The Bangladesh Bank has lifted its complete ban on fund transfers from domestic banking units to offshore banking units (OBUs), now allowing banks to transfer up to 30% of their regulatory capital in foreign currency to OBUs. This move reverses the suspension imposed in January 2024, when the central bank expected an increase in foreign inflows, which only marginally improved.
The decision aims to help institutions settle overdue foreign payments, which, if prolonged, could damage Bangladesh’s reputation and hinder future funding. The central bank has also mandated that OBUs with borrowings exceeding the 30% limit must adjust by December 31, 2024. Offshore banking, a separate system within banks, allows transactions with foreign companies in foreign currencies and operates under different regulations than domestic banks. Currently, 35 banks in Bangladesh engage in offshore banking, with the capital transfer limit raised from 20% to 30% during the Covid-19 pandemic.
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