In a move aimed at broadening financial support for non-resident Bangladeshis (NRBs), the central bank has introduced new provisions for banks to offer them loans in taka for legitimate purposes.
A circular has been issued in this regard on Wednesday.
The decision marks a significant step towards enhancing the financial flexibility of NRBs who contribute immensely to the national economy through sending remittance back home.
As per section 5(1)(a) of the Foreign Exchange Regulation Act 1947, prior permission from the Bangladesh Bank was previously required for granting credit to non-residents.
While general permission for housing finance was already in place, as outlined in the Guidelines for Foreign Exchange Transactions-2018 (GFET), Volume-01, the BB has now taken a further step by allowing loans to NRBs based on a direct relationship between a bank and a client.
This policy has been designed to simplify the process of obtaining credit while ensuring that NRBs can access required financial resources while living abroad.
According to the circular, the NRBs eligible for these loans must be regular remitters who send funds through official banking channels.
The loan amount will be limited to either the necessary sum or a maximum of Tk 1.0 million, whichever is lower. Importantly, all loan repayments must be made from inward remittance sent by a borrower while working abroad.
In addition, banks must comply with standard credit norms, prudential regulations and customers' due diligence procedures while extending loans.
This new directive is expected to benefit NRBs by giving them easier access to loans for genuine purposes, reinforcing the importance of remittances through formal channels and fortifying economic ties between NRBs and Bangladesh.
The regulatory initiative is likely to contribute to financial inclusivity, offering NRBs further scope to support their families and invest in their homeland.
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