Working Capital Financing: A Study of United Commercial Bank Ltd.

Abstract

Working capital is the combination of Gross & Net working capital. On the basis of time Working Capitals are Permanent & Temporary Working Capital. UCBL provides working capital through short term financing like Cash credit, overdraft, working capital loan, under SME and corporate banking sector. Some procedure they follow for providing working capital financing 1. Receiving loan application. 2. Preparing loan proposals.3. Conducting detailed analysis to sanction the loan or not. 4. If so what is the rate will be. For those they also require some pre-sanction and post-sanction documents. As a security purpose UCBL receives for primary (Account Receivable & Stock), for Collateral Fixed asset and for Support or secondary security post (Post-dated MICR cheque, Personal guarantee, Corporate guarantee, Counter guarantee. Through all this they go through risks like underfinancing, over financing, credit risk, liquidity risk, security and so on. Also found some key findings that UCBLs 40%-49% of the total loan contributes to the working capital loan. This report is an overall view what I learn throughout my internship period. All the details discussion separately shown in each chapter.