United Commercial Bank Limited

An Internship Report Presented to the BRAC Business School in Partial Fulfillment of the
Requirement for the Degree of Masters of Business Administration.
 Internship Report

On

SME Banking of United Commercial Bank Limited

(BUS 699: Internship)

Submitted To
Md.Tamzidul Islam
Assistant Professor
BRAC Business School
BRAC University

Submitted By
Kanij Sharmin
ID No: 13164102

Program: Masters of Business Administration

BRAC Business School

Date of Submission: June 16, 2016

 LETTER OF TRANSMITTAL

June 16, 2016

Asst. Prof. MD. Tamzidul Islam

BRAC Business School
BRAC University
Mohakhali, Dhaka, Bangladesh

Letter of Transmittal

Dear Sir,

It is my great pleasure to submit the internship report on “SME banking of United

Commercial Bank Limited"which I have prepared as a partial fulfillment of the course
BUS699 practicum.

I made sincere efforts to study related materials, documents, observe operations performed &
examine relevant records for preparation of the report.

Within the time limit, I have to make this report as comprehensive as possible. But there may
be some mistakes due to various limitations. For this reason, I beg your kind consideration in
this regard.

Sincerely yours

………………………
Kanij Sharmin
ID # 13164102
 Student Declaration

I, Kanij Sharmin, student of Master of Business Administration (MBA), under BRAC

Business School (BBS) at BRAC University declaring that this internship report on the topic
of “SME banking of United Commercial Bank Limited" have only been prepared for the
fulfillment of the course of BUS699 Practicum as the partial requirement of the Master of
Business Administration (MBA).

I hereby declare that this report has been solely prepared by me and to the best of my
knowledge. It contains no materials previously published or written by any other person
which have been accepted for the degree at BRAC University or any other educational
institution, except the quotations and reference which have been duly acknowledged.

It has not been prepared for any other purpose, reward, or presentation.

………………………….

Kanij Sharmin
Program: MBA
ID # 13164102
 Acknowledgement
I would like to convey my sincere gratitude to Md. Tamzidul Islam(Assistant Professor,
BRAC Business School) for his frank inspiration as well as guidelines in preparing this
report. I am also indebted thank to Muhammad Raqib Uddin , Executive Officer, Sonagaon
Janapath Branch, UCBLfor his constant guidance and valuable suggestion from time to time.

Finally, I am also indebted to all the employees of Sonagaon Janapath Branch, UCBL who
extended their wholehearted cooperation to me despite their heavy workload during my
practical orientation.

I am again expressing my special gratitude to all.

With Warm Thanks,

_____________________

Kanij Sharmin

ID – 13164102
 Executive Summary
The purpose of this report to analyze“SME banking of United Commercial Bank Limited" as
well as to fulfill the partial requirement for MBA degree at BRAC University.

The study is made under the supervision of Assistant Professor Md. Tamzidul Islam BRAC
University.

With a firm commitment of the economic and social development of Bangladesh, United
Commercial Bank (UCB) started its journey in mid-1983 and has since been able to establish
itself as one of the largest first generation banks in the country. With a vast network of 158
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.

SME sector through promoting new entrepreneurs with new and innovative ideas of
diversified products. UCBL is a SME friendly bank since its inception in the year 1983.
According to the customer demand UCB created specialized SME division in 2009. Later
from 2012 SME financing is in the center of the business focus for expanding SME business
further in the line with national economic goal.

In the report, I have described the operation of SME products & currents business, my job
responsibility, problems that the department is facing currently and finally recommendation.
 Table of Contents

Description…………………………………………………………………………………………………Page No.

1. INTRODUCTION………………………………………………………………………………1

1.1Objective of the report……………………………………………………………………1

1.2 Methodology……………………………………………………………………………………2

1.3Limitataion of the study………………………………………………………………………..2

2. HISTORY………………………………………………………………………………………3-4

3. UCBL Product and Services……………………………………………………………………5

4) Vision, Mission and Core Values of UCBL…………………………………………………….6

5) ORGANOGRAM………………………………………………………………………………7-8

6) Credit Department of UCBL…………………………………………………………………9-11

7) SME (Small and Medium enterprise)……………………………………………………….12-25

8) Recommendations………………………………………………………………………………26

9) Conclusion………………………………………………………………………………………26

10) Attachments & References…………………………………………………………………27-28

1) Introduction:Now the world is very much competitive. So everybody has to be expert in
his field in both practical knowledge and theoretical knowledge. As BRAC University aims to
build future magnate with the theoretical knowledge as well as practical knowledge of economic
field of our country, Internship course and its report is a significant aspect in the direction of
accomplishing the goal. It is a systematic process for gathering, recording and analyzing of data
about the topic that a student goes to learn on the program.
The aim of this internship program is to connect practical knowledge with theoretical aspects.
Being a student of MBA, I have completed my internship report fromSonagaonJanapath Branch
ofUnited Commercial Bank Limited.

During my internship period, I have tried my best to use the opportunity to enrich my knowledge
about UCBL Credit department, particularly on SME banking.

1.1 Objective of the Report

Broad Objective

To suggest an overview of SME banking practices in UCBL

Specific Objective

 To give an overview of SME related product of UCB.

 To analyze SME credit management system & practices.
 To identify and critically evaluate current challenges of SME banking.

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1.2 Methodology of the study
The data needed for conducting the study has been collected from the primary sources as well as
secondary sources. In collecting the necessary data, care has been taken so that all the variables
that may in some way can't affect the objectives of the study. The information that I used in this
study is collected from the following sources:
Primary data sources:
• Personal experience of working.
• Practical desk work
• Face to face conversation with the colleagues.
Secondary data sources:
• UCBL Website.
• Existing Documents

1.3 Limitation of the Study

Like every other studies, I too faced some constraints during my internship period which
otherwise would have enabled me in making my study more appropriate and logical.
The main limitations are as follows:-
 Some of work in this organization is confidential and not accessible.
 It is tough to summarize the total SME practices in a report from huge information’s.
 Time Constraint.

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2)History:United Commercial Bank is one of the largest Banks in Bangladesh. Day by day
UCBL has become a giant in the banking sector. With a firm commitment of the economic and
social development of Bangladesh, United Commercial Bank (UCB) started its journey in mid-
1983 and has since been able to establish itself as one of the largest first generation banks in the
country. With a vast network of 158 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. UCBL aspire to be the most admired financial institution in the country,
recognized as a dynamic, innovative and client focused company that offers an array of products
andservices in the search for excellence and to create an impressive economic value. To be the
bank of 1st choice by creating exceptional value for our clients, investors and employees

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UCBL at a glance

Name of the Company : United Commercial Bank Ltd.

Legal Form : A public limited company incorporated in Bangladesh on 26th June
1983 under the companies Act 1994 and listed in Dhaka Stock
Exchange Limited on 30th November 1986 and Chittagong Stock
Exchange Limited on 15th November 1995.
Commencement of : 27 June 1983
Business
Head Office : Bulus Center
Plot - CWS- (A)-1
Road No - 34
Gulshan avenue, Dhaka-1212
Telephone No. : +88-02-55668070
+88-09611999999
Fax No. : +88-02-55668070-6000, +88-09611999911-5200
Website : www.ucb.com.bd
SWIFT : UCBL BDDH
E-mail : info@ucb.com.bd
Chairman : Mr. M. A. Sabur
Managing Director : Mr. Muhammed Ali
Auditors : HodaVasi Chowdhury & Co. Chartered Accountants
Tax Consultants : Mr. Md. Mosharrof Hossain, Advocate
Legal Consultant : T.I.M NurunNabi Chowdhury
No. of Branches : 158
No. of ATM Booth : 135
No. of SME Centers :2
Off-Shore Banking :1
Unit
No. of Employees : 3,374 (31.12.2012)
Stock Summary
Authorized Capital : Tk. 15,000 million
Paid up Capital : Tk. 10,541.31 million
Face Value per Share : Tk. 10
Registered Office : Bulus Center
Plot - CWS- (A)-1
Road No - 34
Gulshan avenue, Dhaka-1212
Phone : +88-02-55668070
+88-09611999999
E-Mail : info@ucb.com.bd
Web site : www.ucb.com.bd
Chairman's Office : Plot - CWS- (A)-1 Road No - 34

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 Gulshan avenue, Dhaka-1212
E-Mail : chairman@ucb.com.bd

3)UCBL Product and Services: UCB has versatile product and services. Services and products
are 3 categories-

Deposit Products

 Current Deposit
 Service Deposit
 Special Notice deposit
 Fixed Deposit
 Foreign Currency Deposit A/C
 UCB multi millionaire
 UCB money Maximizer
 UCB Earning Plus
 UCB DPS Plus
 UCB youngsters saving
 UCB Youngsters DPS
 UCB Saving Plus
 UCB women’s saving
 UCB women DPS plus
 UCB NRB Saving
 UCB NRB DPS plus
 UCB RMG DPS plus

Loan Products
 Trade finance
 Industrial finance
 Import finance
 Export Finance
 Loan Syndication
 Working Capital Finance
 Packing credit
 Transport Loan
 Lease Finance
 Hire Purchase Loan
 House Building Loan
 Home Loan
 Consumer credit Scheme
 Auto Loan
 Doctors Loan

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  Marriage Loan
 Education Loan
 Hospitalization Loan
 Travel Loan
 CNG Conversion Loan
 Home Mortgage Loan
 House Hold Durable Loan
 Credit Card

Other Services
 Western Union Money Transfer
 SMS banking service
 Online services
 Inward & outward Remittances
 Travelers Cheques
 Underwriting and bridge Financing
 Locker Services
 Offshore Banking
 Loan syndication
 Ucash(Mobile Financial service)

4) Vision, Mission and Core Values of UCBL

VISION: To be the Bank of first choice though maximizing values for our clients, shareholders
& employees and contributing to the national economy with social commitments.

MISSION: To offer financial solution that create, manage and increase our client’s wealth while
improving the quality of life in the communities we serve.

Core Values:

 We put our customer first.

 We emphasize on professional ethics

 We maintain quality at all levels

 We believe in being a responsible corporate citizen

 We say that we believe in.

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  We foster participative management

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8|Page
6) Credit Department of UCBL:Credit division are segregated in to 03 (Three) separate
Department:
1. Credit Administration Department
2. Credit relationship.
3. Marketing.

There have 03 (Three) types of borrower:

Retail: In the name of the individual person.

SME: As per SMESPD circular in07-01-16

&

Corporate: As per Policy

In general the credit cycle works is as follows:

 Induction of new client

 Proposal /Approval
 Documentation
 Disbursement
 Monitoring & Follow up
 Recovery & settlement

Steps of Borrower Selection:

1) Character: Business behavior of the client, others loan if he/she taken. CIB (credit
Information Bureau) report from Bangladesh bank verifying the loan detail the client has
taken from UCBL or other banks.
2) Capital: Clients net worth in the business. How much capital the client invested in the
business its gives an overview of the client’s recovery capability.

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 3) Condition: Business/ industry condition in the market for which the client is asking for
loan. If the industry condition is good it indicates the success of the business. If the
condition of the business is bad then the recovery chance reduces.
4) Capacity: Income expense ratio analysis of the client gives the recovery capability of the
client.
5) Collateral: To recover the loan need to verify the collateral. If the collateral has no legal
barrier then recovery will be easy.

Credit Risk Grading analysis: There have 5 Major component risk % in CRG:

 Financial Risk-50%
 Business/ Industry Risk-18%
 Management Risk-12%
 Security Risk-10%
 Relationship-10%
Moreover there have to 20 nos. of risk in CRG.

Frequency of CRG-

1. Superior: Guaranteed by Bangladesh bank or any other govt. organization are considered
as superior client.
2. Good:85+
3. Acceptable:75-84
4. Marginal/watchlist:65-74
5. Special Mention 55-64
6. Substandard 45-54
7. Doubtful35-44
8. Bad and Loss(below 35)

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UCBL ask for several documents to verify the prospective clients. The documents are-

• Trade License
• TIN certificate
• NID/ Passport copy
• Bio data mentioning educational experiences
• Business supportive paper(work order copy)
• If the business is stock related need to give a stock report
• Financial report of the company
• Security, utility, land related papers
• Account statement
• Previous business performance
• Net worth
• Credit Application
• CIB(Credit information Bureau)
• CRG(credit risk grading)
• Visit/call report
• Surveyor report of mortgage property.
• Physical verification report of the property to be mortgage.
• Lawyer’s legal opinion.

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7) SME (Small and Medium enterprise): SME are now the key driving force for the
economic and social development of emerging country like Bangladesh. SME can play a vital
role in the development of the country like Bangladesh specially workers with limited skills and
woman who have few alternative sources of income.

UCB SME Banking Services:With a view to be the part of the journey UCB has firm
commitment to encourage SME sector through promoting new entrepreneurs with new and
innovative ideas of diversified products. UCBL is a SME friendly bank since its inceptionin the
year 1983. According to the customer demand UCB created specialized SME division in 2009.
Later from 2012 SME financing is in the center of the business focus for expanding SME
business further in the line with national economic goal.

In the 377th meeting of board of directors UCBL in 29.03.2015 has approved newly designed
Asset products for Small Enterprises and liability products for SME. UCB has got the largest
portfolio in the banking industry of the country. At the end of FY2015 total loans & advances
stood TK 8059.83 corer against total credit portfolio of TK 19741.36 corer by holding 40.82%
share.TK 115.56 corer was financed among women entrepreneurs and Tk278.72 corer in
Agriculture sector.

7.1. SME Asset products are-

1. UCB Dhrubo

2. UCB Onkur

3. UCB Durjoy

4.UCB Jyoti

5. UCB Dipti

7.2. SME Liability Products are-

1.SONIRVOR Current Account

2.SABOLOMBI Easy account

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3.PROTTOYI monthly deposit

4.UDDOMI Fixed Deposit

UCB DHRUBO: UCB DHRUBO is a loan facility for small enterprises (defined within the
frame work of Prudential Regulations) involved in trading, manufacturing, service, non-farm
rural activities, agro-based industries, and many other acceptable sectors spread all over
Bangladesh marketed through our branches/SME branches/Krishi branches across the country.
The product offers ‘overdraft’ facility for the purpose of working capital finance and agriculture
production/trading. This product program guideline (PPG) is being presented as a product review
document for the SME Division of United Commercial Bank Limited.

UCB Dhrubo: Product Features: Overdraft Lending Product for Small Enterprises
Amount Range: Up to Tk. 500.00 lac
Tenor: 01 year, renewable each year.
Eligibility: The business must be a going concern with a minimum 1 year operation.
Purpose: Working capital, agriculture production/trading, and other business purposes for small
sized trading, service, manufacturing concerns.
Legal Form of Business:
a) Sole proprietorship
b) Partnership
c) Private Limited Company
Location: The business should be located within 5km of urban branches 10km for sme
branches/krisi branches.

Market Analysis

A number of Banks and Financial Institutions are offering a variety of lending facilities to SMEs
of Bangladesh. Many banks offer products similar to UCB DHRUBO. A comparison follows:

Bank/FI Name Product Name Loan Range

Brac Bank Limited Apurba BDT 10-100 lac

The City Bank Limited Muldhon BDT 10-100 lac

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Eastern Bank Limited Puji BDT 10-50 lac

UCB ONKUR: UCB ONKUR is a loan facility for small enterprises (defined within the frame
work of Prudential Regulations) involved in trading, manufacturing, service, non-farm rural
activities, agro-based industries, and many other acceptable sectors spread all over Bangladesh
marketed through our branches/SME branches/Krishi branches across the country. The product
offers ‘Terminating’ lending facility for the purpose of working capital finance and agriculture
production/trading.

This product program guideline (PPG) is being presented as a product review document for the
SME Division of United Commercial Bank Limited.

UCB Onkur

Product Features:Terminating Lending Product for Small Enterprises

Amount Range:Up to Tk. 500.00 lac

Tenor:12 to 60 months.

Eligibility:The business must be a going concern with a minimum 1 year operation.

Purpose:Working capital, agriculture production/trading, and other business purposes for small
sized trading, service, manufacturing concerns.

Market Analysis

A number of Banks and Financial Institutions are offering a variety of lending facilities to SMEs
of Bangladesh. Many banks offer products similar to UCB ONKUR. A comparison follows:

Bank/FI Name Product Name Loan Range

Brac Bank Limited Apurba BDT 10-100 lac

The City Bank Limited Muldhon BDT 10-100 lac

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Eastern Bank Limited Puji BDT 10-50 lac

UCB DURJOY is a loan facility for small enterprises (defined as per Bangladesh within the
frame work of Prudential Regulations) involved in trading, manufacturing, service, non-farm
rural activities, agro-based industries, and many other acceptable sectors spread all over
Bangladesh marketed through our branches/SME branches/Krishi branches across the country.
The product offers terminating lending facility for the purpose of Fixed Asset Purchase.

This product program guideline (PPG) is being presented as a product review document for the
SME Division of United Commercial Bank Limited.

UCB Durjoy

Product Features :Fixed Asset Purchase Lending Product for Small Enterprises

Amount Range :Up to Tk. 500.00 lac

Tenor :12 to 60 months.

Eligibility :The business must be a going concern with a minimum 1 year operation.

:Fixed asset (Machinery, Equipments, Furniture, Vehicle for Commercial use etc.) For small
Purpose
service, manufacturing concerns.

Market Analysis

A number of Banks and Financial Institutions are offering a variety of lending facilities to SMEs
of Bangladesh. Many banks offer products similar to UCB DURJOY. A comparison follows:

Bank/FI Name Product Name Loan Range

Brac Bank Limited Apurba BDT 10-100 lac

The City Bank Limited Muldhon BDT 10-100 lac

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Eastern Bank Limited Puji BDT 10-50 lac

UCB JYOTI is a loan facility for ‘women’ entrepreneur’s small enterprises (defined within the
frame work of Prudential Regulations) involved in trading, manufacturing, service, non-farm
rural activities, agro-based industries, and many other acceptable sectors spread all over
Bangladesh marketed through our branches/SME branches/Krishi branches across the country.
The product offers overdraft facility for the purpose of working capital finance and agriculture
production/trading.
This product program guideline (PPG) is being presented as a product review document for the
SME Division of United Commercial Bank Limited.

UCB Jyoti

Product Features : Overdraft Lending Product for Women Small Enterprises

Amount Range :Up to Tk. 500.00 lac

Tenor :01 year, renewable each year.

Eligibility :The business must be a going concern with a minimum 1 year operation by women entrepre

:Working capital, agriculture production/trading, and other business purposes for small siz
Purpose
manufacturing concerns.

Market Analysis

A number of Banks and Financial Institutions are offering a variety of lending facilities to SMEs
of Bangladesh. Many banks offer products similar to UCB JYOTI. A comparison follows:

Bank/FI Name Product Name Overdraft Range

Brac Bank Limited Apurba BDT 10-100 lac
The City Bank Limited Muldhon BDT 10-100 lac
Eastern Bank Limited Puji BDT 10-50 lac

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UCB DIPTI is a loan facility for ‘women’ entrepreneur’s small enterprises (defined within the
frame work of Prudential Regulations) involved in trading, manufacturing, service, non-farm
rural activities, agro-based industries, and many other acceptable sectors spread all over
Bangladesh marketed through our branches/SME branches/Krishi branches across the country.
The product offers terminating lending facility for the purpose of working capital finance and
agriculture production/trading.

This product program guideline (PPG) is being presented as a product review document for the
SME Division of United Commercial Bank Limited.

UCB Dipti

Product Features :Terminating Lending Product for Women Small Enterprises

Amount Range :Up to Tk. 500.00 lac

Tenor :12 to 60 months.

Eligibility :The business must be a going concern with a minimum 1 year operation by women entrepre

:Working capital, agriculture production/trading, and other business purposes for small siz
Purpose
manufacturing concerns.

Market Analysis
A number of Banks and Financial Institutions are offering a variety of lending facilities to SMEs
of Bangladesh. Many banks offer products similar to UCB DIPTI. A comparison follows:

Bank/FI Name Product Name Loan Range

Brac Bank Limited Apurba BDT 10-100 lac
The City Bank Limited Muldhon BDT 10-100 lac
Eastern Bank Limited Puji BDT 10-50 lac

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The following credit principles are the ultimate reference points for making lending
decisions for SMEAsset products:

1. Assess the customer’s character for integrity and willingness to repay

2. Only lend when the customer has capacity and ability to repay

3. Plan for the possibility of default

4. Only extend credit if we can sufficiently understand and manage the risk

5. Use common sense and past experience in conjunction with thorough evaluation and
credit analysis. Do not base decisions solely on customer’s reputation, other lender’s risk
assessment or the recommendations of other officers

6. Behave ethically in all credit activities

7. Be proactive in identifying, managing and communicating credit risk

8. Be diligent in ensuring that credit exposures and activities comply with the requirement
set out in this Product Program

9. Optimize risk and reward by striking a suitable balance between risk and reward

10. Build and maintain a diversified credit risk portfolio to avoid risk concentrations and to
ensure better liquidity management

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Sonirvor Current Account: Current Account for SME’s

"SONIRVOR Current Account" is a Current Account for SME's to encourage them to enter into
the wide range of modern banking facilities of United Commercial Bank Limited.

Eligibility:
Any type of institution/organization (preferably near UCBL Branches). It includes:

• Sole proprietorship business

• Partnership Business
• Limited Company
• Educational Institution
• NGOs/project
• Co-operative Society
• Market/Shop owner association
• Other organization

Features of Sonirvor:

• A perfect transactional account for Small & Medium entrepreneurs

• Free Online Banking
• Up to 5% interest
• Unlimited transaction, no restriction
• Business Debit (VISA/MASTER) Card (Sole Proprietorship Concerns only)
• SMS Banking Facility
• 24 hour Access to ATMs
• Internet Banking (on demand)

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Sabolombi Easy Account: Current Account for Micro/Small Entrepreneur and Farmers

"SABOLOMBI Easy Account" is a current account in individual name used to open accounts of
1) Farmers, & 2) Owners of Sole Proprietorship business concerns.

Eligibility:

• Owners of sole proprietorship concerns, without having trade license issued in favor of
themselves
• Farmers

Features of SABOLOMBI Easy Account:

• Free Online Banking

• Unlimited transaction, no restriction
• Up to 5% interest
• 24 hour Access to ATMS
• Internet Banking (on demand and free)
• SMS Banking (Farmer & Sole Proprietorship only

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Prottoyi Monthly Deposit: Monthly Deposit Scheme for SME's

"PROTTOYI Monthly Deposit Scheme": is a monthly savings scheme targeted to small and
medium enterprises located all over Bangladesh. The objective is to contribute to the growth of
SME deposit book by offering monthly contributory deposit scheme, which will provide a pre-
thought amount of deposit at the end of the plan/scheme tenor at a profitable interest rate on
daily balance.

Eligibility:
Any type of organization (preferably near UCBL Branches). It includes:

• Sole proprietorship business

• Partnership business & limited company
• Educational institution
• NGO/project
• Co-operative society
• Market/shop owner association
• Existing SONIRVOR/SABOLOMBI Account holders
• Other organizations

Minimum monthly contribution amount BDT 500

Maximum monthly contribution amount Multiple of BDT 500 with no upper ceiling
Tenor (Yrs) 1/2/3/4/5/6/7/8/9/10 Years

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Uddomi Fixed Deposit: Fixed Deposit for SME's

UDDOMI Fixed Deposit is a term deposit product designed for SME clients.

Eligibility:
Any type of institution/organization (preferably near UCBL Branches. It includes:

• Sole proprietorship business

• Partnership Business & Limited Company
• Educational Institution
• NGOs/project
• Co-operative Society
• Market/Shop owner association
• SONIRVOR/SABOLOMBI account holders
• Other organizations

Minimum amount BDT 10,000

Maximum amount No upper ceiling
Tenor 1, 3, 6, 12, 24, 36, 48, 60 months

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7.3.Generic SME Products

Working Capital Finance:

UCB offers working capital finance by way of:

• Cash credit
• Overdraft
• Working capital loans

These are suitably structured to your needs and your risk profile as a part of consortium or as a
sole banker. These products are designed to ease the liquidity position of the client.

Letter of Credit:
Whether you are an exporter or an importer, UCB offers an array of services to meet your Letter
of Credit requirement which includes:

• Opening, Negotiating or Discounting

• Advising, Confirming, Reimbursement
• Foreign Exchange services

Import Finance
UCB offers post import finance to the importers in the form of Loan against Imported
Merchandise (LIM), Loan against Trust Receipt (LTR), and Payment against Documents (PAD).

House Building Finance

UCB provides House Building Loan (HBL) for:

• Commercial purposes
• Real Estate Development Finance

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7.4. Other SME Loans
Hire Purchase
UCB provides Hire Purchase (HP) facility to finance capital machinery, equipment and vehicle
of industrial and other business units. In a Hire Purchase facility the borrower agrees to take the
machinery and equipments on hire at a stated rental on an agreed tenure payable in equal
installments that includes both principal and interest. Once payments of all required installments
are made the ownership of the goods is transferred to the borrower.

Lease Finance
UCB also provide loan under lease agreement to finance capital machinery, equipment and
vehicle to the manufacturing and other business units. In this case the leaseholder is given the
exclusive right to use the leasehold asset for an agreed period of time against payment of rent.

Transport Loan
UCB is extending its facility to the transportation sector by providing transport loan to help
purchase vehicles used in the public transportation services.

Work Order Finance

UCB provide work order finance for execution of work order against assignment of work
order/bill for implementation of contractual works. This facility is provided both in funded and
non-funded form for both short and medium term as Overdraft against Work Order or OD (Work
Order), Performance Guarantee (PG), Advance Payment Guarantee (APG), Guarantee against
Retention Money, Earnest Money, and Bid Bond.

Purchase of Bills
UCB purchases export documents against valid Sight/Usance Export L/C and Local Usance L/C
under the head of Local Documentary Bills Purchased (LDBP) as Post-shipment finance.

Guarantee
UCB provides both foreign and local Letter of Guarantee on behalf of our valued customers. Our
guarantee services include Bid-Bond, Performance Guarantee, Advance Payment Guarantee,
Customs Guarantee, Shipping Guarantee, etc.

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Last few years SME banking of UCBL is growing:

Year Balance(corer) Growth

2012 57,545.60 40.09%

2013 70,246.60 22.07%

2014 87,670.00 24.80%

7.5)Challenges of SME: Though SME banking is a prospective business for banking sector still
they have some challenges. UCBL also face challenges to compete in the market. The challenges
are:-

 High Interest rate.

 Political Insatiability reduces the business prospect.
 Economic meltdown
 New Entrance in the banking industry
 Bad or loss in recovery.

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8) Recommendations
 Need to reduce the interest rate to attract more SME borrower.
 Need to set a good marketing plan to compete with other banks.
 They should follow Specific Marketing plan for each product according to target group.
 Credit department works in branch level need to be more specifically distributed to be
more focused.
 Overall future forecasting need to be more effective.

9) Conclusion
Despite many challenges and uncertainty, economic meltdown UCBL is continuously trying to
focus no smooth banking for their clients in SME banking. UCB introduces various type of new
products to maintain the customer demand. To fulfill the customers need they have 2deicated
SME branches and 156 urban & rural branches.UCB also keeping only .25% provisioning for
SME where they keep 1 or 2 % for other loan products. Its indicate UCBL is a SME friendly
bank & aspire to be the most admired financial institution in the country, recognized as a
dynamic, innovative and client focused company that offers an array of products andservices in
the search for excellence and to create an impressive economic value. To be the bank of 1st
choice by creating exceptional value for our clients, investors and employees.

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10) Attachments & References

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1.http://www.ucb.com.bd/index.php?page=know-ucb/reports-and-statements
2.http://www.assignmentpoint.com/business/sme-banking-services-
bangladesh.html
3. Annul Reporet 2012-2015
4. UCBL documents
5. SME Business review

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