Foreign currency in offshore banks now eligible as taka loan collateral

Bangladesh Bank aims to improve liquidity options for businesses with new guidelines

Bangladesh Bank has authorised commercial banks to accept foreign currency deposits held in Offshore Banking Units (OBUs), private foreign currency accounts, and non-resident foreign currency deposit accounts as collateral to secure taka (BDT) loans.

The move, announced via a notication, enables short-term working capital lending in taka against offshore deposits -- subject to conditions -- with no collateral fees.

To manage currency risk, banks may hold a margin on the foreign exchange value of the deposit.

Existing OBUs with International Banking Accounts remain ineligible for this scheme.

Borrowers must maintain a legitimate relationship with the offshore depositor, whose consent is required.

Banks are directed to verify documents before approving loans.

In case of default, banks will sell off the foreign currency collateral following formal procedures.

The deposit then transfers to the bank as owned collateral.

This facility particularly benefits non-resident Bangladeshis, foreign citizens in Bangladesh, and foreign-registered companies with offshore holdings.

A senior Bangladesh Bank official noted that applicants must have business ties with the foreign depositor to qualify.

Offshore banking allows transactions in foreign currencies through a separate unit within a local bank, known as an OBU.