Internship Report

CREDIT APPRAISAL AND RISK MANAGEMENT

OF
UTTARA BANK LIMITED

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 CREDIT APPRAISAL AND RISK MANAGEMENT
OF
UTTARA BANK LIMITED

Submitted To:
Ms. Sreyoshi Ahmed
BRAC Business School
BRAC University

Submitted by:
Md. Junayet Hossain
Id: 09204058
BRAC Business School
BRAC University

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Letter of Transmittal

Ms. Sreyoshi Ahmed

Lecturer
BRAC Business School

Subject: Letter of Transmittal

Dear Madam,
This is to inform you that, I have finalized with my report naming as “Performance credit
appraisal and risk management of Uttara Bank Limited”, I have tried to implement my learning
of Bachelor of Business Administration in the practical field with due sincerity and would like to
thank you for giving me the opportunity to have the chance to work on this report. Despite many
limitations I have tried my level best to address the major and in depth issues in making this
paper accurate and reliable. If you have any further enquiry concerning any additional
information I would be very pleased to clarify that.

I, therefore, pray and hope that you will be kind enough to accept this report as fulfillment of the
requirement for the BBA degree.

Thanking you.

Sincerely yours,
……………………
Md. Junayet Hossain
Id: 09204058
BRAC Business School
BRAC University

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Acknowledgement

First and foremost, I would like to pay my gratitude to the almighty Allah, the most Merciful, the
Beneficent, for blessing me with good health and tenacity of mind to complete the requirements
for the degree.

Many people have been responsible in making this report. . I extend my most sincere thanks and
gratitude to my academic supervisor Ms Sreyoshi Ahmed, lecturer, BRAC Business School,
BRAC University, for the subsequent advice and valuable guidance towards completion of the
report.

I most sincerely express my thanks and gratitude to Mr. Biplab Kumar Halder, Manager,
Sadarghat Branch, Uttara Bank Ltd., for giving me the opportunity to prepare this report. I shall
ever remember the affectionate care rendered by him and for the constant guidance he provided
to me for completing the report. He has been extremely kind to lend me his valuable time
whenever I needed.

I am extremely grateful to the Uttara Bank Limited staffs for allowing me to pursue my
internship and continuous support for the entire work. I recall with thanks and gratitude the
inspiration and support provided by Mr. Abul Kalam Azad, Principal Officer and A.K.M
Taher Uddin Mahmud Senior officer of that Branch who assisted me with his valuable time
and suggestions and with relevant documents. Thanks are also due to all of my colleagues of
Bank Asia for their help and valuable advice.

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Executive Summery
This report is basis on the entire process of credit approval and the credit risk assessment system
of Uttara Bank Limited and identifying the positive aspects as well as the shortcomings of that
credit scheme. After completing of BBA program of BRAC Business School, I have completed
my internship in Uttara Bank Limited (Sadarghat Branch), one of the largest and reputed private
commercial bank in Bangladesh and went under a rotation program in different department of
Uttara Bank Limited (UBL). I worked with some officers and some departments sincerely. But I
mainly gave emphasis on the bank’s credit appraisal and recovery policy. The objective was to
analyze the criteria of UBL’s such as loan distribution sector, interest rate of loan, the bank’s
capability to recover load during stipulated time and the management efficiency regarding
classified loan. The primary activities carried out by the credit department of UBL include
evaluation of loan application, preparing necessary documents for the loan approval, monitoring
the loan after disbursement and ensuring its repayment and finally initiate classification in case
of non-recovery.

Credit proposals are appraised critically by Uttara Bank Limited. The customer at the branch of
the bank place credit proposals. When customers come with a credit proposal, the credit
department of the Branch makes an open discussion with customer on different issues of the
proposal to judge the worthiness of the proposal and the customer. If the proposal seems to be
worthwhile in all respects then the proposal is placed before the credit committee of the bank.
After threadbare discussion, if the committee agrees in principle the proposal is sanctioned as per
the delegated business power of the branch.

The execution of documents in proper from and according to the requirements of law is known
as documentation. The documentation does establish a legal relationship between the lending
bank and borrower. The terms and condition of loans and advances, the securities charged and
the repayment scheduled is recovered in writing proper documentation for safeguard the future
interest of the bank.

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Credit management is an integral part of banking business. The making of credit and advances
has always been prominent profitable function of bank. Sanctioning credit to customer and other
out of fund as its disposal is one of the principal services of modern Bank. Advances by UBL
made in different forms such as overdraft, cash credit bill purchased and discounted etc. UBL
deals with the money from the depositor repayable on the demand. UBL usually grant short –
terms advances which are utilized to meet the working capital requirement of the borrower.

The incessant fall –out of international credit market due to world economic meltdown resulting
in sluggish growth has put significant pressure on financial performance of banks and financial
institutions worldwide. UBL achieved continuous growth almost all arenas of its business amid
this economic crisis, facing intensified competition of the industry. The bank remained
financially strong by dint of its continued focus on the vision of becoming country’s finest
corporate body providing excellent and need-based customer service.

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 Table of contents
SL Contents Page number

Letter of Transmittal iii

Acknowledgement iv
Executive Summary v
Table of Contents vii
List of Abbreviations ix

Chapter 1 Introduction 1
1.1 Origin of the report 2
1.2 Objective of the report 2
1.3 Scope of the report 3
1.4 Methodology 3
1.5 Limitation of the study 4

Chapter 2 Overview of Uttara Bank Limited 5

2.1 Uttara Bank Limited 6
2.2 Historical background of UBL 6
2.3 Objectives, Mission, Vision and goal of UBL 7
2.4 Different Wings of Uttara bank ltd. 9
2.5 Highlights on the overall activities of the Bank for the year 11
ended 2012 and 2011
2.6 Features of UBL 12
2.7 Functions of UBL 13
2.8 Operational Network Organogram 15
2.9 Services & Products 16

Chapter 3 Job Details, Observation & Learning’s 27

3.1 Job Details 28

Chapter 4 Credit Approval and Risk Management 30

4.1 Credit Management 32
4.2 Approval Procedures 36
4.3 Appeal Process 37
4.4 Documentation Procedures 37
4.5 Credit Administration & Disbursement Authority 38
4.6 Monitoring of Credit Portfolio 40
4.7 Large Exposure Assessment Framework 41
4.8 Recovery of Non-Performing Loans & Investments 48
4.9 Internal Audit & Compliance 49

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Chapter 5 SWOT analysis 50
Chapter 6 Major Findings, Recommendations and conclusion 53
References 58

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 List of abbreviations
UBL : Uttara Bank Limited
DSC : Dhaka Stock Exchange
CSE : Chittagong Stock Exchange
DD : Demand Draft
TT : Telegraphic Transfers
LC : Letter of credit
SME Loan : Small and Medium Enterprise Loan
USAID : United States Agency for International Development
SEDF : South Asia Enterprise Development Facility
IFC : International Finance Corporation
CCS : Consumers Credit Scheme
MMS : Monthly Saving Scheme

RFCD : Resident Foreign Currency Deposit

FDR : Fixed Deposit Receipt
DPS : Deposit Premium Scheme

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 Chapter-1

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 Chapter-1: Introduction

1.1 Origin of the report

Internship Program of BRAC University is mandatory for every student to completing
Graduation for BBA.
The purposes of the internship Program are:
Internship will give the students Opportunity to develop their skill in the application of
theory to practical work situation.
Internships will provide students with an in-depth knowledge of the formal functional
activities of a participating organization
Internship will increase a student’s sense of responsibility.
Internship will also provide student the opportunity to develop attitudes conducive to
effective interpersonal relationships.
Internship also helps the students to assess their career on chosen sector.
This internship report, thus, is submitted after completing three month internship at Uttara Bank
Limited. This report includes the major job responsibilities and also a project on specific process
which is “Credit Approval and Credit Risk Management of Uttara Bank Ltd.”. The Report
also includes an overview of Uttara Bank Ltd. More over it describes the major responsibilities
and observation of mine though the internship period in Uttara Bank Ltd.

1.2 Objective of the Report

 General Objective
The general objective of the study is to fulfill requirement of the Graduation under the
Bachelor of Business Administration program of BRAC University as per university policy.

 Specific Objective:
The specific objective of this reports are:
1. To bring together information regarding the entire process of credit approval.

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 2. To achieve knowledge regarding the system of credit risk assessment.
3. To find out the Strengths, Weaknesses, Opportunities and Threats of the bank as well as
the flaws or drawbacks regarding the services and solution offered.
4. To detect the positive aspects as well as the shortcomings of the credit approval and the
credit risk assessment process
5. To identify methods to improve the quality and standard of the products offered to the
customers

1.3 Scope of the Report

The main intention of this report is to find out the Credit approval and risk management system
of Uttara Bank Limited but I got opportunity to learn many other things from different division
like remittance and general banking.

1.4 Methodology
 Selection of the Topic:
The topic was approved by my respective advisor and my on-site supervisor. It was
thoroughly discussed with them and my respective advisor provided me a format so that a
well-organized report can be prepared.

 Sources of data
There are two types of data I collect for that report and those are
1. Primary Sources:
 Face to face conversation with the respective officers
 Direct Observation
 Practical desk work

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 2. Secondary Sources:
 Annual report of UBL
 Internal server and external websites of UBL
 Relevant books, research paper and journals
 Theoretical books of the related banking sector

1.5 Limitation of The Study

On the way of the study, I have faced the problems that are given below that may be terms as the
limitation or shortcoming of the study-
 It was very difficult to collect the information from various personnel for the job
constrain.
 Bank policy was not disclosing some data and information for various reasons.
 The department people always remain busy due to lack of supporting employees so they
could not dedicate their full efforts
 Because of the limitation of information some assumption was made. So there may be
some personal mistake in this report.
 The time 3 months are not sufficient to know all activities of the branch to prepare the
report.
 The annual report is the main secondary source of the information but this information
was not enough to complete the report and it was not identified clear idea about this bank.

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 Chapter-2

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 Chapter-2: Overview of Uttara Bank Limited

2.1 Uttara Bank Limited

Uttara Bank 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 ensures efficient service to the clients. There are 220 branches at home and 600 affiliates
worldwide which has created efficient networking and reach capability. Uttara is a bank that
serves both clients and country. The total numbers of employee of Uttara bank are nearly 3,562.

2.2 Historical Background of UBL

Uttara Bank Limited is deeply related with the history tradition and living standard of human of
the country. This Bank started its operations on 28th January 1965 as a commercial bank by
Eastern Banking Corporation, which is interpreting by a private organization. In 1972 the Bank
takes this name Uttara Bank but it was converted as a public limited company named “Uttara
Bank limited” in the year of 1983 upon the amendment of Bangladesh bank (Nationalization)
order. The Bank was incorporated as a banking company on 29/06/1983 and obtained business
commencement certificate on 21/ 08/ 1983. Only within one year the Bank floated its share &
now the Bank is listed in the DSE & CSE for trading share.

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 Corporate Information
Name Uttara Bank Limited
Nature of Business Banking service and profit oriented
Date of Incorporation 29.06.1983
Chairman Md. Azharul Islam
Number of Branches 220
Total Asset TK. 104,559,589,957
Authorized Capital Tk. 5,000,000,000
Paid up Capital Tk. 3,306,449,088
E-mail Uttara@citecho.net
Web site www.uttarabank-bd.com

2.3 Objectives, Mission, Vision and goal of Uttara Bank Ltd.

The objectives of UBL are follows:

 Mobilizing deposit from the surplus economic unit to deficit economic unit.
 Cater to all different segments of retails and wholesale customer.
 Being a high quality distributor of products and services.
 Serve the people of the country by providing financial assistance.
 Help the nation in reducing the employment problem by securing services to a large
number of people.
 Ensure balanced economic development though out the country.
 To expand business.
 To keep position in the competitive market.
 To contribute in profitability of UBL.

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Missions of UBL are given bellow:
 To provide high quality financial service
 To provide excellent quality customer service
 To maintain corporate and business ethics.
 To become a trusted repository of customers money and their financial advisor.
 To make their stop superior and rewarding to the customers.
 To display team sprite and professionalism.
 To have a sound capital base.

The Visions of UBL are:

Uttara Bank will be a unique organization in Bangladesh. It will be a knowledge-based
organization where the Uttara Bank professionals will learn continuously from their customers
and colleagues worldwide to add value. They will work as a team, stretch themselves, innovate
and break barriers to serve customers and create customer loyalty through a value chain of
responsive and professional service delivery.
Continuous improvement, problem solution, excellence in service, business prudence, efficiency
and adding value will be the operative words of the organization. Uttara Bank will serve its
customers with respect and will work very hard to instill a strong customer service culture
throughout the bank. It will treat its employees with dignity and will build a company of highly
qualified professionals who have integrity and believe in the Bank’s vision and who are
committed to its success. Uttara Bank will be a socially responsible institution that will not lend
to businesses that have a detrimental impact on the environment and people.

The Goals of UBL are-

Uttara Bank will be the absolute market leader in the number of loans given to small and
medium sized enterprises throughout Bangladesh. It will be a world-class organization in terms
of service quality and establishing relationships that help its customers to develop and grow
successfully. It will be the Bank of choice both for its employees and its customers, the model
bank in this part of the world.

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2.4 Different Wings of Uttara bank ltd.

Name of the Division Affiliated Departments

Human Resources Division  Personnel Department
 Disciplinary Department
 Test Key Department
 Research & Planning Department
 Risk Management Department
Central Accounts Division  Accounts Department
 Reconciliation Department
Credit Division  Approval Department
 Admin. & Monitoring Department
 Lease Finance Department
 Recovery Department
 Audit & Inspection Department
Internal Control & Compliance Division  Monitoring Department
 Compliance Department
 Anti-Money Laundering Department
 Branches Operation Department
Banking Control & Common Services Division  Business Promotion Department
 Green Banking Department
 Public Relations Department
 Board Department
Board & Share Division
 Share Department
International Division  Correspondence Banking Department
 Remittance Department
 Trade Services Department
Treasury Division  Front Office (Dealing Room)
 Back Office

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  Asset & Liability Management
Department
Establishment Division  General Services Department
 Transport Department
 Stationery & Records Department
 Engineering Department
Information & Communication Technology  MIS Department
(lCT) Division  Development & Support Department
 Card Department
Corporate Banking Division  Credit Marketing Department
 Credit Business Development
Department

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2.5 Highlights on the overall activities of the Bank for the year ended 2012
and 2011

Sl. Particulars 2012 2011 Change in

No. Taka Taka %
1 Paid-up-Capital 3,306,449,088 2,875,173,120 15
2 Total Capital (Teir -I+II) 9,300,594,902 9,117,416,771 2
3 Capital surplus/(Deficit) 1,781,934,902 2,251,816,771 -21
4 Total Assets 123,790,627,973 97,417,927,797 27
5 Total Deposits 93,658,586,510 72,152,375,394 30
6 Total Loans & Advances 61,328,563,493 54,010,287,476 14
7 Total Contingent Liabilities 12,005,317,556 9,860,040,453 22
8 Advance/ Deposit Ratio 0.65:1 0.75:1 12
Percentage of Classified Loans against
9
total Loans & Advances 8.39% 5.22% 61
10 Profit after tax & provision 1,236,356,336 1,650,339,616 -25
11 Amount of classified loan during current year 3,393,000,000 814,914,000 316
12 Provision kept against classified loans 1,803,533,437 1,091,983,437 65
13 Provision surplus /(deficit) 62,648,745 29,533,837 112
14 Cost of Fund (%) 7.23% 6.32% 14
15 Interest earning Assets 98,677,618,328 79,811,603,347 24
16 Non-interest earning Assets 25,113,009,645 17,606,324,450 43
17 Return on Investment (ROI) % 8.85% 9.63% -8
18 Return on Assets (ROA)% 1.00% 1.69% -41
19 Income from Investment 3,716,097,423 2,204,265,402 69
20 Earning per Share 3.74 4.99 -25
21 Consolidated Earning per Share (SPS) 3.76 5.01 -25
22 Market value per share 38.10 77.80 -51
23 Price Earning Ratio (Times) 10.19 15.59 -35
24 Net Assets value per share 29.63 29.13 2

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2.6 Features of UBL

The bank is committed to turn all its activities as per council board. UBL through its steady
progress and continuous success has earned the reputation of being one of the leading private
sector banks of the country. The distinguishing features of UBL are as follow:
 All its activities are conducted on interest banking system according to council board.
 Establishment of participatory banking instead of banking in debtor creditor relationship.
 Investment is made though deterrent modes permitted under council board.
 Investment income of the bank shared with depositors according to a ratio to endure a
reasonable fair rate of return on their depositors.
 It aims are to introduce a welfare oriented banking system and also to establish equity
and justice in the field of all economic activities.
 It extends economic and financial services to the poor , helpless and height income group
of the people for their economic up liftman particularly in the rural areas.
 It plays a vital role in human resource development and employment generation
particularly for the unemployed youths.
 Its aim is to achieve balanced growth and equitable development of the country through
diversified investment operations particularly in the priority sector and in the less
developed.
 It extends cooperation to the poor the helpless and the height income group for their
economic development.

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2.7 Functions of UBL

The operations of Uttara Bank Limited are divided into three major categories:

1. General banking : it includes:-

a. Mobilization of deposits.
b. Receipts and payment of cash.
c. Handling transfer transaction
d. Operations of clearing house
e. Maintenance of accounts with Bangladesh band and other bank
f. Collection of cheque and bill
g. Issue and payment of Demand Draft, telegraphic transfers and payment order
h. Executing customers standing instructions
i. Maintenance of safe deposit lockers
j. Maintenance of internal accounts of the bank

While doing all the above noted work UBL issue cheques-book, Deposit account opening form,
SS card, Ledgers, Cash book, Deposit account ledgers, preparation statement of accounts. Pass
Book, Balance of different accounts and calculated profits.

UBL offers to open the following account to the depositors:

 Current Account
 Saving Account
 Term Deposit account. (3 month/6month /12 month /36month / 60 month)
 Cash Credit Account.

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2. Foreign Exchange Business
Foreign Exchange Business plays a vital role in providing substantial revenue on the bank
income pool.
 Opening letter of credit against commission for importing industrial agricultural and
other permissible items under council board.
 Opening letter of credit on the principle of sale, on the principle of under wage earner
scheme.
 Handling of export /import document.
 Negotiation of export and import document when discrepancy occurs.
 Financing import under import board.
 Financing to export on profit or loss sharing
 Handling inward and outward remittance.

3. Other activities
The UBL performs the following task for the welfare of the nation. There are some points which
is below:-
 Income generating scheme for the unemployed youth of the nation.
 Monorom sale center for marketing homemade garment, handicraft and other items.
 Education scheme for assisting poor scholar student to case and help them to continue
their study.
 Health scheme for fulfillment of health needs of rural people.
 Uttara University was established to extend service to the student.

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2.8 Operational Network Organogram
Management Hierarchy
Chairman
↓
Board of Director
↓
Managing Director
↓
Deputy Managing Director
↓
Senior Executive Vice President
↓
Executive Vice President
↓
Senior Vice President
↓
Vice President
↓
Senior Assistant Vice President
↓
First Assistant Vice President
↓
Assistant Vice President
↓
Senior Executive Officer
↓
Executive Officer
↓
Principal Officer
↓
Senior Officer
↓
Junior Officer
↓
Assistant officer

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2.9 Services & Products

UBL is a service oriented financial institution. The main function of the bank is to provide
services to its clients. The bank offers various products and services to the clients to attract them.
The first primary job of the bank is to collect deposit from its clients and other prospective
clients who still have not opened their accounts at the bank. They offer different accounts at the
bank. They offer different interest rates to the different accounts. The bank also provides credit
facilities to its clients. In fact the deposits are collected to lend some money to the people to
make profit. Also the foreign exchange department opens the L/C to its clients and thus collects
L/C commissions from its clients and thus makes a huge profit of its own.
UBL offers many products and services to its clients on their satisfaction. It has a good
reputation in the banking sector by continuously updating product and service qualities. A bank
cannot be able to make its desirable progress without the satisfaction of its customers. That’s
why UBL always gives preference to its client satisfaction and made significant progress through
its operation such as deposit mobilization, credit management, foreign trade etc.

SERVICES:

1. Personal Banking:
Amongst private sector banks, UBL has already made its mark in the personal banking segment.

2. Corporate Banking:
UBL offers a full range of tailored advisory, financing and operational services to its corporate
client groups combining trade, treasury, investment and transactional banking activities in one
package. Whether it is project finance, term loan, import or export deal, a working capital
requirement or a forward cover for a foreign currency transaction, UBL’s corporate banking
managers will offer clients the right solution. Customers will find top class skills and in depth

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knowledge of market trends in UBL’s corporate banking specialists, speedy approvals and
efficient processing fully satisfying client’s requirements-altogether a rewarding experience.

3. Capital Market Services:

Capital market operation besides investment in treasury bills, prize bonds and other government
securities constitute the investment basket of UBL. Interest rate cut on bank deposits and
government savings instruments has contributed to significant surge on the stock markets in the
second half of 2004, which creates opportunities for the bank in terms of capital market
operations. The bank is a member of DSE and CSE. The investment portfolio of the bank made
up of government securities and shares and debentures of different listed companies stood at tk.
3078 millions as on December 31, 2004 indexing a 50% increase over tk. 2046 millions in the
previous year. Income from investment stood at tk. 146 millions in 2004 registering a 10%
growth over the previous year.

4. SME Services:
Since inception, the UBL has held socio economic development in high esteem and was among
the first to recognize the potentials of SME’s.

 Uttara Bank Limited‟s involvement:

Recognizing the SME segment’s value additions and employment generation capabilities quite
early, the bank has pioneered SME financing in Bangladesh in 2003, focusing on stimulating the
manufacturing sector and actively promoting trading and service businesses.

 Experience and learning‟s:

The single largest problem of the lower end of the SME sector is that they are unable to fully
understand their needs. Even if these needs are understood, they are seldom met with right
product mix. Small business owners are unable to provide banks with required information of the
right type and quality. This has created a gap between the borrower and the banks and has served
to limit the outreach of SME financial products. In order to conquer this barrier, Uttara Bank
SME unit provides comprehensive support to prospective clients in evaluating their business and

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preparing the required documents in acceptable formats. In this regard, the Uttara Bank SME
unit has been working in close collaboration with the USAID, the SEDF an IFC managed multi
donor facility and the World Bank.
5. Online Banking Services:
Online banking services are designed to provide better services to its clients. Previously UBL
used PC bank but now they use world class software named Flora to avail this service to their
customers. This allows them to give prompt service to their valued clients. Flora is a universal
banking solution that meets the customer’s needs in retail, corporate and investment banking.
Under this system, the bank is capable of doing, for example, the following transactions:

 Cash withdrawal from consumer’s account at any branch of the bank

 Deposit in consumer’s account to any branch of the bank;
 Transfer of money from customer’s account to any other account with any branch of
the bank.
But most of the time UBL are using Telephone or Mobile phone.

6. By Telephone & Internet Banking Services:

UBL provide services by telephone and Internet Banking facilities to its clients.
The following are the glimpses of the facilities:

 Through Telephone banking:

 Access to the account information anytime from anywhere
 Request for cheque book and account statements
 Make cheque status inquiry
 Place stop cheque instruction
 Make utility bill payment.

 Through Internet banking:

 Access to the account information anytime from anywhere

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  Fund transfer
 Make utility bill payment
 Open and close term deposit
 Request for cheque book and account statements
 Place stop- cheque request
 Make loan repayment
 Inquire interest and foreign currency rates and many more.

PRODUCTS:

1. Personal loan:
As part of establishing a personal banking franchise of UBL, the bank has successfully launched
personal loan. The product is a term financing facility to aid them in their purchases of consumer
durables or services. Depending on the size and purpose of the loan, the number of installments
varies from 12 to 48 months.

2. Car loan:
The car loan is a term financing facility to individuals to aid them in their pursuit of has a car of
their dream. The facility becomes affordable to the clients as the repayment is done through fixed
installments facility period. Depending on the size purpose of the loan, the number of
installments varies from 12 to 60 months. In case of brand new cars, the loan tenure will be
maximum 72 months.

3. Vacation loan:
Vacation loan is a term financing facility to individuals to aid them in their hunt for spending a
vacation in the country or abroad. The facility becomes affordable to the clients as the repayment
is done through fixed installments facility period. Depending on the size and purpose of the loan,
the number of installments varies from 12 to 48 months.

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4. Any purpose loan:
UBL introduced “Any Purpose Loan”. Now the client can get loan up to tk. 5,00,000 to spend it
any way he/she chooses to. The client may avail of this loan facility in any UBL’s branches. As a
result this facility is also available at the KBR of UBL.

5. SME Loan:
For small and medium size of business or enterprises Uttara Bank Limited provides some SME
loans. And they are-

 Women Entrepreneur‟s Loan Scheme „Nari Swanirbor Rin Prakalpo‟

Without empowering women no economy can be developed. In Bangladesh there are lots of
firms are growing which are women owned organization. To ensure smooth credit flow for Small
women enterprise Uttara Bnak Limited is decided to start that type of loan. Here the loan sizes
are 1 lac to 15 lac and the interest rate are 10% per annum. Here the collateral Hypothecation of
goods in trade or guaranty of spouses, parents or other family member.

 Loan for Manufacturing Concern

In this Segment people who are involved in manufacturing products & selling thereof can get
this type of loans. To getting this load the customer should experienced Minimum 2 years in the
same business. Here the loan size is 1 lac to 50 lac and the interest will be 17%. The customers
can use Hypothecation of goods, Personal Guarantee, Tangible Assets as collateral.

 Uttaran Small Business Loan (USBL)

For the genuine and hard working Small Entrepreneur who runs their business with their own
capital but for lack of capital they cannot expand their business. Uttara Bank Limited has a loan
scheme named “Uttara Small Business Loan (USBL)” for them. The sizes of loans are 1 lac to 15
lac and the interest rate are 17% per annum

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6. Corporate Banking Products:

 Securitization of assets:
UBL intends to take up the challenge of securitization of assets and play a significant role in
ensuring that securitization of assets becomes a normal part of the range of financial instruments
available for organizations who can count on a steady, but piecemeal, flow of revenue and want
to translate this stream into cash resources with which to carry out further lending activities to
new customers. Some practical issues still need to be settled such as those conceding pricing, or
the legal framework, but it is expected that, as UBL and other institutions pursue more such
securitization activities these will be resolved.

 Corporate finance and advisory services:

Given the needs of its large and varied base of corporate clients, UBL will be positioning itself to
provide investment banking advisory services. These could cover a whole spectrum of activities
such as guidance on means of raising finance from the local stock markets, mergers and
acquisitions, valuations, reconstructions of distressed companies and other expert knowledge
bases advice. By this means UBL hopes to play the role of strategic counselor to blue chip
Bangladesh companies and then move from the level of advice to possible implementation of
solutions to complex financing problems that may arise from time to time. This would be an
extra service that would complement the normal financing activities that UBL already offers to
corporate business houses.

 Syndication of funds:
At UBL, the Syndication and structured Finance Unit was setup on October 30, 2004.This unit
effectively closed two syndicated deals in the first and second quarters of 2004. The syndications
and Structured Finance team as a business unit soon followed up by closing another deal totaling
tk. 2.10 billion for a large local corporate. The year 2004 being the first full year of operation for
the team ended on a high note as UBL was able to close three syndicated deals as the Lead Bank,
two deals as the Co arranger and several other deals as a participant.

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7. Uttaran Consumer-Credit Scheme

UBL started Uttaran Consumers Credit Scheme from 1996.UBL offers opportunity of financial
assistance for –

 Motor cycle/car- New or re-conditioned.

 Refrigerator/ Deep Freeze.
 Television/ VCR /VCP/VCD
 Radio/ Two-in-one/ Three – in – one
 Air-Conditioner/ Water Cooler/ Water Pump
 Washing Machine.
 Personal Computer/ UPS/ Printer/ Type writer
 Sewing Machine.
 House hold furniture- Wooden & Steel.
 Cellular Telephone.
 Fax
 Photocopier.
 Electric Fan- Ceiling/ Pedestal/ Table.
 Bi-Cycle
 Dish Antenna.
 Baby Taxi, Tempo/Microbus (For self employed persons)
 Kitchen articles such as Oven, Micro-oven, Toaster, Blender, Pressure Cooker etc.

7. Monthly Saving Scheme (MSS)

Saving is the best friend in bad days. Small saving can build up a prosperous future.
Saving can meet up any emergencies. UBL has introduced monthly saving scheme that allows
saving on a monthly basis and getting a handsome return upon maturity. If anyone wants to build
up a significant saving to carry out your cherished dreams, UBL MSS is the right solution.

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8. Monthly Benefit Scheme (MBS)
UBL has introduced monthly benefit scheme for the prudent persons having ready cash
and desiring to have fixed in income on monthly basis out of it without taking risk of loss and
without en-cashing the principal amount.

9. Double Growth Deposit Scheme

For people who have cash flow at this moment ant want to get it doubled quickly UBL
has Double Growth Deposit Scheme that offers to make double money within 6 years and 10
years respectively results a high rate of interest.

Deposits Products
At present Uttara Bank Limited has the following deposit product that has been offered to
general public:

1. Current Account
The client can enjoy maximum flexibility and convenience when he/she opens a current account
with us.

This account offers:

 Any number of transactions a day.
 No minimum balance fee.
 Statement of account at your desired frequency.
 Few cost of cheque book.
 Any branch banking facility.
 Statement by Fax on demand.

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 2. Savings Account
The Savings Account allows the client to have interest income on his/her deposit whilst the
account can be used for your transaction purposes. He/she can draw a maximum number of two
cheques per week; exceeding this number will forfeit the interest for the month. UBL offers a
competitive interest rate (6.00%) on the account. Also there is no requirement for a minimum
balance to be maintained in the account to be eligible for the interest. Interest is applied to the
account on half-yearly rests.

This account also offers:

 No minimum balance fee.
 Statement of account at client’s desired frequency.
 Few cost of cheque book.
 Any branch banking facility.
 Statement by Fax on demand.

3. Short Term Deposit Account

UBL Short Term Deposit Account is a unique blend of flexibility and high return on your
deposit. The client can use this account like a current account whilst he earns interest on the
account when the stipulated minimum balance is maintained in the account. UBL offers a very
competitive interest rate (6.00%) and the interest is calculated on a daily product basis.

This account also offers:

 No limit to the number of withdrawals.
 No minimum balance fee.
 Statement of account at client’s desired frequency.
 Few cost of cheque book.
 Any branch banking facility.

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 4. Fixed Deposit account
Clients can open Fixed Deposit Accounts for 3 months, 6 months, 1 year or for longer term. UBL
offers competitive interest rates. Clients can Place their deposit under lien with UBL and take a
loan, buy shares or open an overdraft account to meet their cash requirements. Interest rates on
deposits vary from time to time.

Fixed Deposit Rate:

Tenure/Amount Up to 25.00 lac Above 25.00 lac Above 50.00 lac Above 1.00
up to 50.00 lac up to 1.00 Crore Crore

1 Month 5.00% 5.25% 5.50% 6.00%

3 Months 8.25% 8.50% 8.75% 9.00%

6 Months 8.50% 8.75% 9.00% 9.00%

1 Year 8.75% 9.00% 9.00% 9.00%

5. Others Accounts
Foreign Currency Account for private individual/firm/organization:
 Any person/firm/organization who earns foreign currency can open Foreign Currency
Account with UBL.
 Payments in foreign currency may be made freely abroad from this account and local
payment in Taka may also be made from this account.
Bank pay interest provided the accounts are maintained in the form of term deposit for minimum
period of 90 days.

Foreign Currency Account for Bangladeshi Nationals Working and earning abroad:
 No initial deposit is required.
 A/c holder nominates his nominee to operate the account.

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  The account holder can freely transfer entire amount in foreign currency anywhere he
chooses or can convert into Bangladesh Taka currency.
 Funds from this account may also be issued to the account holder up to his entitlement for
the purpose of his foreign travels in usual manner.

Resident Foreign Currency Deposit Account

 Persons ordinarily resident in Bangladesh may open and maintain RFCD Account with
foreign exchange brought in at the time of his return from travel abroad.
 Any amount brought in with declaration to customs authorities in the form FMJ and up to
US$ 5000 brought in without any declaration can be deposited in this account.
 Balance in this account can be freely transferred abroad.
 Funds from this account may also be issued to the account holder for the purpose of his
foreign travels in the usual manner.
 Interest in foreign currency is paid in this account if the deposits are for a term of not less
than one month and the balance is not less than US$ 1000 or GBP 500 or its equivalent.

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 Chapter-3

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 Chapter-3: Job Details, Observation & Learning’s
3.1 Job Details

The General Banking Division

Uttara Bank Credit Division

Limited

Accounts Division

As an Intern, I was very lucky that I got chance to work on various section of a bank. That helps
me to improve my knowledge about banking activities. I work on four different divisions on
UBL. Now I will briefly describe my job details bellow-

1. The General Banking Division

This division is very important for any bank. All important work like account opening, issuance
of FDR, DPS Processing of inward and outward clearing are happen in this department.
Task I handled in this division are:
 Issuing Cheque Book
 Recording the issuance cheque books in the recording paper.
 Opening Account
 Opening various type of scheme etc.

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 2. Credit Division
The main activities of the bank are done by the Credit division. This division is all about giving
loans and managing the risk of the investment. This department exercises the lending function;
therefore, distribute its funds among various assets in a manner as to drive sufficient income. The
different tasks in this division are as follows:

 Accept customer loan offer.

 Process that offer in the form of credit.
 Lean of customer accounts.
 Sorting the loan form and put that form in according to customers file.
 Fill up the limit form, sanction letter.
 Take signature in charge documents from the customers.
 How loan account open.
 Preparing credit proposal.

3. Accounts Division
Accounts division is one of the most important divisions in the branch. The officers of this
division do all accounts activities of branch. The officers match daily position with the daily
affaires. The task I done in this division are:

 Sorting the debit and credit voucher.

 Arrange that voucher chronologically as their code.
 And then checking that voucher with daily supply

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 Chapter-4

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 Chapter-4: Credit Approval and Risk Management

The word credit comes from the Latin “Credo” meaning, “I believe”. It is a lenders trust in
persons/firms/company’s ability or potential ability to command goods or services of another in
return for promise to pay such goods or services of another in return for promise to pay such
goods or services at some specified time in the future. The making of loans and advances has
always been prominent profitable function of bank. Sanctioning credit to customers and others
out of the funds at its disposal is one of the principal services of a modern bank.
Credit Appraisal is a process to ascertain the risks associated with the extension of the credit
facility. It is generally carried by the financial institutions which are involved in providing
financial funding to its customers. Credit risk is a risk related to non repayment of the credit
obtained by the customer of a bank. Thus it is necessary to appraise the credibility of the
customer in order to mitigate the credit risk. Proper evaluation of the customer is performed this
measures the financial condition and the ability of the customer to repay back the loan in future.
Generally the credits facilities are extended against the security know as collateral. But even
though the loans are backed by the collateral, banks are normally interested in the actual loan
amount to be repaid along with the interest. Thus, the customer's cash flows are ascertained to
ensure the timely payment of the principal and the interest.
In Banks and Financial Institutions, Credit Risk is considered as an essential factor that needs to
be managed. Credit Risk is the possibility that a borrower or counter party will fail to meet its
obligations in accordance with the agreed terms. Credit Risk, therefore, arises from the Bank’s
dealings with or lending to corporate, individuals and other Banks or Financial Institutions.

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Procedure of Disbursement of Loans & Advances

4.1 Credit Management

To have crystal clear idea about the credit management of Uttara Bank Limited.

Critical analyses of the followings are essential:

 Credit policy of the Uttara Bank Limited.

 Credit sanctioning authority of Uttara Bank Limited, and
 Processing and screening of credit proposal.

4.1.1 Credit Policy of Uttara Bank Limited

Uttara Bank Limited credit policy contains the views of total macro-economic development of
the country as a whole by way of providing financial support to the Trade, Commerce and
Industry. Throughout its credit operation Uttara Bank Limited goes to every possible corners of
the society. They are financing large and medium scale business house and industry. At the same
time they also take care entrepreneurs through its operation and lease finance and micro-credit,
small loan scheme etc.

From Financial Aspects it is observed that as a Matter of Policy

1. Charging of interest is flexible depending on insisting of the proposal and the customer.
2. It takes care and maintaining proper “Mix” of Short, Medium and Long term finance for
a period not exceeding five years.
3. Uttara Bank Limited put emphasis on the customer.
4. It takes care of diversity in credit portfolio.

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4.1.2 Credit Sanctioning Authority of Uttara Bank Limited

Uttara Bank Limited believes in decentralization of power and authority as because of the evil
duel subordination may creep in the chain of command. Its authority is not well defined and
properly implemented with a view to ensuring prompt efficient services to its multiple plans
spread far and wide, the bank envisages delegation of optimum power to its executive and
officials at different level of operation.

In order to implements the system of delegation of power effectively and to drive the desired for
the bank as well as the executive concerned, bank has develop a system to ensure that delegated
authority by the executive can be evaluated realistically and qualitatively.

The basic guideline they follow to achieve the objective of delegation of authority is-

 The Managing Director can exercise all the powers vested in other executives
of the bank.
 The Managing Director may suspend exercise of delegated power of any
executive through specific or general order.
 Other than Managing Director, the delegation of powers is exercise by the
executive through specific or general order.
Delegated powers are expected to be exercise by the authorized executives judiciously keeping
the bank interest in mind. In exercising the powers so delegated authorized executives shall also
have credit restrictions as governed by banking company act, Bangladesh Bank for exercising the
delegated power-

1. The borrower must be a man of integrity and must have good

reputation in the market.

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 2. The enterprise of the borrower must be viable and profitable. Proposal of the
borrower must be evaluated properly and carefully so as to ascertains its
profitability.
3. The borrower must have the capital and capability for utilizing credit properly
and profitably.
4. No sanctioning officer can sanction any credit to any of his near relations to
any firm/company where his relations have financial interest.
5. A customer to who credit is to be allowed; should be far as possible within
the command area.
6. There shall be no power to sanction clear advance.

4.1.3 Tools for Appraisal Credit

The 10 C’s of good and bad loan.

In addition to the formal credit appraisal, the credit of Uttara Bank Limited tries to judge the
possible client based on some criteria. These criteria are called the C’s of good and bad loans.
These C’s are described below:

1. Character Make sure that the individual or company you are leading to the

Outstanding integrity.

2. Capacity Make sure that the individual or company you are leading to have

The capacity of repaying your loan.

3. Conditions Understanding the business and economic conditions can and will

Change after the loan is made.

4. Capital Make sure that the individual or company you are leading to have an

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 Appropriate level of investment in the company.

5. Collateral Make sure that there is a “Second way out” of a credit but do not

Allow that to drive the credit division.

6. Carelessness Remember that documentation, follow up and consistent monitoring

Are essential to high quality loan portfolio.

7. Communication Share credit objectives credit decision making both vertically and

Laterally within the bank.

8. Contingencies Make sure that you understand the risk, particularly the downside

Possibilities and that the structure and price the loan consistently

With that understanding.

9. Complacency Do not rely on past history to continue. Start alert to what can go

Wrong in any loan.

10. Competition Do not get swept away by what others are doing.

Others tools of good and bad loans are as follows as:

a) Liquidity
b) Profitability.
c) Purpose of loan.
d) Nature of loan.
e) Source of repayment.
f) Diversification of investment.

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 g) Policy of Central Bank.
h) Education and dealings lender.

4.2 Approval Procedures:

In approval process the Bank segregates its Relationship Management from the Approving
Authority. The existing approval authorities are Head of Branch, Zonal Head, Head Office Credit
Committee, Executive Committee of the Board of Directors and Board of Directors as per their
delegation of business powers defined in later section. The recommending or approving
executives shall take responsibility for and be held accountable for their recommendations or
approval. Delegation of approval limits shall be as per policy guidelines that all proposals where
facilities are up to 15% of the bank’s capital shall be approved at the CRM level, facilities upto
25% of the capital shall be approved by Managing Director & CEO subject to the limit approved
by the Board of Directors.
The Branch Marketing Team comprising of Executives and Officers shall market the clients and
then prepare credit appraisal memo as per the prescribed format and within the purview of the set
rule/policy guideline of the Bank. In case it is within the delegated business power of the Head of
Branch, the concerned Executive / Officer will place it to the Head of Branch who will make
judgment (qualitative and quantitative judgment) and if found viable then he/she will approve the
Loan otherwise he/she may reject it or forward it to the Zonal Head / Head of Corporate /
Commercial Banking at Head Office.

The concerned Executive / Officer at Zonal Office on receipt of the proposal will prepare a credit
appraisal memo as per the prescribed format and within the purview of the set rule / policy
guidelines and then place it to Zonal Head who will make Judgment (qualitative and
quantitative) and if found viable then he will approve the facility, if it is within his business
delegated power otherwise he may reject it or forward it to the Head of Corporate / Commercial
Banking at Head Office along with his recommendations. The Proposal on receipt by the Head of

36 | P a g e
Corporate / Commercial Banking will forward it to the Head of Credit who in turn distribute it to
the respective Credit Officer at the Head Office for scrutiny, analysis and prepare a Office Note /
Memo with due diligence along with their observations / results of analysis and to place it before
the Head Office Credit Committee. In Head Office Credit Division, separate Credit Officers are
designated for looking after the proposal of separate Branches. The Head Office Credit
Committee depending upon the delegated business power shall either approve it (or reject it if
not found viable) or place it to the Executive Committee of Directors / Board of Directors.\

4.3 Appeal Process:

Any declined credit proposal may be presented to the next higher authority for reassessment /
approval. However, there shall be no appeal process beyond the Managing Director & CEO.

4.4 Documentation Procedures:

The Bank maintains a standard set of approved documentation forms and formats for all its
facilities. While the branches continue to initiate documentation, these are checked one level
higher than the originating branch stations, zones, and corporate branches, as in the approval
procedures above.

 Custody & Safekeeping of Documents

Custodial responsibility for original transaction documents are the responsibility of the back
office administration office. These are retained in a secure manner preferably stored within fire-
and burglar-proof premises (e.g. vaults).

 Document Checklist
The approved document checklist must be maintained for every credit facility, which contains:
a) Details of all general and specific requirements
b) The dates on which these were submitted and complied with
c) The location of these documents.

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4.5 Credit Administration & Disbursement Authority:

The Disbursement Authority has been separated from Approval authority. The Disbursement
Authority is vested upon the Credit Administration Division (CAD). The flow chart for
disbursement process is given below:

APPROVAL AUTHORITY

Approval letter

HEAD OF HEAD OF
CAD BRANCH

Ensuring compliance with terms

and condition of the approval letter
and completion of documentation
DISBURSEMENT LETTER
UPTO TK.5.00 CRORE

BEYOND TK. 5.00 CRORE

RECOMMEND TO DMD/AMD

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The Credit Administration function is critical in ensuring that proper documentation and
approvals are in place prior to the disbursement of loan facilities. The functions of Credit
Administration are strictly segregated from Relationship Management/Marketing in order to
avoid the possibility of controls being compromised or issues not being highlighted at the
appropriate level.

4.5.1 Disbursement:
 Security documents are to be prepared in accordance with approval terms and to be
legally enforceable through the enlisted/ competent lawyer. Standard loan facility
documentation’s are to be drafted / prepared by the legal counsel.

 Disbursements under loan facilities are made when all loan and security
documentation is in place and clean CIB report obtained from Bangladesh Bank. All
formalities regarding large loans and loans to Directors are guided by Bangladesh
Bank circulars and related section of Banking Companies Act. All Credit Approval
terms must be met. The checklist certificate is to be signed by Credit In-charge and
Head of Branch. In order to cope with the revised policy, the disbursement authority
will be vested to the Head of Credit Administration Division up to Tk. 5.00 Crore
above which will be vested to the Additional Managing Director/ Deputy Managing
Director. In the absence of the Additional Managing Director/ Deputy Managing
Director the power may be exercised by the Head of CRMD.

4.5.2 Custodial Duties:

 Loan and security documents are to be preserved at respective Branch/ Zonal
Office/Head Office.

39 | P a g e
  Appropriate insurance coverage is maintained (and renewed on a timely basis) on
pledged/ Hypothecated as security.
 Security documents are held under strict control, preferably in locked fireproof
storage and with joint control.

4.5.3 Compliance Requirements:

 All required Bangladesh Bank returns are submitted in the correct format in a timely
manner.
 Bangladesh Bank circulars/regulations are maintained centrally and circulated to all
relevant Divisions and Branches to ensure compliance.
All third party service providers (surveyors/values, lawyers, insurers, External Credit Rating
Agencies etc.) are approved and performance reviewed on an annual basis

4.6 Monitoring of Credit Portfolio

The Credit Administration Division oversees the credit and investment activities of the Bank
with a broader portfolio-based outlook (regional dispersal, industry and customer-type
segmentation, product performance, portfolio classification, etc.).

The Loan Administration unit of the division will establish and maintain a comprehensive data
base on all credit exposures, and monitor consolidated movements as these are reported through
copies of transaction sheets and summaries. It conducts portfolio analyses for the purpose of
evaluating portfolio performance and detecting any deterioration in the risk exposures. Summary
reports and recommendations are submitted to the Credit Committee for appropriate action or
policy decisions.

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The credit review unit of the division is responsible for reviewing the credit process to ensure
that approved policies and procedures are being effectively being implemented throughout the
Bank.

4.7 Large Exposure Assessment Framework:

These applications require assessments in line with the revised Credit Risk Grading System
(CRGS) framework. This is a comprehensive analytical process that examines the following
areas for potential risks:
 Borrower -ownership, ownership structure, past financial performance, management
capability and depth, credit history & deposit account performance.
 Industry-vitality and prospects (sales volume trends in relation to demand levels), level of
competition, buyer-supplier leverages and threats, cost and pricing structure, entry
barriers and threats of new entries/substitution.
 Financial Package-type and purpose of assistance required, tenor, terms and conditions
 Security-quality and quantity

Furthermore, potential risk exposures and any migrating factors must be disclosed in the
analysis. These risks are invariably fall into the following categories:

 Borrower: Any issues regarding lack of management depth, complicated ownership

structure or inter-group transactions are addressed and risk should be mitigated.
 Industry: The key risk factors/of the borrower’s industry are assessed. Any issues
regarding the borrower’s position in the industry, overall industry concerns or
competitive forces are addressed and strengths and weaknesses of the borrower relative to
its competition are identified.

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  Supplier/Buyer Leverages: Any customer or supplier concentrations are addressed, as
these could have a significant impact on the future viability of the borrower.
 Historical Financial Analysis: Analyses of a minimum of 3 years historical financial
statement of the borrower are presented. Cash flow, profitability and leverage trends are
analyzed.
 Projected Financial Performances: A projection of the borrower’s future financial
performance are provided, indicating the sufficiency or lack thereof of cash flow to
service debt repayment, Loans are not granted if projected cash flow is insufficient to
repay debts.
 Account Conduct: For existing borrowers, the historic performances in meeting
repayment obligations (trade payments, cheques, interest and principal payments, etc.)
are assessed.
 Loan structures: The amount and tenors of financing proposed are justified based on the
projected repayment ability and loan purpose. Excessive tenor or amount relative to
business needs increases the risk of fund diversion and may adversely impact the
borrower’s repayment ability.
 Security: A current valuation of collateral is obtained and the quality and priority of
security being proposed are assessed. Loans are not be granted based solely on security,
 Mitigating Factors: Risk factors (margin, sustainability, leverage /gearing, over-
stocking, rapid growth/acquisition/expansion, management changes or succession issues,
customer or supplier concentration, lack of transparency or industry issues) are identified
in the credit assessment.

The Bank rates its individual risk exposures continuously until these have been discharged
through full payment or otherwise written off. However, actual account performances are an
additional consideration in classifying the exposures into one of the following eight categories:

 Superior – Low Risk (AAA):

Industry/Business & Financials: Strong industry and business performance is indicated on the
basis of volume trends and operating margins; the account may be a dominant player in the

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industry.
Account Performance: Account is cooperative, pays on time, and provides non-loan business.
Security: Facilities are fully secured by cash deposits, government bonds or an unconditional
guarantee from a top-tier international bank or financial institution.

 Good-Satisfactory Risk (AA):

Industry/Business & Financials: The account’s performance is strong, having consistently strong
earnings within a vibrant industry, good liquidity and low leverage.
Account Performance: Account is cooperative, pays on time and provides non-loan business.
Security: Security is sub-prime but solid real estate.
Aggregate score would be 95 or above.

 Acceptable – Fair risk (A):

Industry/Business & Financials: Financial condition is currently strong but may be unable to
sustain any major or continued setbacks. This classification indicates strengths below that of the
previous category, but shows consistent earnings and positive cash flow.
Account Performance: Account is paying, but may be delayed by less than one month from time
to time.
Security: Security position is satisfactory.
Aggregate score would be 75-94.

 Marginal -Watch list (BBB):

Industry/Business & Financials: These borrowers have an above-average risk due to strained
liquidity, higher than normal leverage, thin cash flow and/or inconsistent earnings.
Account Performance: Account is paying, but may be delayed by less than one month from time
to time.
Security: Security position could be less than satisfactory if default occurs longer than 3 months.
An aggregate score would be 65-74.

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  Special mention (BB):
Industry/Business & Financials: These borrowers deserve management’s close attention because
of consecutive losses over two years with the potential to have negative net worth, excessive
leverage.
Account Performance: Account is paying, but may be delayed by less than three months from
time to time.
Security: Security position could be less than satisfactory if default occurs longer than 3 months.
An aggregate score would be 55-64

 Substandard (B):
Financial condition is weak, and capacity or inclination to repay is in doubt. These weaknesses
jeopardize the full settlement of loans.
An aggregate score would be 45-54.

 Doubtful and Bad (Non-performing):

Full repayment of principal and interest is unlikely, and the possibility of loss is extremely high.
The adequacy of provisions must be reviewed at least quarterly and the Bank should pursue a
loan workout arrangement (e.g. restructuring), failing which legal options should be explored to
enforce security to obtain repayment.
An aggregate score would be 36-44.

 Loss (Non – Performing):

The prospect of recovery is poor after exploring all options. Legal procedures have been
initiated. In accordance with Bangladesh Bank guidelines, these accounts should be written off.
An aggregate score would be 35 or less.
The deterioration of any loan account is regarded as a serious development that requires the
attention of the Credit Committee. For this purpose, any account which is downgraded to
“Substandard” should be the subject of a Classified Loan Report.

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4.8 Recovery of Non-Performing Loans & Investments

The NPL Recovery Unit is responsible for all accounts assigned to it by the Credit Committee.
The units are staffed by seasoned senior officers who undertake the following activities:

 Check the accounts thoroughly and establish business prospects; and find out the best
way to recover the Bank’s exposure with the least possible losses.

 Restructure those accounts which are deemed to be cooperative and in temporary distress,
and monitor their performance closely until they have substantially complied with the
revised terms including payment of at least six months’ installments; rehabilitated
accounts may be returned to the originating front offices for regular monitoring and
supervision after this prescriptive period.

 Preparation of accounts with security, whose operations are active but the owners are
uncooperative, for legal action; coordinate with the Bank’s legal counsel and/or external
lawyers in the filing and prosecution stage; execute final judgment as may be determined
by the courts. For these types of accounts, the NPL Unit may recommend further
accounting treatments (such as additional loan loss provisions) depending on the
perceptions concerning the Bank’s security position. Blacklist the borrowers to ensure
they are not entertained for future accommodations in the future.

 Prepare accounts without any security, whose operations are either active or inactive and
the owners are uncooperative, for attachment of personal assets through legal means; as
above, coordinate with the legal agents of the Bank until the cases are resolved.
Recommend write-off for accounts with no hope of recovery, and blacklist the borrowers
to ensure they are never entertained in the future. The Board have the sole authority to
approve write-offs

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4.9 Internal Audit & Compliance
All front office lending outlets are audited regularly (at least bi-annually) as an independent
check of their activities. However, more frequent inspections and audits are conducted if
situation is demand. Particular attentions are paid to the corporate and Authorized Dealer (AD)
branches which are expected to originate and maintain the bulk of the credit and investment
portfolios. Compliance Requirements are:

 Bangladesh Bank Circulars and other regulations are maintained and updated regularly.
 Guidelines with regard to CIB reporting, provisioning and write -off of bad and doubtful
debts, and suspension of interest accrual are strictly enforced. These require the approval
of the. Board, as recommended by the MD-CEO.
 The performance of all external service providers (e.g. property appraisers, lawyers,
insurers, CPAs, etc.) are reviewed on a periodic basis.

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 Chapter-5

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 Chapter-5: SWOT Analysis

SWOT analysis is an important part for evaluating the company’s Strength, Weakness,
Opportunity, and Threats. It helps the organization to identify how to evaluate its performance
and scan the micro environment.

As I was engaged to identify the current position of Uttara Bank Limited in the competitive in
the market, it is very necessary to have the SWOT analysis to identify the Strength, Weakness,
Opportunity, and Threats of UBL. This is one of the popular way by which one get take
necessary action to improve their business because SWOT analysis is completely depend on the
market. The SWOT analysis of UBL is given below:

Strength (S)

Uttara Bank Limited is having the following strengths:

 Transparent and quick decision making.

 Efficient team of performance.
 Satisfied customers.
 Diversification to perform business operation.
 As the customers can draw the whole money,

Weaknesses (W)

Uttara Bank Limited is having the following weaknesses:

 Installment period and installment time duration is relatively low.

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  Long management hierarchy.
 UBL has no promotional tools for their clients.
 Lack of Technological Advancement
 Lack of success plan.

Opportunity (O):

Uttara Bank Limited is having the following weaknesses:

 Huge demand from the customer.

 The bank can earn high profit from this sector.
 Further diversification of product.
 As the economic condition of the country is not so good, customers will have need of this
loan.

Threats (T):

 People in Bangladesh have less involvement with the bank.

 Competitors are arising day by day.
 Switching of the customers to the other banks.
 Globalization of banking business.
 Borrowers are having the tendency to be the defaulter.
 Political instability in the country.

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 Chapter-6

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 Chapter-6: Major Findings, Recommendations and conclusion

Major Findings

 In most of the cases, if a client comes to take loan, the questionnaire form filling becomes
hard for him as it is too long and it takes a lot of time.
 Duration of time for preparing appraisal report after submitting and managing all the
documents and papers, the loan operation department takes almost three months and in
some cases, it cross three months and takes 5 or 6 months. The problem is that within this
time period, project that was viable for that time becomes obsolete getting loan and
starting business.
 Lack of proper updated technology is another problem. This is the age of information
technology (IT) all the activities are computerized. Though Uttara Bank has its own
networking system but that system is not up to date.
 There is lack of experienced engineers for the electronic devices.
 Political violence is a crucial limiting factor. Though, the Uttara Bank is not a State
owned bank, however the local politics may effect to granting the loans by giving various
types of pressure.
 There are lack of motivations to the mid and lower level officers. It seems they are
unsatisfied with remuneration and other benefits they get.
 In a few cases, I have seen that the right person is not placed in the right place.
 Sometimes inefficient allocations of resources have created a huge amount of bad debt.
 There is political interruption in sanctioning loan.
 Lack of co-ordination among the various departments is also a big problem of this bank.
 There is also lack of team speed.
 There is trade union but that is politically influenced.

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Recommendations

Uttara Bank Ltd is one of the first leading banks in Bangladesh. Its major operations are profit,
growth, development and welfare oriented. Management system of this bank is fully democratic.
It always maintains the rules declared by Bangladesh Bank. Uttara Bank training institute
provides training facilities to its medium & junior level officers of the bank and also provides
executive development & internship programs. This is my observation that there are some areas
where UBL should improve and those are:
 The number of customer is increasing. To keep the commitment UBL must increase its
manpower. So the customer gets their result without wasting time.
 UBL should take necessary action to motivate its officers to encourage them to work hard
to make them believe that they are also a part of the team and the bank does think about
them.
 Management should place right person in the right place.
 MIS cell should be developed through internal, tax e-mail etc.
 Accounting system of the Bank should be high tech software base.
 Fund management of the Bank should be more efficient. This will reduce the average
cost of working fund.
 Productivity measurement should be done from time to time through developing
customer services.
 Stuck up advances should be reduced through more recovery at lower rate of interest.
 Officers who are working on Credit risk management & Project finance procedure, they
should give attention on timing of sanctioning finance because demand of any kind of
product is being flexible. So if other thing is remaining constant, sanctioning procedure
should not be delayed.
 UBL should take necessary step to increase their network facilities.
 ATM card facilities are not easy of UBL. So they are losing their many potential
customers. So I think UBL should take necessary step to easy their ATM card facilities
for their customers.

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Conclusion

In the changing concept of banking, financing in some areas, especially in advances to

agriculture, small industries, small borrowers and export oriented industries are assuming great
importance. Investment is the most important asset as well as the primary source of earning for
the bank. On the other hand this is also the major source of risk for the bank. So the bank should
always try to make an appropriate balance between its return and risk involved with the
investment portfolio. Close supervision and effective follow up of investment activities might
reduce the risk to a great extent. An unsupervised investment might be stuck up. Consequently
not only the depositors but also the general share holders will be deprived of getting back their
money from the bank.

So as a private bank UBL is trying it’s best to extend their service to the public. UBL, Main
Branch provides all kinds of commercial banking services to its customers. Foreign Exchange
department is doing well in rending all the services related to the international trade and
remittance. Though the advance of Main Branch is high, the Credit department will be in a good
position if the Branch able to recover that. General banking is engaged in cash receipt, payment,
cheque clearing, opening accounts, deposit scheme, and local remittance etc. So if the UBL
wants to continue a profitable business and position itself as one of the top bank in the bank
arena then it has to earn the trust of their assets and must be concerned about their commitment
to the customers.

As concluding remark the bank is able to attain a leading role with the 31 years success story but
to remain unrivalled among new generation banks, the bank must face new challenges. The bank
must make a positive attempt to be more outward looking in their goals and aware of what is
happening. They must also emphasize on the domestic scenario more closely and analyze any
certain trends and strategies of their competitors. The bank must accept any failures and think of

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them as an objective to pursue future goals instead of blaming such failures on other factors and
in this way the Bank will be able to keep on playing its important roles in our economy.

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References

1. Uttara Bank Limited [Online]. Available From http://www.uttarabank-bd.com/ [Accessed on

2/2/2014]

2. Annual Report of Uttara Bank limited (2012)

3. Biplab Kumar Halder

Manager

4. A.K.M Taher Uddin Mahmud

Senior Officer

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