Photo: Collected

DHAKA, Sept 2, 2026 (BSS) - Bangladesh Bank (BB) today issued a consolidated circular updating regulations governing foreign exchange transactions related to loans, overdrafts, guarantees and external borrowings.

The Foreign Exchange Policy Department-1 (FEPD-1) issued the circular, which consolidates the instructions contained in the previous FE Circular No. 34 issued on September 2, 2025, along with subsequent circulars issued thereafter.

With the issuance of the new circular, all previous instructions on the subject have been repealed, except for the reporting instructions contained in the Guidelines for Foreign Exchange Transactions (GFET), Volume-2. The new instructions will remain valid for one year from the date of issuance.

The circular covers lending activities, loans and overdrafts, trading and commercial loans, foreign-owned or controlled companies, guarantees, repayment guarantees, foreign borrowing and related foreign exchange transactions.

Under the updated rules, banks and finance companies may provide admissible Taka financing against overseas bank guarantees (BGs) or standby letters of credit (SBLCs) to resident companies, regardless of their ownership or controlling status, subject to applicable credit norms, prudential requirements and specified conditions.

Such overseas BGs or SBLCs must be unconditional, irrevocable and payable on first demand, and must be issued by a non-resident bank or institution having an acceptable international credit rating. Banks and finance companies must also ensure the legal enforceability of the guarantees and assess borrowers' financial soundness and repayment capacity.

The circular also provides general authorization for banks to extend Taka working capital loans to foreign-owned or foreign-controlled industrial and trading firms operating in Bangladesh, subject to prevailing credit norms and normal banker-customer relationships. Resident companies may also provide interest-free Taka working capital loans to such foreign-owned or controlled companies under the new consolidated framework.

Foreign-owned or controlled companies engaged in manufacturing or services for three years or longer may obtain Taka term loans from the domestic market for capacity expansion or balancing, modernisation, rehabilitation and expansion (BMRE), provided applicable credit norms and prudential parameters are followed. Their total debt, however, must not exceed a 60:40 debt-equity ratio.

The central bank has also retained provisions allowing authorized dealer (AD) banks to issue certain guarantees on behalf of Bangladeshi exporters in favour of overseas buyers without prior approval, subject to banking norms and conditions.

For foreign borrowing, proposals by private-sector industrial enterprises require prior authorization from the Invest Bangladesh Authority. Short-term credit facilities of up to one year from foreign suppliers or buyers remain subject to Bangladesh Bank's guidelines governing current commercial transactions.

The circular says repayment of approved foreign loans may be remitted by AD banks without prior reference to Bangladesh Bank, subject to specified conditions, including submission of relevant loan agreements, repayment schedules and, in the case of supplier's credit, bills of entry confirming the arrival of imported capital goods.

Borrowing abroad by public-sector entities will require government approval, while commercial or non-concessional borrowing will additionally require specific approval from the Standing Committee on Non-Concessional Loan (SCNCL).

The circular also requires AD banks to submit consolidated quarterly statements of foreign loans approved by the Invest Bangladesh Authority or Bangladesh Bank, including information on the utilization of each loan, within 15 days of the end of each quarter.

For enterprises operating in specialized zones, the circular categorizes them as Type A (100 percent foreign-owned), Type B (joint ventures between foreign investors and Bangladeshi entrepreneurs) and Type C (100 percent Bangladeshi-owned). It provides separate provisions for foreign currency and Taka financing for these enterprises.

The circular also allows Type A enterprises in specialized zones to obtain short-term foreign currency loans from overseas banks and financial institutions for specified purposes, including imports of capital machinery and raw materials, payment of interest and service charges, loan repayment and meeting local expenses.

The new consolidated circular was issued under the authority vested in Bangladesh Bank by Section 20(3) of the Foreign Exchange Regulation Act, 1947.