Boosting Foreign Investment: Bangladesh’s Offshore Banking Act 2024 Unveiled

The Bangladesh Parliament recently enacted the Offshore Banking Act 2024, aimed at bolstering the nation’s foreign currency reserves and attracting foreign investment. Under this legislation, non-resident individuals or foreign entities can now open offshore bank accounts upon obtaining a license from the Bangladesh Bank. Those already licensed need not apply for a new one. However, only scheduled banks operating within Bangladesh are permitted to engage in offshore banking activities.

The act permits offshore banking transactions to be conducted in five major currencies: US dollars, pound sterling, euros, Japanese yen, and Chinese yuan. Notably, no income tax or other charges will be levied on the interest or profits earned by offshore banking units (“OBUs”), and no fees will be imposed on depositor or foreign lender accounts.

OBUs are authorized to accept deposits from 100% foreign-owned companies situated in export processing zones, economic zones, and hi-tech parks. Additionally, they are empowered to offer various services, such as short-term loans, letters of credit, guarantees, bill discounting, bill negotiating, and other foreign trade-related outsourcing services.

For resident Bangladeshis, OBUs can extend deferred export bill discounting facilities for imports, as well as services for direct and indirect exports. With approval from the Bangladesh Bank, OBUs may also provide medium and long-term loans to local industrial enterprises.