Cenbank widens trade finance access for offshore banking units
Bangladesh Bank has expanded the scope of trade finance activities for offshore banking units (OBUs) by amending key provisions in its regulatory framework, allowing them to work more flexibly with authorised dealer (AD) banks across the sector.
The central bank issued a circular today (11 November) revising its OBU guidelines, originally published on 30 January, to permit greater interbank collaboration in extending trade loans.
Under the previous framework, OBUs were permitted to provide trade finance to enterprises located in specialised and non-specialised zones, arranged through their own bank's ADs, in the form of buyer's credit, accepted bill financing, and similar instruments.
Keep updated, follow The Business Standard's Google news channel
The latest amendment, however, significantly widens this scope.
According to the revised provisions, OBUs can now extend trade loans not only through ADs of their own bank but also via ADs of other banks, subject to comprehensive risk assessment – including counterparty exposure and limit evaluation.
For enterprises located in specialised zones, OBUs are now allowed to finance entities other than fully foreign-owned ones arranged through both their own ADs and those of other banks in the form of admissible trade finance instruments for the permissible tenure. All such loans must comply with existing prudential credit standards and due diligence procedures.
Similarly, enterprises located outside specialised zones may now access buyer's credit, accepted bill financing, and other approved trade instruments through both their own and other banks' ADs, following appropriate risk evaluation processes.
By allowing OBUs to work with ADs across different banks, the policy seeks to ensure more efficient utilisation of offshore liquidity, minimise transaction bottlenecks, and promote a more competitive financial landscape.
