Bangladesh Bank has introduced a structured framework to govern import transactions into Free Trade Zones (FTZs), aiming to facilitate trade while ensuring prudent risk management by banks, according to a circular issued on Thursday.
The Foreign Exchange Policy Department-1 (FEPD-1) circular directs all Authorized Dealers (ADs) and Offshore Banking Units (OBUs) to follow the new instructions when providing financial services for FTZ-related transactions, in line with existing foreign exchange regulations.
Under the framework, imports into FTZs can be undertaken by industrial enterprises engaged in manufacturing or export-oriented production, authorized importers on record, and licensed logistics service providers operating within the zones.
Goods brought into FTZs for storage, warehousing or distribution may be imported on a consignment basis, with ownership remaining with foreign suppliers until the goods are either used in production or sold to ultimate buyers.
For financing and exposure purposes, banks will not treat such goods as owned inventory of FTZ enterprises until either event occurs.
The circular also sets out rules for purchase and sale transactions. Purchases of goods from FTZs by buyers in Bangladesh, including those in specialized zones or other FTZs will be treated as import transactions requiring standard IMP formalities.
Where such purchases involve industrial raw materials, usance import facilities of up to 270 days will be permitted under FE Circular No. 51 of December 29, 2025.
Sales of finished or semi-finished goods by FTZ enterprises to buyers in Bangladesh will be treated as export transactions for sellers and import transactions for buyers, with both EXP and IMP procedures to be followed accordingly.
All such payments must be settled in freely convertible foreign currency, though FTZ enterprises may retain sale proceeds in designated foreign currency margin accounts for onward settlement of import obligations abroad.
On tenor, goods imported into FTZs under consignment arrangements may remain in the zone for 48 to 60 months, subject to regulatory compliance, while usance import transactions, including those backed by buyer's or supplier's credit will carry a maximum tenor of 270 days.
The circular further allows ADs to extend financing to FTZ entities in a manner similar to facilities available to enterprises in specialized zones. However, for consignment-based imports, ADs and OBUs will not recognise or assume exposure on FTZ entities for goods where ownership remains with the foreign supplier, such consignments will only be recognised as imports once ownership transfers through production use or sale, supported by documentation including a bill of entry.
For usance imports, ADs may arrange buyer's or supplier's credit facilities with a tenor not exceeding 270 days, while OBUs may provide such financing in foreign currency.
On risk management, the central bank instructed that all admissible financing be backed by appropriate documentation aligned with underlying transactions, and directed ADs and OBUs to conduct due diligence on FTZ clients, including assessing contracts with foreign suppliers and buyers, verifying ownership structures, and evaluating production and sales cycles.
Banks have been asked to bring the contents of the circular to the notice of relevant stakeholders.