Bangladesh Bank has brought major changes in offshore banking activities to encourage investment by expatriate Bangladeshis and increase remittance flow through legal channels.
Under the new initiative, expatriates will now be able to open ‘Non-Resident Convertible Taka Account’ through the Offshore Banking Unit (OBU).
There will be an opportunity to take the money and earned profits from this account abroad at any time.
On Tuesday (June 23), Bangladesh Bank issued a circular in this regard and sent it to the chief executives of all scheduled banks in the country.
The central bank says that this new facility has been introduced to ensure maximum utilization of the money sent by expatriates and to make offshore banking activities more effective.
According to the circular, expatriates will be able to open this account against foreign currency sent through legal banking channels.
The account can be operated as a savings, current or deposit account of various tenures.
In addition to remittances, this account can also hold money transferred from other non-resident accounts, interest or profit earned on deposits, income from approved investments in Bangladesh, and dividends or refunds from investments in the stock market.
The most important feature of the new account is its full repatriability. That is, the capital deposited in the account and the interest or profit earned can be transferred abroad without any restrictions.
As a result, expatriates will not have to worry about getting their money back even if they invest in Bangladesh.
In addition to transferring money abroad, the money in this account can also be used in various sectors within the country.
These include foreign direct investment (FDI), investment in the capital market, settlement of local transactions, and conversion or transfer with other foreign currency accounts.
In addition, loans in local currency can be provided to 'Type-A' industrial enterprises under the Bangladesh Economic Zone Authority (Beza), Bangladesh Export Processing Zone Authority (Bepza) and Bangladesh Special Economic Zone (BSEZ) using the account funds.
However, these loans can only be used to meet current operating expenses including salaries, wages, utility bills and the loan amount has to be repaid through the export earnings of the concerned institution.
Under the new provisions, expatriates can also take loan facilities from local banking units in their own name or in the name of a nominated person using the money deposited in their account as collateral. This loan can be used for both personal and business purposes.
However, the central bank has imposed restrictions on investment in some sectors.
The loan amount taken against the collateral cannot be invested in agriculture, plantations and real estate businesses.
Expatriates can use this money for purchasing residential property for their own use or for non-repatriable investments if they wish.