“Loan Recovery Performance of the Uttara Bank Limited” 1.1 Introduction The internship program is an opportunity for the students and it bears a great significant for us. It familiarizes the students with the practical business operations. The students of internship program get the chance to understand the real business world closely and familiarize themselves with internal and external expects of business. It gives them an opportunity to develop the analytical skill and scholastic aptitude. All over the world the dimension of banking has been changing rapidly due to Deregulation, Technological innovation and Globalization. Commercial banks in Bangladesh have to keep pace with the change in global business. Now banks have to compete in market place both with the local institutions as well as with the foreign institutions. To survive and thrive in such a competitive banking world, two important requirements are development of appropriate financial infrastructure by the central bank and development of “professionalism” in the sense of developing an
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Loan recovery performance of the uttara bank limited”
The internship program is an opportunity for the students and it bears a great significant for us. It familiarizes the students with the practical business operations. The students of internship program get the chance to understand the real business world closely and familiarize themselves with internal and external expects of business. It gives them an opportunity to develop the analytical skill and scholastic aptitude.
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Transcript
“Loan Recovery Performance of the Uttara Bank Limited”
1.1 IntroductionThe internship program is an opportunity for the students and it bears a great significant
for us. It familiarizes the students with the practical business operations. The students of
internship program get the chance to understand the real business world closely and
familiarize themselves with internal and external expects of business. It gives them an
opportunity to develop the analytical skill and scholastic aptitude.
All over the world the dimension of banking has been changing rapidly due to
Deregulation, Technological innovation and Globalization. Commercial banks in
Bangladesh have to keep pace with the change in global business. Now banks have to
compete in market place both with the local institutions as well as with the foreign
institutions.
To survive and thrive in such a competitive banking world, two important requirements
are development of appropriate financial infrastructure by the central bank and
development of “professionalism” in the sense of developing an appropriate manpower
structure and its expertise and experience. To introduce skilled banker, only theoretical
knowledge in the field of banking studies is not sufficient. An academic course of the
study has a great value when it has practical application in real life situation. So, I need
proper application of my knowledge to gate some benefit from my theoretical knowledge
make it more tactful. When I engage myself in such fields to make proper use of my
theoretical knowledge in my practical life situation. Such theoretical knowledge is
obtained from a course of study at only the half way of the subject matter.
1.2 Objective of the Study
There are several types of objectives involve here for this study. The objectives of studies
are
۩ To analyze the bank’s overall performance.
۩To know about the loan strategy of Uttara Bank Ltd.
۩ To know about the services provided by the bank .
۩ To acquire the knowledge of practical operations and the function of the
Bank.
۩ To gain an overall idea and know about the financial position of the bank.
۩ To find out the exiting problems of the bank (Branch).
۩ To recommend solutions to the existing problem.
۩ To show the trend of the key financial indicate faced by the bank branch.
1.3 Methodology For the purpose of my study both the primary and the secondary information will be used
for analyses.
Primary Sources1. Personal observation.
2. Desk work in different section.
3. Discussion with the bank’s officers.
4. Discussion with my bank’s advisor/ supervisor.
Secondary Sources1. Annual report of the bank.
2. Publication’s of Bangladesh Bank.
3. Different types of book related with banking.
4. Newspaper.
5. Website information.
Data Analysis:
For the purpose of my study, it requires analyzing the data on the bank. For these
purposed the following techniques have been used.
1. SWOT Analysis.
2. Common size statement Analysis.
3. Ratio Analysis.
4. Statistical Method (Mean, Variability Measures & Standard Deviation) and
5. Trend Analys
1.4 Limitation of the study To prepare this report, I have faced some limitations, which are mentioned in the
follows:
Time Limitation The main and the first constraints is time that hinder to cover all aspect of the study. In
three month it’s not possible to cover learning about any bank properly and also going to
write a report on this. So limitation of time is the main problem.
Lack of Data If any one can wise than he can gather primary data to the banks employees. But this data
is not proper for writing a report. Secondary data is also very rears. It is just only the
annual report and the web site. But in the web site the information is updated and is
properly given.
Limitation of Scope While collecting data, the authority did not disclose much information due to the
confidentially of the Bank
2.1 Historical background of UBLUttara Bank Ltd. has been a nationalized bank in the name of Uttara Bank under the
Bangladesh Bank (Nationalization) order 1972, formally known as Eastern Banking
Corporation Limited.
» Uttara Bank ltd. started functioning from 28.01.1965
» Consequent upon the amendment of Bangladesh Bank (Nationalization) order
1972
» Uttara Bank ltd. converted into Uttara Bank ltd. as a public limited company in
the year
1983 and obtained business commencement certificate on 21.08.1983.
» Uttara Bank ltd. floated its shares in the year 1984.
» Uttara Bank ltd. has 207 branches all over Bangladesh
» The bank is listed in the Dhaka Stock Exchange Ltd. and also in Chittagong
Dhaka
Stock Exchange Ltd.
» It publicly quoted company for trading of its shears.
» The registered office of the Bank is located in 90, Motijheel Commercial Area,
Dhaka-1000.
Adaptation of modern technology both in terms of equipment and banking
practice ensures efficient service to clients. 207 branches at home and 600
affiliates worldwide create efficient networking and reach capability. Uttara is a
bank that serves both clients and country.
UBL is one of the largest private banks in Bangladesh.
It operates through 207 fully computerized branches ensuring best possible and
fastest services to its valued clients.
2.2 UBL NetworksThe Head Office is located at Bank’s own 18-storied building at Motijheel, the
commercial center of the capital, Dhaka.
Corporate Offices ( Corporate Branch & Local Office ) 2Regional Office 13Worldwide Affiliates 600Total Branches ( Including Corporate Branch & Local Office ) 207Authorized Dealer Branches 38Treasury & Dealing Room 1Training Institute 1Man Power 3562
2.3 Board of Director Chairman- Mr. Azharul Islam
Vice Chairman- Mr. Md. Asaduzzaman
Director- Badrunnessa (Sharmin) Islam, Md. Mahfuzus Subhan, Mr. Abul Barq Alvi,
Mr.
Faruque Alamgir, Col. Engr. M. S. Kamal(Retd.), Prof. Mirza Mazharul Islam, Prof.
Sharif Md. Shahjahan, Mr. Syed A. N. M. Wahed, Mr. Shah Habibul Haque, Mr. Sk.
Amanullah
Managing Director- Shamsuddin Ahmed
Secretary- Md. Fazlur Rahman
2.4 Executive CommitteeLike other bank Uttara bank ltd. has also the Executive Committee. In their Executive
Committee there have Chairman, Vice- Chairman, Directors, MD, and Secretary. Its
shows below-
Chairman- Mr. Azharul Islam
Vice Chairman- Mr. Md. Asaduzzaman
Director- Mr. Md. Mahfuzus Subhan, Shah Habibul Haque, Col. Engineer M.S
Kamal (Retd)
Managing Director- Shamsuddin Ahmed
Secretary- Md. Fazlur Rahman
List of the senior Executive
Managing Director- Shamsuddin Ahmed
Additional Managing Director- Md. Abdus Sattar
Deputy Managing Director-Md. Abdul Halim, Shaikh Abdul Aziz
Assistant Managing Director- Md. Abdul Matin
Consultant (Credit)- Shaikh Aminuddin Ahmed
General Manager- Md. Abdur Rashid, Abu Ahmed, Muinuddin Al Hussain, Niresh
Chandran Das, Md. Nazmul Haque, Md. Fazlur Rahman, A.K.M. Idris Ali Faquir, Kazi
The Total amount of loans along with the duration in which these loans taken, need to be
repaid is given below:
Type of Product Loan Amount (Tk) Lac Tenure1. Vehicle 6.00 3 years2. Household items 1.00 2 years3. Office Equipments 2.00 2 years4. Entertainment items 1.00 2 years5. Others Special Considerations Special Considerations
3.10 Small business loan (SBL): For the genuine & hand working small
enterprise who run their business with their own capital but for lack o0f capital cannot
expend their business uttara bank limited has a loan scheme named “Uttara small
business loan (USBL)”
Five year Data of Small Business Loan
Dec-09 Dec-08 Dec-07 Dec-06 Dec-051,025.00m
976.00m 920m 910m
899.00m
3.11 Medium
enterprise Loan:The Common balance sheet shows that the outstanding balance in this sector stands at
TK. 7,764.5 million at the end of the year 2009 as against taka 6,975.1million of the
previous year 2008.in 2007 it stood Tk.6,522.3 million, in 2006 it stood taka 6,320.5
million & 2005 it stood tk.6,310 million.
Five year Data of Medium Enterprise Loan:
Dec-09 Dec-08 Dec-07 Dec-06Dec-05
7,764.50m
6,975.10m
6,522.30m
6,320.50m
6,310m
2005 2006 2007 2008 2009800.00
850.00
900.00
950.00
1,000.00
1,050.00 1025
976
920910899
Small Business Loan
Year
Tk. in mil-lion
3.123.12
WomenWomen
enterpriseenterprise
loanloan
scheme “ Nari Swanirbor Rin Prakalpo “scheme “ Nari Swanirbor Rin Prakalpo “Economic development is closely related to the empowerment of women . In BangladeshEconomic development is closely related to the empowerment of women . In Bangladesh
the number of women – companies\ farms continue to grow. For smooth credit flow forthe number of women – companies\ farms continue to grow. For smooth credit flow for
SE Women enterprise Uttara Bank Limited is dedicated in helping the genuine WomenSE Women enterprise Uttara Bank Limited is dedicated in helping the genuine Women
entrepreneur having sincerity, honest & strong Deliberation to improve the banking habitentrepreneur having sincerity, honest & strong Deliberation to improve the banking habit
of self employed women entrepreneurs to run any legitimate business smoothly with theof self employed women entrepreneurs to run any legitimate business smoothly with the
help of bank finance by ofdfering a special business loan product named “ Narihelp of bank finance by ofdfering a special business loan product named “ Nari
3.19 Syndicate Loan: The Common balance sheet shows that the outstanding
balance in this sector stands at TK. 240.18 million at the end of the year 2009 as against
taka 238.31 million of the previous year 2008.in 2007 it stood Tk238.12 million, in 2006
it stood taka 222.06 million & 2005 it stood tk.220.38 million
Five year Data of Syndicate LoanDec-09 Dec-08 Dec-07 Dec-06 Dec-05
240.18m 208.31m 198.12m 172.06m 120.38m
3.20 Bad Loan: The Common balance sheet shows that the outstanding balance
in this sector stands at TK. 2,842.0 million at the end of the year 2009 as against taka
2,633.8 million of the previous year 2008.in 2007 it stood Tk1,980.0 million, in 2006 it
stood taka 2,703.2 million & 2005 it stood tk.2,583.5 million
Five year Data of Bad LoanDec-09 Dec-08 Dec-07 Dec-06 Dec-052,842.00m
2,633.80m
1,980.00m
2,703.20m
2,583.50m
10
50
100
150
200
250240.18
208.31198.12172.06
120.38
Syndicate Loan
Dec-09Dec-08Dec-07Dec-06Dec-05
Year
Tk. in mil-lion
0.00
1,000.00
2,000.00
3,000.00
Tk. in Million
2005 2006 2007 2008 2009S1
Year
Bad Loan
3.21 Credit Rating of the BankAs per the BRPD Instruction circular No. 06 dated July 5, 2006 the Bank has done its
credit rating by credit Rating Information and Service Limited (CRSL) based on 31.12.06
and the following rating was awarded.
Credit Rating Report (Entry Rating) on Uttara Bank
Particular Long Term Short Term
Current Rating BBB+(Moderate Safety) ST-3(Good grade)
Date of Rating 18.06.07 18.06.07
Validity of Rating 01(one) year 06 (six) month
3.22 Credit Evaluation PrinciplesIn order to get the optimum returns from the deployed funds in different kinds of
lending, more emphasis shall be given on refund of loans and advances out of fund
generated by the borrower from their business activities instead of realization of money
by disposing of the securities held against the advance which is very much uncertain and
time consuming . Some principles or standards of lending are maintained loans in order
to keep the risk to a minimum level and for successful banking business. The main
principles of lending are:
Liquidity
Liquidity means the availability of bank funds on short notice. The liquidity of an
advance means it repayment on demand on due date or after a short notice. Therefore,
the banks must have to maintain sufficient liquidity to repay its depositors and trade off
between the liquidity and profitability is must.
Safety
Safety means the assurance of repayment of distributed loans. Bank is in business to
make money but safety should never be sacrificed for profitability, to ensure the safety of
loan. The borrower should be chosen carefully. He should be a person of good character
& capacity as well as bank must have to maintain eligible number of security from
borrower,
Profitability
Banking is a business aims at earning a good profit. The difference between the
interest received on advances and the interest paid on deposit constitute a major portion
of the bank income, besides, foreign exchange business is also highly remunerative. The
bank will not enter into a transaction unless a fair return assured.
Security
The security offered for an advance is an insurance to fall bank upon incases of need.
Security serves as a safety value for an unexpected emergency. Since risk factors are
involved, security coverage has to be taken before a lending.
National interest
Banking industry has significant roll to play in the economic development of a
country. The bank would lend if the purpose of the advances can contribute more to the
overall economic development of the country.
Loan Administration
The functions of Loan Administration start after the sanction of a credit. UBL Loan
Administration covers mainly maintenance of credit files and charge documents. Broadly
Loan Administration of UBL engulfs the work of documentation and monitoring. Loan
Administration of UBL follows some principles to deal with documentation, supervision,
follow-up and monitoring.
Security against Advances : The different types of securities that may be offered to a banker are as follows:
(a) Immovable property
(b) Movable property
Pratiraksha Sanchaya Patra, Bangladesh Sanchaya Patra, ICB unit certificate,
wage earner development bond.
Pledge of goods
Hypothecation of goods, produce and machinery
Fixed assets of manufacturing unit.
Shipping documents.
Five year Data of Deposit & AdvanceDec-09 Dec-08 Dec-07 Dec-06 Dec-0559,387.30 50817 48312.2 52316.6 48512.9
Deposit & Advance (TK. in Million)
12/01/2009
12/01/2008
12/01/2007
The client’s management capability, equity strength, nature of scheduled work and
feasibility study should be judiciously made to arrive at logical decision. If there is a
provision for running bills for the work, appropriate amount to be deducted from each bill
to ensure complete adjustment of the liability within the payment period of the final bill.
3.23 Credit Monitoring and ReviewIt is the last step in credit policy and procedure framework of UBL. Credit
monitoring and review is very important, because it ensures proper utilities and
repayment of bank fund. Credit monitoring and review feature of UBL is concerned was
assessing the quality of different type of loan. Periodic review and follow up should,
inter-aria aims at ensuring:
That conduct (Turnover, regularity of repayment etc) of the borrowing account
is during the period under review has been satisfactory or as expected.
The account is not having excess over limit
The terms and condition of the sanctioned letter are strictly followed.
The value of the collateral security is adequate.
There is not any unfavorable situation in market, economy and political
conditions, which may endanger the reliability of the borrower account.
The analysis of the borrower’s business performance and comparison of the
projected and actual to find any deviations.
Apparent profitability from the loans
4.1 Findings Of the studyIn the middle of twenty first century here we are facing a heavy competition with each other. Here everyone is competing with each and every single point. So today’s business institution are moving forward to remember this concept. If any one has a week point than the rival party will take the opportunity and make a problem for the week intuition.After complete my internship in The Uttara Bank, I realized that there are many problems and this may be a cause of huge loss or create a barrier for the future prospect. So the bank should taken care it very seriously.
The Problems for The Uttara Bank’s are:
(A) Security ProblemNow a days Uttara bank ltd. is one of the top performer bank in our country. But the security system is very weak. Because they have no security camera in the bank and of course the branch also which is very weak sector of Uttara bank limited
(B) Employment Problem In current situation it would be the major problem of Uttara bank limited. The situation of
too many heads but few heads must be eliminated for the future of the bank. In order to
enhance the productivity of the work force at Uttara bank limited, the management must
have to consider the appropriate amount of work force required and must assess the
productivity of each employee. The employees who do not have many things to be done
should be relocated or provision should be given to them for voluntarily retirement.
(C) Enhancement of Remuneration The most important lacking of UBL that have to be improving immediately is
Enhancement of remuneration. The current remuneration of Uttara bank limited in very
poor, unimpressive and not capable to attract quality personnel to fill up its position. It
have to be said that the foreign banks pay double that of Uttara bank limited and other
private banks also pay a higher scale of remuneration than Uttara bank limited. It is the
time the management should consider revising the remuneration package in order to
attract the high quality human resource and of course to retain them in Uttara bank
limited.
In course of my brief Bank's career in UBL I found that a good number of employees are
not working hour. This work force should be brought under utilization. The skill and
experience of this section of employers should be utilized properly in the development of
the Bank.
(D) Absence of Online Banking:
Today’s world is modern world, so here every one wants that they will do banking from
their own house. The Uttara Bank does not have this kind of facilities. So if they
implement online banking than they will gain huge popularity.
(E) Limited Number Of Branches : The Uttara Bank has limited branches allover the Bangladesh. So if they want to do a vast
business then they have to increase the number of branches.
(F) Limited ATM Booths of the Bank:Uttara Bank has only five ATM Booths overall the Bangladesh. It is not enough, if any
bank need to higher position in this competitive market.
4.2 SWOT Analysis for Uttara bank LimitedStrength Weakness
1.Uttara Bank is one of the largest and
oldest private-sector commercial bank in
Bangladesh,
2. They have over two hundred (207)
branch for customer service.
3. The bank has more than 600 foreign
correspondents world wide.
4. They have over 3000 employees’ for
ensure best possible and fastest services to
its valued clients.
5. Uttara is a bank that serves both clients
and country.
6. They have an 18-storied building at
Motijheel of there own.
1. There banking system is not fully
automation system.
2. There security (Security Camera)
system has to improve.
3. There MIS is not so strong.
4. The absence of certain strengths
may be viewed as a weakness.
5. They working system is know also
manual system.
Opportunities Threats
1. The external environmental analysis may
reveal certain new opportunities for
profit and growth.
2. They have a great opportunity of leading
banking institution and to play a pivotal role
in the development of the country though they
have 207 branch’s.
1. Compete with the huge
number of competitors in the
market.
2. Changes in the external
environmental also may
present threats to the firm.
3. Going with new strategy
would be risky.
5.1 RecommendationBefore drawing the end I would like to offer the following suggestions for bringing
improvements of UBL.
In general banking department they follow traditional system. The entire general
banking system is not fully computerized so an implementation of fully automated
system is required.
They are not using data base networking in information technology (IT) department.
So they have to transfer data from branch to branch and branch to head office by
using transferable disk. Such as –floppy which are risky?
The Accounts opening procedure is not easier to the customers, so every branch have
to need a separate desk for account opening.
6.1 ConclusionBanking sector is the chief financial intermediaries in a country. It’s also true for
Bangladesh. Uttara bank limited is a very challenging institution. In the age of
globalization and free trade, the process and the system of running a bank is changing.
UBL (Uttara Bank Ltd.) is continuously managing itself with this changing environment.
The company strategies are clean and concise. The return is pretty good. If the company
performs this way, we can expect that in near future Uttara bank limited may become one
of the top performer in banking sector of our country. They are also able to contribute to
our economy in better way. The working environment of the bank is impressive. It was
also found that the bank (Branch) is doing better in most of the sectors and their
performance is better than average. However during the year 2008 their investment is not
sufficient. The investment during 2008 went down in comparison to that of the previous
years. Finally it can be said that the bank is doing very good in the competitive market
and if it can continue to perform this way it can become a leading banking institution
which can play a pivotal role in the development of the country.