INTERNSHIP REPORT

ON

OFFSHORE BANKING OF UNITED COMMERCIAL BANK LTD

Submitted to:

Gazi Quamrul Hasan

Senior Lecturer

Department of Economics

East West University

Submitted by:

Rabeya Boshra Al Beroni

ID: 2015-1-30-031

School of Economics

East West University

Date of Submission: 22th August 2019

 Letter of Transmittal

Date: 22th August 2019

Gazi Quamrul Hasan

Senior Lecturer

Departmenr of Economics

East West University

Subject: Submission of Internship Report

Dear Sir,

It is a great pleasure for me to submit the internship report as part of my BSS of Economics program to
you that I am assigned to prepare under your direct supervision of the topic entitled “Offshore Banking of
United Commercial Bank Ltd”. I am fortunate enough that I have got an experience and efficient
professional team in the organization. I have got an opportunity to work with them at different
departments to learn their banking activities.

I tried my best to show my skill which is achieved by 3 months, practical experience of this report.
Finally I would like to assure that I will remain standby for any clarification and explanation when
required.

Thank you in advance for your kind assistance. I enjoyed working on the report and hope you will
consider all my mistakes generously.

Sincerely Yours

-------------------

Rabeya Boshra Al Beroni

ID: 2015-1-30-031

East West University

 Acknowledgement

My acknowledgement begins with thanking my academic supervisor GAZI QUAMRUL

HASAN(Senior Lecturer, Department of economics) who has provided me suggestion for making this
final internship report and also provided me with format for making and preparing the whole report. I
would like to thank sir for his generous cooperation and regular supervision that made me really confident
about the desired outcome of my internship report.

I would like to show my warm hearted gratitude to the whole department of UCBL which has provided
me with great deal of information’s, adequate data and finally cooperated me for the accomplishment of
the whole report successfully. I would like to thank each staffs of different departments. I am especially
grateful to MR. MUMTAZ AHMED, SVP & HEAD OF FI & OBU, UCBL for invaluable support and
direction that lead me to the successful completion of my internship report. I have done my whole
internship period under his supervision and really grateful to him for helping me each and every step of
work at office.

I am very much thankful to offshore banking department of UCBL and its management specially the
employees of the entire department for their cordial support to prepare this difficult study with important
information and data. Without them it would be impossible for me to complete this report. I got all
necessary documents, guidelines, cooperation and advice from them to complete this report.
 Executive Summary

Now a day’s Modern Banking presents an extensive variety of economic services which includes
credit, funds, and payment services. Establishing a good brand image of honesty to the
shareholders is the vital characteristic of banking process. Internship program is an extensive
process which helps a student to attain realistic understanding along with theoretical. Any Study
which has no relation with on the job learning is actually not learning at all and it doesn’t help to
recognize genuine situation of business world. I have obtained a huge bunch of practical
knowledge on Offshore Banking Activities performed by UCBL Corporate Branch by getting
chance to do internship here. As part of completing my graduation, I needed to complete a three months
period of Internship program. I decided to do my Internship at United Commercial Bank
Ltd. As one of the first generation commercial banks in Bangladesh which is UCBL it proudly provides
expert banking services and contributes to both social and economic development of the country .Post
Initiation of business in 1983, it has been able to set up one of the biggest networks in the country having
158 branches in different districts and providing excellent and error free services to its customer. The first
and foremost intention and planning of United Commercial Bank Limited is to play a primary role in the
financial activities of the country. Through adapted services, inventive practices, vibrant advance and
well-organized administration, it has made a distinct mark in the area of private banking division.
 TABLE OF CONTENT

CHAPTER- 1 PAGE NUMBER

ORGANIZATIONAL OVERVIEW 1
OVERVIEW OF UCBL 1
HISTORY 1
MANAGEMENT 2
CORPORATE INFORMATION AT A GLANCE 2
SERVICE OFFERINGS 3
ORGANGRAM OF UCBL 4
PRODUCT AND SERVICE 6
OPERATIONAL NETWORK 6
MISSION 7
VISSION 7

CHAPTER – 2 OFFSHORE BANKING

8
DEFINATION 9
ISSUE OF LISENCE 10
LICENSING REQUIREMENTS 11
ADVANTAGE OF OFFSHORE BANKING 12
DISADVANTAGE OF OFFSHORE BANKING 12
REGULATIONS 13
LEGITIMATE OF OFFSHORE BANKING 14
MONEY LAUNDERING 14

CHAPTER – 3 EXPORT

REGISTRATION OF EXPORT 16
SECURING THE ORDER 17
SIGINING THE CONTRACT 17
RECEIVING LETTER OF CREDIT 18
DOCUMENTS FOR SHIPMENT 19
PAYMENT TO BACK TO BACK LC 21
 CHAPTER – 4 IMPORT

CONTRACT 26
APPLIES FOR LC 26
ISSUING BANK 26
OPEN LC 26
L/C ADVICE 26
FORWARD L/C 26
READY FOR DOCUMENTATION 26
CHAPTER-5
RECOMMENDATION & TASK OF INTERN & CONCLUSION 27
REFERENCE & APPENDIX 28
 OBJECTIVE OF THE REPORT

General Objective:

General objective is to prepare and submit an extensive report elaborating and explaining the
procedures of “Offshore Banking activities of United Commercial Bank Limited. To get a glimpse
regarding the relationship between real life learning and theoretical learning of UCB Ltd

Specific Objective:

 To apply hypothetical knowledge in real-world field.

 To critically and accurately observe the purposes of general
banking and getting a broad and elaborate idea about how
commercial bank works.

 To understand entire branch banking procedures.

 To gain practical experience that will help us in our
practical life.
 To understand how other departments of the branch
function.
 To know the strength and weakness of the bank.
 To understand in which sector the bank is working with proper efficiency.
 To find out the problems of the bank and suggesting the way to solve the
problems.

 To analyze the current performance and making future predictions.

Methodology of the Study

I have designed the methodology or the method in which way the data will be collected in the
following way:

Primary data sources: Inspection in different desks, talking with employee’s in

The bank and organized and planned analysis are the Main resources.

Secondary data sources: Brochures and instructions of UCBL, different journal publications of

Bangladesh Bank and annual reports are the secondary data sources. Extensive and elaborate study
of the existing files, convenient case clarifications, observation interview with the employee were
done to identify the execution and control and monitoring process of the banking system.

Scope of the Study:

This report is entire based and prepared on my practical work experience while working at United
Commercial Bank Limited. It will surely help the students to reduce the distinction between
realistic and hypothetical knowledge and additionally it will also help them to clear the confusion
between practical knowledge and theoretical knowledge. This report significantly helped me a lot
to understand the atmosphere and environment of an organization. As I am an internee of UCBL,
I have access to many different sectors like account opening, clearing, cheque division, pay order
writing, accounts etc. It was near impossible task for me to learn everything about all banking
sectors as it was a large financial sector with such a limited span of time.

How Offshore Banking Related With Economics:

To fulfill this degree Internship course is a associate course which enable the students to gather practical
experience where the student wants to make his/her carrier. My internship course was assigned at United
Commercial Bank, Corporate Branch, under the supervision of GAZI QUAMRUL HASAN ,( Senior
Lecturer , Department of Economics). My internship was on the “OFFSHORE BANKING ACTIVITIES
OF UNITED COMMERCIAL BANK”. So I have tried to analyze how they are operating their offshore
banking system. Form the first the vision of the “United Commercial Bank Limited” is to always strive to
achieve superior financial performance, be considered a leading bank by reputation and performance.
UCBL is heading towards it’s destination with outstanding performance of it’s General Banking, General
Advance and Foreign Exchange Department. I was assigned to work under offshore banking departments
within 3 months. I worked under each officer and learn from them directly. I frequently ask questions and
obey their instructions. As I worked over there as an Intern for about 3 months, they have allowed me to
collect the information from their files, books, audit reports etc. Sometimes they have provided data
verbally & I took note of that. Maximum time I retrieved data through my observation to them. Foreign
Exchange Department deals with import, export, and foreign remittance and post import financing. This
department is playing an important role in enhancing export earnings, which aids economic growth and,
in turn, will be help full for economic development. I have worked in export import zone from where
basically , this type of task are done. Bill purchasing additional discounting, borrow from UCB bank, I
have worked on the discount rate. Who are getting the discount from export and import. I have worked on
LC opening , and the formalities and LC product variations. I have experienced on how to make invoice
and the task of pro forma invoice. I have known how to discharge the product from the port. I have
worked on swift code transaction and how it maintained through Bangladesh Bank.

Limitations of the Study:

It was a great opportunity for me to work at United Commercial Bank Limited during my
internship period. As I was an internee at there, I got a big chance to know the actions and
behaviors of banking system, especially UCBL. None the less I had to face some obstacles while
doing this report. Some of them are given below:
(A) Lack of Time: As there was only three months to complete the report, it was almost
impossible to cover the performance of the such a huge bank in full swing, where a regular
employee gets promoted after 1 or 2 year of his probationary period.
(B) Inadequate Data Resources: All types of information were not available for access, so it
was not possible to access and summarize them properly. Though I had assistance from other
employees but it was not enough for me due to their high work pressure in the bank. Some
assumptions were made due to limited information, so there may be some personal mistakes.

(C) Lack of Experience: It was my first time, doing a report on a banking system in a practical

Corporate life, so my limited experience was one of the main obstacles I faced during the
preparation of this report.

(D) Privacy of Information: Every establishment has its secrecy that is not shared with
everyone. So this confidentiality of information was proved as an obstacle which faced while
preparing this report.
 Chapter 1:

Organizational Overview

1. Overview of United Commercial Bank

At 1983 UCBL (United Commercial Bank Ltd) started its banking journey. From the very
beginning, they are trying to get in depth touch of customer and customer satisfaction and
mostly their target was reaching as much as possible to client’s door. In that goal at
present, they are having 187 branches all over the country. New services, practicing more
client-oriented packages, packages to cover all types of clients, altogether we have seen
and noticed as their dynamic approach. On an average 40,000+, cardholders are ongoing
and it is increasing every months, Indicates they are approaching clients positively.
Diversified banking and services could be introduced but continuously uninterrupted
services should be provided by UCBL otherwise they can lose the competition, after all
economy is the most vital part of a country and these organization (Banks) are directly
involve with that. The different segments, like

 Retail banking
 SME services
 Corporate banking
 Off shore & Online banking
 Foreign exchange & students file
 Card services (Debit & Several Credit Cards)


1.2 History

United Commercial Bank Limited incorporated on 26 June, 1983 as a public company with
limited liability under the Companies Act 1993. The bank obtained permission to commence
business with effect from 27 June, 1983 and started banking operations on 29 June 1983 with
an authorized capital of Tk. 100 million divided into 1 million ordinary shares of Tk. 100
each.

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1.3 Management
The Bank has in its Management a combination of highly skilled and eminent bankers of the
country of varied experience and expertise successfully led by Mr. Mohammed Shawkat
Jamil, a dynamic banker, as its Managing Director and well educated young, energetic and
dedicated officers working with missionary zeal for the growth and progress of the
institution.

1.4 Corporate Information At A Glance

Registered Name UCBL (United Commercial Bank Ltd)

Date of Incorporation At 1983 JUNE, listed incorporated Bank.

Enlisted on DSE (Dhaka Stock Exchange) at 1986.

Enlisted on DSE (Dhaka Stock Exchange) at 1995
Head Quarter Gulshan, Dhaka 1212
Contact 096 11 999 999
Web Link www.ucb.com.bd
Chairman Rukhmila Zaman
Managing Director Mr. Mohammed Shawkat Jamil
Auditors Syful Shamsul Alam & Co.
Tax Advisor Md. Mosharrof Hossain
Legal Advisor Nurun Nabi Chowdhury
Branches (Approx.) 187
ATM (Approx.) 472
SME Branches 2
Off Shore (Banking) 1
Employees (Approx.) 3374 (31.12.2012)
Stock Summary
Authorized Capital Tk. 15,000 (amount in millions)
(Approx.)
Paid up Capital Tk. 10,541.31 (amount in millions)
(Approx.)

United Commercial Bank Limited Network in Bangladesh:

Number of Branches 187

SME (Included) 02
AD Branches 28
ATM 472
Approximate Employees (ALL) 3374

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1.5 Product/Service offerings:

The bank provides a broad range of financial services to its customers and corporate clients.
The Products and Services of UCB is as follows:
 UCB Multi Millionaire  Import Finance
 UCB Money Maximizer  Export Finance
 UCB Earning Plus  Working Capital Finance
 UCB DPS Plus  Loan Syndication
 Western Union Money Transfer  Underwriting and Bridge Financing
 Western Union Money Transfer Online  Trade Finance
Service  Industrial Finance
 Credit Card  Foreign Currency Deposit A/C
 One Stop Service  NFCD (Non Resident Foreign
 Time Deposit Scheme Currency Deposit Account)
 Monthly Savings Scheme  RFCD (Resident Foreign Currency
 Deposit Insurance Scheme Deposit Account)
 Inward & Outward Remittances  Consumer Credit Scheme
 Travelers Cheques  Locker Service

United Commercial Bank divided its branch into several departments. The three main
departments are:

General General Foreign

Banking Advance Exchange

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1.6 Organogram of UCB:

Managing Director(MD)

Deputy Managing Director (DMD)

Executive Vice President (EVP)

Senior Vice President (SVP)

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 First Vice President (FVP)

Vice President (VP)

First Assistance Vice President

Assistance Vice President (AVP)

Senior Executive Officer (SEO)

Executive Officer (EO)

Senior Officer

Management Trainee Officer

Officer

Junior Officer

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 1.7 Products & Services (UCB):

UCB Multi-Millionaire UCB Money Maximize UCB DPS Plus UCB Earning Plus

Western Union MoneySMS Banking Service Online Service Credit Card

Transfer
SME Loans Loan Syndication Working Capital Trade Finance
Finance

Industrial Finance Consumer Credit One Stop Service Locker Service

Scheme
Time Deposit Scheme Monthly Savings Inward &Outward Travelers Cheque
Scheme
Remittances
Deposit Insurance
Scheme

Figure: Website of UCBL

1.8 Operational Network:

UCBL always places utmost importance on the client service. Keeping the satisfaction of
the customer in view the Bank continued its personalized approach in rendering improved
and modernized services to treat the customer with utmost efficiency and fulfill the
customer satisfaction which it has promised to the customer. Presently the number of
branches stands at 158 covering almost all the important places of the country. All the
branches are equipped with computers in addition to modern facilities, logistics and
professional competent manpower. The numbers of authorized dealer branches are 21.
Besides, international correspondent’s network of the bank has also continued to expand
keeping pace with time and requirement covering the important countries in all the
continents of the world. Moreover, the Bank has arrangement with a number of Exchange
Houses at Singapore, U.A.E, Oman, Qatar and Kuwait to facilitate remittance from
expatriate Bangladeshi’s.

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1.9 Mission:

1. To provide a sustainable, high level of financial performance, while continuously

enhancing shareholder value.

2. To build long-term customer relationships by offering a full range of financial

products and services while adhering to the highest ethical standards and providing
quality personalized service.

3. We value and reward both individual initiative and teamwork. We foster an

environment in which our employees are proud and eager to work.

4. To offer financial salutations that create, manage and increase our clients’

wealth while improving the quality of life in the communities we serve.

1.10 Vision:

To be the bank of first choice through maximizing value for our clients, shareholders
& employees and contributing to the national economy with social commitments.

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 CHAPTER TWO

Offshore Banking

2.0 Offshore Banking :

Offshore banking is a pervasive activity both with respect to the number of offshore financial
centers (OFCs) and the volume of transactions. A number of factors ranging from favorable
regulatory frameworks and convenient fiscal regimes, to the possibility of engaging in illegal
activities, including money laundering, continue to attract business to OFCs. Offshore banking
appears to be a particularly appealing option to the sometimes heavily regulated and maturing
financial markets of emerging economies, especially those experiencing sustained high growth
rates and in need of investment financing. Currently, OFCs are an important and growing
intermediation channel for emerging economies, as suggested by a large and growing share of
OFC assets and liabilities in relation to these countries. First, offshore banking has important
implications for financial systems surveillance. A greater leeway for balance sheet management,
granted by favorable regulatory frameworks in OFCs, makes offshore banks potentially more
vulnerable than onshore banks to solvency and foreign exchange risks. These can be transmitted
between offshore and onshore banks with implications for the soundness of onshore banking
systems. Hence, a better understanding of offshore banking is important for the Fund’s financial
sector surveillance activities.

Second, offshore banking is a substantive issue for emerging economies with financial systems
that are perhaps more vulnerable than others to reversals in capital flows, rapid accumulation of
short-term external debt, unhedged exposure to currency fluctuations, and selective capital
account liberalization. Offshore banking has most certainly been a factor in the Asian financial
crises. It also played a significant, but not catalytic, role in the recent Latin America crises. A
special effort is therefore needed to help emerging economies—an important part of the Fund’s
constituency—to avert financial crises through dissemination of internationally accepted
prudential and supervisory standards appropriate for offshore banking.

Third, offshore banking has implications for the Fund’s work on the promotion of good
governance. Offshore banking, as such, is less transparent than normal cross-border banking due

to the complexity of ownership structures and relationships among different jurisdictions

involved. This increases the potential for dubious activities and contributes to weakening good
governance in banks and corporations.

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2.1 DEFINATION:

An offshore bank is a bank located outside the country of residence of the depositor, typically in
a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These
advantages typically include greater privacy less restrictive legal regulation low or no taxation
easy access to deposits protection against local political or financial instability
In other words, offshore banking is just the practice of banking in another country with “tax
haven” jurisdictions characterized by low or zero taxation on interest, dividends, royalties and
foreign derived income as well as strict banking secrecy laws.

Offshore banking denotes carrying on banking activity which is insulated from the monetary
regulations of the host country. Very often, such banking centers are set up deliberately to attract
international banking business of dealing in non-resident foreign currency denominated assets
and liabilities by exempting, reducing or eliminating restrictions upon banking operations as well
a lowering tax and other levies.

2.2 ISSUE OF LISENCE:

No license may be issued under the Banking Ordinance to any person other than an eligible
company or qualified foreign bank. Eligible Company Cap 335 A body corporation is an eligible
company if it is wholly owned subsidiary of a local bank regulated by the Eastern Caribbean
Central Bank that is licensed under the Banking Act to do business in Nevis. A qualified foreign
bank is a foreign bank that upon commencement of this Ordinance is licensed under the Banking
Act. A foreign bank with minimum capitalization and assets, as prescribed by the
Minister, that is not licensed under the Banking Act but is licensed to do
domestic banking in its jurisdiction of incorporation. A financial institution, approved by the
Minister, that is directly or indirectly a wholly owned foreign subsidiary, (a company is a of
another company fit is controlled by that other company).

2. LISENCING REQUIREMENT:
(a) An eligible company must be incorporated under the Companies Act as a company limited by
shares.
(b) Have objects or business activity restricted to offshore banking from within Nevis.
(c) Have at least one director who is a citizen of St. Kitts and Nevis with a residence in Nevis.
(d) Have a memorandum and articles of association acceptable to the Minister.
(e) Have an Authorized Capital of at least ECD2 Million, and capital of not less than ECD1
Million Dollars has been Subscribed and Paid Up in cash, such cash shall be deposited in an
account maintained by the Permanent Secretary at the Eastern Caribbean Central Bank.
(f) Every applicant for a license under the Banking Ordinance must show that it is an eligible
company or a qualified foreign bank.
(g) Give the names and address of its directors.
(h) Give particulars of the off-shore banking it proposes to do from within Nevis.

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(i) Give the names of any shareholders who are residents of Nevis and the number of shares held
directly or indirectly by residents of Nevis, and
(j) Provide such other information of a financial or other nature as the Minister may require in
any particular case.

(k) An application for a license by an eligible company must be accompanied by a certified copy
of the memorandum and articles of association of the
applicant.
(l) An application for a license and all documents submitted pursuant to this Ordinance in
support of the application must be signed by the directors of the company making the
application.
(m) An application for a license by a qualified foreign bank must be
accompanied by such documents as are prescribed by the Minister.
(n) Any person who intends to apply for a license under this Ordinance may submit a proposal to
the Minister for a license, and the Minister may indicate whether or not a subsequent application
based on the proposal.

2.4 ADVANTAGE OF OFFSHORE BANKING:

• Offshore banks provide access to politically and economically stable jurisdictions. This may be
an advantage for that resident in areas where there is a risk of political turmoil who fear their
assets may be frozen, seized or disappear.

• Some offshore banks may operate with a lower cost base and can provide higher interest rates
than the legal rate in the home country due to lower overheads and a lack of government
intervention. Usually government regulation or intervention is a form of tax on domestic banks,
reducing interest rates on deposits.

• Offshore finance is one of the few industries, along with [tourism], in which geographically
remote island nations can competitively engage. It can help developing countries source
investment and create growth in their economies, and can help redistribute world finance from
the developed to the developing world.

• Interest is generally paid by offshore banks without tax deducted. This is an advantage to
individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return
is agreed, or who feel that they can illegally evade tax by hiding the interest income.

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• Some offshore banks offer banking services that may not be available from domestic banks
such as anonymous bank accounts, higher or lower rate loans based on risk and investment
opportunities not available elsewhere.

• Offshore banking is often linked to other structures, such as offshore companies, trusts or
foundations, which may have specific tax advantages for some individuals.

2.5 DISADVANTAGE OF OFFSHORE BANKING:

• Offshore banking has been associated with the underground economy and organized crime,
through money laundering. Following September 11, 2001, offshore banks and tax havens, along
with clearing houses, have been accused of helping various organized crime gangs and terrorists
groups.

• The existence of offshore banking encourages tax evasion, by providing tax evaders with an
attractive place to deposit their hidden income.

• Offshore jurisdictions are often remote, so physical access and access to information can be
difficult. However, this disadvantage in today’s context of global telecommunications is not a
problem. Accounts can be set up online, by phone or by e-mail.

• Developing countries can suffer due to the speed at which money can be transferred in and out
of their economy and can increase problems in financial disturbance.

2.6 STATISTICS CONCERNING OFFSHORE BANKING:

Offshore banking is an important part of the international financial system. Experts believe that
as much as half the world's capital flows through offshore centers. The IMF has said that
between $600 billion and $1.5 trillions of illicit money is laundered annually, equal to 2% to 5%
of global economic output. Today, offshore is where most of the world's drug money is allegedly
laundered, estimated at up to $500 billion a year, more than the total income of the world's
poorest 20%. Among offshore banks, Swiss banks hold an estimated 35% of the world's private
and institutional funds (or 3 trillion Swiss francs), and the Cayman Islands are the fifth largest
banking centre globally in terms of deposits.

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2.7 WHY OFFSHORE BANKING WILL NEVER BE ILLEGAL?:

It seems that widely publicized distortions of the truth have become accepted: banking offshore
is only for criminals, those seeking to escape justice and fair taxation! What is important and
crucial to understand is that it is in the very best interests of your government and your local
banking community to have you believe that banking or investing offshore is illegal, immoral,
and unethical. In fact, it’s fair to say that your government and your local banking community
are happy if fuel is added to the fire to keep the likes of you and me in the dark, allowing us to
feed on the fear and suspicion surrounding offshore banking, investing and company formation.

2.8 REGULATION :
The quality of the regulation is monitored by supra-national bodies such as the International
Monetary Fund (IMF). Banks are generally required to maintain capital adequacy in accordance
with international standards. They must report at least quarterly to the regulator on the current
state of the business.

2.9 LEGITIMATE REASON OF OFFSHORE BANKING:

There are reasons to hold an offshore account other than tax evasion. For example, in unstable
countries, the rich may store their money offshore to protect it from political issues and banking
collapses. Another motive is privacy. Offshore accounts offer anonymity, which is ideal for
celebrities who don't want to be taken advantage of during business deals. This is the explanation
Harry Potter star Emma Watson gave when the Panama Papers revealed that she used an
offshore company to purchase a property. Likewise, big corporations sometimes use offshore
accounts to invest in smaller businesses without their competitors finding out. Furthermore, those
heavily involved in business ,overseas who engage in international money transfer might open
offshore accounts to avoid their bank's transfer fees.

While offshore banking isn't for everyone, investing in safe haven currencies and assets can
globalise your portfolio – this, in turn, can help protect your money against economic
disturbance. Contact us for a chat with one of our friendly brokers to find out more.

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2.10 BANKING SERVICES:

It is possible to obtain the full spectrum of financial service from offshore banks,
including

 Savings accounts
 Corporate administration
 Credit
 Deposit taking
 Fund management
 Investment management and investment custody
 Debit and Credit cards
 Letters of credit and trade finance
 Trustee services
 Wire and electronic funds transfer

Not every bank provides each service. Banks tend to polarize between retail services and private
banking services. Retail services tend to be low-cost and undifferentiated, whereas private
banking services tend to bring a personalized suite of services to the client.

2.11 MONEY LAUNDERING:

The IMF has said that between $600 billion and $1.5 trillions of illicit money is laundered
annually, equal to 2% to 5% of global economic output. Today, offshore is where most of the
world's drug money is allegedly laundered, estimated at up to $500 billion a year, more than the
total income of the world's poorest 20%. Add the proceeds of tax evasion and the figure
skyrockets to $1 trillion. Another few hundred billion come from fraud and corruption. "These
offshore centers awash in money are the hub of a colossal, underground network of crime, fraud,
and corruption" commented Lucy Kaiser quoting these statistics. The New York Times, The Wall
Street Journal, and The Los Angeles Times revealed that the United States government,
specifically the US Treasury Department and the CIA, had a program to access the SWIFT
transaction database after the September 11 attacks (see the Terrorist Finance Tracking Program)
diminishing the value of offshore banking for privacy.

2.12 REGULATIONS OF INTERNATIONAL BANK:

In the 21st century, regulation of offshore banking is allegedly increasing, although critics
maintain it remains largely insufficient. The quality of the regulation is monitored by supra-
national bodies such as the International Monetary Fund (IMF). Banks are generally required to
maintain capital adequacy in accordance with international standards. They must report at least
quarterly to the regulator on the current state of the business. Since the late 1990s, especially
following September 11, 2001, there have been a number of initiatives to increase the
transparency of offshore banking, although critics such as the Association for the Taxation of
Financial Transactions for the Aid of Citizens (ATTAC) non-governmental

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organization (NGO) maintain that they have been insufficient. A few examples of these are:

 The tightening of anti-money laundering regulations in many countries including most

popular offshore banking locations means that bankers are required, by good faith, to
report suspicion of money laundering to the local police authority, regardless of banking
secrecy rules. There is more international co-operation between police authorities.
 In the US the Internal Revenue Service (IRS) introduced Qualifying Intermediary
requirements, which mean that the names of the recipients of US-source investment
income are passed to the IRS.
 Following 9/11 the US introduced the USA PATRIOT Act, which authorizes the US
authorities to seize the assets of a bank, where it is believed that the bank holds assets for
a suspected criminal. Similar measures have been introduced in some other countries.
 The European Union has introduced sharing of information between certain jurisdictions,
and enforced this in respect of certain controlled centers, such as the UK Offshore
Islands, so that tax information is able to be shared in respect of interest.
 The Bank Secrecy Act requires that Taxpayers file an FBAR for accounts outside of the
United States that have balances in excess of $10,000
 FATCA (the Foreign Account Tax Compliance Act) became law in 2010 and "targets tax
non-compliance by US taxpayers with foreign accounts [and] focuses on reporting by US
taxpayers about certain foreign financial accounts and offshore assets [and] foreign
financial institutions about financial accounts held by U.S. taxpayers or foreign entities in
which U.S. taxpayers hold a substantial ownership interest.

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 CHAPTER THREE

EXPORT

3.0 EXPORT:

Export Procedure: The import and export trade in our country are regulated by the Import and
Export (Control) Act, 1950.Export means to transfer goods from one place to another .Under the
export policy of Bangladesh, the exporter has to get 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 incorporate on EXP forms and other papers connected with exports. JBL
mainly handles export of readymade garments, jute goods, leather, plastic scrap, handicrafts etc.
The followings process must be passed by an exporter to open a documentary credit in UCB,
Authorized corporate office.

Fig: Export Import Position of UCB

[a ] Registration of Exporters: For obtaining ERC, intending Bangladeshi exporters are

required to apply to the controller/ Joint Controller/ Deputy Controller/ Assistant Controller of
Imports and Exports, Dhaka/ Chittagong/ Rajshahi/ Mymensingh/ Sylhet/ Comilla/ Barishal/
Bogra/Rangpur/ Dinajpur in the prescribed form along with the following documents:

 Nationality and Assets Certificate;

 Memorandum and Article of Association and Certificate of Incorporation in case of
Limited Company;
 Bank Certificate;
 Income Tax Certificate;
 Trade License etc.

(b) Securing the Order: After getting ERC Certificate the exporter may proceed to secure the

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export order. He can do this by contacting the buyers directly or through agent. In this purpose
the exporter may get help from:

 License Officer;
 Buyer’s Local Agent;
 Export Promoting Organization;
 Bangladesh Mission Abroad;
 Chamber of Commerce (local & foreign)
 Trade Fair etc.

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

(d) Receiving Letter of Credit: After getting contract for sale, exporter should ask the buyer for
Letter of Credit (L/C) 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, preferably confirmed by the advising bank;
 The L/C allows sufficient time for shipment and negotiation.
 Here the regulatory framework is UCPDC-500, ICC publication)

Terms and conditions should be stated in the contract clearly in case of other mode of
payment:
Cash in advance;
Open account;
Collection basis (Documentary/ Clean)(Here the regulatory framework is URC-525,
ICC publication

(e) Procuring the materials: After making the deal and on having the L/C opened in his
favour, the next step for the exporter is to set about the task of procuring or
manufacturing the contracted merchandise.

(f) Shipment of goods: Then the exporter should take the preparation for export
arrangement for delivery of goods as per L/C and incomer’s, prepare and submit shipping
documents for Payment/ Acceptance/ Negotiation in due time.

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Documents for shipment:

 EXP form,
 ERC (valid),
 L/C copy,
 Customer Duty Certificate,
 Shipping Instruction,
 Transport Documents,
 Insurance Documents,
 Invoice,
 Other Documents,
 Bills of Exchange (if required)
 Certificate of Origin,
 Inspection Certificate,
 Quality Control Certificate,
 G.S.P. Certificate

g) Documents Submission: In this step exporter who confined with UCB will prepare export
related documents and submit those documents to UCB, foreign exchange authorized branch for
negotiation. According to those documents UCB collects proceeds from the former issuing
banks.

3.2 Export Financing by UCB:

Financing exports constitutes an important part of a bank’s activities. Exporters require financial
services at four different stages of their export operation. During each of these phases exporters
need UCB provides different types of financial assistance depending on the nature of the export
contract are as follows:

Pre-shipment credit

Post-shipment credit

[a] Pre-shipment credit: Pre-shipment credit, as the name suggests, is given to finance the
activities of an exporter prior to the actual shipment of the goods for export. UCB provides

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different type of Pre-shipment credit to its worthy customers for the following purposes:

 Cost of production or purchase

 Packing including any special packing for export
 Cost of special inspection or tests required by the exporter
 Internal transport cost
 Port, customs and shipping agent’s costs
 Freight and insurance charges if the contract is either C&F contract or a CIF contract and
 Export duty or tax etc.
For Pre-shipment finance UCB, Authorized foreign exchange branch must consider the
following factors related to exporters such as:

 Honesty, integrity and capital of the borrower

 Exporter experience in the line
 Security offered
 The margin and the rate of interest
 The banks previous experience about the exporter
 The standing of the foreign buyer UCB provides facilities to extend Pre-shipment credit
for contracts made on the basis of cables/fax/telex provided the following minimum
information is available:

Details regarding customers

Particulars of the items
Quantity and unit price
Terms of sales and payment and
Date of shipment

An exporter can obtain credit facilities against lien on the irrevocable, confirmed and
unrestricted export letter of credit in form of the followings from UCB, but PC and BTB
L/C is most common form of pre shipment of credit provided by UCB:

a) Export cash credit (Hypothecation)

b) Export cash credit (Pledge)
c) Export cash credit against trust receipt
d) Packing credit.
e) Back to back letter of credit

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 (a) Export cash credit (Hypothecation): Here UCB only gets charge documents and
lien on exports L/C or contract, bank normally insists on the exporter in furnishing
collateral security. The letter of hypothecation creates a charge against merchandise
in favor of UCB but neither the ownership nor the possession is passed to it.

(b) Export cash Credit (Pledge): UCB provides such credit facility to exporter by
pledge of exportable goods or raw materials. Here pledged goods are kept in UCB’s
control and failure of the exporter to honor his commitment, UCB can sell the
pledged merchandise for recovery the advance.

(c) Export Cash Credit against Trust Receipt: In this case, UCB provides credit limit
is sanctioned against trust receipt (TR). It’s also unlike UCB’s pledge facility, only
difference is that the exportable goods remain in the custody of the exporter. This
facility is allowed by UCB only to the first class party and collateral security is
generally obtained in this case.

(d) Packing Credit: Packing Credit is essentially a short-term advance granted by UCB
to an exporter for assisting him to buy, process, manufacture, and pack and ships the
goods. The highest limit of providing PC to a first class exporter by UCB is 10% of
total export value.

3.4 Charge Documents for P.C.

Responsible officer of UCB should obtain the following charge documents duly stamped
prior to disbursement:
 Demand Promissory Note
 Letter of Arrangement
 Letter of Lien of Packing Credit (On special adhesive stamp)
 Letter of Disbursement
 Packing Credit

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Letter Additional Documents for P.C:

(1) Letter of Partnership along with Registered Partnership Deed in case of Partnership Accounts
(2) Resolution of the Board of Directors along with Memorandum & Articles of association in
case of Accounts of Limited Companies. In case of Corporation, Resolution of the Board
Meeting along with Charter is needed

(3) Personal Guarantee of all the Partners in case of Partnership Accounts and all the Directors in
case of Limited Companies

(e)Back to Back Letter of Credit (BTB):

When exporter falls short of raw materials in that case, exporter gives lien of export L/C to bank
as security and opens an L/C against it for importing raw materials. This L/C is called Back to
Back L/C. In back to back L/C, UCB gives facility to open BTB L/C up to highest 80% of lined
export L/C.

Documents Required for Opening a Back-to-back L/C: In JBL, Authorized foreign exchanges
Branch, following papers/ documents are required for opening a back-to-back L/C: -

Master L/C

Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC)

L/C Application and LCAF duly filled in and signed

Pro forma Invoice or Indent

Insurance Cover Note with money receipt

IMP Form duly signed

In addition to the above documents, the followings are also required to export oriented garment
industries while requesting for opening a back-to-back L/C: –

Textile Permission

Valid Bonded Warehouse License

Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favour of the
applicant for quota items

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In case of the factory premises are a rented one, Letter of Disclaimer duly executed by the
owner of the house/premises to be submitted.

A checklist to open back-to-back L/C is as follows –

i)Applicant is registered with CCI&E and has bonded warehouse license;

ii) The master L/C has adequate validity period and has no defective clause;

iii) L/C value shall not exceed the admissible percentage of net FOB value of relative Master
L/C;

iv) Usage Period will be up to 180 days.

Check Points Noted in Master L/C: Following sensitive points of the Master L/C are carefully
checked by the officials of UCB This are-

i)Issuing Bank is not reputed;

ii)Advising credit by the advising Bank without authentication;

iii)Port of destination absent;

iv)Inspection clause;

v)Nomination of specific shipping/Air line or nomination of specified vessel by subsequent

amendment;

vi)Bill of lading endorses blank, endorses to 3rdBank, endorses to buyer or 3rdparty;

vii)No specific reimbursing clause;

viii)UCP clause not mentioned;

ix)Shipment/ presentation period is not sufficient;

x)Original documents to be sent to buyer or nominated agent;

xi) “Shipper’s load and count is not acceptable” clause;

xii)Negotiation is restricted.

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Payment of Back-to-Back L/C: lien gives the payment of the BTB L/C after receiving the
payment from the importers. But in some cases, client sells the bills to the UCB. But if there is
discrepancy, the UCB sends it for collection. In case of BTB L/C, UCB gives the payment to the
beneficiary after receiving the payment from the L/C of the finished product (i.e. exporter). Bank
gives the payment from DFCA (Deposit Foreign Currency Account) where Dollar is deposited in
national rate.

In UCB for BTB L/C, opener has to pay interest at LIBOR rate (London Inter Bank Offering
Rate), which is 4% to 7%. A schedule named PI (Payment Instruction); Forwarding Schedule is
prepared while making the payment to UCB’s foreign corresponding banks. PI is prepared when
the payment of L/C is made and it contains the followings:

a. Reference number of the beneficiary’s bank and date.

b. Beneficiary’s name.

c. Bill Value.

d. Payment order number and date

[b] Post Shipment Credit: This type of credit refers to the credit facilities extended tothe
exporters by the banks after shipment of the goods against export documents. Before extending
such credit, it is necessary for UCB to look into carefully the financial soundness of exporters
and buyers as well as other relevant documents connected with the export in accordance with the
rules and regulations in force. UCB provides following post shipment credit to the exporters
through:

a. Foreign Documentary Bill Purchase (FDBP):

b. Advances against Export Bills surrendered for collection;

(a) Foreign Documentary Bill Purchase (FDBP): Most of the client submits the bill of
export to bank for collection and payment of the BTB L/C. In that case, JBL purchases
the bill and collects the money from the exporter. JBL subtracts the amount of bill for PC
and BTB payment and gives the rest amount to the client in cash or by crediting his
account or by the pay order. For this purpose, JBL maintains a separate register named
FDBP Register. This register contains the following information:
Date
Reference number (FDBP)

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 Name of the drawee
Name of the collecting bank
Conversion rate
Bill amount both in figure & in Taka.
Export form number
Export L/C number

 The OBU are operated through completely separate counter and maintain own account
relating to off-shore banking business separately. The OBU, regardless of its location,
would get coverage under EPZ Act.1980.

 The OBU carries on transactions in freely convertible foreign currencies.

 The OBU are freely to accept deposits from persons/institutions (including Banks) not
resident in Bangladesh and from Type-A units in EPZs.
 The OBU are free to make loans to persons / institutions not resident in Bangladesh and
Type A units in the EPZ. However, Type B and Type C units may avail term loans in the
foreign currencies from the OBU subject to compliance with BOL guideline. Banks
functioning in BD may also maintain correspondent relation with OBU in the manner
they maintain such accounts with their foreign correspondents.
 A bank in an offshore financial centre, not allowed to conduct business in the domestic
market but only with other OBU, s or with foreign persons.

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 CHAPTER FOUR

IMPORT
4.0 Import:

[A]Contract:

The import contract is suitable when a company is buying goods from abroad by way of import.
when importer and exporter both are willingly to doing business then both they are signing a
contract whereas the contract paper they are mention everything related their business purpose
like product name, product price, product quantity, condition etc so many things. This contract is
called commercial contract.

[B] Applies for L/C:

After sign the contract paper importer request to the bank for opening L/C then the bank collect
some money or fixed assets from the importer for their business purpose after taking the charges
the importer should submit all kinds of documents with sign.

[C] Issuing Bank:

Bank issuing the L/C application from, LCAF, IMP. All those papers are signed by importer and
submit to bank.

[D]Opens L/C and Sends it to:

L/C is issuing in the bank then through the swift L/C send for advising bank.
[E] L/C Advise:
Collecting L/C and advise to the exporter then they are collects charge. this paper is legal proof
for exporter from the importer
[F] Forwards L/C to: when the advising bank collect the L/C then they suggest that the exporter
should packing their product and send it.
[G]Ready for documents:
All the documents are preparing for the importer. then the exporter issues this documents to the
bank. They are checking the information and their condition. if there are no problems the bank
will pay the exporter payments.

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 CHAPTER FIVE
RECOMMENDATION AND CONCLUSION

Recommendation:

 UCB bank should emphasize more on advertising about their services and
facility for the clients. Which will help them to reach more number of customers
and give the customer a wide range of option hence they should promote their
services more by advertising.
 The entire department should be well informed regarding their goals and
objectives. It is essential to execute company objectives into individual target. It
is so because if the employees of the Bank have the idea about their main target
it becomes easier for them to reach their target goal
 The bank should promote them more at TV Channel. So that they the existing as
well as the potential customer get to know about your product offerings. TV
commercial is one of the most effective medium of advertising. It’s an easiest
way to promote your brand in mass population. But regrettably it is observed
that UCB does not use that much TV commercials like other Banks
 Establish more ATM Booth & maintain the existing ATM booth will help the
customer to get excellent services and retain them

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TASK AS AN INTERN: To fulfill this degree Internship course is a associate course
which enable the students to gather practical experience where the student wants to make
his/her carrier. My internship course was assigned at United Commercial Bank,
Corporate Branch, under the supervision of GAZI QUAMRUL HASAN ,( Senior
Lecturer , Department of Economics). My internship was on the “OFFSHORE
BANKING ACTIVITIES OF UNITED COMMERCIAL BANK”. So I have tried to
analyze how they are operating their offshore banking system. Form the first the vision of
the “United Commercial Bank Limited” is to always strive to achieve superior financial
performance, be considered a leading bank by reputation and performance. UCBL is
heading towards it’s destination with outstanding performance of it’s General Banking,
General Advance and Foreign Exchange Department. I was assigned to work under
offshore banking departments within 3 months. I worked under each officer and learn
from them directly. I frequently ask questions and obey their instructions. As I worked
over there as an Intern for about 3 months, they have allowed me to collect the
information from their files, books, audit reports etc. Sometimes they have provided data
verbally & I took note of that. Maximum time I retrieved data through my observation to
them. Foreign Exchange Department deals with import, export, and foreign remittance
and post import financing. This department is playing an important role in enhancing
export earnings, which aids economic growth and, in turn, will be help full for economic
development. I have worked in export import zone from where basically , this type of
task are done. Bill purchasing additional discounting, borrow from UCB bank, I have
worked on the discount rate. Who are getting the discount from export and import. I have
worked on LC opening , and the formalities and LC product variations. I have
experienced on how to make invoice and the task of pro forma invoice. I have known
how to discharge the product from the port. I have worked on swift code transaction and
how it maintained through Bangladesh Bank.

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Conclusion:
United Commercial Bank is providing and maintaining pleasant working environment for
delivery of better quality services to maintain edge over the competitors. It is not possible
to make a profitable business without concerning the customers benefits. UCB bank has
a great potential in the country to achieve the desired position in the market, timely
improvement in services is essential. This research has provided some interesting insight
into what kind of service the customers give importance to and what quality service they
get from UCB. It is quite obvious that the customer requirements are not fully met and
they are sometimes dissatisfied with some of the aspects of the bank. UCB should attract
these customers so that the bank can link up strong relationship with the customers. The
efficiency and effectiveness in services only in customer service is not mandatory. It is a
collective responsibility of all the departments. So, all the concern departments should be
more prompt and efficient to compete with the challenging opportunities of the future.
The executive management also should be enthusiastic in to the development of
administration and operational system as per demand of the age.

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REFERENCES
1. https://www.ucb.com.bd/index.php?page=know-ucb/investor-relations/annual-report
2. https://www.ucb.com.bd/index.php

3. https://en.wikipedia.org/wiki/List_of_banks_in_Bangladesh
4. https://en.wikipedia.org/wiki/United_Commercial_Bank_Ltd

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