External borrowing rules eased for foreign-owned industrial enterprises

Bangladesh Bank eased regulations on external borrowing by fully foreign-owned industrial enterprises, allowing them to access loans from parent companies, associates, and shareholders abroad under a general authorisation framework.

According to a circular today, eligible manufacturing and service-sector enterprises operating both within and outside specialised zones, including export processing zones (EPZs), economic zones (EZs), and High-Tech Parks, will be able to obtain short-, medium- and long-term foreign loans subject to specified conditions.

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For short-term borrowings of less than one year, companies outside specialised zones may obtain interest-free loans for working capital purposes without prior approval from Bangladesh Bank.

They may also avail cost-bearing loans at a total cost of up to 3 percent "per annum" for "bona fide" business purposes, including input procurement.

Such loans must be repaid in a single lump sum at maturity and may be extended, up to a maximum term of 3 years.

For medium-term borrowings of 1 to 5 years, Bangladesh Bank allowed interest-free loans of up to $50 million and cost-bearing loans of up to $5 million for capital expenditure, including the purchase of machinery, equipment, and construction.

Long-term borrowings of more than 5 years will also be allowed, with borrowing costs capped at 3 percent "per annum" where applicable.

The circular also allows outstanding borrowings to be converted into equity subject to existing regulations.

As per industry insiders, the new measures are expected to improve access to affordable overseas financing and encourage greater foreign investment in Bangladesh.