The Bangladesh Bank has announced that individuals and companies in the country can now secure taka loans using foreign currency deposits held in Offshore Banking Units (OBUs) as collateral. The new policy was communicated through a circular issued by the central bank’s Foreign Exchange Policy Department today. According to the circular, expatriate Bangladeshis can use their OBU foreign currency deposits as collateral for loans.
OBUs may allow foreign currency deposits of non-resident account holders to be used by domestic banking units as collateral for loans to resident individuals, firms, and companies. The facility comes with certain conditions. A specific request must be made by the account holder, and OBUs must verify a genuine relationship between the account holder and the borrower in Bangladesh.
Taka loans from foreign deposits
This relationship might include non-resident Bangladeshis and their local beneficiaries or foreign investors and their investee companies. The collateral shall be used by domestic banking units for extending short-term working capital loans in local currency.
There will be no charges or fees payable for the respective collateral. The financing should be granted to borrowers subject to margin requirements considered necessary by domestic banking units to absorb exchange rate risk. This policy aims to facilitate easier access to financing for individuals and businesses in Bangladesh, leveraging the foreign currency deposits held by expatriates and foreign investors within the banking system.
The central bank believes the expanded scope will enable OBUs to generate higher service income in foreign currency by offering services to non-resident customers.
