Bangladesh Bank Widens Access to Finance Against OBU Foreign Currency Deposits

TBS Report, Dhaka — The Bangladesh Bank has widened the scope of financing against foreign currency deposits held with Offshore Banking Units (OBUs), allowing such balances to be used as collateral for a broader range of loans in local currency — a regulatory expansion that increases the utility of foreign currency deposits for both resident and non-resident Bangladeshis.

The central bank issued a circular on 3 September 2026 modifying existing provisions on the use of balances held in private foreign currency accounts and non-resident foreign currency deposit accounts as collateral.

💰 What Has Changed

Previously allowed:

• 💰 Foreign currency balances used as collateral only against short-term working capital financing in local currency
• 💰 Available only for resident companies, firms and individuals

Now also allowed:

• 💰 Foreign currency balances as collateral against short-term finance or consumer finance in local currency
• 💰 Available for resident persons AND non-resident Bangladeshis (NRBs)
• 💰 Subject to compliance with existing regulatory instructions

🏛 Regulatory Framework

The circular, issued by the Foreign Exchange Policy Department-1, references:

• 📜 Guidelines for Foreign Exchange Transactions (GFET) — Sections I and II of Chapter 13
• 📜 FE Circular No 27 (3 July 2025) — original OBU collateral framework
• 📜 Foreign Exchange Regulation Act, 1947 — underlying legal framework

Under the original FE Circular No 27, OBUs could allow foreign currency deposits of non-resident account holders to be used by their respective Domestic Banking Units (DBUs) as collateral against financing to resident companies, firms, and individuals. The new circular expands this to include consumer finance and NRB access.

💰 Benefits of the Expansion

• 💰 Wider financing options against foreign currency deposits
• 💰 Consumer finance access using FCY deposits as collateral
• 💰 NRB inclusion: non-resident Bangladeshis can now use FCY deposits for local currency loans
• 💰 Greater deposit utility: FCY deposits become more versatile
• 💰 Increased OBU attractiveness: offshore banking becomes more valuable
• 💰 Remittance channel incentive: NRBs get more value from formal deposits

🌏 Strategic Context: Foreign Exchange Modernisation

The OBU collateral expansion forms part of Bangladesh Bank's broader foreign exchange management modernisation:

• 💻 Electronic FX Market Module — automating forex operations (ID 502)
• 💰 BB eases Hi-Tech Park remittance rules (ID 518)
• 💰 Forward booking facility — Tk 1 per dollar edge for importers
• 💰 Consolidated foreign exchange rules — on loans and guarantees
• 💰 BB buys $50m from banks — after 3-month pause
• 💰 FX reserves: $32.90 billion (BPM6)
• 💰 Remittance inflows: $35.59 billion in FY26 (ID 533)

🌏 Strategic Implications

• ✅ Expanded collateral scope: FCY deposits usable for consumer finance
• ✅ NRB access: non-resident Bangladeshis included
• ✅ Greater OBU utility: offshore banking more attractive
• ✅ Remittance formalisation: NRBs get more value from formal deposits
• ✅ DBU-OBU coordination: domestic and offshore units can cooperate
• ⚠️ Regulatory compliance: subject to existing GFET instructions
• ⚠️ Risk management: banks need to assess FCY collateral valuation

The OBU collateral expansion represents a targeted regulatory reform that increases the utility of foreign currency deposits — particularly for non-resident Bangladeshis who can now use their FCY deposits as collateral for consumer finance in local currency. Combined with the broader FX market modernisation (electronic FX module, forward booking, Hi-Tech Park remittance easing), the measure supports Bangladesh Bank's objective of deepening the foreign exchange market and channelling more remittance inflows through formal banking channels — a strategically important priority as the country approaches LDC graduation in November 2026.