Bangladesh Bank (BB) has widened the scope of financing against foreign currency deposits held with Offshore Banking Units (OBUs), allowing such balances to be used as collateral for a broader range of loans in local currency. The central bank issued a circular today modifying existing provisions regarding the use of balances held in private foreign currency accounts and non-resident foreign currency deposit accounts as collateral.
According to the circular issued by the Foreign Exchange Policy Department-1, balances held in private foreign currency accounts and non-resident foreign currency deposit accounts maintained under Sections I and II of Chapter 13 of the Guidelines for Foreign Exchange Transactions (GFET) may now be used as collateral against short-term working capital financing in local currency to resident companies, firms, and individuals. The balances can also be used as collateral against short-term finance or consumer finance in local currency to resident persons and non-resident Bangladeshis (NRBs), subject to compliance with existing regulatory instructions.
Previously, the provision allowed such foreign currency balances to be used as collateral against short-term working capital financing in local currency to resident companies, firms, and individuals. The latest move is aimed at facilitating a wider scope of financing against foreign currency balances maintained with OBUs and providing greater access to local-currency financing against such deposits.
The circular referred to an earlier FE Circular No. 27, issued on July 3, 2025, under which Offshore Banking Units could allow foreign currency deposits of non-resident account holders to be used by their respective Domestic Banking Units (DBUs) as collateral against financing to resident companies, firms, and individuals. It also reiterated that balances held in private foreign currency accounts and non-resident foreign currency deposit accounts may be used as collateral in accordance with the relevant provisions of the Foreign Exchange Regulation Act, 1947 and the GFET.
The Bangladesh Bank said all other instructions contained in the earlier circular would remain unchanged. This policy shift is expected to enhance liquidity for businesses and individuals, making it easier for them to secure loans in local currency by leveraging their foreign currency deposits. It also reflects the central bank’s ongoing efforts to streamline financial processes and promote economic stability.
