The Bangladesh Bank has allowed resident contracting firms to open a bank account abroad jointly with non-resident co-partners.
The Foreign Exchange Policy Department of the central bank in a circular on Tuesday said, to facilitate resident contracting firms to implement projects awarded by project implementing agencies abroad, it has been decided that they may open bank accounts in the respective countries jointly with non-resident co-partners to credit payments received against the works.
The central bank said short-term loans proceeds against the project work from external sources may be credited to the accounts. For availing of such loans, collaterals from Bangladesh are not admissible. Balance in the accounts is usable for settlement of project-related bona fide payments abroad.
General Manager of Foreign Exchange Policy Department Kazi Rafiqul Hassan told The Business Standard, "As per the applications from different commercial banks, we have initially decided to permit this for all sorts of contracting firms working abroad. They are mostly IT firms, and we are trying to ease foreign currency transactions for all."
"Though such bank account openings and transaction processes mainly depend on the respective countries' banking rules and regulations, we are committed to making the system easy soon," he added.
Resident contracting firms shall maintain bank accounts with Authorised Dealers (Ads) designated for the transactions with regards to accounts opened abroad, the contracting firms shall submit quarterly progress reports of the project work along with bank statements to designated ADs regarding transactions in the accounts within 10 days of the following month at the end of the quarter.
Within one month of the completion of the project works, resident contracting firms have to repatriate their surplus earnings to Bangladesh through designated ADs. However, specified funds as per contractual agreements with the project agencies abroad may be retained in the accounts for the agreed period.
In case the joint venture bank accounts are not workable as per underlying contracts, resident contracting firms may arrange escrow accounts abroad, if warranted, to be operated by escrow agents subject to observance of the instructions stated by the authority.
Out of the repatriated funds, ERQ accounts (the portion of export earnings that an exporter saves as foreign currency) may be credited at the option of resident contracting firms up to the portion admissible for service exports. The remainder needs to be encashed and credited in the account of resident contracting firms.
In all cases, ADs shall ensure deduction and payments of applicable taxes and follow routine reporting formalities to Bangladesh. Within one month from the date of opening bank accounts abroad, designated ADs shall inform in detail the Bangladesh Bank.