BB allows shipping firms, airlines to earn interest on idle foreign currency deposits
The central bank issued a circular in this regard today (24 May), aiming to encourage higher inward remittances and ensure better utilisation of foreign currency earnings generated by the country’s maritime and aviation sectors.
Bangladeshi shipping companies and airlines operating internationally will now be able to earn interest or profit on surplus foreign currency (FC) balances by placing them in renewable FC term deposits with their respective authorised dealer (AD) banks, according to a new directive from the Bangladesh Bank (BB).
The central bank issued a circular in this regard today (24 May), aiming to encourage higher inward remittances and ensure better utilisation of foreign currency earnings generated by the country's maritime and aviation sectors.
Under the new guidelines, the tenure of these foreign currency fixed deposits will be determined in alignment with standard banking practices. Interest or profit rates will be established based on the bilateral banker-customer relationship for the specific currency involved.
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However, the central bank has imposed a strict condition: while the deposits can be maintained in approved foreign currencies, the interest or profit earned from these accounts will be payable exclusively in Bangladeshi taka. The payout will be calculated using the prevailing market spot rate on the date of settlement.
Previously, under a BB circular issued on 10 April 2023, local shipping operators and airlines with worldwide operations were permitted to maintain active FC accounts solely to facilitate international operational expenses. Those regulations, however, lacked provisions for generating investment returns on excess foreign cash piles, leaving substantial foreign resources idle within the banking system.
With the maritime and aviation sectors witnessing steady growth and expanding their footprints internationally, the central bank's latest move is expected to incentivise companies to repatriate more of their offshore earnings through official channels.
The BB clarified that all other relevant instructions and operational modalities outlined in the previous 2023 circular will remain unchanged. AD banks have been instructed to immediately bring this new facility to the notice of all their relevant clientele.
