BB relaxes forex rules to aid pvt sector credit

The Bangladesh Bank (BB) has relaxed foreign exchange regulations, allowing the commercial banks to hold collaterals on behalf of overseas bank branches or correspondents in respect of external borrowing by private sector without BB's prior approval.

According to the new regulations, the banks may hold collaterals on behalf of overseas bank branches or correspondents in respect of external borrowing by industrial enterprises, as approved by the Board of Investment (BoI) and without prior approval of the central bank.

BB issued a circular in this connection Sunday and asked the banks to follow properly the latest instructions relating to collaterals.

"The banks, both local and foreign commercial ones, may hold collaterals on behalf of overseas bank branches or correspondents in respect of external borrowing by industrial enterprises, as approved by BoI and without prior approval of the central bank," a BB senior official told the FE.

He also said it will facilitate private sector credit from overseas sources through easing procedure.

Earlier, the banks might not furnish guarantees to or hold collaterals on behalf of overseas bank branches or correspondents in respect of credit facilities or guarantees, to be extended by them or for any other purpose without BB's prior approval, the central banker added.