Bangladesh Bank on Tuesday issued a new master circular bringing all rules related to loans, overdrafts and guarantees into one framework.
The circular has simplified and consolidated the foreign exchange transaction policy.
The central bank said that the instructions remained scattered across various guidelines and circulars have now been consolidated into a new circular with necessary amendments.
In this, the provisions related to loans, overdrafts and guarantees have been brought under a uniform framework, and this will be effective for one year from the date of issuance.
The circular said that the provisions include commercial loans, loans against guarantees or collateral given abroad, various types of guarantees for both domestic and foreign parties, repayment guarantees and foreign loans granted by licensed financial institutions.
Banks have been instructed to follow internationally accepted rules in terms of guarantees, standby letters of credit (SBLC) and other payment commitments. In this case, URDG, UCP, ISP and other international standards must be followed, but it must be consistent with the laws and regulations of the country.
The new circular also clearly mentioned that the provisions of loan facilities for institutions in specialised areas, the opportunity to borrow in various types of foreign and local currencies, use-sense bill discounting, working capital facilities and medium and long-term foreign loans.
At the same time, instructions related to borrowing and repayment guarantees of government, private and foreign-owned institutions have also been included in it.
Central bank officials said that bringing all the provisions under one umbrella will make foreign transactions related to loans, overdrafts and guarantees easier and more
transparent.
This will be a conducive move for foreign-owned institutions.
This step by Bangladesh Bank is being seen as an important effort to simplify foreign exchange policy and modernise financial transactions in the context of globalisation.
jasimharoon@yahoo.com
