Commercial Bank Ltd. is really satisfactory in our banking
environment. From a mainly feudal agrarian base, Bangladesh has undergone a rapid
economic structural transformation towards manufacturing and services. Providing
credit to clients is a core business of United Commercial Bank Ltd. It is also the pioneer
in offering world class credit/loan facilities for the people of Bangladesh. It has 110
branches in urban, suburbs and rural areas in the country. This makes possible for the
bank to reach to all type of potential clients. Fundamentally most of the revenue comes
from credit department of the bank so it is very essential that United Commercial Bank
Ltd. has well-structured credit risk management department. In this report I have
illustrated different aspects of United Commercial Bank Ltd. credit risk management
department and try to find out the problems and the process to solve the problems.
Although the bank has a very highly structured credit risk management policy, they need
to be careful about future challenges and obstacles, because eventually they have to deal
with future business in this changing world. So, their policy should be upgraded and
modified in order to face the challenges.
52
References
http://www.ucb.com.bd/html/homepages.php
http://www.ucb.com.bd/download/Disclosure_Framework_DEC_2016.pdf
Publications:
Several Booklets from United Commercial Bank Ltd. Limited
Several News letters from United Commercial Bank Ltd. Limited
Books and guideline.
United Commercial Bank Ltd. Training Book-United Commercial Bank Ltd.
Commercial Bank Management by peter S Rose (Fifth Edition).
Website:
http:// www.ucb.com.bd/index.php?page=know-ucb
www.Bangladesh-bank.org.
Others:
Library of United Commercial Bank Ltd. Limited
Financial performance responses to the bank manager by United Commercial Bank
Ltd. Limited.
53

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“An Analysis of Credit Management practices of United

Commercial Bank Ltd.- A study on Chowdhury Hat Branch,

Department of Business Administration

Department of Business Administration

Faculty of Business Studies

International Islamic University Chittagong

Subject: Submission of Internship Report

5.2 Summary of the findings 53

5.3 Policy Implication 55

1.2 Statement of the Problem:

1.4 Scope of the Study:

1.5 Methodology of the Study:

 Face to Face conversation with the respective officers and staffs.

1.7 Limitation of the Study:

2.2 Historical Background of the United Commercial Bank Ltd.:

No. of branches 187

No. of ATM booth 398

No. of SME centers 34

Off-shore Banking Unit 8

No. of Employees 7496

2.3.1 Vision of United Commercial Bank Ltd.

2.3.2 Mission of United Commercial Bank Ltd.

2.3.3 Strategies of United Commercial Bank Ltd.

Source: Annual report of United Commercial Bank Ltd.

Source: Annual report of United Commercial Bank Ltd.

First Vice Precident

Asistant Vice President

Senior Executive Officer

Source: Annual report of United Commercial Bank Ltd.

 Small Business Loan

 Wage Earners Welfare Deposit Pension Scheme

2.6 Objective of Internship:

2.7 Internship Working Experience:

3.1.1 Loan application letter:

3.1.2 Credits & Character Review of Credit References:

 When did you first deliver goods to this client?

3.1.3 Analysis of Credit risk:

3.1.4 Financial information & presentation:

1. It is normally desirable that all loan recommendation be accompanied by three years of

3.1.5 Financial Analysis:

 Small Business Loan

 Wage Earners Welfare Deposit Pension Scheme

3.1.7 Services of United Commercial Bank:

United Commercial Bank Ltd. Current Account

CD A/c is non-interest-bearing deposit account.

Prescribe A/c opening form to be filled in properly.

Photocopy of valid Trade license to be submitted.

Photocopy of partnership deed (registered) to be submitted.

Photocopy of valid Trade license to be submitted.

United Commercial Bank Ltd. Savings Bank Deposit

SB A/c is interest bearing deposit account.

Prescribe A/c opening form to be filled in properly.

SND A/c is interest bearing deposit account.

 Prescribe A/c opening form to be filled in properly.

United Commercial Bank Ltd. Special Deposit Scheme

Amount of Deposit Monthly Dividend Amount of Deposit Monthly Dividend

Tk. 1,00,000.00 Tk. 750.00 Tk. 6,00,000.00 Tk. 4,500.00

Tk. 2,00,000.00 Tk. 1,500.00 Tk. 7,00,000.00 Tk. 5,250.00

Tk. 3,00,000.00 Tk. 2,250.00 Tk. 8,00,000.00 Tk. 6,000.00