Foreign investors can now keep dollars in bank accounts for 1 year

In a bid to increase the flow of foreign direct investment (FDI) in the country, the central bank has allowed foreign investors to keep foreign currency in their relevant account for a year.

Earlier, if foreign investors sent foreign currency to the country, it had to be encashed in taka and kept in a local currency account, bankers said.

The decision of the central bank would now make investors more interested, they said.

In a circular issued yesterday, the Bangladesh Bank said authorised dealers can now open temporary foreign currency accounts under the names of companies/enterprises proposed by foreign investors.

The currency can only be used to make outward payments for capital expenditure or it can be encashed into taka.

Bankers said companies can pay for the import of capital machinery with the dollars in their foreign currency accounts.

The tenure of these accounts shall be one year from the date of opening, subject to closure immediately at the end of the prescribed time after encashment of the fund, if any, held in an account, the circular said.

An official of the central bank said foreign investors have been given the opportunity to retain foreign currency so that the country's investment is not hindered due to the dollar crisis.

As a result, foreign investors will be more interested and at the same time foreign investment will increase, he said.

According to the central bank, net FDI in the country fell by 35.56% in the October-December quarter of 2022 compared to the previous quarter due to the ongoing foreign exchange crisis in the country.

Central bank data shows that foreign net investment in the December quarter 2022 amounted to $703 million, which was $1,100 million in the previous quarter.

Foreign net investment in Bangladesh increased by 20.18% in 2022 compared to 2021, reaching $3,479 million from $2,895 million.

According to the Bangladesh Bank, the country's foreign exchange reserves stood at $30.02 billion yesterday, which was $41.43 billion on 14 June 2022. The amount of foreign exchange reserves decreased by more than $11.41 billion in a year.