CURRENCY TRANSACTIONS : BANGLADESH

• Highlights on Foreign Currency Transactions
• Non-Resident Foreign Currency Deposit Account
• Resident Foreign Currency Deposit Account

b. Bringing in cash from abroad by a foreign investor:

A foreigner can bring in foreign exchange in any form including cash without limit. But for amounts in excess of US$ 5000 a declaration on FMJ form is required to be made to the Customs Authorities at the time of entry. amounts brough in may also be taken our freely, subject to production of the declaration where applicable.

c. Transfer of capital and capital gains:

Foreign Investors are free to make investment in Bangladesh in industrial enterprises excepting a few reserved sectors. an industrial entity may be set up in collaboration with local investors or may even be wholly owned by the foreign investors.

The repatriation of sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh may be made through an AD if such investment takes place through NITA operation. Remittance of sale proceeds of shares of companies not listed in a Stock Exchange requires prior Bangladesh bank (BB) permission, which is accorded to for amounts not exceeding the net asset value of the shares. Transfer of shares and securities from one non-resident to another non-resident requires no prior BB approval.

d. Remittance of proceeds from liquidation of industrial undertaking:

Remittance of proceeds arising out of liquidation of industrial undertaking requires prior BB approval.

e. Remittance of royalty, technical know-how & technical assistance fees:

Industrial enterprises may enter into agreements for payment of royalty, technical know-how/technical assistance fees abroad if the total fees and other expenses connected with technology transfer do not exceed (a) 6% of the previous year’s sales of the enterprise as declared in their tax returns, or (b) 6% of the cost of imported machinery in case of new projects. These agreements need however be registered with the Board of Investment (BOI). Agreements not in conformity with these general guidelines require prior permission of BOI. ADs may remit royalties, technical know-how/technical assistance fees payable as per agreements registered with/approved by BOI.

f. Transfer of profits and dividend accruing to a foreign investor:

(i) Profit

Branches of foreign firms/companies including foreign banks, insurance companies and financial institutions are fee to remit their post-tax profits to their head offices through ADs.

(ii) Dividends:

Remittance of dividend income to non-residents in respect of their investments in Bangladesh may be made through an AD.

g. Repatriation of savings, retirement benefits and salary of foreigners employed in Bangladesh

Foreigners employed in Bangladesh with the approval of the Government may remit 50% of salary, actual savings and admissible retirement benefits through an AD. Net salary of foreign nationals payable for the period of leave admissible to them as per their service contract duly approved by the Government will be remittable.

h. Local borrowings:

Banks may extend working capital loans or term loans in local currency to foreign controlled or foreign owned firms/companies (manufacturing or non-manufacturing) operating in Bangladesh on the basis of normal banker-customer relationship. Banks are free to grant local currency loans to joint venture industries in Export Processing Zone (EPZ) upto the amount of short-term foreign currency loans obtained from abroad.

i. Borrowing abroad:

Borrowing abroad in foreign currency requires prior BOI approval. Repayment of principal and interest of approved foreign currency borrowing may be made through ADs as per agreed terms. 100% foreign owned and joint venture units in EPZs may, however, obtains short term foreign currency loans from overseas banks and financial institutions without prior BOI or B approval. Joint ventures in EPZ cannot, however, create change on their assets favouring non-residents.

01. All non-resident Bangladesh nationals and persons of Bangladesh origin including those having dual nationality and ordinarily residing abroad may maintain interest bearing time deposit accounts named “Non-Resident Foreign Currency Deposit (NFCD) Account” with the ADs.

02. Bangladesh nationals serving with Embassies/High Commissions of Bangladesh in foreign countries as also the officers/staff of the Government/semi-Government departments/nationalized banks and employees of body corporate posted aboard or deputed with International and Regional agencies like IMF, World Bank, IDB, ADB etc. during their assignments abroad may open such accounts. Crew members of the Bangladeshi shipping companies are not entitled to open such accounts, but shore staff posted abroad may open such accounts. Accounts may also be opened with funds transferred from existing foreign currency accounts maintained by the wage earners with ADs in Bangladesh .

03. The accounts are in the nature of term deposits maturing after one month, three months, six months and one year. The accounts may be maintained in US dollar, pound sterling, deutsche mark or Japanese yen; initially with minimum amount of US$ 1000 or pound sterling 500 or equivalent. Account may be opened against remittances in other convertible currencies after conversion of those into US dollar, pound sterling, deutsche mark or Japanese yen.

04. These accounts may be maintained as long as the account-holders desire. Eligible persons are also allowed to open such accounts within six months of their return to Bangladesh .

05. Eligible Bangladesh nationals may send application (as per Appendix 5/4) alongwith a set of specimen signatures of the opener of the account to an AD in Bangladesh duly verified by Bangladesh Mission abroad, or a reputable bank or any other person known to the AD in Bangladesh. The application forms may be had from Bangladesh Missions abroad and from the ADs in Bangladesh or their branches abroad. No set of specimen signatures will be required to be enclosed with the application form if the application is submitted to an AD with whom the applicant has already been holding a foreign currency account. In such case a reference to the respective FC account number will serve as self-introduction and the account opening branch will verfy the signature with the specimen signature maintained for the FC account.

06. The ADs will pay interest on deposits into the accounts at the eurocurrency deposit rates. In case of premature repayments, the interest amount will be forfeited to the depositing AD. The interest on deposits into this account is exempt from the tax payable under Income Tax Act.

07. The ADs in Bangladesh may at their option sell foreign exchange deposits (in US dollars only) to Bangladesh Bank without any lower limit at Bangladesh Bank’s buying rate and repurchase the principal and interest at the Bangladesh Bank’s selling rates prevailing on the day of repurchase. The ADs may also invest abroad the amounts deposited with them and pay interest to the depositors out of earnings from such investments.

08. The account-holder can freely repatriate the balance and the interest accrued thereon in foreign exchange to the country of his residence or anywhere he chooses and may at his option convert the balance into local Taka at the prevailing exchange rate.

09. Foreign nationals and companies/firms registered and/or incorporated abroad, banks, other financial institutions including institutional investors and 100% foreign owned (A-Type) industrial units in the Export Processing Zones in Bangladesh , are also allowed to open and maintain NFCD accounts with the ADs. The minimum amount of time deposits in such cases should be US$ 25,000 or its equivalent in pound sterling, deutsche mark or Japanese yen. Other terms and conditions in respect of these account-holders will be the same as those mentioned above for NFCD accounts of non-resident Bangladesh nationals.

10. Separate monthly statements summarizing currencywise the transactions in the NFCD accounts of all AD branches of a bank should be submitted from the head offices/principal offices of the banks to the FEPD at the head office of Bangladesh Bank, as per proforma at Appendix 5/5, by the 15th of the month following that to which it relates.