Bangladesh Bank has consolidated its rules on cross-border loans, guarantees and external borrowing which is worth a proper read if you advise banks, NBFIs or foreign invested businesses.
FEPD-1 Circular No. 32, dated 2nd September 2026 replaces last year’s FE Circular No. 34, dated 2nd September 2025 in full. The consolidated circular supersedes prior instructions with the exception of reporting guidelines under GFET Volume II and will remain valid for one year. While the core regulatory stance remains unchanged, the specific operational nuances across different facilities warrant a brief review by affected stakeholder.
Overseas Guarantees & NBFI Borrowings
The updated circular maintains general permission for ADs and finance companies to extend Taka financing against overseas Bank Guarantees and SBLCs under stricter operational guidelines. Overseas instruments must be unconditional, irrevocable, payable on first demand and issued by institutions meeting minimum international credit rating thresholds. Resident borrowers may not incur any direct or indirect fees for these guarantees and all liquidation or invocations must be promptly reported to Bangladesh Bank. Where finance companies extend financing, guarantees must be routed through an AD against back-to-back overseas guarantees or equivalent cash deposits. In addition, finance companies licensed by Bangladesh Bank may obtain foreign loans subject to prior approval from Bangladesh Bank, provided that the effective interest rate is consistent with central bank parameters and the repayment period (including grace period) is not less than five years. Foreign currency loans obtained from abroad must be used as security to obtain Taka loans from a bank in Bangladesh and such Taka loans shall be used for lending to manufacturing industries and the infrastructure sector (other than real estate) only.
Foreign-Controlled Entities & NRB Loans
Under Bangladesh Bank guidelines, a company is deemed foreign controlled if 50% or more of its equity or board representation is held by foreign nationals. Banks hold general authorization to extend Taka working capital loans to these entities, and resident entities may provide interest free Taka working capital facilities or purchase their commercial paper. For capacity expansion or BMRE, foreign controlled manufacturing and service entities operating in Bangladesh for at least three years may obtain domestic Taka term loans, provided total debt stays within a 60:40 debt equity ratio and post facto reporting is submitted to Bangladesh Bank on Form-L. Separately, Authorized Dealers (ADs) are permitted to extend Taka housing finance to Non-Resident Bangladeshis (NRBs) up to a 75:25 debt equity ratio, provided equity is funded via inward remittances or designated non-resident accounts. Banks may also extend general purpose Taka loans to NRBs up to a maximum ceiling of Taka 10 Lac.
Credit Facilities for Zone Enterprises
In specialized zones (EPZs, PEPZs, EZs and HTPs) enterprises are categorized into Type A (100% foreign-owned), Type B (joint ventures with local entrepreneurs) and Type C (100% locally owned). Type A enterprises may obtain short term foreign currency loans from overseas financial institutions, parent companies or associate Type A zone entities, routing funds through an Authorized Dealer (AD) foreign currency account to finance capital machinery, raw materials or local expenses. Repayments may be remitted directly from the account but local Taka loans cannot be backed by these repatriable short term facilities. Type B enterprises may access short-term foreign currency loans under similar terms, provided they do not encumber fixed assets or raw materials in favor of offshore lenders. ADs may issue guarantees for these facilities with prior Bangladesh Bank approval. Type C enterprises may access short term foreign currency loans exclusively from their subsidiaries/associates within the same zone. For working capital, ADs may grant local currency loans to Type B and C enterprises up to four months of production input requirements, to be settled through export receipts. All medium and long term external borrowings by zone enterprises require prior Bangladesh Bank approval, submitted through an AD and the relevant zone authority with supporting financial and commercial viability assessments.
Offshore Borrowing Rules & Oversight
Private sector industrial enterprises seeking external borrowing including supplier credits, financial loans, and foreign debt issuances must obtain prior authorization from the Invest Bangladesh Authority, after which handling Authorized Dealers (ADs) must submit executed loan agreements to Bangladesh Bank. Medium and long term foreign loans for industrial enterprises within specialized zones follow a dedicated approval track requiring Bangladesh Bank authorization, submitted through an AD and the respective zone authority alongside comprehensive project viability, debt-servicing and CIB analyses. Public sector external borrowings require Government approval, with non-concessional or commercial loans specifically requiring Standing Committee on Non-Concessional Loan (SCNCL) authorization prior to remitting debt service payments. To maintain regulatory oversight, AD head offices must submit a consolidated quarterly statement of all approved foreign loans and their utilization status to Bangladesh Bank’s Foreign Exchange Investment Department within 15 days of each quarter’s end.
AD Commitments and Renewal Rules
When Authorized Dealers (ADs) apply to Bangladesh Bank for approval to issue repayment commitments on behalf of resident borrowers, they must satisfy specific risk-mitigation criteria. ADs must ensure compliance with all applicable credit norms and prudential parameters, including single borrower exposure limits, backed by documented credit assessments and formal board approval (or foreign bank management clearance). The underlying external borrowing must hold prior authorization from the Invest Bangladesh Authority and the repayment commitment must be fully secured by acceptable collateral, with at least 25% held in cash margin or unencumbered, encashable bank deposits. Furthermore, where the initial issuance of a loan, overdraft, or guarantee requires prior approval from Bangladesh Bank, any subsequent renewal of that facility remains subject to prior central bank approval.
