Bangladesh Bank has made it easier for foreign investors investing in Bangladesh to remit profits or share sale proceeds to their home country.
According to the new directive, from now on, prior approval from the central bank will not be required for repatriating funds up to a maximum of Tk100 crore.
On Monday (March 9), the Foreign Exchange Investment Department (FDID) of the central bank issued a master circular in this regard.
It highlighted various steps to simplify the regulatory framework related to foreign investment and further liberalize the investment environment.
Earlier, foreign investors could repatriate profits or sale proceeds of up to Tk100 crore without the approval of the Bangladesh Bank. The new decision has increased that limit to Tk100 crore.
The central bank said that this decision has been taken to simplify the process of capital repatriation in line with international standards.
According to the new directive, from now on, approval from the central bank will not be required in many cases. Authorized dealer (AD) banks will be able to complete the process of share transfer and refund.
No independent valuation will be required for transactions up to Tk1 crore. Such transactions can be completed only on the basis of a joint declaration by the buyer and seller.
On the other hand, AD banks will be able to directly process transactions up to Tk100 crore by following the prescribed valuation method.
Each AD bank has been instructed to form an internal committee to ensure transparency and good governance of transactions.
In the case of small transactions, this committee will be headed by the bank's Chief Financial Officer (CFO). And in the case of transactions up to Tk100 crore, the committee will be headed by the Chief Executive Officer (CEO).
The committee must have a Chartered Financial Analyst (CFA) or equivalent professional certificate.
They will review the valuation report and approve the refund. If necessary, a reasonable fee has also been charged for the valuation work based on discussions with the customer.
Some deadlines have also been set in the circular to reduce the transaction time and increase the transparency of the process.
According to the instructions, the audit report used for the valuation should be dated within a maximum of six months from the date of signing the MoU. If it is older than this, the company concerned will have to prepare a new audit report for the interim period.
If all the documents are in order, the AD banks will have to complete the process of returning the money within five working days. In cases where the approval of the central bank is required, those applications will have to be sent to Bangladesh Bank within three working days.
In addition, the entire share transfer process will have to be completed within a maximum of 45 days after the signing of the MoU or the approval of the central bank. It has been instructed to report the information of every transaction completed at the bank level to the central bank within 14 days.
The central bank said that the main objective of this initiative is to reduce the time and cost of foreign investors by increasing the approval limit, giving banks the power to make decisions and simplifying the valuation guidelines in line with international standards.
According to the authorities, if the process of returning the capital is simplified, the confidence of foreign investors will increase. This could increase the flow of foreign direct investment (FDI) into the country in the future and establish Bangladesh as a more competitive destination for international investment.