Bangladesh Bank has issued a consolidated directive aimed at further easing foreign exchange transactions related to loans, overdrafts and guarantees. Directives previously issued separately on these matters at different times have been brought together under a single new circular.
The relevant circular was issued Wednesday by Bangladesh Bank’s Foreign Exchange Policy Department.
The new directive will remain in effect for the next one year.
At the same time, the previously issued related directives on these matters have been repealed.
The Bangladesh Bank circular is divided into three main parts. The first part sets out various provisions related to loans, overdrafts and guarantees, including commercial credit, private-sector financing against foreign guarantees or collateral, and various types of guarantees for domestic and foreign institutions.
The second part sets out rules on loans and guarantees for institutions located in special economic zones.
The third part provides guidance on borrowing from abroad, including rules for public- and private-sector institutions taking foreign loans and providing guarantees as assurance of repayment.
However, for foreign-owned or foreign-controlled institutions taking foreign loans, the directive issued by the Foreign Exchange Investment Department on July 15 this year will remain in effect.
The new circular also allows financing from domestic sources against foreign bank guarantees or standby letters of credit (SBLCs). As a result, institutions using a foreign guarantee or SBLC to obtain domestic financing will benefit.
It also allows for foreign-currency guarantees or SBLCs to be issued on behalf of domestic institutions, in favor of project authorities or procuring institutions, against contracts or work orders awarded to foreign companies through international tenders.
Bangladesh Bank had previously issued a similar one-year directive on the same subject in September 2025. This latest consolidated directive continues that practice for another year.
Officials say bringing the various rules on loans, overdrafts and guarantees together in one place will make foreign exchange transactions easier and more transparent. Foreign-owned institutions and those engaged in international trade in particular stand to benefit from the directive.
The move is being seen as a step by Bangladesh Bank to simplify foreign exchange regulations while making the environment for international trade and investment more transparent and effective.