Foreign currency, non-resident account rules eased

The Bangladesh Bank has issued a comprehensive circular consolidating regulations on foreign currency and taka accounts held by non-residents, expatriate Bangladeshis, and foreign nationals. 
The move aims to simplify foreign exchange transactions and ease compliance for both banks and account holders.
Issued on Thursday under Section 20(3) of the Foreign Exchange Regulation (FER) Act, 1947, the guidelines took effect immediately and will remain valid for one year. 
Any subsequent instructions issued by the central bank during this period must be read alongside this circular.
The new framework merges existing instructions under the FER Act with necessary modifications. 
Consequently, prior instructions on foreign currency accounts in Volume 1 of the Guidelines for Foreign Exchange Transactions (GFET), 2018, along with subsequent related circulars, have been repealed, though reporting requirements under Volume 2 remain in force.
Divided into 12 parts, the circular governs a wide range of accounts, including Non-Resident Taka Accounts (Vostro) for foreign bank branches and correspondents, Private Foreign Currency Accounts, Non-Resident Foreign Currency Deposit (NFCD) Accounts, and Resident Foreign Currency Deposit (RFCD) Accounts. 
It also covers foreign currency accounts maintained abroad by contracting firms, Convertible and Non-Convertible Taka Accounts, Non-Resident Taka Accounts, Non-Resident Convertible Taka Accounts (NRCTAs), Non-Resident Blocked Taka Accounts, and Non-Resident Investors’ Taka Accounts (NITAs) – including provisions for foreign nationals and Non-Resident Bangladeshis (NRBs) investing in open-end mutual funds.
Under the updated rules, authorised dealer (AD) banks may open foreign currency accounts without prior central bank approval for eligible Bangladeshi nationals living abroad, foreign nationals residing inside or outside Bangladesh, overseas-registered companies, and foreign missions and their expatriate staff.
The circular also outlines permissible deposit sources and allowable uses of account balances – such as overseas payments and eligible local expenses in Taka – subject to existing foreign exchange regulations.
Interest-bearing foreign currency deposits
The guidelines allow interest-bearing foreign currency term deposits with tenures of one, three, six and 12 months. Banks may determine interest rates through arrangements with customers.
To qualify for interest, an account must maintain a minimum balance equivalent to US$1,000 for at least one month.
NRB accounts without initial deposits
The circular allows NRBs to open accounts without making an initial deposit. Bangladeshis working or earning abroad, including self-employed expatriates, are eligible to maintain such accounts.
Account holders may authorise someone in Bangladesh to operate their accounts.
Funds may be deposited through inward remittances, transfers from other eligible accounts and foreign currency brought into Bangladesh by account holders.
Foreign currency exceeding $10,000 brought into the country must be declared to Customs using the prescribed Foreign Money and Jewellery (FMJ) form.
Account balances may be used for overseas payments or eligible local expenses in Taka, subject to applicable regulations.
NFCD facilities for expatriates and foreign investors
The circular outlines rules for NFCD accounts, which can be maintained by Bangladeshi nationals and people of Bangladesh origin ordinarily residing abroad, including dual nationals.
Certain government and diplomatic personnel, as well as Bangladeshis posted abroad to multilateral organisations, are also eligible.
NFCD deposits can be maintained for one, three, six or 12 months in US dollars, euros, pounds sterling, Japanese yen, Australian dollars, Canadian dollars, Swiss francs, offshore Chinese yuan (CNH) and Singapore dollars.
The minimum deposit is $1,000 or its equivalent in another permitted currency. Both principal and interest are freely repatriable.
Foreign nationals, overseas companies, financial institutions and institutional investors may also open institutional NFCD accounts. 
Companies fully owned by foreign investors operating in Type-A export processing zones and high-tech parks are eligible for the facility.
The minimum deposit for institutional NFCD accounts is $25,000.
RFCD facilities for returning residents
The guidelines also detail the operation of RFCD accounts, which residents returning from abroad may open using foreign currency brought into Bangladesh and declared to Customs through the prescribed FMJ form.
However, export proceeds, service earnings and commissions generated from local businesses cannot be deposited into these accounts.
RFCD balances are transferable abroad and may be used for foreign travel, including carrying cash up to the applicable limit of $5,000. Remaining balances can be accessed through international cards or other permitted channels.
Account holders may also use the funds to meet the travel, education and medical expenses of dependants abroad, subject to relevant regulations.
RFCD account holders can use international debit, credit and prepaid cards and obtain up to two supplementary cards for dependants to make eligible online foreign currency purchases. Applicable taxes and duties must be paid.
Interest may be paid on RFCD balances maintained at a minimum of $1,000 or its equivalent for at least one month.
Taka accounts and cross-border trade settlement
The consolidated guidelines also cover taka accounts maintained by foreign banks and other non-residents.
Foreign banks may open taka Vostro accounts with correspondent banks in Bangladesh without an initial inward remittance in convertible foreign currency to facilitate cross-border trade settlements in taka.
The provision follows Bangladesh Bank’s earlier instruction issued on 23 September.
The circular also allows special foreign currency accounts for diplomatic bonded warehouses, contractors working on foreign-funded projects, and Bangladeshis receiving salaries in foreign currency from foreign or international organisations.
It reiterates restrictions on foreign nationals making payments to local residents in foreign currency, except for transactions specifically permitted under existing regulations, including certain payments through licensed money changers and hotels.
Bangladesh Bank said the consolidation is intended to establish a unified regulatory framework for foreign currency and taka accounts, making the rules easier for banks and other stakeholders to understand and follow.
AD banks have been instructed to comply with the consolidated guidelines when managing relevant accounts and processing transactions.