Banks’ offshore units to need specific codes

With rising operations of offshore banking units (OBU), the Bangladesh Bank has asked banks concerned to register new units with a specific code, in order to collect and preserve information.

A central bank circular in this regard issued on Monday said that a bank has to apply to the central bank for a code, attaching required documents, within seven days of launching a new OBU.

Similarly, when discontinuing an OBU, the bank has to inform the central bank within seven days. However, codes previously issued by the Foreign Exchange Policy Department of the central bank will remain active.

According to the world's leading financial website Investopedia, offshore banking units refer to bank branches located outside the home country, handling transactions made in foreign currency known generically as "Eurocurrency".

OBU covers providing loans to foreign companies as well as collecting deposits from sources abroad. Lower borrowing interest rates have made OBUs popular and the loans they provide have been increasing. 

In 1985, the Bangladesh Bank issued a gazette notification regarding the operation of OBUs. Later, a comprehensive policy was issued in 2019. Initially, only foreign banks introduced this service but the popularity of OBUs has increased in the country in the last five years. Recently, many local banks have opened OBUs.