Bangladesh Bank granted easing given current situation due to Covid-19 pandemic
Bangladesh Bank has relaxed its policy towards foreign owned and controlled companies, which operate in the country, allowing banks and non-bank financial institutions (NBFIs) to issue credits to entities in local currency against foreign collateral .
In view of the current situation due to the Covid-19 pandemic, it has been decided that banks and NBFIs can extend eligible taka financing to resident businesses, regardless of their ownership or control status, against collateral. abroad in the form of bank guarantees and stand-by letters of credit (LCs), ”according to a central bank circular published on Tuesday.
For the provision of credit to such entities, the collateral that would be provided by the borrowers must be acceptable to the lending banks and the NBFIs. No fees can be paid against the guarantee, the circular said.
Bank officials said the new policy waiver would help foreign owned or controlled companies access loans against payment guarantees from their overseas parent companies.
A senior central bank official said the easing was introduced by the central bank to make it easier for businesses to access loans against external guarantees.
Bangladesh Bank has granted relaxation given the current situation due to Covid-19, he said.
The installations will be applicable until June 2021.
The circular also stated that in the event of a loan by NBFIs, guarantees should be issued by local banks issued against back-to-back foreign guarantees.
Foreign exchange regulations allow banks and NBFIs to extend taka loans in local currency to businesses owned or controlled by foreigners.
However, banks and NBFIs need the authorization of the Bangladesh Bank to make loans to borrowers against collateral or collateral abroad, regardless of the ownership or control of the borrowing entities.