Commercial banks, including City Bank, Prime Bank, Eastern Bank, and Bank Asia, are seeking foreign funding of $160 million from the International Finance Corporation (IFC) to provide customers with dollar-denominated loans. The recent exemption of a 20% tax on interest accrued from foreign loans has lowered borrowing costs, renewing interest in foreign financing.
This move is expected to increase dollar inflows, helping reduce the deficit in the country’s financial account. The IFC is considering an investment in these banks to support their working capital, trade-related dollar lending programs, and key sectors affected by the pandemic and global economic challenges. The funds will address immediate dollar liquidity needs and facilitate loans to eligible export/import-based sub-borrowers. Foreign borrowings are crucial for improving dollar liquidity and supporting importers and exporters in Bangladesh.
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