Bangladesh Bank’s new circular to ease foreign transactions

Bangladesh Bank has issued a new circular to further ease the process of transactions in foreign currency. Various provisions related to loans, overdrafts and guarantees have been brought together in it. The new directive will remain effective for one year.

The central bank informed that directives on these issues for one year were given at the same time last year on Wednesday (September 2). In that continuity, a new circular has been issued this time. At the same time, the previous directives related to this have been cancelled.

The new circular has been arranged in three parts. The first part has provisions related to loans, overdrafts and guarantees. It has included the issues of commercial loans, loans to the private sector against foreign guarantees or collateral and providing various types of guarantees of domestic and foreign organisations.

The second part has highlighted the rules and regulations applicable for the organisations located in specialised economic zones. And the third part has determined the rules for taking loans from abroad. It has also included the issue of providing guarantees as assurance for the repayment of foreign loans along with the borrowing by government and private organisations.

However, in the case of borrowing by foreign-owned or foreign-controlled organisations, the directive issued by the Foreign Exchange Investment Department on July 15 will remain in force.

In the new directive, the opportunity of financing from domestic sources against foreign bank guarantees or standby letters of credit (SBLC) has been kept. Alongside this, the provision of providing guarantees or SBLC in foreign currency from the side of domestic organisations in favour of the project authority or purchasing organisation against contracts or work orders made with foreign organisations through international tenders has also been kept.

According to the concerned persons of Bangladesh Bank, the process of foreign transactions will become easier and more transparent due to bringing the provisions related to loans, overdrafts and guarantees in one place. Through this, complexity in conducting necessary financial transactions in the field of business and commerce will decrease and the consistency of the country’s financial system with global trade will increase further.