Banks asked to follow new guidelines on payment to foreigners

Staff Correspondent

12 April, 2021 12:00 AM printer

Banks asked to follow new guidelines on payment to foreigners

Bangladesh Bank (BB) has directed the authorized dealer (AD) banks to observe the latest guidelines of Bangladesh Investment Development Authority (BIDA) to issue payments to the foreigners aligned with local companies.

In a letter to all banks’ head offices on Sunday, the central bank instructed that the types of payments include royalty, fees for technical assistance and franchise fees to foreigners.

“In accommodating the requests for specified remittance under general authorization, the ADs shall observe the instructions of the guidelines,” read the letter from the BB’s Department of Foreign Exchange Policy.

It added that the permission will be granted for outward remittance for paying fees in the nature of operation.

Earlier in first week of March, BIDA issued guidelines for outward remittance on foreigners’ accounts.

Royalty is a fee paid by a local industrial company to the foreign collaborator in consideration of license to use the foreign manufacturers’ patent for marketing and/or producing the products.

“In case of advance payment permitted in accordance with guidelines of BIDA, the ADs shall observe regulatory instructions contained in GFET-2018 and its subsequent circulars in this regard,” read the letter signed by Md Shahidul Islam, general manager at the Department of Foreign Exchange Policy.

Earlier in 2018, the central bank formulated the guidelines for Foreign Exchange Transaction (GEFT) to regulate the outward remittance to the foreigners.

“Transactions under the authorization shall be executed by one AD bank branch nominated by remitters. For any intended change in this respect, the relevant files shall be transferred directly to the new AD branch concerned on written request by remitters,” the letter added.

The ADs shall, before effecting the transactions, have been ensured of deductions and payments of source taxes, VAT and other levies applicable against the remittances, the central bank also directed.