Tenure of short-term intercompany external loans extended
Under the revised rules, the short term borrowing will also be admissible for industries engaged in service output activities
The foreign-owned companies can now avail short term working capital loans from their parent companies and shareholders abroad for an extended period, as per a circular issued by the Bangladesh Bank.
Concerned companies can avail the short term working capital loans from their parent companies and shareholders abroad for maximum 6 years from the date of inception of their manufacturing and service output activities. The eligible time for availing such loans was 3 years earlier.
Under the revised rules, the short term borrowing will also be admissible for industries engaged in service output activities. Earlier, the facility was available only for manufacturing companies.
The trading activities will not come under the purview of the new rules, the circular noted.
The Foreign Exchange Policy Department (FEPD) of the central bank has issued the circular in this regard on Tuesday (19 January, 2021).
The maximum interest rate for these loans is set at 3% of the amount received in convertible foreign currency.
An official of the central bank said it would help the foreign companies to access the short term financing for an extended period.
He added that the Bangladesh Bank has continuously been updating regulations, including the ones regarding the foreign investment, to facilitate businesses.
The new rules will help foreign-owned and controlled companies to access short term external loans to a wider extent.