Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has relaxed foreign exchange regulations allowing non-banking financial institutions (NBFIs) to provide term loans in local currency to foreign companies through authorized dealer (AD) banks, officials said.
The branches of non-AD dealer banks will also be able to offer such loans to foreign-owned or -controlled companies under the similar provisions, they added.
“The central bank has taken the measures aiming to create a new window for borrowing of foreign companies for expansion of their businesses in Bangladesh,” a senior official of the Bangladesh Bank (BB), the country’s central bank, said, adding that the new arrangements will help to create an opportunity for the NBFIs to invest their funds in the foreign-owned companies, following the BB’s instructions.
Currently, 31 NBFIs are now operating their businesses in Bangladesh.
He also said the AD banks will have to ensure that the companies follow all provisions, in line with the existing guidelines for foreign exchange transactions (GFET) for the whole amount of financing.
Earlier, only AD banks were allowed to offer such loans to the foreign-owned companies after complying with the conditions, set by the BB, the central banker said.
Under the conditions, the term loans in Bangladesh Taka (BDT) should not exceed, as percentage of total term borrowings, the percentage of equity of the firms/companies held by Bangladesh nationals and firms/companies, not owned or controlled by foreigners.
Besides, the total debt liabilities of the firms/companies must not also exceed the 50:50 debt equity ratio.
“The prevailing credit norms and regulatory provisions regarding lending operations including single party exposure limits etc., will have to be duly complied with,” the BB said in its circular, issued recently.
BBN/SSR/AD-07May12-7:36 am (BST)
