United Commercial Bank Limited

Credit Risk Management Division

Credit Risk Review Department
Head Office, Dhaka

Instruction Circular No. 1011 August 24, 2010

All Branches:

Subject: Quarterly Credit Risk Grading (CRG) Status Report for Review of Asset Migration

All of you are aware that the largest portion of Bank’s asset portfolio consists of different types of loans
and advances which are vulnerable to numerous risks associated with its sanction, documentation,
disbursement and recovery process.

In the above perspective, it is imperative to keep continuous monitoring on the Credit Risk Gradation
status of individual borrower as well as overall portfolio status of the Bank. As per Credit Risk
Management (CRM) Policy of the Bank the Branches have so far been preparing and furnishing Credit
Risk Grading (CRG) of customers while processing proposals for sanction of loans. However, CRM
Policy of the Bank also covers some other important activities which may be recapitulated from chapter 6,
page 25-32 of the said Policy Manual.

Relationship Officer (RO) of particular customer will prepare Risk Grading Scorecard in case of new
proposal, renewal and/or enhancement of existing facility, any deterioration in the borrower’s business
position, any breach of contract by the borrower or as and when he/she feel it necessary.

The RO shall regularly monitor the customer and bear the responsibility of Credit Risk Grading with
surveillance. If any deterioration in risk is noted, the RO will propose changes in the risk grading of the
customer and prepare Early Alert report and forward the same to Credit Risk Management Division
(CRMD), Head Office (HO) through respective credit marketing Divisions (CBD/SME). The exercise
should be an ongoing and continuous process.

Branches and HO credit marketing Divisions as well as CRMD will keep record of CRGs of individual
customers where applicable as per CRM Policy. After the end of each quarter, the Branches will send
Risk Grading Status Report of their credit portfolio as per annexure 10 of CRM Policy to CRMD, HO
by the 15th day of the following month along with position of previous quarter. In turn, CRMD, HO will
place the Borrower’s CRG status for entire Bank before the Management summarizing the migration
effects from Branches.

As an initiation of the system, the Branches will furnish the quarterly report as on December 31,
2012 by January 15, 2013. Thereafter, comparative quarterly reports are to be furnished as advised
above.

All concerned are therefore advised to comply by instructions of the above circular for effective
implementation of CRM Policy with a view to improving credit portfolio health of the Bank.

(Md. Tariqul Azam) (Mamun-Ur-Rashid)

Deputy Managing Director Deputy Managing Director

Distribution to:
1. All Divisional Heads, UCBL, Corporate Head Office, Dhaka
2. SVP, Board Audit Cell, UCBL, Corporate Head Office, Dhaka
3. VP, Managing Director’s Secretariat, UCBL, Corporate Head Office, Dhaka
4. PA to All DMDs, UCBL, Corporate Head Office, Dhaka
5. Zonal Office, UCBL
6. Training Institute, UCBL, Dhaka