‘Islami Bank prepares for surge in offshore deposits with enhanced services’

The recent expansion of operational freedom for offshore banking is potentially leading to notable successes, particularly in enhancing the country's foreign exchange reserves and attracting foreign investment. Since 1985, offshore banking units (OBUs) have been playing a significant role in global settlements and foreign currency financing facilities. At the primary stage offshore banking unit's activities were limited to the Export Processing Zones (EPZ). With the first policy amendments in May 27, 2019,the span of offshore banking has been widened. With the amendment local companies could avail foreign currency loan subject to approval from Bangladesh Bank, exporters could avail short term financing against shipments, which is popularly known as export bill discounting and joint venture companies operating in export processing zones/economic zones/hi-tech parks could avail short term loan facilities without prior approval from Bangladesh Bank. Recently the Bangladesh Parliament enacted the Offshore Banking Act 2024 aiming at bolstering the nation's foreign currency reserves and attracting foreign investment. Under this legislation, non-resident individuals or foreign entities can now open offshore banking accounts. This act has eased the way of opening offshore banking account, transferring the funds and also waived the charge, levy and tax on theprofit against deposits. With the new act person residing outside Bangladesh including NRBs, foreign nationals, persons of Bangladeshi origin with foreign citizenship, fully foreign owned enterprises in EPZ, Private EPZ, Economic Zone and Hi-Tech Parks, firms registered and operating abroad and foreign institutional investors can open offshore banking account. Most outstanding feature is that the resident Bangladeshi individuals having bonafide relations with non-resident remitterscan also open offshore banking account. Islami Bank is the AAA rated bank and has been ranked in 1000 bank list of the world. Islami Bank is the largest bank in the country in respect of deposit, import, export and remittance collection. We foresee very positive success in offshore banking activities. We are working to give convenient service through the offshore banking units.

The Offshore Banking Act of 2024, passed by the Parliament, aims to enhance the country's foreign currency reserves and attract foreign investment. This legislation allows non-resident individuals or foreign entities to open offshore bank accounts, provided they obtain a license from the Bangladesh Bank. This move is expected to offer several advantages similar to those found in other countries, such as facilitating international trade and investment and providing a degree of financial privacy. The Act stipulates that offshore banking accounts can be opened in multiple major currencies including the US Dollar, British Pound, Euro, Japanese Yen, Australian Dollar, Canadian Dollar, Swiss Franc, Chinese Yuan and Singapore Dollar which could make it easier for investors to do business in Bangladesh without facing currency exchange issues. It is designed to offer clients similar advantages to those found in other countries, such as more flexible capital movement and potentially favorable tax regulations. Additionally, relatives of Bangladeshis living abroad can manage accounts as supporters, which could encourage remittances and investment from the Bangladeshi diaspora. This Act could indeed bolster economic growth by drawing foreign investment with its multifarious facilities.

The Offshore Banking Act 2024, recently passed, indeed marks a significant shift in the financial landscape by making the profit to be paid on deposits tax free. However, the aspect of financial privacy remains a critical concern for many depositors. Financial privacy is highly valued by depositors for various reasons, including the protection of personal information and the safeguarding of assets from unwarranted scrutiny. While the Act facilitates financial growth, it also raises concerns about potential money laundering risks. It's important to note that while some countries have stringent reporting standards like the Common Reporting Standard (CRS), which mandates banks to share financial data with other nations, there are still non-CRS countries that offer greater banking secrecy. In the context of Bangladesh, the Act specifies that offshore banking operations can be conducted in selected currencies, and while it aims to increase reserves and financial benefits, it stipulates that no questions will be asked about the sources of the funds in these accounts. This provision could be seen as a move to enhance financial privacy, but it also underscores the importance of robust legal frameworks to prevent misuse of the system. The balance between financial privacy and transparency is delicate and requires careful navigation to ensure that while the privacy of depositors is protected, the integrity of the financial system is not compromised.

Attracting foreign currency deposits is a strategic objective for many governments, aiming to bolster economic stability and foster growth. The role of credit ratings, assigned by agencies like Moody's and Fitch, is indeed pivotal in this context. These ratings serve as a barometer of a country's economic health, influencing investor confidence and affecting the terms under which a country can access international capital markets. A favorable rating can lead to increased foreign investment, including deposits, as it signals lower risk and potential for return. Conversely, a lower rating may deter investment and increase borrowing costs. In the current global economic landscape, marked by uncertainty and rapid change, maintaining or improving a country's credit rating requires sound fiscal policies, political stability, and transparent governance. It also involves managing external and domestic debt levels prudently, ensuring a stable financial sector, and fostering a conducive environment for sustainable economic growth. These factors are closely monitored by rating agencies and play a crucial role in their assessments. Therefore, under the prevailing circumstances, a government's policy measures aimed at economic reform and stability are more important than ever for attracting foreign currency deposits and securing a favorable country rating. This, in turn, can contribute to a virtuous cycle of investment, growth, and financial resilience.

In light of the recent developments in offshore banking regulations, Islami Bank has been adapting strategies to attract deposits. We are now offering more competitive profit rates, ranging up to 8.55% to entice depositors looking for better returns on their investments. Additionally, our bank is leveraging technology to provide remote account opening services, making it easier for potential clients to start banking offshore. The response from prospective clients is also positive. We are getting response from different parts of the world like Germany, US, Cyprus and so on. Furthermore, we are focusing on providing personalized services and financial privacy, which will be a significant draw for clients. To ensure compliance and security, we are also emphasizing our adherence to Sharia'h principles and international regulatory standards, which help build trust with new clients. Overall, the easing of offshore banking regulations has allowed us to offer more attractive and secured services, leading to a favorable response from would-be clients.

Offshore banking has evolved significantly, and many countries now offer comprehensive services that include ATM access, internet banking, and smartphone applications. These services provide convenience and accessibility for account holders, regardless of their location. Countries like Switzerland, Singapore, and the Cayman Islands are renowned for their robust offshore banking sectors, offering a wide range of services to international clients. While the specific details regarding ATM access, net banking, and smartphone app functionalities of OBUs are not explicitly stated in the Offshore Banking Act 2024, the overarching goal of it to align with international banking standards, which typically include such facilities. We have already initiated the opportunity to open offshore account online. Gradually all other modern services will be added to ease offshore banking transaction.