Bangladesh Bank on Tuesday launched a new banking facility called the "Non-Resident Convertible Taka Account" for expatriate Bangladeshis, allowing them to freely repatriate their principal funds and earned profits from abroad.
A directive to this effect was dispatched to the managing directors and chief executives of all scheduled banks operating across the country today.
According to the central bank, the primary objectives behind introducing this account are to channel remittances more effectively through formal networks, step up investment opportunities, and expand offshore banking operations of scheduled banks.
Under the new guidelines, expatriates can open non-resident convertible taka accounts by funneling funds sent through formal banking channels via Offshore Banking Units (OBUs). Expatriates will have the flexibility to open current, savings, or fixed deposit accounts under this mechanism.
The accounts can accept funds transferred from other non-resident convertible foreign exchange accounts, interests or profits earned from investments, yields from investments, refunds from equity subscriptions, and other permissible foreign exchange transactions.
The central bank circular explicitly details that the principal amount deposited in these accounts, alongside any accrued interest or profit, will remain fully repatriable. Concurrently, the deposited funds can be utilized locally for legitimate domestic payments, transfers to other non-resident accounts, conversion into foreign currencies, and financing foreign direct investments (FDI) or portfolio investments inside Bangladesh.
Furthermore, commercial banks are permitted to extend local Taka-denominated credit facilities to Type-A (100 percent foreign-owned) industrial units situated in specialized economic zones by using funds from these non-resident convertible accounts. However, such loans can only be utilized to meet approved working capital expenditures, such as salaries, wages, and utility bills, and must be repaid exclusively using the respective industry's export earnings.
The central bank circular also notes that banks can offer credit facilities to expatriates or their local nominees against the security or collateral of the funds maintained in these accounts. These loans can be utilized for personal or business purposes. However, investments in agriculture, plantation activities, and the real estate sector remain strictly prohibited. These funds are also restricted from being used to buy residential property for personal use or for non-repatriable domestic investments.
A senior official of Bangladesh Bank stated that this fresh financial apparatus will significantly bolster financial intermediation for remittances while adding dynamism to offshore banking functions. It will offer a structured platform for expatriate Bangladeshis to actively participate in domestic investments and ease Taka liquidity challenges for Type-A industries operating in specialized economic zones.