Bangladesh Bank has introduced a new banking facility for expatriate Bangladeshis. The facility is named, the Non-Resident Convertible Taka Account (NRCTA).
The initiative aims to create greater opportunities for the effective utilisation of remittance income, strengthen the link between remittances and investment, and expand offshore banking activities through the offshore banking units of scheduled banks.
Bangladesh Bank issued a circular on Tuesday outlining the new arrangement.
Under the scheme, expatriate Bangladeshis will be able to open non-resident convertible taka accounts through offshore banking units against foreign currency remitted through formal banking channels. The account may take the form of a savings account, current account, or fixed deposit account.
According to relevant stakeholders, the new account facility will deepen the financial intermediation of remittance income.
Account holders may deposit funds transferred from other NRCTA accounts, interest or profits, income earned from approved investments, refunds from share subscriptions, and other authorised foreign-exchange-related receipts into these accounts.
The circular states that both the principal amount deposited in the account and any accrued interest or profit will be fully repatriable.
Account holders may also use the funds domestically for various purposes, including local payments, transfers to other non-resident taka accounts, conversion into foreign currency, and foreign direct or portfolio investment in Bangladesh.
In addition, offshore banking units may use funds held in these accounts to provide loans in Bangladeshi taka to type-A industrial enterprises located in specialised economic zones.
However, borrowers may use such loans only for approved operating expenses, including the payment of salaries, wages, and utility bills. The relevant enterprises must repay the loans from their export earnings.
The circular further states that expatriate Bangladeshis or their nominated persons may obtain loans for personal or business purposes by using the deposits in these accounts as collateral.
They may also use the funds for non-repatriable investments in Bangladesh or for the purchase of residential property for personal use. However, borrowers may not use such loans for investment in the agriculture, plantation, or housing sectors.
According to relevant stakeholders, the new account facility will deepen the financial intermediation of remittance income.
It will also enhance the effectiveness of offshore banking operations and create a platform through which expatriate Bangladeshis can participate more actively in domestic investment.