Investment & Trade
Foreign Exchange Regulation Act 1947
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Executive Summary
The Foreign Exchange Regulation Act 1947 is the foundational statute governing all foreign exchange transactions in Bangladesh. Originally enacted by the British colonial government for undivided India, it was adapted for Bangladesh via the Bangladesh (Adaptation of Existing Bangladesh Laws) Order 1972, and has been amended multiple times (notably in 1985, 1994, and 2003) to progressively liberalise the foreign exchange regime. The Act vests exclusive authority in Bangladesh Bank to regulate foreign exchange dealings, including: imports and exports of currency, payments to and from Bangladesh, transactions in foreign exchange, issue of foreign exchange licences to banks and authorised dealers, and the monitoring of invisible trade transactions. For exporters, the Act mandates that all export proceeds be repatriated to Bangladesh within 120 days of shipment, be realised through an Authorised Dealer (AD) bank, and be surrendered to Bangladesh Bank's exchange reserve pool (subject to the export retention quota).
Key Points
- Enacted 1947 (adapted for Bangladesh 1972)
- Last major amendment: 2003 (foreign exchange liberalisation)
- Bangladesh Bank is the sole regulatory authority
- Export proceeds must be repatriated within 120 days of shipment
- All export proceeds realised through Authorised Dealer (AD) bank
- Export retention quota: up to 60% for diamond-category exporters
- Exchange rate: managed float (Bangladesh Bank intervenes via USD/BDT auctions)
- Authorised Dealers: scheduled commercial banks with FE licence
- Invisible transactions (services, royalties) require Bangladesh Bank approval above thresholds
- Violation: penalty up to 3x the amount involved + criminal prosecution
Full Details
Regulations governing foreign exchange transactions, repatriation of profits, and capital movements in Bangladesh.