Foreign investors allowed to repatriate capital up to Tk100cr without prior approval

The Bangladesh Bank has raised the prior approval threshold for capital repatriation by foreign investors to Tk100 crore from the existing Tk10 crore in line with international standards.

The central bank in a circular said the move eases capital repatriation rules and represents a significant step towards liberalising capital outflows and simplifying the regulatory framework for foreign investment in Bangladesh.

The new circular, issued by the Foreign Exchange Investment Department (FEID) of the Bangladesh Bank on 8 March, substantially expands the scope of bank-level approvals.

Authorised Dealer (AD) banks can now independently process repatriation for transactions of up to Tk100 crore, where fair value has been determined by an independent valuer using prescribed valuation methods.

For transactions where the deal value does not exceed the Net Asset Value (NAV) based on the latest audited financial statements, AD banks may process repatriation regardless of the transaction amount, eliminating a major bottleneck in the capital outflow process.

Moreover, transactions of up to Tk1 crore do not require an independent valuation report.

To strengthen governance of the delegated approval process, the circular mandates that AD banks constitute internal committees headed by the chief financial officer for smaller transactions and by the chief executive officer for transactions of up to Tk100 crore.

These committees will evaluate valuation reports and authorise repatriation. They must include members with relevant professional certifications such as CFA.

AD banks are also permitted to charge reasonable fees, negotiated with their clients, for valuation assessments conducted by these internal committees.

Several procedural improvements have been introduced to reduce transaction timelines and enhance the integrity of the valuation process.

The circular now requires that audited financial statements used for valuation must not be older than six months from the date of the memorandum of understanding (MoU). If this condition is not met, the target company must prepare audited financial statements for the interim period.

AD banks are required to execute repatriation within five working days where no discrepancy is found and forward applications requiring Bangladesh Bank approval within three working days.

The overall transfer process must be completed within 45 days from the MoU signing date or the approval date of Bangladesh Bank, whichever is later.

Post-facto reporting to the central bank is required within 14 days for all transactions processed at the AD level.

This master circular reflects the central bank's ongoing commitment to creating a more investor-friendly regulatory environment.

"By raising approval thresholds, empowering banks with greater decision-making authority, streamlining documentation requirements, and providing clear valuation guidelines aligned with international standards, the central bank aims to reduce the time and cost associated with capital repatriation for foreign investors," the circular said.

It added, "These reforms are part of Bangladesh Bank's broader agenda to streamline capital repatriation, attract more foreign investment in the coming days, enhance investor confidence, and position Bangladesh as a competitive destination for foreign direct investment."