Bangladesh Bank has issued a consolidated circular updating regulations governing foreign exchange transactions related to loans, overdrafts, guarantees and external borrowings.

The circular, issued by the Foreign Exchange Policy Department-1 (FEPD-1), consolidates instructions previously issued under FE Circular No. 34 dated September 2, 2025, along with subsequent directives. The new rules repeal all previous instructions on the subject, except reporting provisions under the Guidelines for Foreign Exchange Transactions (GFET), Volume-2, and will remain effective for one year.

Under the updated framework, banks and finance companies may provide eligible Taka financing against overseas bank guarantees (BGs) or standby letters of credit (SBLCs) to resident companies, regardless of ownership or control, subject to applicable credit and prudential requirements.

The overseas guarantees must be unconditional, irrevocable and payable on first demand, and must be issued by non-resident banks or institutions with acceptable international credit ratings.

The circular also allows banks to provide Taka working capital loans to foreign-owned or foreign-controlled industrial and trading companies operating in Bangladesh, subject to prevailing credit norms.

Foreign-owned or controlled manufacturing and service companies operating for at least three years may obtain Taka term loans from the domestic market for capacity expansion, modernisation, rehabilitation and expansion, provided their debt-equity ratio does not exceed 60:40.

For foreign borrowing, private-sector industrial enterprises must obtain prior approval from the Invest Bangladesh Authority. Short-term supplier or buyer credit of up to one year will continue to be governed by Bangladesh Bank’s guidelines on current commercial transactions.

Authorized dealer banks may remit repayments of approved foreign loans without prior reference to Bangladesh Bank, subject to specified documentation and conditions.

The circular also requires AD banks to submit quarterly consolidated statements on foreign loans approved by the Invest Bangladesh Authority or Bangladesh Bank, including loan utilisation details, within 15 days of the end of each quarter.

For enterprises operating in specialized zones, separate provisions have been outlined for Type A, Type B and Type C companies regarding foreign currency and Taka financing.

The new circular was issued under Section 20(3) of the Foreign Exchange Regulation Act, 1947.