The Bangladesh Bank on Thursday clarified that no local entity will be allowed to take foreign currency aboard to set up subsidiary company.
The central bank issued a notice making correction in the Guidelines for Foreign Exchange Transection 2018 to this end.
Under the paragraph 24, chapter 10 of the guidelines, prior approval of Bangladesh Bank was not required for the Bangladeshi residents to open branch offices or subsidiary companies abroad.
The provision also enabled companies to spend annual remittance of up to $30,000 or equivalent to meet expenses of their foreign offices, the GFET said.
Repealing the words ‘subsidiary companies’ from the paragraph, Thursday’s BB circular said, ‘This is to clarify that this authorisation for remittance is applicable only for opening and meeting current expenses of branch offices abroad. In no way, this authorisation is useable for equity remittance to establish subsidiaries abroad.’
Central bank repealed the phrase as the country does not allow capital account transferability to anyone.
However, businesses have been demanding for capital account transferability with a view to expanding their business abroad.
In last few years, the central bank, upon approval from the government, has allowed several companies to setup business aboard.
Those companies, which were allowed to setup business, were only allowed to use foreign currency from their export retention quota (ERQ) account.
Exporters are allowed to preserve a portion of export proceeds in the ERQ account.