Govt moves to ease capital repatriation to boost investor confidence
The government has planned to introduce a 30-day deadline for processing applications to repatriate profits from lawful foreign investments, alongside a series of financial reforms aimed at reducing business costs and strengthening investor confidence.
The proposed measures, outlined in a budget document, seek to address administrative bottlenecks affecting foreign investors while making banking services, foreign trade transactions and access to financing more efficient.
The document says coordination among banking verification, tax-related documents and approval processes will be strengthened to ensure timely processing of profit repatriation applications.
The government has also simplified the repatriation and reinvestment of proceeds from shares or securities purchased through a Non-Resident Investors’ Taka Account (NITA).
The requirement for an auditor’s certificate has been withdrawn, allowing such proceeds to be credited directly to the relevant NITA. This will enable repatriation and reinvestment within one working day and reduce compliance costs.
Share transfers and capital repatriation involving unlisted companies will also become easier. No valuation report will be required for transactions worth up to Tk 1 crore, while repatriation of transaction proceeds of up to Tk 100 crore will be allowed without prior approval from Bangladesh Bank.
For larger transactions, licensed valuation firms will be introduced to ensure more neutral and acceptable share valuations.
It is also considering a certification board comprising representatives from Bangladesh Bank, the Bangladesh Investment Development Authority (BIDA), the Bangladesh Securities and Exchange Commission (BSEC), the National Board of Revenue and the private sector.
Acceptance of reports from approved valuation firms could reduce repeated verification and delays in capital repatriation.
To cut the time and cost of foreign trade, the government will consider gradually relaxing the mandatory use of letters of credit for reliable importers and low-risk goods. The use of Documents against Payment (D/P) and Telegraphic Transfer (TT) will be expanded where appropriate.
Companies registered in Bangladesh will also be able to obtain loans in taka against foreign bank guarantees or Standby Letters of Credit (SBLC), regardless of their ownership or control structure, subject to applicable rules.
The requirement for separate prior approval for each loan from an Offshore Banking Unit (OBU) will be reviewed. However, existing provisions on Credit Information Bureau reporting, single-borrower limits, loan classification and provisioning will remain in force.
The approval process for renting, leasing, renewing and relocating bank branches and business centres has also been simplified. Within prescribed region-wise rent ceilings, banks may take such decisions with approval from their boards of directors.
The government has further simplified the process of obtaining a Sukuk Investor ID (SIID) for investment in government Sukuk by determining the required application forms, documents and fee structures.
To expand digital financial services, Real Time Gross Settlement (RTGS) will be made more effective, with faster payment and settlement arrangements among banks, mobile financial service providers and other payment platforms.
The document says the introduction of digital small loans, or e-Loans, has been permitted. Loans of up to Tk 50,000 may be provided for 12 months through a fully digital process to improve access to credit and reduce customers’ time and operational costs.
Pre-suit mediation has also been encouraged for recovering defaulted loans to reduce court-related delays and expenses and improve recovery efficiency.
The government has relaxed lending rules for environment-friendly vehicles and personal financing.
The maximum auto loan for electric and hybrid vehicles has been increased from Tk 60 lakh to Tk 80 lakh, while the debt-equity ratio has been raised from 60:40 to 80:20.
The ceiling for unsecured personal loans has been doubled from Tk 5 lakh to Tk 10 lakh, while secured personal loans may now be provided up to Tk 40 lakh.
Credit card limits have also been increased. The maximum limit for unsecured credit cards has risen from Tk 10 lakh to Tk 20 lakh, while the limit against securities has increased from Tk 20 lakh to Tk 40 lakh.
Banks may introduce new credit cards with approval from their boards of directors without obtaining prior approval from Bangladesh Bank.
The document says the measures are intended to reduce administrative complexity and costs across investment, foreign trade, banking and lending, while strengthening investor confidence, financial inclusion and the growth of the digital economy.
Source: UNB