Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has relaxed its regulations allowing foreign companies to issue Taka bonds for mobilising funds from the local sources.
Under the relaxations, foreign owned companies are now allowed to issue Taka bonds with permission of the Bangladesh Securities and Exchange Commission (BSEC) for raising funds from local sources.
The foreign companies had been permitted to receive loans from local banks and non-banking financial institutions (NBFIs) to meet their business requirements.
On the other hand, individuals and local companies are eligible to invest in the foreign companies through purchasing their Bangladesh Taka (BDT) bonds, according to a notification, issued by the Bangladesh Bank (BB), the country’s central bank, on Wednesday.
“General approval is hereby accorded for purchase by individuals and institutions resident in Bangladesh of Taka bonds issued with permission of the BSEC by foreign owned/controlled companies in Bangladesh,” the central bank said in the notification.
Earlier no person resident in Bangladesh may lend any money or security to any foreign owned/controlled company other than banking company except with the general or specific approval of the central bank.
Talking to BBN, a senior BB official said the central bank has a series of measures to facilitate foreign controlled companies for attracting the FDI (foreign direct investment) into Bangladesh.
Currently, both individuals and local companies are allowed to invest in the commercial papers (CP), issued by the foreign companies, to widen the scope of Taka working capital loans for the overseas business entities, he explained.
Earlier on March 23 last, the BB issued a circular in this connection.
The banks are permitted to invest in the CPs, provide credit enhancements to CP issuers and act as an issuing and paying agents (IPA) of CPs in the existing guidelines.
The IPA means a bank that delivers CPs to the investors against the proof of payment and at maturity repays the investors after receiving funds from the issuer.
The gross inflows of FDI increased by 16.91 per cent to $ 2.08 billion during the July-February period of the ongoing fiscal year (FY) 2016-17 from $ 1.78 billion in the same period of the FY 16 while net FDI inflows rose by 17.35 per cent to $1.17 billion from $997 million.