Dhaka Bureau: For the first time, the government is going to enact offshore banking laws in the country. For this purpose, Finance Minister Abul Hasan Mahmud Ali raised the ‘Offshore Banking Bill, 2024’ in Parliament on Saturday. The bill has been sent to the Parliamentary Standing Committee on Finance Ministry to scrutinize it and report to Parliament within a day. As a result, the bill is going to be passed in the current first session of the Twelfth Parliament. It is to be noted that the draft of the ‘Offshore Banking Act, 2024’ was approved in the cabinet meeting last Wednesday.
In the offshore banking system, funds are created in foreign currency from foreign sources, and these funds are managed and accounted for under separate laws outside of the conventional banking laws. Offshore banking accounts are maintained in a designated foreign currency against the local currency.
Scheduled banks in the country can also do offshore banking. It is stated in the bill raised in this regard that for the conduct of offshore banking activities, there should be approved policies of the concerned Scheduled Bank Council in the light of Bangladesh Bank’s directives. Separate accounts must be maintained for the offshore operations of the Scheduled Bank. Funds can be transferred from domestic banking units to offshore banking units with the special approval of the Bangladesh Bank. The bill also mentions that the accounts of depositors or foreign lenders in the offshore banking system will be exempt from any duty.
Regarding the operation of deposit and loan operations, the bill states that deposits can be accepted from 100% foreign-owned enterprises in Export Processing Zones (EPZs), Economic Zones, and Hi-Tech Parks. In addition, the offshore banking unit can provide short-term loans and advances or investments, debentures and guarantee facilities, bill discounting, bill negotiating, and other foreign trade-related external transaction services to such institutions. The bill also states that offshore banking units can accept deposits and loans from non-resident Bangladeshis, foreign individuals, and institutions.
Incidentally, although there has been no law for so long, the offshore banking system has been in operation in the country since 1985 through a notification issued by the Ministry of Finance. Later in 2019, the central bank issued an offshore banking policy.
