Bangladesh Bank has broadened the scope for using foreign currency deposits held with Offshore Banking Units (OBUs) as collateral, allowing such balances to support a wider range of local-currency financing.

The central bank issued a circular on Thursday amending the existing provisions governing the use of balances maintained in private foreign currency accounts and non-resident foreign currency deposit accounts as collateral.

Under the revised provisions, balances held in private foreign currency accounts and non-resident foreign currency deposit accounts maintained under Sections I and II of Chapter 13 of the Guidelines for Foreign Exchange Transactions (GFET) can now be pledged against short-term working capital financing in local currency extended to resident companies, firms and individuals.

The deposits may also be used as collateral for short-term finance and consumer finance in local currency provided to resident persons and non-resident Bangladeshis (NRBs), subject to compliance with existing regulatory requirements.

Previously, the facility was limited to using such foreign currency balances as collateral against short-term working capital financing in local currency for resident companies, firms and individuals.

The latest amendment is expected to expand access to local-currency financing for customers holding foreign currency deposits with OBUs by enabling them to use those balances for a broader range of borrowing facilities.

The circular, issued by the Foreign Exchange Policy Department-1, referred to an earlier FE Circular No. 27 issued on July 3, 2025. Under that circular, OBUs were allowed to permit foreign currency deposits held by non-resident account holders to be used by their respective Domestic Banking Units (DBUs) as collateral for financing extended to resident companies, firms and individuals.

Bangladesh Bank also reiterated that balances held in private foreign currency accounts and non-resident foreign currency deposit accounts may be used as collateral in accordance with the relevant provisions of the Foreign Exchange Regulation Act, 1947 and the GFET.

The central bank said all other provisions and instructions contained in the earlier circular would remain unchanged.