Local cos in EPZs

BB relaxes rules for intra-firm forex loans

Siddique Islam | Published: October 19, 2018 10:06:31 | Updated: November 04, 2018 21:35:06

The front view of Bangladesh Bank seen in this FE file photo

The central bank has relaxed regulations for local industries in export processing and economic zones to get short term foreign currency loans from their sister concerns.

Under the relaxed provision, "C" category industries located at export processing zones (EPZs) and economic zones (EZs) are allowed to secure such loans from their subsidiaries or associates operating in the same EPZs and EZs.

Such short term foreign currency loans can be utilised for bonafide business transactions, including import payments, according to a notification issued by the Bangladesh Bank (BB) on Thursday.

"We've relaxed such regulations to help ease pressure on foreign exchange (forex) in the market through expediting forex transactions," a BB senior official told the FE.

He also said it would also facilitate local groups of companies, which have industries in such special zones for boosting their transactions.

The BB's latest move comes against the backdrop of depreciating mode of Bangladesh Taka (BDT) against the US dollar mainly due to higher demand for the greenback.

The demand for the US dollar is increasing gradually, mainly due to higher import payments, particularly those of petroleum products and capital machinery.

On the other hand, the central bank has continued its foreign currency support to the banks for settling import payment obligations, particularly of fuel oils and capital machinery for power plants.

As part of the move, the central bank sold US$ 12 million directly to the banks on Thursday to meet the growing demand for the greenback in the market.

Last week, the BB sold $ 53 million to the banks on the same ground.

A total of $ 277 million has been sold to the commercial banks since July 01 of the current fiscal year (FY) as part of its ongoing support, according to the central banker.

Earlier 'A' and 'B' categories industries in the EPZs and EZs have been allowed to receive such loans from their subsidiaries or associates operating in the same location.

In the special zones, 100 per cent foreign-owned companies are called 'A' category, while joint venture companies are known as 'B' category industries.





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