Dhaka: Bangladesh Bank (BB) has widened the scope of financing against foreign currency deposits held with Offshore Banking Units (OBUs) by allowing these balances to be used as collateral for a broader range of loans in local currency. The central bank issued a circular today modifying the existing provisions regarding the use of balances held in private foreign currency accounts and non-resident foreign currency deposit accounts as collateral.
According to Bangladesh Sangbad Sangstha, the circular issued by the Foreign Exchange Policy Department-1 specifies that balances held in private foreign currency accounts and non-resident foreign currency deposit accounts maintained under Sections I and II of Chapter 13 of the Guidelines for Foreign Exchange Transactions (GFET) may now be used as collateral against short-term working capital financing in local currency to resident companies, firms, and individuals.
The circular further clarifies that these balances can also be used as collateral against short-term finance or consumer finance in local currency for resident persons and non-resident Bangladeshis (NRBs), provided that existing regulatory instructions are followed. Previously, the provision allowed such foreign currency balances to be used as collateral only against short-term working capital financing in local currency to resident entities.
This strategic move is aimed at facilitating a wider scope of financing against foreign currency balances maintained with OBUs and enhancing access to local-currency financing against such deposits. The circular makes reference to an earlier FE Circular No. 27, issued on July 3, 2025, which allowed Offshore Banking Units to permit foreign currency deposits of non-resident account holders to be used by their respective Domestic Banking Units (DBUs) as collateral against financing to resident companies, firms, and individuals.
The directive reiterates that balances held in private foreign currency accounts and non-resident foreign currency deposit accounts may be used as collateral in accordance with the relevant provisions of the Foreign Exchange Regulation Act, 1947, and the GFET. Bangladesh Bank emphasized that all other instructions contained in the earlier circular would remain unchanged.