The Bangladesh Bank has removed the cap on interest rates for non-resident foreign currency deposit accounts, also known as NFCD accounts.
The central bank’s foreign exchange policy department on Sunday issued a circular in this regard, ordering banks to collect new deposits from non-resident Bangladeshis and people of Bangladeshi origin with dual nationality.
“Previously, banks had to pay 3-4% interest, depending on euro deposit rates, on deposits in NFCD accounts. With the new provision, banks now have the freedom to determine deposit rates themselves. deposit,” a central bank said. official, wishing to remain anonymous, told The Business Standard.
This relaxation will also apply to NFCD accounts held by foreign nationals and foreign registered and/or incorporated companies, banks, other financial institutions, including institutional investors and wholly owned industry units. foreigners (type A) in export processing zones or economic zones. in Bangladesh, according to the circular.
NFCD accounts are like time deposits maturing after one month, three months, six months and one year. Accounts may be held in US Dollars, British Pounds, Euros or Japanese Yen; initially with a minimum amount of $1,000 or £500 or equivalent. Accounts can be opened against remittances in other convertible currencies after conversion into US dollars, pounds sterling, euros or Japanese yen.
Foreign nationals and companies/enterprises registered and/or incorporated abroad, banks and other financial institutions, including institutional investors and 100% foreign industrial units (Type A) in export processing zones or economic zones in Bangladesh, are also allowed to open and maintain NFCD accounts with banks. The minimum deposit amount in such cases must be $25,000 or the equivalent in British Pounds, Euros or Japanese Yen.
Banks can use 50% of NFCD account balances for discounting export invoices of type A and type B units from export processing zones or economic zones, and payment of back-to-back LC open at sight . The amounts thus used should be immediately replenished upon realization of the respective export earnings.