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BB seeks more dollars in resident accounts thru offshore units

FE REPORT | April 29, 2024 00:00:00


The central bank has asked commercial banks to increase the volume of US dollars held in resident foreign currency deposit accounts by properly following the recently enacted Offshore Banking Unit Act.

Bangladesh Bank Governor Abdur Rouf Talukder verbally issued the directive during a meeting with a delegation from the Association of Bankers, Bangladesh (ABB) at the central bank headquarters on Sunday.

The governor asked the bankers to promote investment opportunities locally and globally in a coordinated way.

This, he said, would not only boost foreign currency inflows -- especially US dollars -- but also help narrow the widening deficit in the financial account.

The central bank's instructions follow the recent statutory regulatory order (SRO) by the National Board of Revenue (NBR), which grants tax waivers on interest or profits earned from deposits held in Offshore Banking Units (OBUs).

According to the Offshore Banking Unit Act 2024, non-resident individuals and foreign firms, who will invest in Bangladesh, can open offshore bank accounts.

An offshore banking unit will require the Bangladesh Bank's licence, and only scheduled banks working in Bangladesh can provide offshore banking services.

Offshore banking transactions can be conducted in five currencies: US dollar, pound sterling, euro, Japanese yen and Chinese yuan.

No income tax or other charges are levied on interest or profits earned by OBUs. Besides, there are no fees imposed on depositor or foreign lender accounts.

Emerging from the meeting, ABB Chairman Selim R.F. Hussain expressed optimism about the investment opportunities created by the OBU Act, especially for resident foreign currency deposit (RFCD) accounts.

He said banks need to promote and advertise these benefits globally, attracting Bangladeshi white-collar expatriate workers to invest their US dollars in these accounts for lucrative returns.

According to the ABB chairman, several countries like India, the Philippines and Thailand have successfully utilised RFCD accounts to attract investment.

"We have also started it. Now we need a comprehensive plan to promote and market it globally," he said. "We need to inform people overseas that investing in RFCD and OBU accounts in Bangladesh can be highly lucrative."

ABB Vice-Chairman Mashrur Arefin said they have asked to organise roadshows outside Bangladesh in a bid to raise growth in RFCD and OBU operations, by properly marketing the gains available.

Sources at the Bangladesh Bank said some banks have already begun advertising the benefits of investing US dollars in Bangladesh, underlining attractive interest rates approaching 7 per cent.

The sources also talked about a positive development -- the volume of RFCD accounts has risen from $14 million to $48 million in recent months, a welcome sign for the economy, which is currently facing multiple strains due to a foreign exchange shortage.

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