The Bangladesh Bank Expands Offshore Banking Operations

In a move to enhance offshore banking in Bangladesh, scheduled commercial banks can now actively participate in offshore banking operations (OBOs) by obtaining approval from the Bangladesh Bank. The comprehensive guidelines, approval procedures, and operational protocols for OBOs, including the acceptance of foreign currency (FC) deposits, are meticulously outlined in BRPD Circular No-02  dated 25 February 2019.

To broaden the reach of these operations, individuals residing outside Bangladesh—such as non-resident Bangladeshi nationals, persons of Bangladeshi origin, foreign nationals, companies/firms registered and operating abroad, and foreign institutional investors—are now allowed to open and maintain FC accounts in approved foreign currencies with OBOs.

Additionally, OBOs are now authorized to establish and manage FC accounts, termed as International Banking (IB) accounts. These accounts can be held in the names of resident Bangladeshi individuals and corporate entities, including Type-A, Type-B, and Type-C industrial enterprises operating in EPZs/EZs/HTPs, with authentic connections to non-residents. In this role, IB account holders act as facilitators for remitters and utilize the funds accordingly.

Accounts opened following the specified procedures will exclusively receive credits from inward remittances facilitated through official channels.

Further empowering OBOs, the circular grants them the authority to offer interest/profit on deposits in the form of term deposits. The interest rates are tiered based on the deposit period:

• For three months to one year: Benchmark reference rate + 1.5%
• For more than one year up to three years: Benchmark reference rate + 2.25%
• For more than three years up to five years: Benchmark reference rate + 3.25%

Balances held in deposit accounts can be strategically utilized for: (i) transferring funds to onshore bank accounts to meet necessary payments and various investments; and (ii) making outward remittances of the balance amount, including interest/profit, as and when necessary.

While ushering in these progressive changes, it’s noteworthy that all other instructions concerning OBO transactions will remain unchanged, providing stability and consistency in OBOs in Bangladesh. This strategic expansion aims to attract a diverse range of individuals and enterprises, fostering economic growth and financial inclusivity in the global financial landscape.