BB relaxes lending limit to foreign firms

Bangladesh Bank (BB) has relaxed lending rules for foreign companies that have been operating in the country for at least three years, as part of efforts to ease their access to term loans from the domestic market.

In a circular issued today, the banking watchdog said local banks can now lend up to 60 percent of the project cost to foreign firms in local currency, while the companies must provide the remaining 40 percent as equity.

Previously, the debt-equity ratio for such firms was capped at 50:50.

The BB said foreign companies engaged in manufacturing or service activities for three years or longer are allowed to borrow from local banks and financial institutions for capacity expansion or BMRE (balancing, modernisation, rehabilitation, and expansion).

These borrowings remain subject to applicable credit norms and prudential parameters, including the single borrower exposure limit and the revised debt-equity ratio.