The Bangladesh Bank has allowed the multinational companies operating in the country to borrow interest-bearing loans from their parent companies abroad.
The central bank issued a circular in this regard on Thursday.
The move has been undertaken to facilitate the firms’ access to short term finance with a view to encouraging foreign investment in the country.
Earlier, foreign firms were restricted to pay interest on their borrowing from their parent companies abroad.
The bar was discouraging foreign companies to expand their investment in the country as their parent companies were reluctant to lend them at zero interest rate, said a senior executive of the central bank.
Against this backdrop, some foreign companies requested central bank to allow them to pay interest on borrowing from abroad, he said, adding that the regulator, responding positively to their request, has issued the circular.
The central bank also extended the tenure of interest bearing loans to three years from existing one year, according to the circular.