Thesis Paper on Foreign Exchange Activities of Selected

Banks in Bangladesh
1.1 Origin of the Report
I am lucky to say that, Stamford University, Bangladesh, assigned me the report on foreign
Exchange operations of selected banks. The data reuired for preparing this report has
!een collected from the annual reports of most recent years.
"BB#, $%%, $B# & South 'ast Banks that perform most of the standard !anking services
and investment activities on the !asis not only profit sharing !ut also social partnership. This
study attempts to analy(e the nature of modern !anking activities and performance of
selected !anks. Its performance )as revie)ed and analy(ed through the annual reports, and
internal records of the !ank.
This thesis report covers*
+ An Overview on foreign exchange operations of B!
+ Financial Perfor"ance of the Bank
+ Export and #"port Perfor"ance$
The o!,ectives of the study are as follo)s*
%eneral Ob&ectives*
The general o!,ective of the report is the evaluation of foreign e-change operation of selected
!anks and compare )ith its competitor.
Specific Ob&ective*
+ To apply theoretical kno)ledge into practical area.
+ To !e familiar )ith the !anking management system.
+ To attain practical kno)ledge on the foreign e-change operations performed !y selected
!anks.
+ To evaluate the performance of .eneral Banking division.
+ To kno) the !anking operational guideline of a !ank.
+ To get a !rief idea a!out operational procedure.
+ To analy(e the financing systems of the !ank and find out )hether the !ank needs any
improvement to !e done and make greater contri!ution to)ards the country/s economy.
+ To familiari(e different rules and regulations of Bank/s formalities.
+ To familiari(e the )orking hours, values and environment of the !ank.
+ To adopt )ith the everyday !anking activities.
+ To find out the contri!ution of private commercial !anks for the economic development
of the country.
+ To attain practical kno)ledge on the foreign e-change operations performed !y 0B#.
+ To have !etter direction to identify and suggest the scope of enhancement in foreign
e-change operations to fulfill the reuirement of the internship program.
+ #1% Opening.
+ To learn a!out the !enefits and incentives provides to the e-port proceeds.
+ To kno) the collection process of e-port proceeds.
+ To detect the pro!lems involved and to o!tain solutions.
The main o!,ective of the study is to o!tain a clear idea a!out the 2oreign '-change !usiness
of our !anking operation i.e. ho) the #1% is opened and ho) the import & e-port is done
To meet the o!,ectives of the study, I reali(ed that a single method )ould not !e effective.
2ormal & oral discussion, direct o!servation, uestioning clients & printed papers of the
Banks )ere found useful. To collect the necessary and meaningful information, the follo)ing
methods )ere applied. Both primary and secondary sources )ere used here.
'$($' )esearch *esign
'-ploratory research has !een conducted for gathering !etter information that )ill give a
!etter understanding on different financial data. Both primary and secondary sources of data
collection procedure have !een used in the report. 3rimary data has !een collected mainly
through the )riter/s o!servation of the approval process and monitoring techniues, informal
intervie)s of e-ecutives, officers and employees of selected !anks.
To make the Report more meaningful and presenta!le, t)o sources of data and information
have !een used )idely.
2igure 1.1 Sources of data
Both primary and secondary data sources )ere used to generate the report. The information
incorporated in this report has !een gathered from primary and secondary sources. 4part from
this, a revie) of related circular and office circular as )ell as face5to5face intervie) of the
e-ecutives, officials and clients )ere carried out.

'$+$' Pri"ar, So-rces
+ 2ace to conversation )ith the respective officers and stuffs of the !anks.
+ "iscussing )ith my supervising teacher and manager.
+ In5depth study of selected cases.
5 See more at* http*11))).assignmentpoint.com1!usiness1thesis5paper5on5foreign5e-change5
activities5of5selected5!anks5in5!angladesh.html6sthash.7t8%429h.dpuf
'$+$. Secondar, So-rces
+ 4nnual Report of the !anks.
+ :e!site of the !anks.
+ Several !ooks and periodicals related to the !anking sector.
+ Bangladesh Bank Report.
+ ;arious documentary file of the !anks.
+ 3rior research report.
9.1 Banking System of Bangladesh
The 8e)s in 8erusalem introduced a kind of !anking in the form of money lending !efore the
!irth of %hrist. The )ord <!ank/ )as pro!a!ly derived from the )ord <!ench/ as during
ancient time 8e)s used to do money 5lending !usiness sitting on long !enches.
2irst modern !anking )as introduced in 1==> in Stockholm as <Svingss 3is Bank/ )hich
opened up a ne) era of !anking activities throughout the 'uropean 0ainland.
In the South 4sian region, early !anking system )as introduced !y the 4fgan traders
popularly kno)n as ?a!uli)allas. 0uslim !usinessmen from ?a!ul, 4fganistan came to
India and started money lending !usiness in e-change of interest sometime in 1@19 4.".
They )ere kno)n as <?a!ulia)allasA.
The num!er of !anks in all no) stands at 7B in Bangladesh. Out of the 7B !anks, four are
$ationalised %ommercial Banks C$%BsD, 9> local private commercial !anks, 19 foreign
!anks and the rest five are "evelopment 2inancial Institutions C"2IsD.
Sonali Bank is the largest among the $%Bs )hile 3u!ali is leading in the private ones.
4mong the 19 foreign !anks, Standard %hartered has !ecome the largest in the country.
Besides the scheduled !anks, Sama!ai C%ooperativeD Bank, 4nsar5;"3 Bank,
?armasansthan C'mploymentD Bank and .rameen !ank are functioning in the financial
sector.The num!er of total !ranches of all scheduled !anks is =,E@> as of 8une 9EEE. Of the
!ranches, @B.BF per cent C9,719D are located in the ur!an areas and =E.EF per cent C@,=9=D in
the rural areas. Of the !ranches $%Bs hold @,=1=, private commercial !anks 1,917, foreign
!anks @1 and speciali(ed !anks 1,1GG.
Bangladesh Bank CBBD regulates and supervises the activities of all !anks. The BB is no)
carrying out a reform programme to ensure uality services !y the !anks.
Bangladesh Bank CBBD has !een )orking as the central !ank since the country/s
independence. Its prime ,o!s include issuing of currency, maintaining foreign e-change
reserve and providing transaction facilities of all pu!lic monetary matters. BB is also
responsi!le for planning the government/s monetary policy and implementing it there!y.
The BB has a governing !ody comprising of nine mem!ers )ith the .overnor as its chief.
4part from the head office in "haka, it has nine more !ranches, of )hich t)o in "haka and
one each in %hittagong, Ra,shahi, ?hulna, Bogra, Sylhet, Rangpur and Barisal.
4 co""ercial bank Cor b-siness bankD is a type of financial institution and intermediary. It
is a !ank that provides transactional, savings, and money market accounts and that accepts
time deposits.
.$/$' Service
Acco-nts0 1-rrent0 F*)0 P*S 2 *eposit Sche"e

.$/$'$' 1-rrent Acco-nt
.enerally this sort of account opens for !usiness purpose. %ustomers can )ithdra) money
once or more against their deposit. $o interest can !e paid to the customers in this account. If
the amount of deposit is !elo) taka 1,EEE on an average the !ank has authority to cut taka FE
from each account as incidental charge after every si- months. 4gainst this account loan
facility can !e ensured. Usually one can open this account )ith taka FEE. One can open this
sort of account through cash or check1!ill. 4ll the !anks
.$/$'$. Saving Bank Acco-nt
Usually customers open this sort of account at a lo) interest for only security. This is also an
initiative to create people/s savings tendency. .enerally, this account is to !e opened at taka
1EE. Interest is to !e paid in 8une and "ecem!er after every si- months. If money is
)ithdra)n t)ice a )eek or more than taka 1E,EEE is )ithdra)n Cif 9FH more compared to
total depositD then interest is not paid. This account guarantees loan. 4lmost all the !anks
follo) the same rules in the field of savings account, e-cept foreign !anks for varying
deposit. On an average, all the !anks give around si- percent interest.
.$/$'$3 Special Service
Some Banks render special services to the customers attracting other !anks.
.$/$'$/ #nternet Banking
%ustomers need an Internet access service. 4s an Internet Banking customer, he )ill !e given
a specific user I" and a confident pass)ord. The customer can then vie) his account
!alances online. It is the industry5standard method used to protect communications over the
Internet.
To ensure that customers/ personal data cannot !e accessed !y anyone !ut them, all reporting
information has !een secured using ;ersion and Secure Sockets #ayer CSS#D.
.$/$'$( 4o"e Banking
Iome !anking frees customers of visiting !ranches and most transactions )ill !e automated
to ena!le them to check their account activities transfer fund and to open #1% sitting in their
o)n desk )ith the help of a 3% and a telephone.
.$/$'$( Electronic Banking Service for 5indows
'lectronic Banking Service for :indo)s C'BS:D provides a full range of reporting
capa!ilities, and a comprehensive range of transaction initiation options.
The customers )ill !e a!le to process all payments as )ell as initiate #1%s and amendments,
through 'BS:. They )ill !e a!le to vie) the !alances of all accounts, )hether )ith Standard
%hartered or )ith any other !anks using S:I2T. 4dditionally, transactions may !e approved
!y remote authori(ation even if the approver is out of station.
.$/$'$+ A-to"ated Teller achine 6AT7
4utomated Teller 0achine C4T0D, a ne) concept in modern !anking, has already !een
introduced to facilitate su!scri!ers 97 hour cash access through a plastic card. The net)ork of
4T0 installations )ill !e adeuately e-tended to ena!le customers to non5!ranch !anking
!eyond !anking.
.$/$'$8 Tele Banking
Tele Banking allo)s customers to get access into their respective !anking information 97
hours a day. Su!scri!ers can update themselves !y making a phone call. They can transfer
any amount of deposit to other accounts irrespective of location either from home or office.
.$/$'$9 S5#FT
S:I2T is a !ank o)ned non5profit co5operative !ased in Belgium servicing the financial
community )orld)ide. It ensures secure messaging having a glo!al reach of =,7BF Banks and
2inancial Institutions in 1G> countries, 97 hours a day. S:I2T glo!al net)ork carries an
average 7 million message daily and estimated average value of payment messages is US" 9
trillion.
S:I2T is a highly secured messaging net)ork ena!les Banks to send and receive 2und
Transfer, #1% related and other free format messages to and from any !anks active in the
net)ork.
Iaving S:I2T facility, Bank )ill !e a!le to serve its customers more profita!le !y providing
#1%, 3ayment and other messages efficiently and )ith utmost security. 'specially it )ill !e of
great help for our clients dealing )ith Imports, '-ports and Remittances etc.
.$( one, and Banking sector review
.$($' onetar, 2 1redit Polic,
The monetary and credit policy for the financial year that ended in 8une,9EEE )as formulated
)ith the o!,ective of full utili(ation of domestic resources and rapid economic gro)th
through priorities for agriculture, industry, e-port, and e-pansion and strengthening of the
private sector, at the same time keeping inflation )ithin tolera!le limits. 4 modern
e-pansionary monetary and credit policy )as adopted in order to make good the losses to
agriculture, industry, and infrastructure !y the devastating floods of 1BB>. 4fter the flood the
economy remained sluggish in the first uarter of 1BBB59EEE and the private sector demand
for credit shrank. In vie) of this, the 4nnual "evelopment 3rogrammed C4"3D )as
e-panded and development activities in the private sector )ere geared up. 4s a result, the
pu!lic sector a!sor!ed credit at an accelerated rate. Though credit to the private sector picked
up to)ards the end of the year, the overall annual gro)th )as smaller than programmed,
although gross domestic credit e-panded a little faster than pro,ected. 0oney supply
increased !y 1F.@H in 1BBB59EEE compared to the e-pansion of >.=H in the preceding year.
.$($. :arrow one,
$arro) 0oney increased !y Tk. 9,=@1.BE crores or 1F.@H to Tk.1B,>>1.@E crores in 1BBB5
9EEE. Of the components of $arro) 0oney, currency outside !anks )ent up !y Tk.1,7>B.7E
crores or 1G.9H to Tk.1E,1G=.EE crores, and demand deposits )ent up !y Tk.1,179.FE crores
or 1@.@H to Tk.B,GEF.@E crores.
.$($3 Broad one,
Broad 0oney increased !y Tk.11,G@F.GE crores or 1>.=H to Tk. G7,G=9.7E crores in 1BBB5
9EEE compared to the increase of 19.>H in the preceding year. Of the components of Broad
0oney, $arro) 0oney increased !y 1F.@H and time deposits rose !y 1B.BH compared to the
increase of >.=H in $arro) 0oney and 17.FH in time deposits in the preceding year. The
shares of currency outside !anks, demand deposits and time deposits in Broad 0oney stood
at 1@.=H, 1@.EH, and G@.7H respectively on @Eth 8une, 9EEE compared to 1@.>H, 1@.=H and
G9.=H respectively on @Eth 8une, 1BBB.'-pansion of credit to the private sector, government
sector CnetD, pu!lic sector, and other assets CnetD, along )ith a surplus in net foreign assets
contri!uted to the e-pansion of Broad 0oney.
.$($/ )eserve one,
Reserve 0oney increased !y Tk.9, @91.>E crores or 1F.GH to Tk.1G,E=7.FE crores in 1BBB5
9EEE compared to the increase of >.@H during the preceding year. Of the components of
Reserve 0oney, currency outside !anks increased !y Tk.1,7>B.7E crores or 1G.1H compared
to the increase of Tk.F@@.@E crores or =.FH during the preceding year. Scheduled !anks
!alances )ith the Bangladesh Bank increased !y Tk.GGE.BE crores or 1F.@H in 1BBB59EEE
compared to the increase of Tk.7>>.9E crores or 1E.>H in the preceding year. Their cash in
tills increased !y Tk.=1.FE crores or =.EH as against the increase of Tk.1E@.=E crores or
11.9H in the preceding year. The increase in Bangladesh Bank/s credit to the government
CnetD !y Tk.1,G@>.1E crores and net surplus in the foreign sector !y Tk.1,9=9.7E crores played
the main role in e-erting e-pansionary influence on the Reserve 0oney. Io)ever the decline
of Tk.@@@.=E crores and Tk.77.BE crores in the !orro)ings !y the scheduled !anks and other
financial institutions respectively along )ith the fall of Tk.@EE.9E crores in other assets CnetD
partly offset the e-pansionary impact of those sectors.
.$($( *o"estic 1redit
Total domestic credit increased !y Tk.>, F>1.9E crores or 1@.=H to Tk. G1,7>B.EE crores
C including ad,ustment of !onds issued !y the governmentD in 1BBB59EEE as compared to the
increase of Tk.G,9=G.=E crores or 1@.1H in the preceding year. '-pansion of credit to the
government, private, and pu!lic sectors to the e-tent of Tk.@,F97.@E crores C@1.@HD,
Tk.7,BE=.1E crores C1E.GHD, and Tk.1FE.>E crores C9.FHD respectively contri!uted to the
e-pansion in total domestic credit in 1BBB59EEE. %redit to the government and private sector
had increased !y 91.@H and 1@.>H respectively, )hile credit to the pu!lic sector declined !y
@.GH in the preceding year.
.$($+ Bank 1redit
The outstanding level of !ank credit Ce-cluding foreign !ills and inter5!ank itemsD increased
!y Tk.F, 19@.@E crores or 1E.@H to Tk.F7, =7=.1E crores in 1BBB59EEE as compared to the
increase of 19.7H in the preceding year. Of the components of !ank credit, advances
increased !y Tk.7, >B9.GE crores or 1E.@H and the !ills purchased and discounted )ent up !y
Tk.9@E.=E crores or 11.@H.
.$($8 Bank *eposit
Bank deposits Ce-cluding inter5!ank itemsD increased !y Tk.11,E77.GE crores or 1>.=H to
Tk.GE,9G>.GE crores in 9EEB59E1E compared to the increase of 17.9H in the preceding year.
Of this increase , time deposits )ent up !y Tk.B,1E@.>E crores or 1B.BH to Tk.F7,>>1.1E
crores, government deposits !y Tk.G9@.=E crores or 17.>H to Tk.F,=1F.9E crores and demand
deposits !y Tk. 1,179.FE crores or 1@.@H to Tk.B,GEF.@E crores. On the other hand, restricted
deposits increased !y Tk.G7.>E crores in 9EEB59E1E.

@.1 3rofile of Southeast Bank #imited
The emergence of Southeast Bank #imited )as at the ,uncture of li!erali(ation of glo!al
economic activities. The e-perience of the prosperous economies of the 4sian countries and
in particular of South 4sia has !een the driving force and the strategic operational policy
option of the Bank. The company philosophy J K4 Bank )ith ;isionA has !een precisely an
essence of the legend of success in the 4sian countries.
Southeast Bank #imited is a scheduled commercial !ank in the private sector, )hich is
focused on the esta!lished and emerging markets of Bangladesh. In "haka, the first !ranch
)as launched in 1BBF and the !ank has !een gro)ing ever since. Southeast Bank #imited has
99 !ranches throughout Bangladesh and its aim is to !e the leading !ank in the country/s
principal markets. The !ank !y concentrating on the activities in its area of speciali(ation has
achieved good market reputation )ith efficient customer service. The Bank is committed to
providing continuous training to its staff to keep them up to date )ith modern practices in
their respective fields of )ork. The Bank also tries to fulfill its share in community
responsi!ilities. By such measures the Bank intends to gro) and increase shareholders/
earning per share. Southeast Bank #imited pledges to ma-imi(e customer satisfaction
through services and !uild a trusting relationship )ith customers, )hich has stood the test of
time for the last nine years.
3$'$. ;ision of Bank
+ To stand out as a pioneer !anking institution in Bangladesh
+ To contri!ute significantly to the national economy.
3$'$3 ission of Bank
+ Iigh uality financial services )ith the help of latest technology.
+ 2ast & accurate customer service.
+ Balanced gro)th strategy.
+ Iigh standard !usiness ethics.
+ Steady return on shareholders/ euity.
+ Innovative !anking at a competitive price.
+ "eep commitment to the society and the gro)th of national economy.
+ 4ttract and retain uality human resource.
3$'$/ Social )esponsibilit,
4n organi(ation cannot move along. Organi(ation needs people to generate its activities &
people needs organi(ation to get some kind of services. Southeast !ank is an organi(ation that
is concerned to ma-imi(e its profit along )ith maintaining some kind of social
responsi!ilities. It is fully devoted to fulfil the needs for its customer/s satisfaction as )ell as
it is involved socio5economic development activities. O!,ectives of the !anks are*
+ %reating employment opportunities )ithin the !ank through e-panding its net)ork
+ %ooperating )ith organi(ations such as .ramen Bank )hich are helping the poor through
micro credit and other facilities.
+ It finances the small scale industries to help them survive.
3$'$( anage"ent Tea"
To achieve the mission, a set of efficient drivers is mandatory. %ommercial !anks in
Bangladesh are no) in a hard competition. This is !ecause of continuous gro)th of similar
service oriented local !ank along )ith special service providing foreign !ank due to
glo!ali(ation.
In this respect, Southeast !ank en,oys a team of sound professionals. It is managed !y a team
of professionals having long e-perience in the !anking industry. :hile the !oard sets the
management o!,ectives and policies, the management is instrumental in providing the inputs
and implementing the strategies set !y the !oard. The !ank maintains a continuous policy of
developing its human resources. It !elieves that, the professionals are the key forces !ehind
the achievement of success in !anking !usiness at the face of prevailing rigorous competitive
market situation.
3$'$+ anage"ent #nfor"ation S,ste"
South east !ank uses 3% Bank10 a !ranch !anking soft)are developed !y leads
%orporation5 developed on SL* on )indo)s platform. The head office and !ranches use the
soft)are for !ook keeping, automatic interest calculation, daily transaction listing and audit
trials, auto maturity and auto rene)al of 2"RS, automatic integration of customer/s ledger
and general ledger, printing of general ledger position including !alance of su!sidiaries,
monthly income and e-penditure position etc.
3$'$8 Service 2 Prod-cts
S'B# al)ays try to provide !est services and products to their clients to acuire their
satisfaction. The !ank provides the follo)ing the products and services to consider client/s
demand
Locker
Services
Yearly
Charge
Security
Deposit
Service Available at
Small Tk. GFE15
Tk.9, FE15
CRefunda!leD
2or all types of
lockers.
Gulshan
Branch
0edium Tk. 1,9FE15
Dhanmondi
Branch
!arge Tk$ .0<<<=>
Ta!le* @51
*eposit Sche"es
*eposit )ate 6*$)$7 6Effective
fro" April <'0'??87
Savings (SB)
8$(<@
Special Notice Deposit (STD)
+$<<@
i!ed Deposit

"# Days
8$<<@
$# Days
8$(<@
" (Three) %onths
9$.(@
$ (Si!) %onths
9$(<@
& ('ne) Year
?$<<@
( (T)o) Years
?$(<@
" (Three) Years
'<$<<@
Ta!le* @59
3$'$. *eposit
S'B# al)ays try to collect deposits from their clients !y providing high interest against the
deposits. The !ank provides the follo)ing deposits to consider client/s demand

1-sto"er Friendl, *eposit Sche"es
Customer riendly
*eposit Sche"es
*ension Savings
Sche"e 6P$S$S$7







Sche"e 6E$S$S7
%arriage Savings S Scheme (%+S+S)
Ta!le* @5@
Savers Benefit *eposit Sche"e
Deposited
A"o-ntA
(<0<<<$<<
Term Si,e o- deposited .mount )ith
interest after co"pletion of the
ter" 6T$B$7
1
st
Year
/(0<<<$<<
2
nd
Year
(?0<<<$<<
3
rd
Year
+(0<<<$<<
4
th
Year
8.0<<<$<<
5
th
Year
8?0(<<$<<
$
th
Year
9?0<<<$<<
Ta!le* @57
!oan Sche"esA
Loan Schemes Lending Categories Lending /ates
(L+/+)
.gricultural
Scheme
Loan to prmary Producers
'.$<<@
Loan to agrcutura
Input
v traders and fertzer
dealers1 distri!utors
'3$<<@
Commercial
Lending
|ute Tradng
'($<<@
Other Commerca Lendng
'($<<@
0orking Capital |ute
'/$<<@
Other than 8ute '($<<@
1ouse Building
Loan
'($<<@
Special
*rogrammers
P.C. Loan Scheme for
'ducational and Other
Training Institutions
'($<<@
'ther Loans Educatona Loan Scheme
'($<<@
Consumer Credt Scheme
Small2Cottage
#nd-str,
Term Loan
'3$<<@

Large2%edium
Scale
#nd-str,
Term Loan
'($<<@
Loan against |ute Goods Exports
8$<<@
Ta!le* @5F
3$'$3 Foreign Exchange *ivision
2oreign '-change "epartment is international department of Bank. It deals glo!ally. It
facilitates international trade through its various modes of services. It !ridges !et)een
importers and e-porters. If the !ranch is authori(ed dealer in foreign e-change market, it can
remit foreign e-change from local country to foreign country. This department mainly deals
in foreign currency. This is )hy this department is called foreign e-change department.
Some national and international la)s regulate functions of this department. 4mong these,
2oreign '-change 4ct, 1B7G is for dealing in foreign e-change !usiness, and Import and
'-port %ontrol 4ct, 1BFE is for "ocumentary %redits CU%3"% J 1BB@ revision &
International %ham!er of %ommerce 3u!lication no J FEED is also an important la) for
settlement of terms and conditions !et)een e-porter and importer in international trade.
.overnments/ Import &'-port policy is another important factor for import and e-port
operation for !anks.
3$'$/ F-nctions of *epart"ent

#"port Operation
Import section helps !usiness and other people to import goods. In international environment,
!uyers and sellers are often unkno)n to each other. So seller al)ays seek guarantee for the
payment for his goods e-ported. Iere is the role of !ank. Bank gives e-port guarantee that it
)ill pay for the goods on !ehalf of the !uyer. This guarantee is called #etter of %redit. Thus
the contract !et)een importer and e-porter is given a legal shape !y the !anker !y its <#etter
of %redit/.
:hen a !uyer goes to import some goods from a foreign !uyer, he reuest his !ank makes
payments to the e-porter of goods. 4nd the !ank recovers the amount from the importer.
oreign
Bills
P-rchased
6FBP7
This loan is given to the e!porter+ 0hen local e!porter
gets a 3sance 4ill o-
exchange0 he has to wait -ntil the "at-rit, of the bill for receiving
pa,"ent$
So"eti"es he cannot wait -ntil "at-rit, and reC-est the bank to
p-rchase it$ #f
bank decides to p-rchase it0 then it "akes pa,"ents to the exporter
against the
bill of exchange$ Dpon "at-rit,0 banks present it to the drawee of the
bill for
encash"ent$ Bank p-rchases it at disco-nt$
5* Loan When L/C opener has no sumcent fund to purchase Foregn
Exchange to
open #1%, then !ank provides him credit to purchase necessary foreign
e-change under the :'S1S'0. This loan is called Import #oan under
:'S1S'0 or I3 loan.
Export Operation
Bangladesh e-ports a large uantity of goods and services to foreign households. Readymade
te-tile garments C!oth knitted and )ovenD, 8ute, 8ute5made products, fro(en shrimps, tea are
the main goods that Bangladeshi e-porters e-ports to foreign countries. .arments sector is
the largest sector that e-ports the lion share of the country/s e-port. Bangladesh e-ports most
of its readymade garments products to U.S.4 and 'uropean %ommunity C'%D countries.
Bangladesh e-ports a!out 7EH of its readymade garments products to U.S.4. 0ost of the
e-porters )ho e-port through SB#are readymade garment e-porters. They open e-port #1%s
here to e-port their goods, )hich they open against the import #1%s opened !y their foreign
importers.
'-port #1% operation is ,ust reverse of the import #1% operation. 2or e-porting goods !y the
local e-porter, !ank may act as advising !anks and collecting !ank Cnegotia!le !ankD for the
e-porter.
a$ As an advising bank* It receives documents from the foreign importer and hands it over to
the e-porter. Sometimes it adds confirmation on the #1% on reuest from the Opening Bank.
By adding confirmation, it assumes the responsi!ility to make payment to the e-porter.
1. 4+ .s Negotiating Bank: It negotates the bs and other shppng
documents n favor of the exporter. That s, t coects the proceeds of the
export-b from the drawee and credts the exporters account for the
same. Coecton proceed from the export b s deposted n the banks
N'ST/' account n the mporters country. Sometmes the bank
purchases the bs at dscount and wats t maturty of the b. When the
b matures, bank presents t to the drawee to encase t.
In our country, '-port and Import operation of !ank is very much related )ith one another
!ecause of use of Back to Back and maturity of payment for Back5to5Back #1% is set in such
that it can !e paid out of e-port proceeds. So e-port and import sections )orks as one unit.
These t)o operations can hardly !e separated from one another in the !ranch.
Foreign )e"ittance *epart"ent
This !ank is authori(ed dealer to deal in foreign e-change !usiness. 4s an authori(ed dealer,
a !ank must provide some services to the clients regarding foreign e-change and this
department provides these services. The !asic function of this department are out)ard and
in)ard remittance of foreign e-change from one country to another country. In the process of
providing this remittance service, it sells and !uys foreign currency. In such transactions the
foreign currencies are like any other commodities offered for sales and purchase, the cost
Cconvention valueD !eing paid !y the !uyer in home currency, the legal tender.
iscellaneo-s Services b, this *epart"entA


Student
File
Students )ho are desirous to study a4road can open
6le in the 4ank+
B, opening this file0 bank ass-res the re"ittance of f-nds in
abroad for
st-d,$
N/5T
Acco-nt
Non resident Investors Taka Account s account
$on5resident Bangladeshi can deposit foreign currency for investment
in security of stock e-changes. 2or such accountholders, FH of
primary shares are reserved.
+C+
Acco-nt
Foreign Currency accounts opened n the names of
Bangadesh
nationals or persons of Bangladeshi origin )orking or self5employed
a!road can no) are maintained as long as the account holders desire.
NCD Stands for Non-resident Foreign Currency Deposit
'ligi!le persons may open such accounts even after their return to
Bangladesh, )ithin si- months of their arrival.

Ta!le* @5=
Anal,sis of this *epart"ent
T,pes of Acco-nt
No+ '-
.ccounts
A"o-nts 6#n Taka$7
&+&+&+&+&+& CD7oreign
Currency Deposit
91G GB=>>1=.EE
NCD
G 9BB>GEG.EF
/CD
19 1FF79BG.GF
8!port Cash Credit 9 8CC
@ 9@E1E7@9.7@
Ta!le* @5G
:-"ber of *ifferent Acco-nts aintained b, this *epart"ent




:-"ber of *ifferent Acco-nts aintained b, this *epart"ent


2ig. @.9


4mount "eposited and 4dvanced in "ifferent 4ccounts 0aintained
2ig. @.@
3$'$( Banks Perfor"ance
The !ank/s overall o!,ective is to have a higherMprofita!ility than that of the )eighted average
of other !anks
1apital and )eserve
The authori(ed capital of the !ank )as Tk. @,FEE.EE million and paid5up capital )as Tk.
9,>F9.9E million as of "ecem!er @1, 9EE>. The capital and reserve of the !anks in 9EE> stood
at Tk. G,=FG.E1 million compared )ith Tk. =,7=>.@= million of the previous year sho)ing an
increase of 1>.@>H
The capital and reserve position of the Bank as on @151959EEF is appended as*
Taka in %illion
6a7 1O)E 1AP#TA! 6Tier># 1apital7A
3aid Jup %apital 9,>F9.9E
Shares 3remium 41% 7>F.B@
Statutory Reserve 1,BGF.9F
.eneral Reserve 97G.=F
Retained 'arnings F79.GB
6a7 Total 1ore 1apitalA +0'<3$9.
6b7 SDPP!EE:TA)E 1AP#TA! 6Tier>## 1apital7A
3rovision for Unclassified 4dvances =71.@1
.eneral 3rovision on off Balance
Sheet '-posures
@1@.E@
4ssets Revaluation Reserves FBE.=>
Revaluation Reserves of IT0 Securities @.B=
'-change 'uali(ation 41% 7.9E
6b7 Total S-pple"entar, 1apitalA '0((3$'?
Total 1apital 2 )eserves 61apitalA7 6aFb7 80+(8$<'
Ta!le* @5>
@.9 3rofile of 0ercantile Bank
0ercantile Bank #imited, a private commercial Bank )ith head office at =1 "ilkusha %14,
"haka Bangladesh started operation on 9
nd
8une, 1BBB. The Bank has 7F !ranches spread all
over the country )ith assets of Tk. 77,B7E.F7 million and more than 1EEE employees, the
!ank have diversified activities inertial !anking, corporate !anking and international trade.
3$.$' 5orld Econo",
The year 9EE> reminds us the )orst financial meltdo)n since the 1B@E/s. It is argued that the
meltdo)n of the financial system )as Kmade in 4mericaA !ecause it rela-es rules of
providing loans to the people )ith no income for !uying houses, called Ksu!5prime housing
loansA amounting to a!out N9.1 trillion. 2urthermore, US regulators did not monitor the )ay
in )hich the !anks )ere providing loans during the housing5!oom period. The regulatory
!odies in the US ignored )arning signs of a financial storm since 4ugust 9EEG and !elieved
that the free market system )ould take care of it. But free market could not prove its
effectiveness in avoiding the financial crisis. 4s a result, almost every country of the )orld
faced the ongoing )orld economic crisis.
:orld gro)th is e-pected to fall to E.FH in 9EE, its lo)est rate since :orld :ar 9. The US
economy, the )orld/s largest and the epicenter of the 2inancial Tsunami )ould shrink to 1.@H
in 9EEB. Output in the advanced economies is no) e-pected to contract !y 9H in 9EEB, first
contraction during the post )ar period. .ro)th in emerging and developing economies is
e-pected to slo) sharply from =.9FH in 9EE> to @.9FH in 9EEB. %hina, the fastest gro)ing
economy in the )orld is e-pected to slo) do)n to G.FH in 9EEB from a dou!le5digit gro)th
rate over the past several years, )hile India/s deceleration )ould !e less steep to F.EH from
=.9H and the economy of 8apan )ould shrink to 1.9H in 9EEB.
Sluggish real activities and lo)er commodity prices resulted from tiny demand caused !y the
current economic meltdo)n have dampened inflation pressures. In the advanced economies,
headline inflation is e-pected to decline from @.FH in 9EE> to a record lo) of E.9FH in 9EEB,
!efore edging up to E.GFH in 9E1E. In emerging and developing economies, inflation is also
e-pected to su!side to F.GFH in 9EEB and FH in 9E1E, do)n from B.HH in 9EE>.
3$.$. Bangladesh Econo",
Bangladesh 'conomy recorded satisfactory gro)th in 2O9EE> in spite of e-periencing t)o
consecutive floods and devastating cyclone Sidre, price hike of oil and other commodities in
the )orld market. .overnments gro)th generating and poverty reduction programs coupled
)ith the prudent monetary policy of Bangladesh Bank lead to achieve =.9H gro)th in
2O9EE>, slightly lo)er than =.7H of 2O9EEG. $early all sectors contri!uted to the ."3
gro)th, particularly significant )ere the gro)th of e-port5oriented sectors, inflo) of
remittances and some service sector like transport and communication.
3$.$3 Backgro-nd of B!
Banking system occupies an important place in an economy. 4 !anking institution is
indispensa!le in modern society. It plays a li!erali(ation of economics policies in
Bangladesh. 0ercantile Bank #imited emerged as a ne) commercial !ank to provide
efficient !anking service )ith a vie) to improving the socio5economic development of the
country.
0ercantile Bank #imited has !een incorporated on 0ay 9E, 1BBB in "haka, Bangladesh as a
3rivate limited company )ith the permission of the Bangladesh BankP 0ercantile Bank
#imited commenced formal commercial !anking operation from the 8une 9, 1BBB. The !ank
stood 7F !ranches all over the country up to "ecem!er, 9EE>.
There are 9> sponsors involved in creating 0ercantile Bank #imited. The sponsors of the
!ank have a long heritage of tradeP commerce and industry. They are highly regarded for their
entrepreneurial competence. The sponsors happen to !e mem!ers of different professional
groups among )hom are also reno)ned !anking professionals having vast range of !anking
kno)ledge. There are also mem!ers )ho are associated )ith other financial institutions like
insurance companies, leasing company etc.
3$.$/ ;ision
:ould make finest corporate citi(en.
3$.$( ission
W become most carng,
Focused for equtabe growth based on dversed depoyment of
resources, an
Nevertheess woud reman heathy and ganfuy protabe Bank.
3$.$+ Ob&ective
v Strategic Ob&ectivesA>
Q To achieve positive 'conomic ;alue 4dded C';4D each year.
Q To !e market leader in product innovation.
Q To !e one of the top three 2inancial Institutions in Bangladesh in terms of cost efficiency.
Q To !e one of the top five 2inancial Institutions in Bangladesh in terms of market share in
all significant market segments they serve.
v Financial Ob&ectiveA>
Q To achieve a return on shareholders/ euity of 9EH or more, on average.
3$.$8 1ore val-es
v For the c-sto"ersA>
3roviding )ith caring services !y !eing innovative in the development of ne) !anking
products and services.
v For the shareholdersA>
0a-imi(ing )ealth of the Bank.
v For the e"plo,eesA>
Respecting )orth and dignity of individual employees devoting their energies for the
progress of the Bank.
v For the co""-nit,A>
Strengthening the corporate values and taking environment and social risks and re)ard into
account.
3$.$9 4ierarch, of Positions in ercantile Bank !i"ited
3$.$? Organ gra"
3$.$'< 1overage of B!

3$.$'' F-nction of B!
4 !ank has a lot of function in different )ays. 4 Bank means an institution, )hich !orro)s
money from the surplus unit of the society and lends money to the deficit unit for earning
profit. The deposits are mainly accepted !y the !anker through current and saving account
that is )ithdra)al !y cheues. 4 !ank includes a !ody of person/s )eather incorporated or
not )ho carry on !usiness of !anking. Thus a !ank is a profit intuition )hich deals in money
and credit.
The functions of %ommercial !anks are no) )ide and varied. Io)ever, the functions of
%ommercial Banks may !roadly !e classified under the follo)ing t)o categories*
Q 3rimary 2unction
Q Secondary 2unction
3$.$''$' Pri"ar, F-nctionA
The 3rimary functions of %ommercial Bank10B# are as follo)s5
R Accepts *epositsA
The first primary functions of !ank are to accept deposits of money from the pu!lic
or sever group. The total deposits held !y the !anker are !roadly classified as5
R *e"and *epositA "emand deposits are )ithdra)n a!le on demand and thus no prior
notice is needed. "eposits in %urrent 4ccount and Saving 4ccount fall in this category.

R Ti"e *epositA Time deposits are repaya!le on the e-piry of a fi-ed period of time only.
2i-es deposit 4ccounts, recurring "eposit 4ccounts and deposit paya!le at specified
!ends one,A
Banking system essentially involves lending. "epending on the reuirements of the !orro)er,
!anks lend money in the forms follo)ing*
R !oansA In case of loan, the entire amount is paid to the !orro)er in lump sump, either in
cash or )ay of transfer to his account. The !orro)er can )ithdra) the amount at any time.
Interest is calculated and charged on the de!it !alance usually )ith uarterly rests. 4 loan
once repaid in full or in part cannot !e )ithdra)n further. Thus, no cheue !ook is issued
against the loan account.
R OverdraftA Overdraft is usually a temporary arrangement )here the customer is allo)ed to
)ithdra) money e-ceeding the credit !alance of the current account up to an agreed limit.
Interest in charged only for the amount dra)n.

R 1ash 1reditA 4 cash credit is an arrangement )here the customer is allo)ed to )ithdra)
money up to the sanctioned limit. Unlike overdraft this is a permanent arrangement and
usually used to meet the )orking capital needs of !usiness housed, industries etc. in cash
credit account )ithdra)als and deposits may !e effected freuently. Interest is charged on the
daily !alanced. %ash credit arrangement is usually made against pledge or goods !ut this
could also !e e-tended against personal security.
R Bill *isco-nted and P-rchaseA 4nother mode of advancing money is discounting of the
issuance !ill of e-change. The !anks !uy the !ill !efore its maturity at a price less than the
face value. The amount, )hich the !ank deducts from the face value of the instrument, is
actually the interest calculated up to the date of maturity of the !ills.

R 1reates 1reditA The creation of credit is one of the important functions of %ommercial
Bank. The !ank accepts deposits from the pu!lic and lends money to its customers. :hen a
!ank e-tends loan, it does not pay the amount in the !ank account of the !orro)er and allo)
)ithdra)ing the reuired amount !y cheues. In this )ay the !ank creates credit or deposit
)hich is regarded as money and can !e used for the purchase goods and services and also for
the payment of de!t ,ust like currency notes.

1reates "edi-" of ExchangeA %ommercial !ank usually issues cheue )hich circulates like
money in the society and creates the medium of e-change.
3$.$''$. Secondar, F-nction
0odern commercial !ank like 0B#, !esides performing the primary functions, cover a )ide
range of financial and non5financial services to meet the gro)ing needs of the time. Some of
the services are availa!le only to the customer )hile others are availa!le to the pu!lic in
general. The su!sidiary services provided !y a modern !anker may !e classified into the
follo)ing t)o groups*
Agenc, ServicesA
In many cases the %ommercial Banks acts the agent of the customers. 4s agents the !anks
provide the follo)ing services*
R %ollection of cheue, draft, !ill of e-change, promissory note, dividends, salaries, pension,
rent etc. on !ehalf of the customer.
R 4cting as correspondent and representative of its customers, other !anks, and financial
institutions.
R %onducting stock e-change transaction i.e. purchase and sale of share and securities for the
customers.
R 2unctioning as trustee, e-ecutor or administrator of estate of a customer.
%eneral Dtilit, ServicesA %ommercial !anks provide a variety of general utility services
to the customers. They are given !elo)*
R Issue letter of credit C#1%D
R 4ccepts valua!les for safe custody
R %onducts in foreign e-change !usiness
R #ease financing
R 3rovides Internet !anking services
R 3rovides speciali(ed advisory services
R Issues de!it and credit cards
R Under)rites of share and securities
R 0erchant Banking
R Serving as a referee as to the financial standing !usiness reputation and respecta!ility of
their customers
3$.$'. Foreign Exchange b-siness
4 commercial Bank10B# is involved in financing foreign trade apart from financing internal
credit reuirement in the economy. This involves handling of import !usiness through
opening #1% and handling of e-port !usiness. 4s !anking has !ecome very keenly
competitive, !anks find it convenient to involve in foreign e-change !usiness as a lucrative
source of earning income and profit.
4part from financing foreign trade, %ommercial Banks also provide guarantees of various
types to their clients. :hile these facilities clients to undertake ,o!s assigned to them !y
various corporations and organi(ation, this ena!les the !ank to earn commission.
4 commercial Bank also provides the facilities of remittance to its clients for transfer of
funds to various traded centers )ithin the country and also outside the country in keeping
)ith the foreign restrictions of the %entral Bank.
3$.$'3 !one Prod-cts
Credit Schemes
1ons-"ers 1redit Sche"e
Ob&ectivesA>
Hep xed-ncome peope for buyng house hod durabe.
For the amount up to Tk. 1, 00,000 the perod s two years.
Interest rate w be charged quartery rest.
Ter"s 2 1onditionsA>
Interest Rate 16.00%
Rsk Fund 1.00%
Supervson Charge (per year on outstandng baances) 0.25%
Appcaton Fee BDT 200.00
Special Feat-reA>
The oan amount s drecty credted to the customers account.
1A) !OA: Sche"e
Ob|ectves:-
Hep xed-ncome peope for buyng car
Interest rate w be charged quartery rest.
Terms & Condtons:-
Maxmum oan amount s BDT 25.00 acs.
'ur :arious Credit Schemes;7

R %O$SU0'RS %R'"IT S%I'0'SC%%SD
R %4R #O4$ S%I'0'
R "O%TORS %R'"IT S%I'0'
R RUR4# "';'#O30'$T S%I'0'
R #'4S' 2I$4$%I$.
R 3'RSO$4# #O4$
R S04## #O4$
Tenure of oan s 05 (Fve) years
Interest Rate 16.00%
Rsk Fund 1.00%
Supervson Charge (per year on outstandng baances) 0.25%
Appcaton Fee BDT 200.00
Special 2eature
BDT 7.50 Lac for recondtoned Car/|eeps/SUVs and BDT 25.00
Lac for new Cars/|eeps/SUVs.

*octorsG 1redit Sche"e

O!,ectives *5
Hep new F.C.P.S. or post-graduate doctors for settng up chambers and
buyng medca equpment.
Q Ielp e-perienced doctors for refur!ishing cham!ers and !uying medical euipment.
Q 4ssist private clinics for acuiring modern medical euipment.
Q Interest rate )ill !e charged at uarterly rest.
3$3$' Profile of the OrganiHation
Sponsored !y some dynamic and reputed entrepreneurs and eminent industrialists of the
country and also participated !y the .overnment, U%B started its operation in mid 1B>@,
company act 1B=9 and has since !een a!le to esta!lish the largest net)ork of >F !ranches as
on E@1.19.9EE= among the first generation !anks in the private sector.
:ith its firm commitment to the economic development of the country, the Bank has already
made a distinct mark in the realm of 3rivate Sector Banking through personali(ed service,
innovative practices, dynamic approach and efficient 0anagement. The Bank, aiming to play
a leading role in the economic activities of the country, is firmly engaged in the development
of trade, commerce and industry thorough a creative credit policy. It has resulted in great
success in all areas of operation )ith a vie) to improve the socio5economic development of
the country. The high profita!ility track record underpins value that the shareholders derive
from investing in the shares of United %ommercial Bank. In doing !usiness, United
%ommercial Bank follo)s the fundamental principles of %orporate .overnance
4ccounta!ility, Responsi!ility and Transparency. United %ommercial Bank #imited )ill
uphold its !usiness motto of Kpeople come firstA and strive to provide the !est !anking
products and services to its customers. In the process of reform and development, the !ank is
trying to improve its management capa!ilities and service standards through hard )ork and
innovation. 4nd such efforts have helped it gain a good reputation from its customers.
3$3$. ;ision of the Bank
To !e the !est 3rivate %ommercial Bank in Bangladesh in terms of efficiency, capital
adeuacy, asset uality, sound management and profita!ility having strong liuidity.
3$3$3 ission of the Bank
To bud Unted Commerca Bank Lmted nto an emcent, market drven,
customer focused nsttuton wth good corporate governance structure.
Contnuous mprovement n our busness poces, procedure and emcency
through ntegraton of technoogy at a eves.
3$3$/ Strategic State"ent
To have sustained gro)th, !roaden and improve range of products and services in all areas of
!anking activities )ith the aim to add increased value to shareholders investment and offer
highest possi!le !enefits to our customers.
3$3$( Ob&ectives of the Bank
To !uild up strong pillar of capital, To promote trade, commerce and industry, To discover
strategies for achieving systematic gro)th, To improve and !roaden the range of product and
services, To develop human resource !y increasing employment opportunities, To enhance
asset of shareholders, To offer standard financial services to the people, To keep !usiness
morality, To develop )elfare oriented !anking service, To offer highest possi!le !enefit to
customers.
3$3$+ 1orporate infor"ation of D1B!
$ame of the !ank * United %ommercial Bank #td
Status * 3rivate #imited %ompany
"ate of Incorporation * 8une 9@, 1B>@
4uthori(ed %apital * Tk.@FE.EE %rore
3aid5up %apital * Tk.1G1.@GF %rore
$um!ers of Branches * >F C'ighty 2iveD
3roposed Branches * 1F C2ifteenD
%hairman * 0r.0d.8ahangir 4lam ?han
%ompany Secretary * 0r. 0ahmud Rafiur Rahman
0anaging "irector * 0r. 0. Shah,ahan Bhuiyan
$um!er of 'mployees * 9FEE
%redit Rating * #ong Term* 4@ C4deuate SafetyD
Short Term* ST59
Registered Office * 2ederation Bha!an C7
th
through =
th
2loorD
=E, 0oti,heel %ommercial 4rea, "haka51EEE.
Bangladesh ..3.O5 Bo-* 9=F@
34BS* T>>5E95BFFEGF5GG, BF=>=BE5B@
2a-* T>>5E95BF=EF>G
'mail* iinfoUuc!l.com
:e! site* :::. Uc!l.com S.:.I.2.T* U%B#B""I
3$3$8 1apital and )eserve
"uring the year under report authori(ed capital of the !ank remained unchanged at tk.1EEE
million and the paid up capital stood s at tk.9@Emillion.The reserve fund of the !ank
increased !y @@H to Tk51E7F as against Tk5G>@ million in the previous year. The capital fund
of the !ank stood at Tk. 1B7@ million in 9EE> against Tk.1@>B million of 9EEG recording an
increase of Tk.@B.>>H. %ore capital increased !y T?.7B9 million and stood at Tk.1G@F
million )hile supplementary capital increased !y Tk.=9 million and stood at Tk.9E> million.
Total capital fund is euivalent to B.G9H of risk )eighted 4ssets.
3$3$9 )isk anage"ent
Risks involved in different operational area are under control of the management. The !ank
has taken appropriate measures to enforce and follo) all approved risk manuals 1guidelines
covering the follo)ing risk area in order to control and minimi(e the !usiness as )ell as
financial risks at an accepta!le level.
1. Pocy gudenes on asset abty management
2. Pocy gudenes on credt management
3. Pocy gudenes on foregn exchange rsk management
4. Pocy gudenes on money aunderng preventon
5. Pocy gudenes on nterna contro and compance
The !ank has formed a management committee C04$%O0D to revie) proper
implementation and regular monitoring of core areas of risk management.
3$3$? 4ierarch, of Positions in D1B Bank !i"ited
3$3$'< *istrict I5ise Branch *istrib-tion
"haka "ivision
1.Bangsha
Branch
2.Bhuta
Branch
3. Dhanmond
Branch
4.Erphant Road
Branch
5.Fardpur
Branch
6.Foregn
Exchange
Branch(AD)
7. Gushan
Branch
8. hasnabad
Branch
9.Isampur
Branch
10.Kawran Bazar
11.Madhabdee 12.Mabag 13.Mrpur 14.Mohakha 15.Mohammadp
ur
16.Mouvbazar 17. Mymensgh 18.
Narayangon|
19. Narsngd 20.Nawabpur
21. Nayabazar 22.North Brook
Ha Road
23. Pagabazar 24.Prncpa
Branch
25. Tanga
26.Uttara
Branch
27. Znzra
Branch

%hittagong "ivision
1. Agrabad 2. Anderka 3.Bahaddarhat 4.Brahmanbar
a
5. Chandpur 6.Chawkbaz
ar
7.Chowmuhan8. Coma 9. Coxs Bazar 10. Dhohazar 11.
Fatckchar
12. Chokora
13Fen Branch 14.Gohra 15.|ubee Road16. Kadamto 17. Kama
Bazar
18.Khatungo
n|
19.Lakshmpur20.Lohagara 21.
Madunaghat
22. Mazdee
Court
23.Muradpur 24. Nazrhat

Ra,shahi "ivision
1.Bogra 2.Chapanawabgon| 3. Dna|pur 4. Naogaon
5.Natore 6. Pabna 7.Ra|shah 8. Rangpur
9. Seara|gon|
?hulna "ivision
1.Chuadanga 2. |essore 3. |henadah 4. Khan |ahan A
Road
5.Khuna 6. Kushta 7.Noapara Bazar
Barisal "ivision
1.Barsa Branch
Sylhet "ivision
1.Amborkhana 2.Baroekha 3.Bean Bazar 4. Bswanath
5.Goaa Bazar 6.Nabggon| 7. Sherpur 8.Shbgon|
9. Syhet 10.Znda Bazar 11.Shah|aa
Upashahar


3$3$'' Prod-ct and Service
UCB Mut Monare
UCB Money Maxmzer
UCB Earnng Pus
UCB DPS Pus
Western Money Transfer
SMS Bankng Servce
Onne Servce
Credt Card
One Stop Servce
Tme Depost Scheme
Monthy Savngs scheme
Depost Insurance Scheme
Inward & Outward Remttances
Balance Sheet as at 3'
st
*ece"ber .<'<
United %ommercial Bank
Balance Sheet
4s at @1
st
"ecem!er, 9E1E
Partcuars 2010 2009
*roperty < .ssets
Cash (=&(+>?((&?=+>@
Cash n hand(ncudng foregn currences) 661.34 652.13
Baance wth Bangadesh Bank & Sona Bank(ncudng
2oreign currenciesD
2151.12 1526.31
Balance )ith others 4anks and 6nancial
institutions
(&##+#& $("+@#
In Bangadesh 1841.8 253.97
Outsde Bangadesh 258.17 369.53
%oney at Call and short notice &##+## &$?#+##
5nvestments $&##+?? (=??+>?=
Govt. 5954.187 2706.89
Others 146.586 170.58
Loans and .dvances ($&&#+#A(#(&#+$>
Loans, cash credt, overdraft etc. 24200.03 20065.17
Bs purchased and dscounted 2024.77 1327.21
i!ed assets including premisesB -urniture and
6!tures
(A&+(# (??+@>
'ther assets &&("+## A?>+A$
Non 4anking assets - -
Total .ssets "=@>?+$((==&(+@A
Lia4ilities< Capital
Borro)ing -rom other 4anksB 6nancial institution
< agents
($>+$A =A+(
Deposits < others accounts ""#&@+=>(>@@A+""
Currents accounts & other accounts 4876.15 4488.85
Bs payabe 581.00 541.59
Savng bank depost 7655.76 6861.99
Term deposts 19902.91 12666.88
Bearer certcates of deposts - -
'ther lia4ilities (A>>+A= (@#A+>$
Total lia4ilities "$((@+@((?#??+?(
Capital2 ShareholdersC eDuity
Pad-up capta 230.15 230.15
Statutory reserve 898.79 689.89
Genera reserves 363.56 358.08
Surpus n prot & oss account 829.58 459.72
Total ShareholdersC 8Duity ("((+#A &?">+=$
Total Lia4ilities < ShareholdersC 8Duity "=@>?+$((==&(+@A
Source* 4nnul Report of U%B# during year 9E1E
Ta!le* @5B
Profit 2 !oss acco-nt 6#nco"e State"ent7 for the ,ear ended 3'
st
*ece"ber .<'<
Partcuars 2010
Tk.
2009
Tk.
'perating income
Interest ncome 2303987311 1721378600
Interest pad on Deposts & Borrowng (1195364906)(971684083)
Net interest income &&#=$((>#@?>A$A>@&?
Income from nvestment 215152384 242857269
Commsson, Exchange & Brokerage 552266846 478710061
Other operatng ncome 116577443 109185330
Total 'perating 5ncome . &AA($&A#?=&@=#>>?&?
?
'perating 8!pense
Saary & aowance 583011961 502619152
Chef Executve saary Fees 3457500 2685000
Rent, Taxes, Insurance, Lghtng etc 81512694 69418169
Lega Expense 5122133 3238667
Postage, stamp, Teegram, teephone etc 23413092 20107259
Statonary, prntng etc 18496793 11428313
Drectors fees & other Expense 1225328 1798936
Audtors Fees 1645000 145000
Deprecaton and repar of xed assets 56899102 52750930
Other Expense 65381462 59033895
Total operating 8!pense B =>#&$@#$@ ?("((@"(&
*ro6t 4e-ore *rovision &&@(&@>#&"=@?((&=@$
Provson for oans & advances 300000000 231154000
Provson for dmnuton n vaue of nvestments - -
Other Provson - -
Total *rovision (D) "######## ("&&@>###
Tota prot/oss before Income Tax 852454013 626067856
Provson for Income Tax 435357685 457716712
Current Tax 430702971 457716712
Deferred Tax Expense 4654714 -
Net pro6t 2 L'SS .T8/ 5ncome Ta! >&?#A$"(= &$="@&&>>
Appropratons
Stator Reserve 170490802 125213571
Genera Reserve 16447918 -
Dvdends - -
Retaned Surpus 230157608 43137573
>&?#A$"(= &$="@&&>>
8arning per ordinary Share(8*S) &=&+(( ?"+&@
Source* 4nnul Report of U%B# during year 9E1E
Ta!le* @51E
5hat #s Foreign Exchange
'very country has certain natural advantages and disadvantages in producing certain
commodities )hile they have some natural disadvantages as )ell in other areas. 4s a result
)e find that some countries need to import certain commodities )hile others need to e-port
their surpluses. 2oreign trade !rings the fruits of the earth to the homes of the hum!lest
among the countries. These transactions are the !asis upon )hich international trade is made.
4s more than one currency is involved in foreign trade, it gives rise to e-change of currencies
)hich is kno)n as Foreign Exchange. The term JForeign ExchangeG has three principal
meanings*
2irstly it is a term used referring to the currencies of other countries in terms of any single
one currency. To a Bangladeshi, "ollar, 3ound Sterling, etc. are foreign currencies and as
such foreign e-changes.
Secondly, the term also commonly refer to some instruments used in international trade, such
as !ill of e-change, drafts, traveler/s cheue and other means of international remittance.

In terms of section .6d7 of the Foreign Exchange )eg-lations>'?/8, as adopted in
Bangladesh foreign e-changemeans foreign currency and includes any instrument dra)n,
accepted, made or issued under clause 1@ of article 1= of the Bangladesh Bank Order, 1BG9,
all deposits, credits and !alances paya!le in any foreign currency and draft, travelers cheue,
letter of credit and !ill of e-change e-pressed or dra)n in Bangladesh currency !ut paya!le
in any foreign currencies.
In e-ercise of the po)ers conferred !y sec. @ of the Foreign Exchange Regulations51B7G,
Bangladesh Bank issues license to scheduled !anks to deal )ith foreign e-change. These
!anks are kno)n as 4uthori(ed"ealers C4"D. #icenses are also issued !y Bangladesh Bank to
persons or firms to e-change foreign currency instruments such as T.%., %urrency notes and
coins. They are kno)n as 4uthori(ed 0oney %hangers.
/$' #nternational Trade and Foreign Exchange of B!
International Trade forms the ma,or !usiness actively undertaken !y 0ercantile Bank
#imited. The Bank )ith its )orld)ide net)ork of correspondents and close relationship )ith
key financial institutions provides an e-tensive trade services net)ork to handle the
transactions efficiently. International trade is an important constituent of the !usiness
portfolio of the Bank.
The import !usiness of the Bank decreased to Tk. 7E,@>E.1E million in 9EEG from Tk.
79,779.>E million in 9EE= and e-port !ills decreased to Tk.@9, =GE.1E million in 9EEG from
Tk.@7, FB9.1E million in 9EE=. Remittances handled !y the Bank increased and reached Tk.
@,F1E.7E million and Tk. 9,B>B.1E million respectively in 9EEG and 9EE= It )as tk. =GB.1E
million in 9EEF.
The num!er of foreign correspondents is F>7 as of "ecem!er @1, 9EEG. 'fforts are !eing
continued to further e-pand the %orrespondent Relationship to facilitate Bank/s gro)ing
foreign trade transactions. The Bank is using S:I2T communication system for fast and
accurate handling for foreign trade. The Bank is connected to R'UT'RS also for up5to5date
information on the foreign e-change markets.
To have crystal clear idea a!out the 2oreign '-change of 0B# %ritical analysis of the
follo)ing are essential
%redit policy of the Bank
%redit sanctioning 4uthority of 0B# and
%redit 0onitoring 1 Supervision of %ell
Import section helps !usiness and other people to import goods. In international environment,
!uyers and sellers are often unkno)n to each other. So seller al)ays seek guarantee for the
payment for his goods e-ported. Iere is the role of !ank. Bank gives e-port guarantee that it
)ill pay for the goods on !ehalf of the !uyer. This guarantee is called #etter of %redit. Thus
the contract !et)een importer and e-porter is given a legal shape !y the !anker !y its <#etter
of %redit/.
:hen a !uyer goes to import some goods from a foreign !uyer, he reuest his !ank makes
payments to the e-porter of goods. 4nd the !ank recovers the amount from the importer.
SectionsA
2oreign e-change department of 0B#, 0ain Branch is divided into t)o sections*
!=1 Operation
Foreign )e"ittance
/$'$. !=1 OPE)AT#O:
!etter of 1redit 6!=17 can !e defined as a K%redit %ontractA )here!y the !uyer/s !ank is
committed Con !ehalf of the !uyersD to place an agreed amount of money at the seller/s
disposal under some agreed conditions. Since the agreed conditions include amongst other
things, the presentation of some specified documents, the letter of credit is called
"ocumentary letter of credit.
The Uniform %ustoms and 3ractices for "ocumentary %redit CU%3"%D pu!lished !y
International %ham!er of %ommerce C1BB@D pu!lication no FEE define "ocumentary %redit*
aD 4ny arrangement ho)ever named or descri!ed )here!y a !ank Cthe issuing !ankD
acting at the reuest and on the instructions of a customs Cthe 4pplicantD or on it/s o)n
!ehalf,
!D Is to make a payment to or to the order of a third partyCthe !eneficiaryD or is to accept
and pay !ills of e-changeC"raftsDdra)n !y the !eneficiary or
cD 4uthori(e another !ank to effect such payment or to accept and pay such !ills of
e-change C"raftsD.
dD 4uthori(e another !ank to negotiate against stipulated documents provide that terms
and conditions are complied )ith.
/$'$3 T,pes of *oc-"entar, !etter of 1redit
"ocumentary letter of credit, !asically, can !e classified into t)o segments*
aD Revoca!le letter of credit
!D Irrevoca!le letter of credit

a7 )evocable !etter of 1reditA
This type of letter of credit can !e revoked or cancelled at any time )ithout consent of, or
notice to the !eneficiary. 4s per article > CaD of U%3"%5FEE K4 revoca!le credit may !e
amended or cancelled !y the issuing !ank at any moment and )ithout prior notice to the
!eneficiaryA.
In case of seller C!eneficiaryD, revoca!le credit involves risk, as the credit may !e amended or
cancelled )hile the goods are in transit and !efore the documents are presented, or although
presented !efore payments has !een made. The seller )ould then face the pro!lem of
o!taining payment on the other hand revoca!le credit gives the !uyer ma-imum fle-i!ility, as
it can !e amended or cancelled )ithout prior notice to the seller up to the moment of payment
!uy the issuing !ank at )hich the issuing !ank has made the credit availa!le. In the modern
!anking the use of revoca!le credit is not )idespread.
b7 #rrevocable !etter of 1reditA
4n irrevoca!le credit is a documentary credit, )hich cannot !e revoked, varied or
changed1amended or cancelled )ithout the consent of all parties5 !uyer C4pplicantD, seller
CBeneficiaryD, Issuing Bank, and %onfirming Bank Cin case of confirmed #1%D.
4s per 4rticle BCaD of U%3"% FEE, an irrevoca!le credit constitutes a definite undertaking of
the Issuing Bank, provided that the stipulated documents are presented to the $ominated
Bank or to the Issuing Bank and that the terms and conditions of the credit are complied )ith.
Irrevoca!le %redit gives the seller greater assurance of payments, !ut he1she remains
dependent on an undertaking of a foreign !ank.
/$'$( *oc-"ents Dsed in !=1 Operation
The most commonly used documents in foreign e-change are*
i. Bill of '-change
ii. Bill of #ading
iii. %ommercial invoice
iv. %ertificate of origin
v. Inspection certificate
vi. 3acking list
vii. Insurance document
viii. 3ro 2orma Invoice C3ID1Indent
B#!! OF EK14A:%EA
Bill of e-change is one of the important negotia!le instruments in the mercantile )orld and
used as a vital document facilitating settlement of payments !et)een !uyer1importer and
seller1e-porter at home and a!road. 4 !ill )hen accepted !y the dra)ee, gives evidence of the
claim as made !y the dra)er as )ell as testimony to the acceptance of the de!t !y the dra)ee.
The payment is done either in accordance )ith the terms of sale contract or under a #1%
opened !y the !uyer1importer in favor of the seller1e-porter.

B#!! OF !A*#:%A
4 !ill of lading is a document that is usually stipulated in a credit )hen the goods are
dispatched !y sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a
document of title to the goods. It also constitutes a document that is, or may !e, needed to
support an insurance claim.
The details on the !ill of lading should include
R 4 description of the goods in general terms not inconsistent )ith that in the credit.
R Identifying marks and num!ers.
R The name of the carrying vessel.
R 'vidence that the goods have !een loaded on !oard.
R The ports of shipment and discharge.
1OE)1#A! #:;O#1EA
4 commercial invoice is the accounting document !y )hich the seller charges the goods to
the !uyer. 4 commercial invoice normally includes the follo)ing information*
R "ate
R $ame and address of !uyer and seller
R Order or contract num!er, uantity and description of the goods, unit price and the total
R 3rice
R :eight of the goods, num!er of packages, and shipping marks and num!ers
R Terms of delivery and payment
R Shipment details
1E)T#F#1ATE OF O)#%#:A
4 certificate of origin is a signed statement providing evidence of the origin of the goods.

#:SPE1T#O: 1E)T#F#1ATEA
This is usually issued !y an independent inspection company located in the e-porting country
certifying or descri!ing the uality, specification or other aspects of the goods, as called for in
the contract and1or the #1%. The !uyer )ho also indicates the type of inspection he )ishes the
company to undertake usually nominates the inspection company.
PA1B#:% !#STA
This is a uniue document and not com!ined )ith other document. This is a listing of the
contents of each package, cartoon etc. and other relevant information.

#:SD)A:1E *O1DE:TA
Insurance is a contract )here!y the insurer is undertaking to indemnify the assured to the
agreed manner and e-tent against fortuitous losses. Insurance document generally contains
the follo)ing information*
The name of the nsurer or hs agent
The name of the shp/carrer
The name of assured
The sub|ect matter of nsurance
/$. F-nctions of Foreign Exchange *epart"ent of 6D1B!7A
2oreign '-change "epartment performs many functions to facilitate the foreign e-change
transactions. These are*
v 2acilitating Import Trade
v 2acilitating '-port Trade
v 3roviding 2unded and $on5funded %redit 2acility.
v 3rovide $on %ommercial Remittance
v 2oreign %urrency 4ccounts
v Selling of 2oreign %urrency Bond
v 3reparation and Su!mission of Statements
The International "ivision placed at the United %ommercial Bank/s head office at 0oti,heel
is the !ack!one of all international transaction that is conducted through the various !ranches
of the !ank. 4 total of >F !ranches of United %ommercial Bank have the license to carry out
international trade functions. 'ach of these 4" !ranches have foreign e-change department
)hose sole purpose is to carry out cross !order transaction demanded !y the customers. The
functions of such 2oreign '-change "epartment can !e divided into three sections*
v Import Section
Import is the flo) of goods and services purchased !y economic agent staying in the country
from economic agent staying a!road.
:e can simplify Import as a means purchase of goods and services from the foreign countries
into Bangladesh. $ormally consumers, firms and .overnment of Bangladesh import foreign
goods to meet their various necessities. Import section of the 2oreign '-change "epartment
helps !usiness and other people to import goods. So seller al)ays seeks guarantee for the
payment for his goods e-ported. Iere is the role of !ank. Bank gives e-port guarantee that it
)ill pay for the goods on !ehalf of the !uyer. This guarantee is called #etter of %redit. Thus
the contract !et)een importer and e-porter is given a legal shape !y the !anker !y its <#etter
of %redit/. :hen a !uyer goes to import some goods from a foreign !uyer, he reuest his
!ank makes payments to the e-porter of goods. 4nd the !ank recovers the amount from the
importer.
/$.$' !etter of 1reditA
#etter of %redit is a guarantee or undertaking or commitment to the !eneficiary1e-porter for
making payment issued !y the issuing !ank on !ehalf of the importer upon fulfillment of
some conditions. %entral Banks, therefore assure these things to happen simultaneously !y
opening #etter of %redit guaranteeing payments to seller and goods to !uyer. By opening a
#etter of %redit on !ehalf of !uyer in favor of seller, commercial !anks undertake to make
payments to a seller su!,ect to su!mission of documents dra)n on in strictly compliance )ith
#etter of %redit terms giving title of goods to the !uyer. It is a conditional guarantee. The
#etter of %redit thus constitutes one of the most important methods of financing foreign
trade. In the Import 3olicy Order 9EE@59EE> #etter of %redit denoted as J <K#etter of %reditA
means a letter of credit opened for the purpose of import under this Order/ The e-pression
K"ocumentary %reditCsDA and KStand!y #etterCsDA means any arrangements, ho)ever named
or descri!ed, )here!y a !ank CKthe issuing !ankAD acting at the reuest and on the instruction
of a customer Cthe K4pplicantAD or on its o)n !ehalf,
v Is to make a payment to or the order of a third party CKthe BeneficiaryAD, or is to accept and
pay !ills of e-change C"raft/sD dra)n !y the Beneficiary, Or
v authori(es another !ank to effect such payment, or to accept and pay such !ills of
e-change C"raftCsDD,Or
v authori(es another !ank to negotiate,
v 4gainst stipulated documentCsD, provided that the terms and conditions of the %redit and
complied )ith.
On the other hand #etter of credit can !e defined as a K%redit %ontractA )here!y the !uyer/s
!ank is committed Con !ehalf of the !uyersD to place an agreed amount of money at the
seller/s disposal under some agreed conditions. Since the agreed conditions include amongst
other things, the presentation of some specified documents, the letter of credit is called
"ocumentary letter of credit. The uniform customs and practices for documentary %redit
CU%3"%D pu!lished !y international %ham!er of %ommerce C1BB@D revision, pu!lication no
FEE define "ocumentary %redit*
v 4ny arrangement ho)ever named or descri!ed )here!y a !ank Cthe issuing !ankD acting at
the reuest and on the instructions of a customs Cthe 4pplicantD or on it/s o)n !ehalf,
v 4uthori(e another !ank to effect such payment or to accept and pay such !ills of e-change
C"raftsD
v 4uthori(e another !ank to negotiate against stipulated documents provide that terms and
conditions are complied )ith.
/$.$. T,pes of !etter of 1reditA
There are many types of #etter of %redits that are used in different countries of the )orld. But
International %ham!er of %ommerce CI%%D vides their U%3"%5 FEE, )hich denotes only t)o
types of #'TT'R O2 %reditsP mentioned*
Revocabe Letter of Credt
4 revoca!le credit may !e amended or cancelled !y the issuing !ank at any moment and
)ithout prior notice to the !eneficiary. That is to say, this type of letter of credit can !e
revoked or cancelled at any time )ithout consent of, or notice to the !eneficiary.
In case of seller C!eneficiaryD, revoca!le credit involves risk, as the credit may !e amended or
cancelled )hile the goods are in transit and !efore the documents are presented, or although
presented !efore payments has !een made. The seller )ould then face the pro!lem of
o!taining payment on the other hand revoca!le credit gives the !uyer ma-imum fle-i!ility, as
it can !e amended or cancelled )ithout prior notice to the seller up to the moment of payment
!uy the issuing !ank at )hich the issuing !ank has made the credit availa!le. In the modern
!anking the use of revoca!le credit is not )idespread.
In this case the issuing !anks must perform the follo)ing t)o roles*
V Reim!urse another !ank )ith )hich a revoca!le %redit has !een made availa!le for sight
payment, acceptance or negotiation J for any payment, acceptance or negotiation made !y
such J prior to receipt !y it of notice of amendment or cancellation, against documents )hich
appear on their face to !e in compliance )ith the terms and conditions of the %reditP
V Reim!urse another !ank )ith )hich a revoca!le %redit has !een made availa!le for
deferred payment, if such a !ank has, prior to receipt !y it of notice of amendment or
cancellation, take up documents )hich appear on their face to !e in compliance )ith the
terms and conditions of the %redit.
Irrevocabe Letter of Credt
4n irrevoca!le credit is a documentary credit, )hich cannot !e revoked, varied or
changed1amended or cancelled )ithout the consent of all parties5 !uyer C4pplicantD, seller
CBeneficiaryD, Issuing Bank, and %onfirming Bank Cin case of confirmed #etter of %reditD.
Irrevoca!le %redit gives the seller greater assurance of payments, !ut he1she remains
dependent on an undertaking of a foreign !ank. In the issuance of Irrevoca!le #etter of %redit
!oth the Issuing and %onforming Bank have some lia!ility, mentioned !ello), as per U%3"%
5FEE* The follo)ing types of #etter of %redits are used in the U%B#, 0ohammadpur Branch*
Cash Letter of Credt
3ayment made form cash foreign e-change not from e-port proceedsP there is not e-port #.%.
)hich !acks the import #etter of %redit 3ayment term is at sight.
Deferred Letter of Credt
The only difference !et)een cash #etter of %redit and deferred #etter of %redit lied in the
terms of payment. 3ayment under deferred #etter of %redit is made after certain days of
presentation of the e-port !ill. #etter of %redit the differed payment !asis may !e opened for
the follo)ing cases*
Items Perod
Back to Back Imports 0a-imum 1>E days
4gricultural Industrial Ra) 0aterials C2or o)n useD 0a-imum 1>E days
Implements & %hemical 2ertili(er 0a-imum 1>E days
%apital 0achinery 0a-imum @=E days
%oastal ;essel 0a-imum @=E days
#ife Saving "rugs 0a-imum BE "ay
Back to Back Letter of Credt
The !ack to !ack credit is a ne) credit opened on the !asis of an original credit in favor or
another !eneficiary. Under !ack to !ack concept, the seller as the !eneficiary of the first
credit offers it as security to the advising !ank for the issuance of the second credit. The
!eneficiary of the !ack to !ack credit may !e located inside or the out side the original
!eneficiary/s country.
Antcpatory Credt
The anticipatory credits make provision for pre5shipment payment to the !eneficiary in
anticipation of his effecting the shipment as per #1% conditions.
/$.$3 %eneral 1onditions of #"port of %oodsA
Import Trade Contro Schedue Number For mport purpose, use of ITC
Number (H.S. Code) wth at east sx dgts correspondng to the
casscaton of goods as gven n the Import Trade Contro Schedue 1988,
based on the Harmonzed Commodty Descrpton and Codng System,
sha be mandatory. The seven Dgt H.S. Code pubshed by Bangadesh
Bureau of Statstcs may aso be mentoned n the Letter of Credt. Form,
Letter of Credt and other reevant paper wthn a bracket n addton to
norma H. S. Code as mentoned above. No bank sha ssue Letter of
Credt Authorzaton form or open Letter of Credt wthout propery
mentonng I. T. C. number (H. S. Code) thereon.

/$.$/ Parties of a !etter of 1reditA
APPLICANT FOR THE CREDIT: The mporter or buyer on whose request
and on whose behaf the etter of credt s opened s caed the appcant.
ISSUING BANK/ OPENING BANK: The bank that opens a Letter of Credt,
at the request of the mporter, s known as Issung Bank. The Issung Bank
s the buyers bank and s aso caed openng bank.
BENEFICIARY: The party, normay the supper of the goods, n whose
favor the Letter of Credt s opened s caed benecary. The seer, after
shppng the goods as per terms of the credt, presents the documents to
negotatng bank/conformng bank for negotaton.
ADVISING BANK: The bank s the exporters country, usuay the foregn
correspondent of the mporters bank; through whch Letter of Credt s
advsed to the supper s caed the advsng bank.
CONFORMING BANK: If the advsng bank aso adds ts own undertakng
to honor the credt whe advsng the same to the benecary, t becomes
the conformng bank. The conformng bank, n addton, becomes abe to
pay for documents n conformty wth the Letter of Credt terms and
condtons.
NEGOTIATING BANK: The Bank, whch negotates the b (draft) of the
exporter drawn under the credt, s known as negotatng bank. If the
advsng bank s aso authorzed to negotate the b (draft) drawn by the
exporter t tsef becomes the negotatng bank.
ACCEPTING BANK: A bank that (as speced n the Letter of Credt)
accepts tme or usance drafts on behaf of the mporter s caed the
acceptng bank. The Letter of Credt ssung bank can aso take on the
responsbty of an acceptng bank.
PAYING BANK: The bank that ehects payment to the benecary (as
named n the Letter of Credt) s known as payng bank/drawee bank.
REIMBURSING BANK: If the ssung bank does not mantan any account
wth THE
$'.OTI4TI$. !ank an alternate arrangement is made to reim!urse it for the amount
paya!le under a credit form some other !ank. The later !ank is termed as reim!ursing !ank.
4n authority to de!it his account is sent to the !ank )ith )hom the account is maintained to
honor the claims placed !y a negotiating !ank.

/$.$( Preparation of Proposal and s-b"itting it to the 1o"petent A-thorit, for
Obtaining Per"ission of Opening !etter Of 1reditA
Before opening #etter of %redit the applicant must take permission from the competent
authority. :hether the authority has to !e taken form the Branch or from the Iead Office
depends on the amount of #etter of %redit and the percentage of margin. 4 proposal for
o!taining permission for opening #etter of %redit generally contains the follo)ing points*
Name and address of the mporter;
Name and address of the Guarantor f any;
Partcuar of Merchandse to be mported aong wth name of the tem
Harmonzed System (H.S.) Code, country of orgn, quantty, unt prce
and purpose of mport.
Partcuars/ Terms of LC aong wth name and address of the benecary,
tenor of payment, port of oadng and dscharge, shpment vadty and
expry date etc.;
Landed cost of the goods;
Market prce of the goods at Dhaka and Chttagong (f appcabe);
Name of the prevous banker wth outstandng abty (f any);
Number of CD accounts and transacton performance through ths
account;
Present abty poston wth the bank;
Present abty poston of aed/sster concerns wth the bank
Letter of Credt performance of the party durng the year/prevous year;
/$.$+ Steps for #"port !=1 operationA
Step 1* Registration )ith %%I & '*
For engagng n nternatona trade, every trader must be rst regstered
wth the chef Controer of Import and Export.
By payng speced regstraton fees to the CCI & E. the trader w get
IRC/ERC to open L/C wth Bank, ths IRC s must.
Steps 95 "etermination terms of credit*
The terms of the letter of credit are depending upon the contract !et)een the importer and
e-porter. The term of the credit specify the amount of credit, name and address of the
!eneficiary and opener, tenor of the !ill of e-change, period and mode of shipment and of
destination, nature of credit, e-piry date, name and num!er of sets of shipping documents etc
Steps @5 3roposal for opening of #1%*
To have an import #% limit an importer su!mits an application to department to united
commercial !ank ltd. The proposal contains the follo)ing particular*
Fu partcuars of the bank account.
Nature of busness
Requred amount of mt
Payment terms and condtons
Goods to be mported
Ohered securty
Repayment schedue
Step 754pplication !y importer to the !anker to open letter of credit*
For openng LC, the mporter s requred to up a prescrbed appcaton
form provded by the banker aong wth the foowng documents:
1. L/C appcaton form 7. authorty to debt account
1. Fed up LC form 8. ed up amendment request form
1. Demand promssory note 9. IMP form
1. Pro-forma nvoce 10. nsurance cover note and money
recept
1. Tax dentcaton number 11. membershp certcate
1. Import regstraton certcate 12. rate uctuaton undertakng
Step F5 Opening of #1% !y the !ank for the opener*
Takng ed up appcaton form the mporter
Coects credt report of exporter from exporters country through hs
foregn correspondence there.
Openng bank then ssues credt by ar ma/ TELEX/SWIFT foowed by L/C
advce as asked by the opener through hs foregn correspondent or
branch as the case may be, at the pace of benecary. The advsng bank
advses the L/C to the benecary on hs own from where t s addressed to
hm or merey hand over the orgna L/C to the benecary f t s so
addressed.
Step =5 Shipment of goods and lodgment of documents !y e-porter*
Then exporter shps the goods to the destnaton of the mporter country
Sends the documents to the L/C openng bank through hs negotatng
bank. Generay the foowng documents are sent to the openng banker
wth L/C:
B of exchange Packng st
B of adng Advce detas
Commerca nvoce Vesse partcuar
Certcaton of orgn Pre shpment Inspecton certcate
A certcate statng that each packet
contans the descrpton of goods over the
packet.
shpment certcate
Step G5 #odgment of document !y the opening !ank from the negotiating !ank*
4fter receiving the document, the opening !anker scrutini(es the documents. If any
discrepancy found, it inform the importer. If importer accepts the fault, then opening !ankers
call importer retiring the document. 4t this time many thing can happen. These are indicated
in the follo)ing*
Dscrepancy found but the mporter accepts- no probem occurs n
odgment.
Dscrepancy found but the mporter not agreed to accept- n ths case,
mporter protest and send back a the documents to the exporter and
request hs to make n the speced manner. Here banker s not bound to
pay because the documents send by exporter s not n accordance wth
the terms of L/C.
Documents are ok but mporter s wng to retre the documents- n ths
case bank s obgated to pay the prce of exported goods. Snce mporter
dd not pay for b of exchange, ths payment by bank s one knd of credt
to the mporter and ths credt n bankng s known as PAD.
Everythng s ok but mporter s faed to cear goods from the port and
request bank to cear- n ths case banks cear the cear the goods and
takes devery of the same by payng custom duty and saes tax etc. so,
ths expendture s debted to the mporter account and n bankng t s
caed LIM.
The a!ove mentioned description could !e pointed out as under*
a$ The seller !eing satisfied )ith the terms and the conditions of the credit makes shipment of
the goods as per #etter of %redit terms.
b$ 4fter making the shipment of the goods in favor of the importer the e-porter su!mits the
documents to the negotiating !ank.
c$ 4fter receiving all the documents, the negotiating !ank then checks the documents against
the credit. If the documents are found in order, the !ank )ill pay, accept or negotiate to 3rime
Bank
d$ Branch & Bank received seal to !e affi-ed on the for)arding schedule
e$ The Bill of '-change & transport documents must immediately !e crossed to protect loss
or fraudulent.
Step >5 Retirement*
On receipt of cost memo1lodgment voucher the importer pays the necessary amount. This
stage of the documentary credit operation is kno)n as <Retirement of Import Bills/. The
!ranch )ill prepare the retirement voucher to reflect the amount of cost and other charges to
!e collected from the importer, ad,ustments of margin and 34" 4ccount. Thereafter the
documents may !e handed over to the importer against proper ackno)ledgement after
certification and endorsement. The certifications !y authori(ed personnel of the !ank are as
follo)s*
V The invoice is certified !y the authori(ed officer of the !ank )ith the e-change rate as
applied in lodgmentP
V The !ill of '-change received from negotiating !ank on issuing !ank !y the !eneficiaryP
V The Transport "ocuments evidencing the carrying of goods as per #etter of %redit term has
to the endorsed !y the 4" !ranch.
On receipt of intimation, the importer is given necessary instructions )ith regard to
retirement of the !ill, disposal of the shipping documents and clearance of the goods from the
customs authorities. The importer may ask the !ank to retire the !ill !y de!iting his account
or may reuest for the providing #I0 or #TR facility, if arranged earlier. On intimation the
importer approaches )ith a letter for retirement of the document against full payment )ith up
to date interest and charges paya!le. Bank prepares cost memo in printed form on account of
the concerned party giving details head of charges paya!le.

/$.$+ Financing )elated with #"portA
4dvances against Import Bill are originated for the lodgment of shipping documents received
from foreign correspondents against #etter of %redit estimated !y the Bank on !ehalf of its
customers. Threes !ills of lodged !y de!iting 34" account and crediting IO account. To
%reate 34", the documents received form the negotiating !ank is to !e scrutini(ed
thoroughly )hether they are in order as per #1% terms. If on scrutiny, the documents are
found in order, lodgment of the same is done as 34", after converting the foreign currency
into Taka at the conversion rate.
/$3 Abo-t Export Polic, of ercantile Bank !i"ited$
'-port policies formulated !y the 0inistry of %ommerce, )hich provide the overall guideline
and incentives for promotion of e-ports in Bangladesh. '-port policies also set out
commodity5)ise annual target.
It has !een decided to formulate these policies to cover a five5year period to make them
contemporaneous )ith the five5year plans and to provide the policy regime.
The e-port5oriented private sector, through their representative !odies and cham!ers are
consulted in the formulation of e-port policies and are also represented in the various e-port
promotion !odies set up !y the government.

/$3$' Export #ncentivesA
"ifferent incentives are*
Financial #ncentivesA
Restructuring of '-port %redit .uarantee SchemeP
%onverti!ility of Taka in current accountP
'-porters can deposit 7EH of 2OB value of their e-port earnings in o)n accounts in dollar
and pound sterlingP
'-port "evelopment 2undP
'-pansion of e-port credit period from 1>E days to 9GE daysP
FEH ta- re!ate on e-port earningsP
"uty dra) !ackP
Bonded )arehouse facilities to 1EEH e-port oriented firmsP
"uty free import of capital euipment for 1EEH e-port oriented firmsP

%eneral #ncentivesA
$ational '-port Trophy to successful e-portersP
Training course on e-ternal tradeP
4rrangement of international trade fairs, commodity5!ased e-hi!itions in the country and
participation in foreign trade fairs.

Other #ncentivesA
4ssistance in improvement of uality and packaging of e-porta!le itemsP
Simplification of e-port proceduresP
/$3$. Export Proced-reA
The import and e-port trade in our country are regulated !y the Import and '-port C%ontrolD
4ct, 1BFE.
Under the e-port policy of Bangladesh the e-porter has to get valid '-port registration
%ertificate C'R%D from %hief %ontroller of Import & '-port C%%I&'D. The 'R% is reuired
to rene) every year. The 'R% num!er is to incorporate on 'S3 forms and other papers
connected )ith e-ports.
/$3$3 )egistration of ExportersA
2or o!taining 'R%, intending Bangladeshi e-porters are reuired to apply to the controller1
8oint %ontroller1 "eputy %ontroller1 4ssistant %ontroller of Imports and '-ports, "haka1
%hittagong1 Ra,shahi1 0ymensingh1 Sylhet1 %omilla1 Barisal1 Bogra1 Rangpur1 "ina,pur in
the prescri!ed form along )ith the follo)ing documents*
$ationality and 4ssets %ertificateP
0emorandum and 4rticle of 4ssociation and %ertificate of Incorporation in case of
#imited %ompanyP
Bank %ertificateP
Income Ta- %ertificateP
Trade #icense etc.
Signing the %ontract*
4fter communicating !uyer, e-porter has to get contracted C)riting or oralD for e-porting
e-porta!le items from Bangladesh detailing commodity, uantity, price, shipment, insurance
and marks, inspection and ar!itration etc.
/$3$/ )eceiving the !etter of creditA
4fter getting contract for sale, e-porter should ask the !uyer for #etter of %redit C#1%D clearly
stating terms and conditions of e-port and payment.
The follo)ing are the main points to !e looked into for receiving1 collecting e-port proceeds
!y means of "ocumentary %redit*
C1D The terms of the #1% are in conformity )ith those of the contractP
C9D The #1% is an irrevoca!le one, prefera!ly confirmed !y the advising !ankP
C@D The #1% allo)s sufficient time for shipment and negotiation.
CIere the regulatory frame)ork is U%3"%5FEE, I%% pu!licationD
Terms and conditions should !e stated in the contract clearly in case of other mode of
payment*
Cash n advance;
Open account;
Coecton bass (Documentary/ Cean)
CIere the regulatory frame)ork is UR%5F9F, I%% pu!licationD
Proc-ring the aterialsA
4fter making the deal and on having the #1% opened in his favor, the ne-t step for the
e-porter is to set a!out the task of procuring or manufacturing the contracted merchandise.
Ship"ent of %oodsA
Then the e-porter should take the preparation for e-port arrangement for delivery of goods as
per #1% and Inco terms, prepare and su!mit shipping documents for 3ayment1 4cceptance1
$egotiation in due time.
"ocuments for shipment*
'S3 form,
'R% CvalidD,
#1% copy,
%ustomer "uty %ertificate,
Shipping Instruction,
Transport "ocuments,
Insurance "ocuments,
Invoice,
Other "ocuments,
Bills of '-change Cif reuiredD
%ertificate of Origin,
Inspection %ertificate,
Luality %ontrol %ertificate,
..S.3. %ertificate,

Final StepsA
Su!mission of the documents to the Bank for negotiation.
/$3$( Export FinancingA
2inancing e-ports constitutes an important part of a !ank/s activities. '-porters reuire
financial services at four different stages of their e-port operation. "uring each of these
phases e-porters need different types of financial assistance depending on the nature of the
e-port contract.
W Pre>ship"ent credit
W Post>ship"ent credit
3re5shipment credit
3re5shipment credit, as the name suggests, is given to finance the activities of an e-porter
prior to the actual shipment of the goods for e-port. The purpose of such credit is to meet
)orking capital needs starting from the point of purchasing of ra) materials to final shipment
of goods for e-port to foreign country. Before allo)ing such credit to the e-porters the !ank
takes into consideration a!out the credit )orthiness, e-port performance of the e-porters,
together )ith all other necessary information reuired for sanctioning the credit in accordance
)ith the e-isting rules and regulations. 3re5shipment credit is given for the follo)ing
purposes*
%ash for local procurement and meeting related e-penses.
3rocuring and processing of goods for e-port.
3acking and transporting of goods for e-port.
3ayment of insurance premium.
Inspection fees.
2reight charges etc.
4n e-porter can o!tain credit facilities against lien on the irrevoca!le, confirmed and
unrestricted e-port letter of credit in form of the follo)ings*
'-port cash credit CIypothecationD
'-port cash credit against trust receipt.
3acking credit.
Back to !ack letter of credit.
3ost5shipment credit
This type of credit refers to the credit facilities e-tended to the e-porters !y the !anks after
shipment of the goods against e-port documents. $ecessity for such credit arises as the
e-porter cannot afford to )ait for a long time for )ithout paying manufacturers1suppliers.
Before e-tending such credit, it is necessary on the part of !anks to look into carefully the
financial soundness of e-porters and !uyers as )ell as other relevant documents connected
)ith the e-port in accordance )ith the rules and regulations in force. Banks in our country
e-tend post shipment credit to the e-porters through*
1. Negotaton of documents under L/C;
2. Foregn Documentary B Purchase (FDBP):
3. Advances aganst Export Bs surrendered for coecton;

/$3$+ Packing 1redit 6P$17A
3acking %redit is essentially a short5term advance granted !y a Bank to an e-porter for
assisting him to !uy, process, manufacture, pack and ships the goods. .enerally for
movement of goods from the hinterland areas to the ports of shipment the Banks provide
interim facilities !y )ay of 3acking %redit. This type of credit is sanctioned for the
transitional period starting from dispatch of goods till the negotiation of the e-port
documents.
3ractically e-cept for single transaction, most of the pre5shipment credits are allo)ed in the
form of limits duly sanctioned !y Bank in favor of regular e-porters for a particular period.
The dra)ings are reuired to !e ad,usted fully once )ithin a period of @ to = months. Suiting
to the !reed and nature of e-port, sometimes an e-porter may also !e allo)ed to avail a
com!ined %ash %redit and 3acking %redit limit )ith fi-ed ceiling on revolving !asis. But in
no case the !orro)er )ould !e allo)ed to e-ceed individual credit limit fi-ed for the purpose.
The dra)ings under '-port %ash %redit limits are generally ad,usted !y the dra)ing in
packing credit limit, )hich is, in turn liuidated !y the negotiation of e-port documents.
/$3$8 Foreign doc-"entar, bill p-rchase 6F*BP7A
Sometimes the client su!mits the !ill of e-port to !ank for collection and payment of the
BTB #1%. In that case, !ank purchases the !ill and collects the money from the e-porter. 3B#
su!tracts the amount of !ill from BTB and gives the rest amount to the client in cash or !y
crediting his account or !y the pay order.
2or this purpose, 3B# maintains a separate register named 2"B3 Register. This register
contains the follo)ing information*
*ate
)eference n-"ber 6F*BP7
:a"e of the drawee
:a"e of the collecting bank
1onversion rate
Bill a"o-nt both in fig-re 2 in Taka$
Export for" n-"ber
/$/ Abo-t Export Polic, of Dnited 1o""ercial Bank !i"ited
The goods and service sold !y Bangladesh to foreign households, !usinessmen and
government are called '-port. The e-port trade of the country is regulated !y the imports and
e-port 4ct, 1BFE. There are a num!er of formalities, )hich an e-porter has to fulfill !efore
and after shipment of goods. The e-porters from Bangladesh are su!,ect to e-port trade
control e-ercised !y the ministry of %ommerce through %hief %ontroller of import and
e-port. $o e-porter is allo)ed to e-port any commodity permissi!le for e-port from
Bangladesh unless he is registered )ith %%I & ' and holds valid e-port registration
%ertificate. The 'R% is reuired to !e rene)ed every year. The 'R% num!er is to !e
incorporated on 'S3 forms and other documents connected )ith e-ports.
/$/$' T,pe of ExportA
'-port must !e done as under*
1. Export aganst L/C or rm contract
2. Export aganst advance payment
3. Export under consgnment bass.
The formalities and procedure are enumerated as follo)s*
1. Obtanng exports L/C: To get export LC form exporter ssued by the
mporter.
2. Submsson of export documents: Exporter has to submt a necessary
documents to the coectng bank after shppng of goods.
3. Checkng of export documents: After gettng the documents banker used
to check the documents as per LC terms.
4. Negotaton of export documents: If the bank accepts the bank document
and pay the vaue draft to the exporter and forward the document to
ssung bank that s caed a negotatng bank. If the bank does by the LC
then the bank normay acts as coectng bank.
1. Reazaton of proceeds: Ths s the perod when the ssung bank
has reazed the payment.
2. Reportng to the Bangadesh bank: As per nstructon by Bangadesh
bank the bank has to report to respectve department of
Bangadesh bank by montorng atest payment.
3. Issue to proceeds reazaton certcate (PRC): Bank has to ssue
proceed reazaton certcate of export LC to the supper for
gettng cash assstance.

/$/$. Export OperationA
Bangladesh e-ports a large uantity of goods and services to foreign households. Readymade
te-tile garments, ,ute, ,ute made products, fro(en shrimps, tea re the main goods that
Bangladeshi e-porter e-ports to foreign countries. .arment sector is the largest sector that/s
e-ports lion share of the country/s e-port. Bangladesh e-ports most of its readymade
garments product to U.S.4 and 'uropean %ommunity C'%D countries. Bangladesh e-ports
a!out 7EH of its readymade garments products to U.S.4. 0ost of the e-porters )ho e-port
through U$IT'" %O00'R%I4# B4$? are readymade garments e-porters. They open
e-port #1% here to e-port their goods, )hich are open against the import #1%s opened !y
their foreign importer.
4s an advising !ank*
It receives documents from the foreign importer and hands it over to the e-porter. Sometimes
it adds confirmation on the #1% on reuest from the opening !ank. By adding confirmation, it
assumes the responsi!ility to make payment to the e-porter.
4s $egotiating Bank*
It negotiates the !ills and other shipping documents in favor of the e-porter. That is, it collect
the proceeds of the e-port !ill from the dra)ee and credit the e-porter account for the same.
%ollection proceeds from the e-port !ill are deposited in the !ank $OSTRO account in the
importer/s country. Sometimes the !ank purchases the !ills at discount and )aits till maturity
of the !ill. :hen the !ill matures, !ank presents it to the dra)ee to encash it.

/$/$3 Back To Back !=1A
It is simply issues to the clients against an import #1%. Back To Back mechanism involves
t)o separate #1%s. One is master e-port #1% and another is Back to Back #1%. on the strength
of master e-port #1% !ank issued !ank Back #1%. Back to Back #1% is commonly kno)n as
!uying #1%. on the contrary, 0aster e-port #1% is kno)n as selling #1%.
#1% num!er 2ormation*
:hen an #1% num!er are crated in that case the follo)ing items are arrange in a seuence.
These are*
1. Specc code of Bangadesh bank.
2. Branch code
3. Year
4. Category
5. Sera number
2eatures of Back5To5Back #1%*
An mport L/C to procedure goods for further processng.
It s opened based on export L/C.
It s a knd of export nance.
No margn s requred to open back to back L/C.
Appcaton s regstered wth CCI &E.
Appcaton has bonded warehouse cense.
Usance perod w be up to 180 days.
The mport L/C s opened for 75% of the vaue of export L/C.
Here L/C ssued aganst the en of export L/C.
"ocuments reuired for opening a Back5To Back #1%*
In united commercial !ank, follo)ing papers1 documents are reuired for opening a !ack to
!ack #1%5
1. Master L/C
2. Vad Import Regstraton Certcate (IRC) and Export Regstraton
Certcate (ERC).
3. L/C Appcaton and LCAF duy ed n and sgned
4. Proforma Invoce or Indent
5. Insurance Cover Note wth money recept
6. IMP from duy sgned
7. Texte permsson
8. Vad Boned Warehouse Lcense
%hecklist of e-ports #1%*
2ollo)ing defective points are usually found in master #1%. So, the !ank officials so much
carefully check these points. These are*
1. Name of the advsng bank
2. Name of the transferrng bank
3. From of document. Credt:
Name of ssung bank
Documentary credt No. and ssung date
Date of shpment
Expry date and pace
1. On account
2. Benecary / Favorng
3. Amount
4. Avaabty of credt
5. Parta shpment
6. Payment condton
7. Category
8. Descrpton of goods:
Item
Tota Ouantty
Unt prce
1. B/L Cause
2. Rembursement cause
3. UCPDC cause
4. Net FOB vaue.
/$/$/ Pa,"ent of back>to>back !=1A
In case !ack to !ack as =E5BE519E51>E days of maturity period, deferred payment is made.
3ayment is given after utili(ing e-port proceeds from the #1% issuing !ank.
#1% under '"2*
Exporter deveopment fund s created by Bangadesh bank to gve
encourages to exporter n Bangadesh.
Generay back -to- back L/C s that s here b of exchange s payabe
after some maturty date say 90 or 120 days after the date of acceptance.
But some foregn seer may requre sght payment. Here mport L/C
matures rst. In that case Bangadesh gves the fund to the bank to pay
the prce of mported goods n favor of the oca purchaser of raw
materas. When export proceeds come, rst Bangadesh bank oan to the
mporter s ad|usted and remanng part goes to the mporter of raw
materas.
:egotiation of exports doc-"entsA
The most common method of financing e-porters is negotiation of documents under #1%. it is
a post shipment credit. Iere the !ank acts as a negotiating !ank. 4fter the shipment of the
goods, the e-porters su!mit the relative documents to the !ranch for negotiation. The
documents are to su!mit )ithin the period mentioned in the #1%, after approval of negotiation
of the !ill the full particulars of the documents are entered in to the foreign !ill purchased
register. The documents are sent to the #1% opening !ranch )ith a for)arding letter. The
!ranch claim reim!ursement from the issuing !ank, giving clear instruction to credit the
proceeds of the !ill to the United %ommercial Bank head office $OSTRO 41% maintained
)ith the named correspondent !ank a!road under tele- intimation to the principal !ranch and
head office.
/$/$( Foreign doc-"entar, bills for collection 6F*B17
United commercial !ank for)ards the documents for collection due to the follo)ing reasons5
If the documents have dscrepances
If the exporter s a new cent.
2"B% signifies that the e-porter )ill receive payment only )hen the issuing !ank gives
payment. U%B make regular follo) up )ith the #1% opening !ank in case of any delay in
getting payment.

Settle"ent of !ocal BillsA

The settlement of local !ills is done in the follo)ing )ays5
1. The consumer submts the L/C to Unted Commerca Bank Ltd. Aong wth
the documents to negotate
2. Unted Commerca Bank Ltd. Omca scrutnzes the documents to ensure
the conformty wth the term and condtons
3. The documents are then forwards to the L/C openng bank
4. The L/C ssung bank gves the acceptance and forwards an acceptance
etter
5. Payment s gven to the customer on ether by coecton bass or by
purchasng the documents.
/$/$+ Foreign re"ittanceA
2oreign remittance is the transfer of foreign currency from one country to another country.
In another )ord, foreign remittance means, remittance in foreign currency that are received in
and made out a!road. 4ctually, foreign remittance is purchase and sale of freely converti!le
foreign currencies as permissi!le under e-change control regulations of the country. 2oreign
remittance is very important for the country as valua!le foreign e-change is involved in the
transfer mechanism. 2oreign remittance takes place in t)o )ays5
/$/$8 Foreign Process )e"ittanceA
2und transfer from one country to another country goes through a process )hich is kno)n as
remitting process. Suppose a local !ank has 9EE domestic !ranches. The !ank has
corresponding relationship )ith a foreign !ank say5KSA, and maintaining K$ostro 4ccountA
in US N )ith the !ank. Bangladeshi e-patriates are sending foreign remittances to their local
!eneficiary, through that account. $o), )hen the Bangladeshi e-patriates through other
!anks of different countries remit the fund to their K$ostro 4ccountA )ith KSA, then the local
!ank/s Iead Office international division )ill receive tele- message and the remittance
section )ill record the advice and generate the advice letter to the respective !ranch of the
!ank. The !ranch )ill first decode the test, verify signature and check the account num!er
and name of the !eneficiary. 4fter full satisfaction, the !ranches transfer the amount to the
account of the !eneficiary and intimate the !eneficiary accordingly. But some times the
comple-ity arises, if the respective local !ank has no !ranch )here the !eneficiary maintains
his account. Then the local !ank has to take help of a third !ank )ho has !ranch there.
#nward )e"ittanceA
Remittance comes from foreign countries to our country is called in)ard remittance. To the
!ankers or 4"s in)ard remittance means purchase of foreign currency !y authori(ed dealers.
.enerally, in)ard remittances are received !y draft, mail transfer, TT, purchase of foreign
!ills & travelers %heue, e-port !ills. Basically, these are the formal channels of receiving
in)ard remittance. 4 local !ank also receives indenting commission of local firm also comes
under purvie) of in)ard remittance.

O-tward )e"ittanceA
Remittance from our country to foreign countries is called out)ard foreign remittance. On
the other )ord, sales of foreign currency !y the authori(ed dealer or formal channels may !e
addressed as out)ard remittance. The authori(ed dealers must utmost caution to ensure that
foreign currencies remitted or released !y them are used only for the purposes for )hich they
are released. Out )ard remittance may !e made !y appropriate method to the country to
)hich remittance is authori(ed. 0ost out)ard remittance is approved !y the authori(ed
dealer on !ehalf of Bangladesh Bank.
Out)ard remittance may !e made for follo)ing purposes5
Trave
Medca treatment
Educatona purpose
Attendng semnar etc.
Baance amount of F.C account.
Prot of foregn companes.
Technca assstance
New exporters up to USD 6,000/- for busness promoton
F.C. remttance can be made for fare, exhbton from export retenton
quota.

Out)ard remittance in favor of !eneficiaries outside Bangladesh may !e made in any of the
follo)ing manners5
For"al 1hannelA
2und transfer from one country to another country through official channels, i.e. !anking
channel, post office, and other private service channels, such as J :estern money order, $eno
money order etc.
#nfor"al 1hannelA
2und transfer from one country to another country through hand !y hand or over telephone in
an unofficial channel like as KIundyA. Iaue C1BB9D comments, that remittance collected !y
informal KIundiA rings operating in 0iddle 'ast countries and U? are also used to finance
illegal trade and transactions.
Islam C9EEED o!serves that as informal channel is needed for illegal trade of goods, as )ell as
gold and drugs into Bangladesh, and therefore, helping the ever5present pro!lem of capital
flight out of Bangladesh.
%riminals use informal channel for moving money a!road !ecause of5
Deang n arms & ammunton
Drug tramckng
Fnancng terrorst actvtes
Evason of exchange reguatons/ contro
Evason of taxaton
Dsguse or remove proceeds of threat/ fraud/ brbe.
Makng backma payments
Payng random for kdnapper.
Findings fro" financial perfor"ance anal,sis
4fter analy(ing the financial and overall performance of 0B#, I have identified some sort of
issues )hich are given in !elo)*
+ The Bank is too much centrali(ed. 2or each and every )ork !ranch office has to get
permission from the head office. The head office tightly controls each and every !ranch
office. This dependency on head office causes slo) do)n their activities.
+ Interest rate on deposit is much higher than other !anks, )hich increase their cost of
fund and it diminish the opportunity to provide loan at a lo)er interest rate. It makes high
demand on short term deposit and manages these lia!ilities )ith loan they might need to
!orro) from call money market.
+ 0ercantile Bank #imited has committed to their prospective customers to honor it/s of
cheue )ith in @E second after su!mission !ut unfortunately they are not a!le to fulfill this.
+ 0B# is @
rd
generation !ank of our country. The liuidity level of the !ank is fluctuating
year to year and al)ays !elo) the standard limit.
+ The !ank/s operating cost to income ratio is increasing year !y year )hich is not
desira!le.
+ The !ank/s net profit margin is decreasing yearly )hich indicates that the !ank is run in
a )orst situation.
+ The !ank has financed on an average of a!ove B@H of its total assets )ith de!t in every
year. So the !ank should more emphasi(e on euity capital than the de!t capital.
+ 3% !ank is not comprehensive !anking soft)are. It is desira!le that a more
comprehensive !anking should replace 3% !ank system.
Findings fro" foreign exchange operations anal,sis
%eneral foreign exchange service portfolioA 2oreign '-change operations mainly include
#1%, Import and e-port procedures. 4s an 4uthori(ed "ealer, 0B#, 0ain Branch is al)ays
committed to facilitate import of different goods into Bangladesh from the foreign countries.
Import Section, )hich is under 2oreign '-change "epartment of the !ranch.
*ifferent eans of Pa,"ent * The !ank provide different means of payment for the
importers and e-porters )hereas they prefer. The clients make their payment !y %ash in
advance, Open 4ccount, %ollection 0ethod, #etter of credit
1oncentrate on Export #ncentivesA The !ank is currently concentrated on different types of
e-port incentives to attract the actual and potential customers. They are 2inancial Incentives,
.eneral Incentives, and Other Incentives. 0ost of them are already implemented.
%rowing fastest 1orrespondent )elationshipA The num!er of foreign correspondents is
F>7 as of "ecem!er @1, 9EEB. 'fforts are !eing continued to further e-pand the
%orrespondent Relationship to facilitate Bank/s gro)ing foreign trade transactions. The Bank
is using S5#FT communication system for fast and accurate handling for foreign trade. The
Bank is connected to )EDTE)S also for up5to5date information.
)eco""endations of B!A
0ercantile Bank #imited has !een a!le to operate its all issues proficiently and more
competently in the operations of foreign '-change and other related perspective around the
Bank. To improve the management culture and foreign e-change department/s performance
in future, 0B# should adopt some of the industry !est practices currently. This areX5
+ The !ank should give close attention on its interest e-pense. This cost is rising over year
to year. It has an affect on interest income. The !ank should try to handle it on strictly and
close monitoring system have !een maintained.
+ 4mount of import and e-port )as turn do)n last year !ut it is a concerning issue to
have direct monitoring system. 2oreign '-change department/s main function is to handle
e-port and import procedures and there is a direct relationship !et)een amount of '-port &
Import and '-change gain )hich is charged to customers on letter of credit and letter of
guarantee are credited to income at the time of effecting the transactions. The direct
monitoring and supervision process should develop )here !ranch manager and head 1 in
charge of the related department are hold responsi!le
+ Total foreign remittance in a single year, in 9EEG made a record high to the tune of B"T
@F1E.7E million. So the !ank has deepened its step on the foreign soils further !y esta!lishing
more and more remittance arrangements )ith overseas e-change companies )here
Bangladeshi e-patriates are )orking.
0oreover for prompt & safe delivery of this hard earned money to their near and dear ones in
every corner of the country, the !ank can esta!lished agency arrangements )ith some !ig
!anks.
+ Shortage of skilled human resource in foreign e-change department is a ma,or pro!lem
In 0B#. ;acancies should fill up )ith ualified and e-perienced personnel !y offering
attractive incentives. The !ank should provide training facility for its e-isting employer for
their !etterment.
+ The procedure related )ith '-port and Import and other formalities of foreign
'-change is so lengthy that it )ould take more time to finali(e one transaction. The !ank and
2oreign '-change department should take initiative to trim do)n the official formalities as
possi!le
+ 2or proper documentation and keeping the record, it is essential to update 0anagement
Information System C0ISD. But currently they have 3% Bank 9EEE, )hich is not enough for
the !ank.
+ .4t present the 4T0, de!it card, credit card etc services are so much popular. So the
!ank should try to make this service availa!le for each and every client.
)eco""endations of D1B!A
The bank shoud try to arrange more tranng programs for ther omcas.
Ouaty tranng w hep the omcas to enrch them more recent
knowedge of nternatona trade nancng. Wth more professona base
empoyees can better satsfy the customers. They shoud be taught about
how to dea wth probem customer and how to dea probematc
stuatons.
Margn and commsson on L/C vares from customer to customer. A few
customers are aowed to open L/C even wth n margn and fees
commsson. I thnk the bank shoud revew the customer transacton
behavor for a perod of tme and shoud deveop a certan poty n ths
regard.
In many cases, the foregn banks want conrmaton from other foregn
banks wth whch ths bank has correspondence. Ths proves the poor
nanca condton of our country. Bank shoud try to mprove ths
stuaton.
Over burden of work and dened assgnment unabe to empoyee to
dscharge ther dutes n coo manner.
To ensure emcent and tmey credt ow t s mportant to ensure ehectve
work and output from a the subsectons of credt department. Rght now,
there are four approva omcers, four operaton stuhs to assst them where
there s ony one MIS omcer. Ths MIS omcer has to do a ot of
msceaneous works aong wth gvng oan n put to the database.
New nvestment scheme shoud be ntroduced to meet customer
demands. Other banks have hgh amount of nvestment schemes and
servces. New persona savngs, future nvestment products shoud be
aunched to sty ahead of competton and better satsfy customer
requrements.
UCB s now facng mage crss probem. In stock market ther share
transacton stopped snce 1 year. They do not ca ther AGM on tme. The
devauaton of ther share prce creates a negatve mpact on the peope
mnd. So I thnk now very rst they shoud sove ths probem.
1oncl-sion
4ll "epartments are important tool used in international trade. They provide security for !oth
%ustomer and !anker )here conditions may !e uncertain or there is little or no previous
trading relationship !et)een the parties. 4s a student !efore thesis I have learned a!out the
corporate )orld through !ooks and analysis. This program also taught me the differences
!et)een !ookish and 4nalytical kno)ledge.
I have truly en,oyed my )ork from the learning and e-perience vie)point. I am confident
that this program at the selected !anks )ill definitely help me to reali(e my further carrier in
the ,o! market.
United %ommercial Bank #imited is a first generation !ank. it is provide high uality
financial service to contri!ute to the gro)th of ."3 of the country through stimulating trade
and commerce, accelerating the pace of industriali(ation, !oosting up e-port creating
employment opportunity for the educated youth, poverty alleviation, raising standard of
living of limited income group and overall sustaina!le socio economic development of the
country. 4lready Dnited 1o""ercial Bank !i"ited makes a strong position through it
varies activities. Its num!er of clients, amount of deposit and investment money increases
day !y day. This !ank already has sho)n impressive performance in investment. The !ank
no) should think to start ne) services and take different types of marketing strategy to get
customer in this competition market of !anking and also the overall performance of despite
some ercantile Bank !i"ited criticism is a!ove the average of present !anking industry.
Solid revenue gro)th together )ith strict discipline on e-penses and a culture of sound risk
management have upgraded the Bank to a level of e-cellence. In its pursuit of e-cellence, the
Bank constantly revie)s its systems, policies, process and prices of its products and services
in line )ith the changing market reality. Thus, 0B# intends to pave the )ay for a ne) era in
!anking.
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