Bangladesh Eases Loan Rules to Attract Foreign Investors
Bangladesh Bank has made it easier for foreign-owned companies to borrow money from overseas. This new rule allows these companies to get loans more easily from their main offices, related businesses, and owners. The central bank announced this change on Wednesday.
Experts say this move will provide cheaper foreign money for industrial businesses owned by foreign entities. This, in turn, is expected to bring more foreign direct investment into Bangladesh.
The new rules apply to fully foreign-owned industrial businesses. This includes those in manufacturing and services. It covers companies both inside special zones, like Export Processing Zones (EPZs), Economic Zones (EZs), and High-Tech Parks, and those outside these zones.
For short-term loans, less than one year, companies outside special zones can now get interest-free loans for daily operations without needing central bank approval first. If loans have interest, the cost can be up to 3 percent per year. These loans must be paid back all at once when they are due. They can also be renewed for up to three years.
For medium-term loans, from one to five years, companies can get interest-free loans up to $50 million. They can also get interest-bearing loans up to $5 million. These are for things like buying machinery, equipment, and building facilities. If interest applies, the maximum yearly rate is 3 percent.
Long-term loans, over five years, are also now possible. For these, if interest is charged, the maximum annual rate is 3 percent.
The new rules also allow outstanding foreign loans to be turned into company ownership shares. This provides more flexibility for foreign investors in Bangladesh.
