BB Extends Deadline For Foreign Entities Seeking Loans Until End Of This Year
Any such funding should be reported to the relevant central bank department within a week of sanctioning.
The Bangladesh Bank (BB) has extended until the end of this year the deadline for foreign-owned and controlled companies, which operate in the country, to access domestic financing in local currency against foreign collateral.
In a circular released on Wednesday, the central bank’s foreign exchange policy department said the decision to extend the deadline was made due to the ongoing Covid-19 pandemic.
However, any such funding should be reported to the relevant central bank department within a week of its sanction, the circular also said.
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Bangladesh Bank executive director and spokesperson Md Serajul Islam told Dhaka Tribune that companies often need loans to finance their operations.
In light of the pandemic, the decision was made to extend the deadline, which was also something the business community had been asking for for some time now, he added.
In July last year, the Bangladesh Bank relaxed its policy to allow local banks and non-bank financial institutions (NBFIs) to issue loans to entities in local currency against foreign guarantees.
In order to issue credits to such entities, the collateral that would be provided by the borrowers must be acceptable to the lending banks and the NBFIs. No charges can be paid against the warranty.
In case of loan by NBFIs, guarantees must be issued by local banks issued against back-to-back foreign guarantees.
Foreign exchange regulations allow banks and NBFIs to extend loans in local currency to companies owned or controlled by foreigners.
However, banks and NBFIs need the authorization of the Bangladesh Bank to make loans to borrowers against foreign collateral or guarantees, regardless of the ownership or control status of the borrowing entities.