The Bangladesh Bank is going to allow three more commercial banks to open offshore banking branches to utilise the country’s foreign currency reserve more effectively and boost competition among the banks.
The banks can open their offshore banking units in areas of their choice.
The central bank has already finalised the process of approving the proposals submitted by EXIM Bank, Social Islami Bank, and Uttara Bank for opening OBUs and informed them about its decision, said a senior BB official.
A senior official of EXIM Bank told New Age on Monday that they had received a letter from the central bank about its decision to approve their proposal for opening OBUs and the bank would initially set up two such units at Gulshan and Motijeel in the capital.
The banks will start their overseas banking operations after completion of the official procedures.
The deposit and lending operations of OBUs are done entirely in foreign currencies.
The overseas banking operations at normal bank branches are carried out over separate counters, maintaining separate offshore banking accounts.
The OBUs, regardless of their location, function in compliance with the provisions of the Export Promotion Zones Act, 1980 and conduct transactions in freely convertible foreign currencies. They use foreign currencies borrowed from the central bank and international lending agencies.
The BB introduced overseas banking to ensure maximum utilisation of its foreign currency reserve in productive sectors and allowed local banks to set up OBUs. The banks were initially allowed to open OBUs in the EPZs only but later they were permitted to extend the facility beyond the zones.
The OBUs also cater to the financial needs of foreign-owned or joint-venture units in the EPZs as foreign investors here do not have access to credit facilities offered by the local financial institutions.
At present, the foreign banks operating in Bangladesh, such as Standard Chartered Bank, HSBC, Woori Bank, Citi Bank NA, Commercial Bank of Ceylon, and the State Bank of India, are also licensed to offer offshore banking services.
Besides the foreign banks, 22 local banks are now offering offshore banking services in the country. These are Prime Bank, Dhaka Bank, Southeast Bank, National Bank, Eastern Bank, Bank Asia, Shahjalal Bank, The City Bank, Premier Bank, IFIC Bank, BRAC Bank, Dutch-Bangla Bank, AB Bank, Mutual Trust Bank, Jamuna Bank, One Bank, Pubali Bank, Standard Bank, National Credit and Commerce Bank, Islami Bank Bangladesh, Trust Bank, Mercantile Bank, and United Commercial Bank.
Three more local banks – First Security Islamic Bank, ICB Islamic Bank, and Al-Arafah Islami Bank – also have applied for permission to the central bank for opening OBUs.
-With New Age input
