FC accounts can retain approved external loan proceeds: BB

The Bangladesh Bank has allowed designated authorised dealers (ADs) to open and maintain foreign currency (FC) accounts for eligible private-sector industrial enterprises to retain proceeds from approved medium- and long-term external loans.
The central bank issued a circular on Wednesday to facilitate cross-border settlement of payments from approved foreign financing.
Under the circular, private-sector industrial enterprises may obtain medium- and long-term external financing with approval from the competent authorities, including the Scrutiny Committee on Foreign Loan/Supplier’s Credit of the Invest Bangladesh Authority, Bangladesh Bank and/or the Standing Committee on Non-Concessional Loan, as applicable.
Eligible borrowers can retain approved foreign-loan proceeds in FC accounts and use them in line with the relevant loan approvals and agreements with foreign lenders.
Balances in the accounts may be used for import payments under the prevailing Import Policy Order and foreign-exchange regulations. They may also be used for bona fide service payments required to implement the approved projects, subject to the relevant conditions.
Foreign currency may be converted into taka for approved local procurement. The accounts may also earn interest or profit subject to the terms and conditions governing the banker-customer relationship. The circular allows borrowers to maintain FC balances for external-loan repayment after completion of drawdown and utilisation. Where loan agreements require funds to be retained for repayment, the accounts may be maintained until loan maturity, subject to a ceiling equivalent to the amount required for the next three instalments.
The new arrangement is expected to give eligible industrial enterprises greater flexibility in managing foreign-currency proceeds from approved external financing, particularly for import and service payments, approved local procurement and scheduled external debt servicing.