Dhaka: Bangladesh Bank (BB) has compiled the foreign exchange transaction rules concerning loans, overdrafts, and guarantees, aiming to simplify cross-border financial dealings. “To bring ease in conducting transactions on loans, overdrafts, and guarantees, the existing regulations have been compiled at one place with modifications as necessitated,” stated a BB circular issued today.
According to Bangladesh Sangbad Sangstha, the new directive will be valid for one year from its issuance. The circular is categorized into three parts to provide clarity and guidance on various financial transactions. Part-A covers loans, overdrafts, and guarantees, including commercial loans, private loans backed by overseas guarantees or collaterals, and a variety of guarantees for both residents and non-residents. It also encompasses repayment guarantees and provisions for foreign loans facilitated by licensed finance companies.
The circular mandates banks to adhere to internationally accepted best practices when issuing guarantees, standby letters of credit (SBLCs), and other payment commitments. This adherence should align with the latest versions of the Uniform Rules for Demand Guarantees (URDG), the Uniform Customs and Practice for Documentary Credits (UCP), the International Standby Practices (ISP), among other relevant standards, while ensuring compliance with applicable domestic laws and regulations.
Part-B of the circular focuses on enterprises in specialized economic zones, detailing rules for foreign currency loans to Type A, B, and C enterprises, Taka loans to Type B enterprises, discounting of usance bills, working capital support for B and C enterprises, and medium- to long-term external borrowing.
Part-C provides guidance on borrowing abroad by resident entities, including guidelines for private and public sector enterprises, guarantees for repayment of foreign loans, and working capital borrowing by foreign-owned or controlled firms.