United Commercial Bank in Foreign Exchange Operation

Main principle of this report is to analysis Foreign Exchange Operation of United Commercial Bank Limited. Other objectives are to observe the major outline of Foreign Exchange Business and Credit line arrangement. Here also observe the post important financing operations and analysis the expansion of foreign trade Business of the UCBL. Finally identify the problems of its financing and recommended solutions of or solving the problems faced by UCBL in Foreign Exchange Branch.

Objectives of the study:

Objective of the study acts as a bridge between the starting point and the goals of the study. To illustrate the objectives properly, presented into two parts:


To observe the Foreign Exchange Operation of United Commercial Bank    Limited  and their services.


  • To observe the major outline of Foreign Exchange Business.
  • To observe Credit line arrangement.
  • To observe the Foreign correspondents of UCBL.
  • To observe the post important financing operations.
  • To analysis the expansion of foreign trade Business of the UCBL.
  • To identify the problems of its financing.
  • To recommended solutions of or solving the problems faced by UCBL in Foreign Exchange Branch.


Overview of Financial institutes of Bangladesh:

Financial institutes play an important role of the economic development of any country. The objective of these institutions is to accumulate the scattered deposit and invest it in a productive manner for economic emancipation.

There are 52 schedule banks(January 2001) operate in Bangladesh of them 4 nationalized commercial Banks, 5 Specialized Banks, 30 private Banks and 12 Foreign Banks. The number of Branches of those Banks is 6242. Of  which 2511 (40.2% of total) are in urban areas and rest 3731(59.8% of total) are in rural areas.

Up to February 2002, of fiscal 2001-2002, total deposit and loan of all Banks is Taka 85259.8 and Taka 69392.6 Cr. Respectively.

For proper monitoring the operations of Banks, Bangladesh bank introduces ”Problem Bank Monitoring Division” in addition to Camel Rating. To increase the economic activities Bangladesh Bank reduces the Bank rate to 6% from 7%.

To increase Customer service Banks are using Various modern techniques like on line banking ATM, Money Gram, Credit Card etc.


United Commercial Bank Limited in a nutshell

Historical Back Ground:

Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the government United Commercial Bank Limited started its operation in mid 1983 and has since been able to establish the largest network of 80 Branches as on 31.08.2001 among the first generation Banks in the private sector.

With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of private sector banking through personalized services, innovative practices, dynamic approach and efficient management. 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 through a creative credit pricy.

Structure and management:

The bank has an authorized capital of Tk. 1000.00 million and a paid up capital of Tk.230, 157, 608.00 contributed by sponsors. The head office of the bank is situated at 60, Motijheel Commercial Area, Dhaka-1000.  The sponsor directors of the bank are well established businessman, industrialist, and professionals of the country having business in and out of Bangladesh. The chairman of the Board Hajee Younus Ahmed is a renowned businessman besides being an eminent personality of the country. The management team of the bank is successfully led by Mr. Hamidul Huq, Managing Director of the Bank. He is prominent and dynamic banker Mr Niaz Habib Deputy Managing Director of the bank. The management is ably supported and assisted by qualified executives and officers.


  • Synchronized and steady growth of the bank.
  • Utilize all available resources to develop various plans, policies and procedure in each of the objective and goal areas.
  • Implement plans, policies and procedures.
  • Utilize a team of professional employees.
  • Search for a total customized solution of let for the purpose of full automation step.


  • Develop a realistic deposit mobilization plan.
  • Develop appropriate lending risk assessment system.
  • Develop capital plan.
  • Develop a system to make good advances.
  • Develop a recruitment, compensation, training and orientation plan.
  • Develop a plan for offering better customer service.
  • Develop appropriate management structure, system, procedures and approaches.
  • Develop scientific MIS to monitor banks activities.

Business objectives:

  • Build up a low cost fund base.
  • Make sound loan and investment.
  • Meet capital adequacy recruitment at all the time.
  • Ensure 100% recovery of all advances.
  • Ensure a satisfied work force.
  • Focus on free based income.
  • Adopt a appropriate management technology.
  • Install a scientific MIS to monitor banks activities.


Current Position:


During the year 2002 authorized capital of the Bank remained unchanged at tk.1000.00 million and the paid up capital stood at tk.230.16 million. On the other hand the reserve fund of the bank increased by tk.46.92 million to tk.440.42 million as against tk.393.50 million in the previous year.

Number of Branches:

UCBL always places utmost importance on the client services. With that end in view The Bank continued its personalized approach in rendering improved and modernized services. Presently the number of branches stand at 80 covering almost all the important places of the country. The number of authorized dealer branches are 18.


At the close of 2002, total investment of the bank stood at tk.3961.60 million as against tk.1961.58 million in2001. However, dividend amounting to Tk. …million has been received from different companies/institutions against investment in shares during the year.

Number of share holders:

During the year 2002, total number of share holders of the bank stood 3943 as against number of share holders 3539 in the year 2001.


The importance of the mobilization of savings for the economic development ok our country can hardly be over emphasized. We consider savings and deposits life blood of the bank. More the deposits, greater is the strength of the bank. The bank intends to launch various new savings schemes with prospect of higher return duly supported by a well orchestrated system of customer services.

The bank is catering to the credit needs of individuals as well as corporate clients. It is emphasizing on trade finance which would be short-term and self-liquidating in nature, considering the importance of foreign trade in our national life, financing and handling of export & import business and also handling of foreign remittance business by giving top most priority.


United commercial bank Limited aims at excellence and is committed to explore a new horizon of m banking and provide a wide range of quality products and services. It is a bank for the common people including businessmen and professionals. It intends to serve with quality at a price competitive to anyone in the financial market. It would constantly keep on exploring the needs of the clients. So the united commercial bank Limited shall also develop a youthful and exuberant management team-technologically sound and rich in experience. They would work hand in hand with zeal and enthusiasm to achieve the objectives of the bank in the new millennium.



Foreign trade can be easily defined as a business activity, which transcends national boundaries. These may be between parties or government ones. Trade among nations are a common occurrence and normally benefit both the exporter and importer. In many countries, international trade accounts for more than 20% of their national income.

Foreign trade can usually be justified on the principle of comparative advantage. According to this economic principle, it is economical profitable for a country to specialize in the production of that commodity in which the producer country has the greater comparative advantage and to allow the other country to produce that commodity in which it has the lesser comparative advantage. It includes the spectrum of goods, service, investment, technology transfer etc.

This trade among various countries causes for close linkage between the parties dealing in trade. The bank which provides such transactions is referred to as rendering international banking operations. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller and this flow of 23 goods and payment are done through letter of credit (L/C).

As more than one currency is involved in foreign trade, it gives rise to exchange of currencies which is known as foreign exchange. The term”Foreign Exchange” has three principal meanings. Firstly, it is a term used referring to the currencies of other currencies in terms of any single one currency. To a Bangladesh, Dollar, pound sterling etc. are foreign currencies and as such foreign exchange. Secondly, the term also commonly refer to some instruments used in international trade, such as bill of exchange, drafts, Travel Cheques and other means of international remittance. Thirdly, the terms foreign exchange is also quite of ten referred to the balance in foreign currencies held by a country.

In terms of section 2(d) of the foreign exchange regulations 1947 as adopted in Bangladesh, Foreign exchange means Foreign currency and includes any instrument drawn, accepted made or issued under clause (13) of article 16 of the Bangladesh Bank order 1972 all the deposits, credits and balance payable in any foreign currency and draft Cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any Foreign country.

In exercise of the power conferred by section 3 of the foreign exchange regulation, 1947 Bangladesh bank issues license to schedule bank to deal with exchange. These Banks are known as Authorized dealers. Licensees are also issued by Bangladesh bank to persons or firms to exchange foreign currency instruments such as T.C currency notes and coins. They are known as authorized money changers.


Functions of Foreign Exchange Department:


  1. Pre-shipment advance.
  2. Purchase of foreign bills.
  3. Negotiating of foreign bills.
  4. Export guarantees.
  5. Advising/confirming letters-letter of credit.
  6. Advance for deferred payments exports.
  7. Advance against bills for collection.


  1. Opening of letter of credit (L/C)
  2. Advance bills.
  3. Bills for collection.
  4. Import loan and guarantees.


  1. Issue of DD, MT, TT etc.
  2. Payment of DD, MT, TT etc.
  3. Issue and enhancement of traveler’s cheques.
  4. Sale and enhancement of foreign currency notes.
  5. Non-resident accounts.

The Most commonly used documents in Foreign Exchange:

  • Documentary Letter of Credit.
  • Bill of exchange.
  • Bill of Lading.
  • Commercial Invoice.
  • Certificate of origin of goods.
  • Inspection certificate.
  • Packing List.
  • Insurance policy.
  • Pro-forma Invoice/ Indent.
  • Master receipt.
  • GSP certificate.


Documentary Credit:

In simple terms a documentary credit is a conditional bank undertaking a payment. Expressed more fully, it is a written undertaking by a bank (issuing bank) given to seller (beneficiary) at the request, and in accordance with the instructions of the buyer (applicant) to effect payment (that is, by making a payment or accepting or negotiating bill of exchange) up to a started sum of money, with in a prescribed time limit and against stipulated documents. The customary clauses contain in a L/C are the followings:

  • A clause authorizing the beneficiary to draw bills of exchange up to certain on the
  • List of shipping documents, which are to accompany the bills.
  • Description of the goods to be shipped.
  • An undertaking by the opening bank that bills drawn in accordance with the conditions will be dully honored.
  • Instructions to the negotiating banks for obtaining reimbursement of payments under the credit.

Parties to a letter of credit (L/C): The parties to a letter of credit are:

  1. Importer/ Buyer
  2. Opening Bank/ Issuing Bank.
  3. Exporter/ Seller/ Beneficiary.
  4. Advising Bank/ Notifying Bank.
  5. Negotiating Bank.
  6. Confirming Bank.
  7. Paying/ Reimbursing Bank

Bill of Lading:

A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by 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 constituted a document that is, or may be, needed to support an insurance claim.

The details on the bill of lading should in Claude-

  • A description of the goods in general terms not in consistent with in the credit.
  • Identify marks and numbers, if any.
  • The name of the carrying vessel.
  • Evidence that the goods have been paid loaded on board.
  • The ports of shipment and discharge.
  • The names of shipper, consignee, and name and address of the notifying party.
  • Whether freight has been paid or is payable at destination.
  • The number of original bills of lading issued.
  • The date of issuance.

A bill of lading specifically states that goods are loaded for ultimate destination specifically mentioned in the credit.

Commercial Invoice:

A commercial invoice is the accounting document by which the seller changes the goods to the buyer. A commercial invoice normally includes the following information;

  • Date
  • Name and address of the buyer and seller
  • Order of contract number, quantity and description of the goods, unit price and the total price.
  • Weight of the goods, number of the package, shipping marks and numbers.
  • Terms of delivery and payment.
  • Shipment details.


Certificate of origin:

A certificate of origin is a signed statement providing evidence of the origin of the goods.

Inspection certificate:

This is usually issued by an independent inspection company located in the exporting country certifying or describing the quality, specification or other aspects of the goods, as called for in the contract on the L/C. The inspection is usually nominated by the buyer who also indicates the types of inspection he wishes the company to undertake.

Insurance certificate:

The insurance certificate documents must-

  • Be that specified in the credit.
  • Cover the risks specified in the credit.
  • Be consistent with the other documents in its identification of the voyage and description of the goods.
  • Unless otherwise specified in the credit
    1. Be a document issued and/or signed by an insurance company or its agent, or by underwriters.
    2. Be dated on or before the date of the date of shipment as evidenced by the shipping documents.
    3. Be for an amount at least equal to the C/F value of the goods and in the currency of credit.

Import operation:

Import is foreign goods and services purchased by customer, firm and Government in Bangladesh.

An importer must have import registration certificate (IRC) given by chief controller of import and exports (CCI&E) to import any thing form other country. To obtain import registration certificate (IRC) the following certificates are required:-

  1. Trade License
  2. Income Tax clearance certificate.
  3. Nationality certificate
  4. Banks solvency certificate
  5. Asset certificate.
  6. Registration partnership deed (if any)
  7. Memorandum and Article of Association.
  8. Certificate of incorporation (if any)
  9. Rent receipt of the business premises

Import procedure:

To import though United Commercial Bank Limited (UCBL) a customer/Client requires:-

  1. Bank Account
  2. Import registration certificate.
  3. Tax paying identification number
  4. Pro-forma Invoice/Indent
  5. Membership certificate
  6. L/C application form duly attested
  7. One set of Imp Form
  8. Insurance cover note with money receipt

Import Mechanism:

To import, a person should be competent to be an importer. According to import and export control Act, 1950, the office of chief controller of import and Export provides the registration certificate (IRC) to the importer. After obtaining the person has to secure a letter of credit Authorization (LCA) from Bangladesh Bank and then a person becomes a qualified importer.

He is the person who requests or instructs the opening Bank to open an L/C. He is also called opener or applicant or the credit.

Importers application for L/C limit/ Margin:

To have an import L/C limit, an importer submits an application to the department of (UCBL) furnishing the following information:-

  1. Full particulars of Bank account.
  2. Nature of Business.
  3. Required amount of limit.
  4. Payment terms and conditions.
  5. Goods to be imported.
  6. Offered Security.
  7. Repayment Schedule.

A credit officer scrutinizes this application and accordingly prepares a proposal (CLP) and forwards it to the head office credit committee (HOCC). The committee, if satisfied, sanctions the limit and return back to the Branch. Thus the importer is entitled for the limit.

Opening of letter of credit (L/C) by bank:-

Opening of L/C means, at the request of the applicant (Importer) issuance of a L/C in favor of the beneficiary (Exporter) by a bank. The bank which open or issue L/C is called L/C opening bank or issuing bank. On receipt of the importers L/C application supported by the firm contract (Indent/Pro-Forma Invoice) and insurance cover note the bank scrutinize the same thoroughly and fix up a margin on the basis of banker-customer relationship.

Before opening a L/C, the issuing bank must check the following:-

  • L/C application properly stamped, signature verified and margin approved and properly retained.
  • Indent/ pro-forma Invoice signed by the importer and Indenter/supplier.
  • Ensure that the relevant particulars of L/C application correspond with those stipulated in indenter/pro-forma invoice.
  • Validity of LCA entitlement of goods, amount etc. Conforms to the L/C application.
  • Conversion and rate of exchange correctly applied.
  • Charges like commission, FCC, postage, Telex charge, swift charge, if any recovered.
  • Insurance cover note-in the name of issuing bank-A/C importer covering required risks and voyage route.
  • Incorporation of instruction for negotiating banks as per banks existing arrangement.
  • Reimbursement instruction for reimbursing bank.
  • If foreign bank confirmation is required, necessary permission should be obtained and accordingly advising bank is advised as per banks existing arrangement.
  • If add confirmation is required on account of the applicant charges should be recovered from the applicant.
  • In case of séance L/C, mention rate of interest clearly in the letter of credit.

Liability of issuing Bank:-

As per article 9(a) of UCPDC 500, An irrevocable credit constitutes a definite undertaking of the issuing bank, provided that the stipulated documents- comply with the terms and conditions of the credit.

Advising of letter of credit:

Advising means forwarding of a documentary letter of credit received from the Issuing bank to the beneficiary (exporter).

Before advising a L/C the advising bank must see the following:-

  • Signature of issuing bank officials on the L/C verified with the specimen signatures book of the said bank when L/C received.
  • If the export L/C is intended to be an operative cable L/C test code on the L/C invariably be agreed and authenticated by two authorized officers.
  • L/C scrutinized thoroughly complying with the requisites of concerned UCPDC provisions.
  • Entry made in the L/C Advising Register.
  • L/C advised to the beneficiary (Exporter) promptly and advising charges recovered.

Advising Banks Liability:-

Advising banks liability is fixed up in uniform customs and practice for documentary credits, publication 500.

Article7(a):- Credit may be advised to a beneficiary through another bank (the “Advising Bank”) without engagement on the part of the advising bank, but the bank, if it elects to advice the credit shall take reasonable care to check the appeasement authenticity of the credit which it advises. If the bank elects not to advice the credit, it must inform the issuing bank without delay.

Article7(b):- If the advising bank cannot establish such apparent authenticity it must inform, without delay the bank form which the instructions appear to have been received that it has been unable to establish the authenticity of the credit and if its elects nonetheless to advice the credit it must inform the beneficiary that it has not been able to establish the authenticity of the credit.

Adding confirmation:- 

Adding confirmation is done by the confirming bank. Confirming bank is a bank which adds its confirmation to the credit and it is done at the request of the issuing bank the advising usually does not do it if there is not a prior arrangement with the issuing bank. By being involved as a confirming agent the advising bank undertakes to negotiate beneficiary bill without recourse to him.

  • Issue L/C and request to add confirmation.
  • Review the L/C terms.
  • Provide reimbursement.
  • Drafts to be drawn on L/C opening bank.
  • Availability of credit facilities.
  • Line allocation from the business and ownership units in the importers country.
  • Confirm and advice L/C.


Amendments to letter of credit:

After issuing and advising of a L/C, it may be felt necessary to delete, add or alter some of the clauses of the credit. All these modifications are communicated to the beneficiary through the same advising bank of the credit. Such modifications to a credit are termed as amendment to a letter of credit.

There may be some of the conditions in a credit are not acceptable by the beneficiary. In that cases beneficiary contract applicant and request for amendment of the clauses. On receipt of such request applicant approaches his bank that is issuing bank with a written request for amendment to the credit. The issuing bank scrutinizes the proposal for the amendment and if the same is not in contravention with the exchange control regulation and banks interest, the bank may then process for amendment. There can be more than one amendment to a credit. All the amendment forms an integral part of the original credit.

L/C amendments are to be communicated by SWIFT or mail. If there are more than one amendment to a credit, all the amendment must bear the consecutive serial number so that the missing the any amendment can be identified by the advising bank or by the beneficiary.

What is to be done by the issuing bank before advising amendment:-

The issuing bank has to-

  1. Obtain written application from the applicant of the credit duly signed and verified by the bank.
  2. In case of increase of value, applications for amendment are to be supported by revised indent/pro-forma invoice evidencing consent of the beneficiary.
  3. In case of extension of shipment period, it should be ensured that relative LCA is valid/ revalidated/increased up to the period of proposed extension.
  4. Amendment of an increase of credit amount and extension of shipment period both the cases amendment of insurance cover note also is submitted.
  5. Proper recording and filling of amendment is to be maintained.
  6. Amendment charges (if an account of applicant) will be recovered and necessary voucher is to be passed


The following clauses of L/C are generally amendment:-

  1. Increase/decrease value of L/C and increase/decrease of quantity of goods.
  2. Extension of shipment/negotiated period.
  3. Terms of delivery i.e. FOB, CFR, and CIF etc.
  4. Mode of shipment.
  5. Inspection clause.
  6. Name and address of the supplier.
  7. Name of the reimbursing bank.
  8. Name of the shipping line etc.

Settlement of letter of credit:

Settlement means fulfillment of issuing bank in regard to affecting payment subject to satisfying the credit terms. Settlement may be done under three separate arrangements as stipulated in the credit.

Settlement by payment:

Here the seller presents the documents to the nominated bank and the bank scrutinizes the documents. If satisfied the nominated bank makes payment to the beneficiary and in case this bank is other than the issuing bank, then sends the documents to the issuing bank and claim reimbursement as per arrangement.

Settlement by Acceptance:

Under this arrangement, the seller submits the documents evidencing the shipment to the accepting bank (nominated by the issuing bank for acceptance) accompanied by drafts down on the bank at the specified tenor. After being satisfied with the documents, the bank accepts the documents and the draft and if it is a bank other than issuing bank, then sends the documents to the issuing bank stating that it has accepted the drafts and the maturity the reimbursement will be obtained in the pre-agreed manner.

Settlement by Negotiation:

This settlement procedure starts with the submission of documents by the seller to the negotiating bank in a freely negotiate documents and if negotiation restricted by the issuing bank, only nominated bank can negotiate the documents. After scrutinizing that the documents meet the credit requirement, the bank may negotiate the documents and give value to the beneficiary. The negotiating bank then sends the documents to the issuing bank, as usual, reimbursement will be obtained in the pre-agreed manner.

Accounting Treatment:

Sundry Deposit L/C Margin A/C—————————————— Dr

PAD A/C————————————————————————-Cr

(Margin amount transferred to PAD A/C)

Customer A/C——————————————————————– Dr

PAD A/C————————————————————————– Cr

(Customer account debited for the remaining amount)

PAD A/C————————————————————————— Dr

Head Office A/C+ Exchange Trading A/C———————————- Cr

Income A/C interests on PAD————————————————- Cr

(Amount given to Head office ID and interest credit)


Reversal Entries:

Bankers Liability ————————————————————— Dr

Customers Liability ——————————————————— Cr

(When lodgment is given)

After realizing the telex charge, service charge, interest (if any) and the shipping documents is then stamped with PAD number & entered in the PAD register. Intimation is given to the customer calling on the banks counter requesting retirement of the shipping documents. After passing the necessary vouchers, endorsements is made on the back of the bill of exchange as “Receipt payments” and the bill of lading is endorsed to the effect “please deliver to the order of M/S–

Under two authorized signatures banks officers (P.A. holder). Then the documents are delivered to importer.

Payment procedure of the import documents:

This is the most sensitive task of the import department. The officials have to be very much careful while making payment.

  1. Date of payment: Usually payment is made within 7 days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.
  2. Preparing sale Memo: A sale memo is made at BC rate to the customer. AS the TT & DD rate is paid to the ID the difference between these two rates is exchanging trading. Finally, an inter Branch exchange Trading credit advice is sent to ID.
  3. Requisition for the foreign Currency: For arranging necessary fund for payment, a requisition is sent to the International Department.
  4. Transmission of Telex: A telex is transmitted to the correspondent bank ensuring that payment is being made.


Export Operation:

Practically by the term Export we mean out carrying of anything from one country to another. As banker we define export as sending of visible things outside the country for sale. Export trade plays a vital note in the development process of an economy. With the earning we meet out import bills.

Although export trade is always encouraged, any body can not export anything to any place. Like importer the exporters are also required to get them registered before entering into export trade. Export registration certificate (ERC) given by CCI & E is required for this purpose. The required documents to obtain ERC are also same as IRC.

When a bank (Authorized Dealer) receives a L/C (Cable or original) it ascertains the correctness of the test number and the authorized signature. Then the bank sends the original copy of the L/C to the Beneficiary.

The exporter presents the relative documents to the negotiating bank after the shipment of the goods. The L/C issuing bank undertakes to honor is obligation only if the beneficiary fulfills the conditions stipulated in the L/C, may namely, the submission of stipulated documents with in the stipulated time. Even a slide deviation of the documents from these specified in the L/C may give an excuse to the negating bank. So the negotiating bank must be careful, promote, systematic and bias-free while scrutinizing the tender documents after careful and through examination of the documents, the banker has to list out the discrepancies which may be classified as major or minor, irremovable or removable. The removable discrepancies can be corrected by the tendered or future losses, which may arise due to non-repatriation of proceeds.

The following types of discrepancies may be noted while the negotiating bank examines the documents:

  • L/C expired
  • Late Shipment
  • Amount drawn in excess of the L/C
  • Bill of exchange not properly drawn
  • Descriptions of goods differ.
  • Bill of lading or Airway bill of state
  • Bill of lading classed
  • Insurance covered Note as per terms L/C
  • Insurance cover obtained after the bill of lading or Airway bill date
  • Enough number of copies not submitted as required by L/C
  • Negotiation under L/C restricted
  • Packing list and certificate of analysis not as per the L/C
  • Documents not properly endorsed in favor of the bank
  • Full shipment not effective and part shipment prohibited
  • Gross weight and Net weight shown in different documents differ
  • Same of the documents required by L/C not submitted and
  • Documents inadequately stamped.

Documents with major discrepancies, which could not be negotiated, should be sent on collection basis with the permission of the exporter.


Exporter Procedure:

The export and importer trade in our country are regulated by imports and exports (control) Act, 1950. Under the Export policy of Bangladesh the exporter has to get the valid export Registration certificate (ERC) from chief controller of import & Export (CCI & E). The ERC is required to renew every year. The ERC number is to be incorporated on EXP forms and other papers connected with Exports.

Registration of exporter:

For obtaining ERC indenting Bangladesh exporters are required to apply to the controller/ Join controller/ Deputy controller/ Assistant controller of imports and Exports, Dhaka/ Chittagong/ Khulna/ Mymensingh/ sylhet/ comilla/ Barisal/ Bogra/ Rangpur/ Dinajpur in the prescribed from along with the documents:

  1. Nationality and assets certificate
  2. Memorandum and Articles of Association and certificate of Incorporation in case of limited company.
  3. Bank certificate
  4. Income Tax certificate
  5. Trade license etc.

Securing the order:

After getting the ERC (Export Registration certificate) the Exporter may proceed to secure the Export order. He/she can do this by containing the buyers directly or though agent. In this purpose exporter can get help from-

  • Liaison office
  • Buyer’s local agent.
  • Export promotion organization
  • Bangladesh mission abroad
  • Chamber of commerce (Local & Foreign)
  • Trade fair etc.

Signing the contract:

After communicating with buyer exporter has to get contracted (writing or oral) for exporting exportable items from Bangladesh detailing commodity, quantity, price shipment, insurance and marks, inspection, arbitration etc.

Receiving the letter of credit:

After getting contract for sale, exporter should ask the buyer for letter of credit clearly stating terms and conditions of export and payment.

The following are the main points to be looked into for receiving (collecting export proceeds by means of documentary credit) –

  • The terms of the L/C are in conformity with those of the contract
  • The L/C is an irrevocable one, preferable confirmed by the advising bank.
  • The L/C allows sufficient time for shipment and negotiation

Terms and conditions should be stated in contract clearly in case of other modes of payment:

  • Cash in advance
  • Open A/C
  • Collection basis (Documentary/ clean)
  • (Here the regulatory frame work is URC-525, ICC publication).

Procuring the Materials:

After the making deal on the L/C opened in his favor, the next step for the Exporter is to set about the task of procuring or manufacturing the contracted materials/ merchandise.

Shipment of goods:

Then the Exporter should take the preparation for export arrange for delivery of goods as per L/C and INCO-terms, prepare and submit shipping documents for payment/Acceptance/Negotiation in due time. Documents for shipments-

  • Exp form
  • ERC (Valid)
  • L/C Copy
  • Customer Duty Certificate
  • Shipping instruction
  • Transport Documents
  • Insurance Documents
  • Invoice
  • Other Documents
  • Bill of Exchange (if required)
  • Certificate of origin
  • Inspection certificate
  • Quality control certificate
  • S.P. certificate
  • Photo -sanitary certificate


Performance of United Commercial Bank Limited in Foreign Exchange Business

United Commercial Bank Limited has diversified activities in retail banking, corporate banking and international trade. From the very beginning it has obtained a solid foundation in respect of foreign trade. Its total import, export and remittance for the year of 2002 were 14,970.30, 5,620.90 & 735 million taka respectively. The United Commercial Bank limited has established a modern dealing room for foreign trade money management. It has 18 authorized branches out of total so branches for dealing foreign exchanges business. SWIFT has already been introduced and installed at 10 A.D Branches out of 18 to spread up international transactions and parsing of L/Cs and it will be installed at all the A.D branches of the Bank shortly.

The progress of UCBL at a glance: Fig in million

2000        2001      2002           2003         2004

  1. Authorized Capital 1000        1000      1000           1000         1000
  2. Paid-up Capital 230       230        230             230           230
  3. Reserve Fund 349         394        440             658           783
  4. Deposits 12,387     14,246   16,417       17,413      20,970
  5. Advances 9,444       10,942   11,826       14,396      15,385
  6. Investment 2,163       1,962     3,962          3,022        3,020
  7. Gross income 1,402       1,727     1,766          2,197        2,554
  8. Gross Expenditure 1,096      1,224     1,311          1,493        1,697
  9. Net Profit (pre-tax) 23            175        155             417           626
  10. Import Business 12,534     13,133   14,975       18,488      24,386
  11. Export Business 7,179       5,309     5,621          7,492        10470
  12. Foreign Exchange 156      193        256             295           322
  13. Number of Employee 1,842 1,812 1,819          1,874        1,878
  14. Number of Branch 79 79            80              80            80
  15. Number of Shareholders 3,200 3,539 3,943       3,907        3,979


Import Business:                                                                                                                                      

United Commercial Bank Limited has embarked on Extensive foreign exchange with a view to facilitating international trade transactions of the country. The bank has established 8761 Letter of credit for import worth Tk.13132.90 million-during the year 2001.

Foreign Exchange Business-Import


Year                                                                              Import

(Figure-in million)

1998                                                                   13,049.90

1999                                                                   14,150.90

2000                                                                   12,534.40

2001                                                                   13,132.90

2002                                                                   14,975.30


Import Business From 1998-2002


Foreign Remittance

Foreign Remittance handled by the bank stood at Taka 735.00 million during the year 2002. Countries from which inward foreign remittances were received included USA, UK, Canada, Denmark etc.

Foreign Exchange Business – Remittance

Year                                                                      Remittance (Figure-in Million)

1998                                                                             480.00

1999                                                                             522.00

2000                                                                            600.00

2001                                                                             628.00

2002                                                                            735.00

Remittance From 1998 – 2002


A Comparison among Import, Export & Foreign Remittance:

Year             Import                             Export                         Foreign Remittance

(Figure-in million)         (Figure-in million)              (Figure-in Million)

1998       13,049.90                          5,192.40                                 480.00

1999       14,150.90                          5,616.50                                 520.00

2000       12,534.40                         7,178.90                                  600.00

2001       13,132.90                         5,309.30                                  628.00

2002        14,975.30                        5,620.90                                  735.00


A comparative analysis of foreign Exchange Business of United Commercial Bank Limited with other private commercial Banks:

The year 2002 is proved to be a successful and challenging one for the United   commercial Bank Limited In this year United Commercial Bank Limited not only became the top performer of the 3rd generation Banks but also surpassed some 2nd generation private banks in terms of foreign exchange business. Excellent performance is evident from the following financial data:-

Banks                                 Items                year-2000        year-2001      year-2002

United Commercial           Export               7,179.90           5,309                5,620

Bank Limited                    Import                12,534.40        13,133             14,975

Remittance         600.00             628                   735

Mercantile Bank

Limited                             Export                  6554              10458                     2873

Import                  9220             12268                    3808

Remittance             369               308                       65

AB Bank Ltd.                     Export                   8434              8275                    204

Import                    12,119            12428                4229

Remittance             1579                1622                   411


Bank Asia Ltd.                   Export                   210                  1135                  1563

Import                    1995                 3953                 4927

Remittance             304                   57                      162


Dhaka Bank Ltd.               Export                   6494                  6183                1929

Import                  13828                17649               5050

Remittance             593                   752                  253


EXIM Bank Ltd.        .       Export                  2797                  7442                 2039

Import                  8200                  8520                 3176

Remittance           110                     403                    123


Islami Bank (BD) Ltd.       Export                  25327                 25907             6059

Import                   16889                 16082             3963

Remittance            369                      308                    65


National Bank Ltd.            Export                    2167                  22071            1209

Import                    22420                20773            1764

Remittance             4662                  4979              1626


NCC Bank Ltd.                  Export                    4214                   4505             1110

Import                   13534                 13754           3430

Remittance            197                      318                 71


Uttara Bank Ltd.                  Export                   15550                   19387         5485

Import                   29161                   29633        7418

Remittance            4287                     6316          2089


The City Bank Ltd.               Export                    472                      3982           1536

Import                   8666                     13503         3218

Remittance            883                        953              250


Source: Activities of Banks and other financial institutions2001-2002 published by financial department, Finance Ministry, Govt. of the peoples Republic of Bangladesh.



Major Drawbacks of United Commercial Bank Limited in Foreign Exchange Business:-

In recent years, the foreign exchange business of United Commercial Bank Limited is increasing at a faster rate. Now a days United Commercial Bank Ltd. Rendering a stable support to the national Foreign Exchange Business. Although the Foreign exchange Business loading day by day there are also some obstacles around it they are as per observations-

  1. Insufficient presence of modern communication equipment.
  2. Application of modern technology such as computerization are not sufficient.
  3. Poor conditions of balance of payments of United commercial bank Limited.
  4. Lack of enthusiastic scheme for exporter & importer.
  5. Less attractive remuneration package and motivation for the Employees.
  6. Lack of fair entrepreneur class.
  7. Knowledge of entrepreneur about foreign trade policy is so poor.



Through conducting this study I have acquired some practical knowledge about export import business in Bangladesh and other relevant matters. Now I would like to provide some recommendation which may be helpful to promote the export import business of United commercial Bank Limited as well as Bangladesh. As per earnest observation some suggestions for improvement of the situation are given below:-

  • For attracting more clients United Commercial bank Limited has to create a new marketing strategy which will increase the total export import business.
  • Effective and efficient initiative in necessary to recover the default loans.
  • Attractive incentive package for the exporter will help to increase the export and accordingly it will diminish the balance of payment gap of United Commercial Bank limited.
  • Introduction of attractive WES which will increase the remittance.
  • For the foreign exchange officials long terms training very much essential.
  • For a sound and stale foreign exchange operation, United Commercial Bank Limited.
  • Foreign exchange operation of other renowned Commercial banks is more dynamic and less time consuming. United Commercial Bank limited should take some initiative to compete with those banks.
  • Bank can provide foreign market reports which will enable the exporter to evaluate the demand for their products in foreign countries.



Proper financial system of a country can contribute towards the development of that country’s economy. In our country Bangladesh, banks have a leading power to its financial system. For this reason, the banks should have a potential role to make our financial system. In this arena, private commercial banks are playing a vital role in the development of our country. But Govt. and Bangladesh bank plays a crucial role to the private commercial banks through imposition of deposit restriction, lending role and other banking operations. In recent years of banking business, United commercial Bank limited has shown better performance comparing with other first generation banks.

We expect the United Commercial Bank limited may hold its prospect in future and can contribute a vital role in the socio-economic prospective.