Offshore banking is now free to net foreign-currency deposits in a relaxation of regulatory grips ostensibly for providing props to Bangladesh's falling foreign-exchange reserves.
The central bank of Bangladesh Wednesday notified that resident Bangladeshi individuals having bona-fide relations with non-residents are allowed for opening offshore-bank account.
This is aimed at enhancing inflows of foreign exchange into the country.
An offshore bank account, also called international-banking account, transacts in foreign currencies, including the US dollar.
The corporate entities, including Type-A, Type-B, and Type-C industrial units operating in EPZs/EZs/HTPs having bona fide relations with non-residents can also open such account.
"The accountholders will act as facilitators of remitters and utilise the funds accordingly," says the BB.
Bangladesh Bank's Foreign Exchange Policy Department issued on the day a circular to this effect-in the wake of a chain of relaxation measures.
The central bank also directed the rate of interest to be applied to the deposits.
Up to 1.0 year, not less than 3.0 months, the interest rate will be the benchmark reference rate-plus 1.5 per cent. Currently benchmark reference applicable for November is 7.43 per cent.
For above 1.0 year and up to 3.0 years, the interest rate will be the benchmark reference rate-plus 2.25 per cent.
Above 3.0 years and up to 5.0 years, the interest rate rises to be the benchmark reference rate-plus 3.25 per cent.
Currently, banks offer 5.0-to 6.0-percent interest on deposits except for some Shariah-based banks.
Earlier, there was no defined interest rate on such deposits.
Balances held in deposit accounts can be used for (I) transfer to onshore bank accounts for meeting necessary payments and various investments and (ii) making outward remittances of balance amount including interest/profit as and when necessary.
Central bankers have said this measure would help "increase the flow of remittances into the country as well as help alleviate the dollar crisis" that casts multifaceted impacts on the economy and consumer prices.
Offshore banking is a separate banking service within a bank. Offshore banking offers opportunities for lending to foreign companies and collecting deposits from foreign sources. Offshore banking accounts deals in foreign currency instead of local currency.
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