A Report

On

United Commercial Bank

Submitted To
Shamshad Nowreen
Associate Professor
Department of Tourism and Hospitality Management
University of Dhaka

Submitted By
Armaan Kabir Noman
72302020
Fahim Foysal
72302025
2nd Batch
Service Management and Toursim
Executive MBA
University of Dhaka

Date of submission
6th december,2024
Table of Content

SN Description Page Number

Introduction
1.1 Preface 3
1.2 Profile 4
1.3 Goal and Objectives of UCB bank 5
1.4 Nature of Business 6
1.5 The purpose of the Bank 6
1.6 Management Hierarchy 6
Task and Duties of UCB
2.0 Major Sectors of Foreign Exchange Division 7
2.1 Letter of Credit 7
2.2 Remittance 8
2.3 Types of Remittance 8
2.4 Instruments of Foreign Remittances 9

2.5 Trading Currency 9

2.6 Formalities for opening foreign currency (FC) Account 9
2.7 The structure, rules, and general financial environment of the 10
banking systems in Bangladesh and the USA differ
significantly. Here are a few significant variations
2.8 Task between Private bank and Bangladesh Bank 11
Recommendation
Conclusion
 Introduction

1.1 Preface:

The banking system plays a vital intermediary function in a country's economy, ensuring resource
allocation and reallocation while maintaining the momentum of economic activity. In the
contemporary world, a banking institution is essential. It is essential to any country's money market
and plays a crucial part in the economic development of that nation. The advancement of economic
growth in a developing nation like Bangladesh depends critically on the functioning of the
financial sector as a whole. Gathering funds from the surplus unit and transferring them to the
deficit unit is the main goal of banking. The Subject of my Report is “Foreign Exchange Activities
of UCB Bank Limited- A Study on Principal Branch”. So, my focus is mainly on Foreign Exchange
Activities of UCB Bank for contributing total profit of the bank.

Foreign trade plays an important role in economic development of a country. The economic
development of a country is comprised with domestic production and foreign trade (especially the
balance of export and import). It plays a vital role in the Balance of Payment (BOP) of a country.
Surplus (export-import) is favorable for a country. Although Bangladesh usually exercises deficit
BOP (import-export) it has to continue foreign trade.

To conduct foreign trade of a country, bank plays an important role; usually this duty is played by
commercial banks. As a commercial and non-conventional bank, UCB Bank Limited also engaged
in the dealing of foreign trade in Bangladesh. Foreign trade operations play a significant role in
the overall business of UCB in order to strengthen its position. UCB has further consolidated its
relationship with the existing network of international correspondents.

The revenue earning sources of banks are mainly Investment. The credit facility can be of two
types: funded & non-funded. Funded credit can be expensive as the bank has to pay interests. Non-
funded credit includes LC, which is the main source of income for the Foreign Exchange business.
Remittance is also a part of foreign exchange activities.
1.2 Profile

With a firm commitment of the economic and social development of Bangladesh, United
Commercial Bank PLC (UCB) started its journey in mid1983 and has since been able to
establish itself as one of the largest first-generation banks in the country. With a vast network of
224 branches the Bank has already made a distinct mark in the realm of Private Sector Banking
through personalized service, innovative practices, dynamic approach and efficient Management.

The Bank has expanded its arena in different and diverse segments of banking like Retail
Banking, SME Banking, Corporate Banking, Off-shore Banking, and Remittance etc. Besides
various deposit and loan products of Retail Banking, the Bank caters export and import loan to
deserving candidates which in turn helps the overall economy of the country through increased
earning of foreign exchange. Other consumer products like UCB Cards have been showing
tremendous success and growth since its inception in 2006 and soon became the leader in local
market with around 40000 card holders.

The Bank also provides its clients with both incoming and outgoing remittance services. thus, the
expatriates find an easy way to send money through proper channel.

With a firm commitment to promote SME sector, the Bank is also assessing and monitoring
business loans, managing business financing risks, pricing products and working for further
development of SME. Its Corporate banking service consists of simple business of issuing loans
to more complex matters, such as helping minimize taxes paid by overseas subsidiaries,
managing changes in foreign exchange rates or working out the details of financing packages
necessary for the construction of a new office, plant or other facility. Its area of expertise is in-
depth knowledge in financial analysis with analytical capability of financing large project
including RMG and infrastructure development projects.

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 by investing in network expansion
and new technology adoption to have competitive advantage.
1.3 Goal and Objectives of UCB bank:

Maximize of profit through customer satisfaction is the main objective of the bank. In addition,
the other relevant objectives are:

❖ To be market leaders in high quality banking products and services.

❖ Active excellence in customer service through providing the most modern and advance
state of art technology in the different spheres of banking.
❖ To participate in the industrial development of the country to encourage the new and
educated young entrepreneurs to undertake productive venture and demonstrate their
creativity and there by participate in the national development.
❖ To provide credit facilities to the small and medium size entrepreneur located in urban and
sub urban area and easily accessible by our branches.
❖ To reduce dependence of moneylender.
❖ To make the small and medium enterprise self-reliant.
❖ To develop saving attitude and making acquaintance with banking facilities.
❖ To inspire for undertaking small projects for creation employment through income.
❖ To ensure the high return on investment.
❖ To strive for profit and sound growth.
❖ To play a sign UCB role in the economics development of the country.
❖ To protect money laundering.
1.4 Nature of Business:
UCB Bank Ltd offers full range of banking services that include:
❖ Deposit banking
❖ Loan & advance facilities
❖ Export and import facilities
❖ International remittance facilities
❖ Foreign exchange transactions

1.5 The purpose of the Bank:

❖ Maintaining good communication with different parties involved in export activities.
❖ Export will be given more convenience to exporters and their benefits on performance
basis will be provided.
❖ Expansion of adequate workshop exports and import business, special service delivery
and various training programs of the officials have been started.
❖ Importing of import machinery, factory expansion, extending outgoing parties will
introduce huge quantities of new dimensional credit products in the name of BMME loan
for export projects.
❖ Competitive position, charging commission, reducing commission and other facilities
will be completed.

1.6 Management Hierarchy

2.0 Major Sectors of Foreign Exchange Division:
There are 4 major division of Foreign Exchange Division of IBBL according to its regular
activity-
❖ Remittance Division
❖ Import Division
❖ Export Division
❖ Trading Currency

2.1 Letter of Credit:

Letter of credit is an arrangement whereby bank (issuing bank) acting on the instruction of the
depositor (importer), undertakes to make payment, or to accept drafts, or authorizes of another
bank to pay, accept or to negotiate draft drawn by the beneficiary (exporter) against stipulated
documents, provided that 4 the terms and condition of the credit are compile.
Types of Letters of Credit:
❖ Document credit
❖ Stand-by letter of credit
❖ Revocable credit
❖ Irrevocable credit
❖ Counter credit
❖ Letter of credit
❖ Back-to-back credit
Parties of Letter of Credit:
❖ Issuing bank
❖ Advising bank
❖ Credit applicant
❖ Beneficiary
❖ Nominated bank
❖ Negotiating bank
2.2 Remittance:
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a
bank must provide some services to the depositors regarding foreign exchange and this
department provides these services. The basic function of this department are outward and
inward remittance of foreign exchange from one country to another country. In the process of
providing this remittance service, it sells and buys foreign currency. The conversion of one
currency into another takes place an agreed rate of exchange, which the banker quotes, one for
buying and another for selling. In such transactions the foreign currencies are like am other
commodities offered for sales and purchase, the cost (convention value) being paid by the buyer
in home currency, the legal tender.

2.3 Types of Remittance:

There are two types of remittance: 1. Inward remittance 2. Outward remittance.
Inward and Outward Remittances Remittance means a payment of money sent to a person in
another place or a remittance is a transfer of money by a foreign worker to his home country.
Inward Remittances: Inward remittance is a term used when we purchase foreign currency in any
form. Inward remittance not only include purchase of foreign currency but also it includes
purchase of M.T.1, T.T.2, draft3, traveler cheques4, drafts under traveler letters of credit, bill of
exchange, currency notes and coins etc. for inward remittance, we debit the account of banks
nonresident taka account.
2.4 Instruments of Foreign Remittances:
❖ Cash for: Dollar, Pound, France Fr. Riyal or any other currency.
❖ T.C.: Travelers Cheque.
❖ F.D.D: Foreign Demand Draft.
❖ T.T: Telegraphic Transfer, Cable transfer or swift transfer.
❖ M.T: Mail Transfer.
❖ I.M.O: International Money Order. Cheque: By any person & institution.

❖ P.O: Payment Order.

2.5 Trading Currency:

Trading of foreign currency means Purchase & sale of different currencies or exchange of one
currency into other. It includes mainly dealing room operation (Dealing room: A room where
online buying & selling of foreign currency takes places) excluding the money market operation.
This is purchase or sale of one currency in term of another, either Local Currency to Foreign
Currency, or Foreign Currency to Local Currency, or Foreign Currency to Foreign Currency
(Cross Currency).

2.6 Formalities for opening foreign currency (FC) Account:

AD may without prior approval of the Bangladesh Bank Open Foreign Currency (FC) account in
the name of: 1. Bangladesh national residing abroad. 2. Foreign nationals residing abroad/ in
Bangladesh and also foreign firms 3. Registered abroad and operating in Bangladesh and abstract
foreign missions and their expatriate employees. 4. Resident of Bangladesh nationals working
with the foreign / international organization operating in Bangladesh provided their salary in paid
in foreign currency.
2.7 The structure, rules, and general financial environment of the banking systems
in Bangladesh and the USA differ significantly. Here are a few significant variations:

Dimensions and intricacy:

The banking system in the United States is among the biggest and most intricate in the world,
consisting of a combination of credit unions, national and local banks, and other financial
organizations.
Bangladesh's financial system is relatively smaller and less complicated than other countries' due
to its smaller GDP.

Bank Types and Numbers:

Large international banks, regional banks, community banks, and credit unions are all part of the
varied banking landscape in the United States.
Foreign banks, domestic banks, and specialty banks such as development or agricultural banks
make up Bangladesh's banking industry.

Regulatory Structure:
The United States of America has a sophisticated regulatory system comprising various regulatory
entities, including the Federal Reserve, the Office of the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation.
The Bangladesh Bank, the nation's central bank, manages and controls all financial institutions and
is responsible for regulating the banking sector in Bangladesh.

Innovation and Technology:

Modern financial technologies are frequently used and developed in the USA, with an emphasis
on digital services like online banking and mobile payments.
Bangladesh is adopting digital banking as well, though perhaps not to the same extent as the United
States.

Inclusion of Finances:
Although the United States has a well-established banking system that offers financial services,
there are still areas where people lack or have limited access to banking services.
2.8 Task Between Private bank and Bangladesh Bank

There are 43 private commercial banks which are majorly owned by individuals/the private entities. PCBs
can be categorized into two groups.

Bangladesh Bank maintains the foreign exchange reserve of the country in different currencies to minimize the
risk emerging from widespread fluctuation in exchange rate of major currencies and very irregular movement
in interest rates in the global money market. BB has established Nostro account arrangements with different
other Banks. Funds accumulated in these accounts are invested in Treasury bills, repos and other government
papers in the respective currencies. It also makes investment in the form of short-term deposits with different
high rated and reputed commercial banks and purchase of high rated sovereign/supranational/corporate bonds.
A separate department of BB performs the operational functions regarding investment which is guided by
investment policy set by the BB's Investment Committee headed by a Deputy Governor. The underlying
principle of the investment policy is to ensure the optimum return on investment with minimum market risk.
3.0 Recommendation:
I have to make some recommendations based on the findings that I have got from my research.
The recommendation will help the bank to take necessary steps in order to increase the
Satisfaction level of customers of UCB Bank Limited.

❖ To increase the profit from remittance to Bank, more density of foreign remittance
is required. UCB's remittance performance for 2018 and 2020 was very bad, so
performance and profit should be increased year after year.
❖ Export earnings growth slowdown in 2020 but they come back in 2021. They have
to main the developing situation.
❖ On all foreign exchange earnings, remittances contribute only a small portion.
Maximum income come from export and imports. Bank should increase remittance
income for our economy development.
❖ In the past five years, the rate of increase in export earnings and the rate of increase
in import income fluctuated. So, banks should try to keep a constant growth rate.
❖ Developing sincere banking relationships with foreign banks in important parts of
World Business world.
.
3.1 Conclusion:
In recent times, banking courtyards are one of the most competitive business areas in
Bangladesh. Bangladesh is a developing country; a strong banking sector can change the
socio-economic structure of the country. So, we can say that the economy of the country is
associated with its banking system. UCB Bank is a highly probable commercial bank of
Bangladesh Bank. This bank performs hundreds of important activities for the public and
for the government as a whole. It is committed to deliver high quality financial services /
products to contribute to the country's GDP growth by increasing the country's trade GDP
to rising trade and commerce, to speed up industry, to increase employment, create
employment opportunities for educated youth, increase poverty and increase the standard.
Limited income group and the overall sustainable socio-economic development of the
country. It has an outstanding bearing on improving our business sector. It has strong
performance on general banking, loans and advances, industrial credit and foreign currency.
Through my active participation in this branch, I had the privilege of learning a lot from
foreign exchange corporate branches. A broad network of home branches and large number
of communication banks worldwide handle exclusively export-import business, including
homebound remittances. The effective and effective foreign exchange business of the bank
helps in the growing growth and progress of the national economy.