Regulatory (Bangladesh Bank): The Complete Cross-Border Playbook for Companies
Authored by Tahmidur Remura Wahid (TRW) Law Firm — Bangladesh | Dubai | London
Why this guide matters
Whether you’re a multinational entering Bangladesh, a regional player financing trade through Dhaka, or a growth-stage fintech building rails across South Asia and the Gulf, your operational reality runs through Bangladesh Bank (BB) — the central bank and gatekeeper for banking, foreign exchange, payments, and prudential standards. Getting BB compliance right is the difference between frictionless transactions and frozen funds, between scalable growth and regulatory drag.
This guide distills the BB rulebook into a board-ready, counsel-level manual. It maps the regulatory perimeter, explains permissions and reporting, highlights traps for foreign investors, and benchmarks Bangladesh against Dubai (CBUAE, DFSA) and London (BoE/PRA, FCA) so your group policies line up across hubs.
Big picture: how the Bangladesh Bank ecosystem fits together
Core legal instruments & institutions
Bangladesh Bank Order, 1972 — BB’s foundation statute.
Bank Company Act, 1991 (BCA) — licensing, governance, prudential rules for banks.
Foreign Exchange Regulation Act, 1947 (FERA) (amended) — the exchange control perimeter implemented via the Guidelines for Foreign Exchange Transactions (GFET) and ongoing FE circulars. (BB)
Payment & Settlement System Act, 2024 — the new, unified backbone for payments oversight (banks and non-banks). (Bangladesh Laws, BSS)
Banking licenses, prudential norms, and governance — BRPD.
FX inflows/outflows, trade finance, profit repatriation — FEPD/FEID implemented through GFET. (BB)
Payment rails (PSP, PSO, MFS, RTGS, BEFTN, card switches) and consumer protection in payments — PSD under the Payment & Settlement System Act, 2024. (BB)
AML/CFT, KYC/CDD, sanctions — BFIU (centralized AML policy and sectoral guidance). (bfiu.org.bd)
Conventional/Islamic banks require BCA licenses, meet capital and Basel standards, and follow BRPD governance rules (board composition, independent directors, committees).
Digital banks are now formalized. Digital Bank Guidelines (v2, Aug 2025) set minimum paid-up capital (Tk 300 crore), head-office-only model, IPO within 5 years, and full compliance with the Payment & Settlement System Act, 2024. If your group is applying for a digital license or partnering with one, expect bank-level governance and risk management from day one. (BB)
Prudential standards to note
Basel III / Risk-Based Capital Adequacy: BB’s RBCA framework aligns to Basel III; it is the reference for minimum capital, buffers, Pillar 2 review, and disclosures. (BB)
Single borrower & large exposure: Updated BRPD circulars cap exposure to single obligors and connected parties, including off-balance sheet items — critical when structuring parent guarantees or intra-group facilities. (BB)
Interest-rate regime (SMART): Since July 2023, lending has been referenced to SMART — the six-month moving average of treasury-bill yields — replacing the earlier lending cap. This materially alters pricing on Taka loans and trade facilities. (IMF, BB)
B. Non-bank financial institutions (NBFIs)
NBFIs are supervised separately (DFIM) but often mirror bank-like prudential norms. If your financing strategy relies on NBFIs for leases or project finance, diligence their BB compliance: capital, liquidity, concentration risk, and governance.
C. Payments: PSP, PSO, MFS & rails
PSP and PSO licenses are issued by PSD. PSPs interact with customers (wallets, front-end acceptance) and settle via banks; PSOs operate settlement systems (switches, gateways, aggregators) with a bank as principal participant. (BB)
The Payment & Settlement System Act, 2024 consolidates BB’s power to authorise, supervise and enforce across electronic payments, with explicit penalty powers and consumer-protection hooks — an inflection point for all fintechs. (Bangladesh Laws, The Financial Express)
Rails you’ll touch: BD-RTGS (high-value real-time gross settlement), BEFTN (batch ACH), NPSB (card switch), card networks, and MFS rails — all within BB’s perimeter. (BB)
Mobile Financial Services (MFS) operate under dedicated regulations; PSPs/MFSPs may be permitted to repatriate wage remittances under FEPD permissions (deadlines for applications have been relaxed). (BB)
Foreign exchange regime (GFET): how money legally moves
The GFET is the practical compendium of FX rules for Authorized Dealer (AD) banks and their clients. If you are moving capital, paying import invoices, receiving export proceeds, or repatriating profits, your AD’s documentation and reporting to BB follow GFET chapters, appendices, and forms. (BB)
A. Current account flows: trade & services
Imports: ADs submit import information, verify supplier credit reports, and collect importer undertakings on cashflows — expect more documentary discipline on UPAS, usance LCs, and deferred terms post-2024 circulars. (BB)
Exports: Export proceeds must be repatriated within stipulated time windows (for physical exports, historically within four months absent specific BB approval). ADs monitor overdue bills and report through GFET formats. (Bangladesh Trade Portal)
Merchanting trade (third-country trade): BB now allows merchanting without EXP/IMP forms, using Form-C for the export leg and Form-TM for the import leg, with strict KYC and FATF-country counterparties. If you’re a global trader using Bangladesh balance sheets, align treasury controls accordingly. (BB)
Back-to-back LCs: For exporters, value caps link to master LC FOB value and value-addition rules; recent 2025 guidance tightens certain practices (e.g., restrictions for barter/STA LCs, sight eligibility when funded from EDF/NFCD). (BB)
B. Capital account flows: FDI, equity transfers, offshore borrowing
FDI inflows and profit repatriation Dividends to non-resident shareholders can be remitted through ADs without prior BB approval (subject to taxes and documentary checks). Share transfers involving non-residents must be notified to FEID within prescribed timelines. (BB)
Liquidation and capital repatriation FEID publishes document checklists for repatriating residual funds on winding-up; engage early with ADs to align tax clearances and auditor certificates. (BB)
Borrowing abroad & offshore accounts Borrowing by resident industrial enterprises (including supplier’s credit, financial loans and debt securities) requires prior authorisation, historically through investment authorities with BB oversight; recent FEID circular practice governs JV/consortium accounts and allows specific overseas accounts under conditions. Plan lead times. (BB)
Foreign-owned companies’ local borrowing Foreign-owned/controlled enterprises may borrow from Offshore Banking Units (OBUs) and locally, but often need FEID approvals for foreign currency borrowings or specific structures. Build compliance into term-sheet conditions precedent. (BB)
C. Central bank funding windows you might use
Export Development Fund (EDF): USD on-lending via ADs to fund raw material imports against export orders. BB sets AD rate spreads and repayment tenor; interest parameters and procedures are periodically reset. (BB)
Green Transformation Fund (GTF): USD/EUR refinancing for green tech, initially for textile/leather and now broader sustainable finance. Useful for capex decarbonisation roadmaps. (BB)
Governance, AML/CFT & Shariah oversight
AML/CFT: BFIU mandates risk-based AML programs, KYC/CDD, sanctions screening, PEP handling, correspondent-banking controls, wire-transfer information, and independent testing. Align global standards with local rule nuances in onboarding and payments. (bfiu.org.bd)
Shariah governance (for Islamic banks/windows): BB’s guidance requires formal Shariah governance frameworks, segregation of funds, and board-level oversight — relevant if your group operates Islamic finance products or invests in local Islamic banks. (BB)
Agent banking: Prudential and operational guidelines govern the use of third-party agents (KYC, cash handling, transaction limits, system controls). If your distribution strategy relies on agent networks, compliance is bank-level. (BB)
Payments after the 2024 Act: what changes for PSPs, PSOs & merchants
The Payment & Settlement System Act, 2024 gives BB a clear legislative spine to authorise, regulate and penalise across the payments stack, spanning banks, non-banks, and new categories (e.g., prepaid instruments). Expect:
Consolidated oversight across e-money, wallets, gateways/aggregators, and clearing systems.
Harmonised consumer-protection and dispute-resolution hooks.
Sharper enforcement — license conditions, audits, and monetary penalties.
Alignment with digital bank regime — PSPs touching store-of-value or settlement may face bank-like controls by function.
If you already operate in Dubai (CBUAE SVF regime) or London (FCA PSRs 2017), you’ll recognise the convergence: licensing, safeguarding, capital/float rules, operational resilience, and strong reporting. Map your group policies accordingly to avoid “policy arbitrage” between hubs. (Central Bank Rulebook, centralbank.ae, FCA, Legislation.gov.uk)
Pricing, liquidity and treasury: the SMART era & cash management
Loan pricing: SMART (six-month T-bill moving average) plus BB-prescribed margins governs Taka lending. Treasury should track the reference series and margin caps for accurate term-sheet pricing and covenant projections. (BB)
FX dealing with BB: Interbank is market-quoted; BB spot purchases/sales with ADs operate in USD with minimum lot sizes and reporting via GFET schedules. If you centralise FX at group level, ensure local ADs’ BB lines and reporting are synced. (BB)
Liquidity lines: For exporters, EDF and for capex decarbonisation, GTF; both carry documentary discipline and tenor constraints — align with delivery schedules and LC terms early. (BB)
Structuring transactions: what foreign corporates must get right
1) Market entry & bank accounts
Entity choice: Subsidiary, branch, liaison/project office, JV/consortium (JVCA). Branch/liaison offices require BIDA permission and reporting to FEID; JVCA rules include AD nomination and (in specific cases) permissioned overseas bank accounts. (BB)
Banking stack: Choose an AD bank with proven trade ops, RTGS/BEFTN reliability, and cross-border coverage. For groups with Dubai/London hubs, pick ADs strong on correspondent banking to avoid wire-screening frictions.
2) Funding your Bangladesh operations
Equity: Inward remittance through AD; share issuance/transfer involving non-residents triggers FEID notifications within set windows — bake this into your corporate secretary timelines. (BB)
Debt: Offshore borrowings and OBUs require prior approvals; local facilities priced off SMART with exposure-limit checks. If using parent guarantees, run early tests against single borrower exposure and connected lending rules. (BB)
3) Trade finance architecture
LCs: Master LCs, back-to-back LCs for input imports, UPAS usance structures, and pre/post-shipment finance. Align value-addition caps and tenor with exporter production cycles — and track evolving 2025 FEPD stipulations. (BB)
Merchanting: New merchanting regime (Form-C/TM instead of EXP/IMP) allows third-country trades through the same AD with KYC and FATF-country counterparties. This enables asset-light trading on Bangladesh books, but requires tight treasury control. (BB)
4) Payments and collections
Collections: Route high-value settlements via BD-RTGS; use BEFTN for payroll/AP; deploy PSPs/PSOs for e-commerce and agent acceptance where licensed. Confirm dispute-handling SLAs and safeguarding under the 2024 Act. (BB)
Remittances: If your model entails wage remittance facilitation, note that licensed MFSPs/PSPs may obtain permission to offer repatriation services subject to FEPD rules. (BB)
5) Profit repatriation & exits
Dividends: Remittable through ADs without prior BB approval (subject to taxes and documentation). Build a “repatriation pack” template with your AD to avoid month-end scramble. (BB)
Capital: Liquidation proceeds repatriation follows FEID’s checklist; start early with tax clearances, audited statements, and regulatory notices. (BB)
Dubai & London cross-checks: align your group policies
Dubai (CBUAE, DIFC/DFSA)
If your group runs wallets or issuer float in the UAE, you already comply with CBUAE Stored Value Facilities (SVF) Regulation — licensing, safeguarding, operational resilience, audits, and enforcement. Bangladesh’s 2024 Act moves in the same direction. Unify safeguarding, outage reporting, and incident-response playbooks. (centralbank.ae)
For DIFC businesses, DFSA licensing categories (e.g., Cat 1–5) determine prudential and conduct requirements; ensure your BB-facing entity won’t trip into regulated activity without proper permissions in either jurisdiction. (Thomson Reuters, Dfsa)
London (BoE/PRA, FCA)
UK PRA authorises banks; FCA regulates conduct and payment services (PSRs 2017/EMRs 2011). If you maintain UK PIs/EMIs, port over your safeguarding, complaints, and major-incident processes to Bangladesh operations where functionally similar under the 2024 Act. (Bank of England, FCA)
The UK is tightening expectations on international bank branches vs subsidiaries to protect depositors — a reminder to assess structural choices for Dhaka vis-à-vis your London presence. (Reuters)
Operational playbook: controls that de-risk Bangladesh Bank interactions
Governance & documentation
Establish a BB Compliance Matrix mapping every product and flow to the governing BB department, circular, and GFET chapter/form. Keep it evergreen with quarterly legal reviews.
Maintain bank-facing binders: Incorporation, board resolutions, tax and audit packs, KYC, controller registers, FDI encashment certificates, share-valuation files for transfers, and dividend resolutions.
Banking & treasury
AD bank SLAs: Agree on turnaround times for LC issuance/amendment, documentary collection discrepancies, EDF/GTF applications, and repatriation processing.
SMART watch: Price models and covenants should parameterize SMART series movements; rehearse “rate shock” scenarios with lenders. (BB)
Merchanting controls: Ensure same-AD routing, counterparties from FATF-compliant countries, and tight hedging windows. (BB)
FX & trade
GFET form discipline: Train teams on EXP/IMP (where applicable), Form-C and Form-TM for merchanting, and Appendix forms for special cases. (BB)
License coverage check: If you touch funds or store value, confirm you sit on the right authorization (Bank vs PSP vs PSO vs MFS). New products (prepaid, P2P) may now sit squarely under the 2024 Act. (Bangladesh Laws)
Rails & resilience: Align incident response across BD-RTGS/BEFTN/NPSB and non-bank platforms; implement transaction-level auditability and reconciliation.
AML/CFT & sanctions
Model risk: Local rules require risk-based programs. Harmonize with BFIU’s guidance, ensure PEP/ECDD and wire-message data compliance, and document sanctions decisions. (bfiu.org.bd)
Red flags & common pitfalls for foreign companies
Assuming “any bank will do.” BB interacts through AD banks; your AD’s FX desk quality, documentary scrutiny and BB relationship will decide your operational speed.
Mismatched group policies. UK/UAE policies often exceed local minima; good. But ensure local execution still meets specific BB form/reporting requirements (e.g., Form-C/TM in merchanting). (BB)
LC structures without export production reality. Back-to-back LC tenor/value-addition and master LC amendment tracking are live compliance risks. (BB)
Late FEID notices on share transfers. Miss the window and you’ll add weeks to repatriation. (BB)
Underestimating payments authorization scope. With the 2024 Act, gray zones are shrinking — clarify whether you are a PSP, PSO, MFS, bank partner, or technology vendor before launch. (Bangladesh Laws)
Ignoring SMART drift. Margins can change, and so do covenants. Treasury must forecast reference-rate paths. (BB)
Sector scenarios: how the rules play out
Export-oriented manufacturer
Working capital via back-to-back LCs and EDF; watch tenor and interest parameters; agree purchase-to-cash flow with production schedules. (BB)
GTF for green capex (e.g., effluent treatment, energy efficiency). (BB)
Dividend planning through standard AD channels; pre-agree documentation. (BB)
Global e-commerce/fintech aggregator
Confirm PSP/PSO footprint; ensure safeguarding and reconciliation meet PSD expectations.
Map UK PSRs and UAE SVF obligations to Bangladesh 2024 Act duties; implement unified incident reporting and customer redress. (FCA, centralbank.ae)
Trading house / commodity merchant
Merchanting on Bangladesh books is doable under new rules — but lock in one AD, Form-C/TM processes, and FATF-compliant counterparties. Build conservative FX hedging policy. (BB)
One policy, three jurisdictions: We draft a Group Financial Services Compliance Framework harmonised across the Payment & Settlement System Act, 2024, CBUAE SVF, and UK PSRs/EMRs, with local annexes per entity. (Bangladesh Laws, centralbank.ae, FCA)
Bankability by design: Our term sheets and security structures pre-bake BB exposure limits, GFET form routines, and repatriation pathways, so you don’t renegotiate at closing. (BB)
Fintech launchpad: For PSP/PSO/MFS or digital bank bids, we align governance, capital, safeguarding, IT/security, and consumer redress to BB expectations from day 1. (BB)
Q1: Can we remit dividends freely? Yes, through AD banks — no prior BB approval if taxes and documentation are in order. Build a standing “dividend pack.” (BB)
Q2: Can our Bangladesh JV hold an overseas bank account? Possible by permission for JV/consortium entities under FEID circular practice — case-specific conditions apply. (BB)
Q3: We’re a UK-regulated EMI; can we passport into Bangladesh? No passporting. You need the right local authorization (PSP/PSO/MFS/bank partnership) under the 2024 Act, plus GFET alignment for any FX legs. (Bangladesh Laws)
Q4: How will loan pricing move? Track SMART monthly. Treasury models should test +/- 200–300 bps and margin headroom. (BB)
Q5: How strict is AML? Risk-based and documentation-heavy. Align global standards to BFIU specifics (CDD, PEPs, wire-message data, independent testing). (bfiu.org.bd)
Action plan: 30-60-90 for new or scaling entrants
First 30 days
Choose an AD bank experienced in cross-border, EDF/GTF, and merchanting.
Build the BB Compliance Matrix for your products and flows.
Confirm licensing posture (Bank vs PSP vs PSO vs MFS) under the 2024 Act. (Bangladesh Laws)
60 days
Lock LC structures (back-to-back/UPAS) with documentary and value-addition guardrails.
Finalize dividend/repatriation packs with AD; test a small trial run. (BB)
Stand up AML program and sanctions stack per BFIU. (bfiu.org.bd)
90 days
Treasury integrates SMART monitoring and covenants into dashboards. (BB)
Payments ops complete BD-RTGS/BEFTN onboarding and incident playbooks. (BB)
If relevant, start the digital bank or PSP/PSO licensing dossier. (BB)
Summary table — Bangladesh Bank regulatory essentials (with Dubai & London context)
Topic
Bangladesh Bank Rule / Instrument
What it means
Foreign-company action
Cross-hub alignment (Dubai/London)
FX controls
GFET (ongoing), FE circulars (FEPD/FEID)
AD banks control documentation & reporting for imports/exports, FDI, services
Map flows to GFET chapters and forms; train ops on EXP/IMP or Form-C/TM for merchanting
UK: PSRs apply to payments (not FX controls); UAE: SVF governs wallets; harmonize KYC/docs. (BB)
Payments perimeter
Payment & Settlement System Act, 2024; PSD regime
BB authorises PSP/PSO/MFS, sets consumer-protection and penalties
End-to-end regulatory mapping: We convert your product catalogue and flows into a BB-compliant operating model, down to forms, annexures, and schedules.
Licensing & approvals: Bank, digital bank, PSP/PSO, MFS onboarding; FEID notifications; EDF/GTF windows.
Bankability audits: We stress-test terms against BB exposure caps, SMART variability, and GFET constraints.
Cross-border harmonisation: We align Bangladesh ⇄ Dubai ⇄ London policies so group compliance is unified, auditable, and exam-ready.
If you’d like, we can translate this into a regulatory implementation checklist tailored to your corporate structure, products, and Dubai/London interlocks — and draft the board papers, policies, and AD bank engagement packs to make it real.
Restructuring & Insolvency in Bangladesh — A Comprehensive TRW Guide for Foreign and Domestic Companies
Prepared by Tahmidur Remura Wahid (TRW) Law Firm — Dhaka • Dubai • London
Why this guide & who it’s for
Bangladesh is a vibrant, fast-growing market where capital costs, FX controls, and banking practices make distress management a practical discipline for boards, lenders, sponsors, and suppliers. If you are:
a foreign investor or lender with a Bangladeshi opco;
a Bangladesh parent with financing raised in Dubai or London; or
a local company navigating liquidity stress, shareholder disputes, or market shocks,
this playbook explains the legal pathways, creditor dynamics, board duties, timelines, and cross-border coordination you’ll actually face — and how TRW runs these processes end-to-end across our Dhaka, Dubai, and London platforms.
Executive summary
■ Bangladesh’s core corporate distress tools live in the Companies Act, 1994 (winding-up by court, voluntary winding-up, supervision by court; plus schemes/compromises under sections 228–229 for restructurings and mergers/demergers), the Bankruptcy Act, 1997 (bankruptcy framework), and the Artha Rin Adalat (Money Loan Court) Act, 2003 (specialized loan recovery track for banks and NBFIs). (ICSI, International Bar Association, Department of Printing and Publications, Bangladesh Laws)
■ Secured lenders in practice often prefer Artha Rin recovery and enforcement while pursuing parallel settlement/rescheduling under Bangladesh Bank policies (including historic “one-time exit” and rescheduling regimes). These supervisory levers shape real-world negotiating leverage and timing. (Bangladesh Laws, BB, Daily Observer)
■ Court-supervised restructurings via scheme of arrangement (s.228–229) can be powerful where creditor classes are organized and disclosure, valuation, and sanction strategy are tightly managed. This is also the bridge for mergers/demergers to right-size balance sheets. (International Bar Association, LafargeHolcim Bangladesh PLC.)
■ Winding-up grounds include inability to pay debts and “just & equitable” situations, with “bona fide dispute” defenses common. Expect creditor class fights, valuation contests, and liquidator oversight. (Mahbub Law, Tahmid Ur Rahman)
■ Bangladesh has not adopted the UNCITRAL Model Law on Cross-Border Insolvency. Cross-border recognition therefore relies on comity-based strategies and deal engineering via security, governing law, intercreditor arrangements, and parallel filings (e.g., Dubai, London). (Academia)
■ In Dubai/UAE, Federal Decree-Law No. 51 of 2023 (in force 1 May 2024) modernizes restructuring/bankruptcy and — crucially — the UAE is operationalizing a dedicated Bankruptcy Court (2025), tightening timelines and tools for preventive settlements and court-led restructuring. (King & Spalding, UAE Legislation, Charles Russell Speechlys)
■ In London/England & Wales, the UK toolkit features the Part A1 moratorium (debtor-in-possession breathing space), Part 26 schemes, and the Part 26A restructuring plan (with cross-class cram-down). These are globally credible platforms to restructure English-law debt of Bangladeshi groups. (Legislation.gov.uk)
TRW’s advantage: We run Bangladesh processes in Dhaka while structuring recognition and parallel solutions through Dubai (UAE) and London (UK) counsel within the same team, solving the real constraints: FX approvals, bank supervisory interactions, security perfection/enforcement, public-sector counterparty risk, and timeline choreography across three legal systems.
Bangladesh legal framework — What actually works
1) Core statutes & forums
■ Companies Act, 1994 — Modes of winding-up (by court, voluntary, supervision) and compromise/arrangement (s.228–229) for restructurings, mergers, and demergers. High Court Division supervises sanction. (ICSI, International Bar Association)
■ Bankruptcy Act, 1997 — Bankruptcy adjudication framework and the role of the court and official receiver/trustees. In practice, corporate distress is more often navigated through Companies Act tools and creditor recoveries under sectoral regimes. (Department of Printing and Publications)
■ Artha Rin Adalat Act, 2003 — Specialized Money Loan Courts for banks/NBFIs to recover loans quickly; these often run in parallel with settlement talks and shape restructuring leverage. (Bangladesh Laws)
■ Bangladesh Bank — Rescheduling/exit policy setting (historic waves in 2019–2024); FX approvals for external debt/equity conversions and cross-border settlements under FEPD circulars. (BB, Daily Observer)
Practical point: Even when a board is focused on a consensual restructuring, secured lenders can and do file Artha Rin suits while you negotiate. Your plan must price and sequence that litigation risk into standstill language and milestone-driven term sheets.
2) Pre-insolvency playbook (8 must-dos)
■ Liquidity map (13-week cash flow), including LCs, customs/VAT choke points, payroll, and critical vendors. ■ Security audit: registration, stamping, ranking, negative pledge, share pledge, land/machinery hypothecation — fix perfection gaps early. ■ Regulatory early touch with Bangladesh Bank (if external debt/FX involved) to roadmap approvals. (BB) ■ Lender alignment: intercreditor realities in Bangladesh often hinge on lead bank dynamics — run a steering committee and hold-out strategy. ■ Board governance: minuted solvency assessments; avoid new preferences/under-value transfers; manage related-party exposure. ■ Tax & withholding: NBR positions on debt-equity swap, haircuts, and interest deductibility affect feasibility. ■ Communications & disclosure: prepare scheme/rescheduling-grade information (business plan, valuation, classes). ■ Artha Rin risk plan: contingency pleadings and settlement ladders if filings land mid-process.
Schemes under s.228–229 can restructure debt and equity (haircuts, maturities, security upgrades, new money, governance), or amalgamate/demerge businesses to salvage value. The High Court Division convenes meetings, oversees class voting, and sanctions if the scheme is fair and lawful. Listed and regulated entities add consents (BSEC, Bangladesh Bank). (International Bar Association, BB)
Winning tactics:
■ Class architecture that survives challenge (secured vs unsecured; trade; landlord; tax). ■ Robust valuation with sensitivity to FX and market-comparable constraints. ■ Lock-up agreements with key creditors to anchor votes. ■ Regulatory choreography (BB/BSEC) built into long-stop dates and CPs.
Use cases TRW runs:
■ Bank club deal (term + working capital) into a three-tier structure: super-senior new money, reinstated secured, and compromised unsecured with equity warrants. ■ Demerger to isolate loss-making verticals and secure vendor support for the profitable core. (LafargeHolcim Bangladesh PLC.)
4) Winding-up & liquidation: when rescue is over
Grounds: inability to pay debts (including failure to satisfy statutory demand and unsatisfied execution), persistent business suspension, and just & equitable circumstances. Bona fide dispute about the debt can defeat a winding-up petition at threshold. Expect liquidator appointment, asset realization, and distributions per statutory priority. (Mahbub Law, Tahmid Ur Rahman)
What boards must manage:
■ Trading in twilight — stop loss-making trades without a path to rescue; avoid new preferences. ■ Books & custody — preserve accounting, tax, and HR records; cooperate with the liquidator. ■ Stakeholder comms — scripted updates to reduce rumor-driven supplier runs.
5) Artha Rin Adalat (Money Loan Court) — why it matters even in a restructure
Banks/NBFIs can file a specialized recovery suit, attach collateral, and move execution faster than ordinary civil courts. That leverage drives early settlements or parallel litigation during your scheme talks. Expect certificate cases, auction processes, and interlocutory skirmishes. (Bangladesh Laws)
TRW tip: Negotiate interim forbearance tied to milestones (data-room access, IBR delivery, independent monitor) to pause escalation while your scheme architecture hardens.
6) Bangladesh Bank overlays you cannot ignore
Rescheduling/one-time exit policies have periodically eased down-payments and extended tenors to clear NPLs; macro shifts in 2024–2025 tightened expectations again. Any plan with external debt or debt-equity conversions will also need FEPD clearance and filings. Build regulator milestones directly into term sheets and timetables. (Daily Observer, BB)
7) Priorities waterfall (high-level)
While the exact order depends on specific statutes and security, the practical hierarchy typically sees costs of the insolvency, secured claims up to collateral value, preferential claims (e.g., certain wages/statutory dues), then unsecured, then shareholders. Your scheme or settlement should model recoveries by class and demonstrate no-worse-off outcomes relative to liquidation.
8) Governance & director duties in distress
Bangladesh law polices fraudulent trading/misfeasance, and courts will examine preferences and under-value transfers. Best practice (and TRW’s advice to directors):
■ Minute solvency assessments and advice taken (legal/financial). ■ Avoid selective payments without documented business-critical rationale. ■ Disclose related-party exposure early; recuse where needed. ■ Preserve records; plan employee communications to reduce exit risk.
Cross-border coordination — Dhaka × Dubai × London
The problem set
When groups have English-law debt (LMA term loans, notes) and/or UAE assets/finance, a purely Dhaka-centric solution often cannot bind all stakeholders. Bangladesh also has not adopted the UNCITRAL Model Law; recognition of foreign proceedings is case-by-case. Your plan must engineer recognition through contracting (governing law/jurisdiction), security location, parallel filings, and consensual lock-ups. (Academia)
UAE (Dubai) layer — fast-evolving tools
The UAE’s new Financial Restructuring & Bankruptcy Law (Federal Decree-Law 51/2023), effective 1 May 2024, repeals the 2016 regime and introduces a modern toolbox (preventive settlements, restructuring, fresh financing permissions, tighter management liability). In 2025, the UAE began operationalizing a dedicated Bankruptcy Court, signaling faster, specialized handling. Free zones ADGM/DIFC maintain their own insolvency systems. (King & Spalding, UAE Legislation, Charles Russell Speechlys)
Why TRW uses Dubai: ■ Many Bangladesh groups have UAE trade flows (suppliers, receivables, owner residency). ■ A compliant UAE restructuring can anchor moratoria and provide a court-blessed plan to pressure hold-outs, while Bangladesh scheme steps run in parallel.
London (England & Wales) layer — global gold standard
The UK Part A1 moratorium offers short, court-filed breathing space supervised by a monitor, while Part 26 schemes and the Part 26A restructuring plan (with cross-class cram-down) give court-tested, enforcement-friendly outcomes for English-law debt. When your senior documents are English-law, a UK plan/scheme can bind complex creditor stacks and re-paper intercreditors. (Legislation.gov.uk)
How we combine them: ■ Dhaka: class design + data-room + scheme track (or creditor settlement/Artha Rin standstill). ■ Dubai: preventive settlement or court restructuring to corral GCC creditors. ■ London: Part 26A plan to bind English-law lenders; then shuttle amendments downstream.
What foreign companies must be careful about (the hard truths)
1) Security reality vs paper perfection ■ Check registration/stamping status for all Bangladeshi security — unperfected security loses priority in liquidation and weakens negotiation. ■ Share pledges often require bespoke enforcement steps; plan the mechanics and timing early.
2) Parallel enforcement risk ■ Banks may file Artha Rin while you’re negotiating. Build standstill and milestones into term sheets; include an escalation ladder (forbearance → scheme vote → fallback auction timetable). (Bangladesh Laws)
3) FX controls & approvals ■ External debt restructures, equity conversions, and cross-border settlements may need Bangladesh Bank pre-clearance. Model approval lead times into your CPs. (BB)
4) Voting/class fights ■ Supplier concentrations and public-sector counterparties make for unusual class dynamics; document objectively why classes are drawn and why outcomes are fair.
5) Tax ■ Haircuts, debt-equity swaps, and withholding must be tax-modeled; missteps erode cash runway and can derail approvals.
6) Public messaging & workforce stability ■ Bangladeshi markets are relationship-driven; a communications miscue can trigger supplier freezes and key staff exits. Script coordinated updates across Dhaka, Dubai, and London stakeholders.
7) Cross-border recognition ■ Without the Model Law in Bangladesh, you can’t assume foreign orders will bite domestically. Engineer recognition via contract terms, security location, and parallel filings. (Academia)
8) Board process risk ■ Courts look for good-faith process: regular solvency monitoring, considered advice, and avoidance of preferences/under-value transfers.
Typical TRW restructuring pathways (and when to use them)
A) Out-of-court bank rescheduling + vendor standstill
When: Liquidity shock is temporary; business is fundamentally viable; lenders are cooperative. How: Steering committee + rescheduling (Bangladesh Bank framework) + vendor settlement ladder + performance milestones. (BB) Watch-outs: Parallel Artha Rin threats; governance over related-party leakages.
B) Scheme of arrangement (s.228–229) with demerger
When: You need to re-tier the capital stack and/or split businesses (profitable vs legacy). How: Court-convened classes, valuation, disclosure pack, and sanction; demerger to ring-fence value. (International Bar Association) Watch-outs: Class composition attacks; regulatory consents (BSEC/BB) on timeline. (BB)
C) Bangladesh scheme + UK Part 26A plan
When: English-law senior debt with hold-outs. How: UK plan to cram down cross-class; Dhaka scheme to align local creditors and deliver regulatory clearances. (Legislation.gov.uk) Watch-outs: Valuation fairness; cross-border disclosure consistency.
When: Major GCC creditors/trade flows; sponsor or ops in Dubai. How: UAE process to deliver court protection/new money; Dhaka rescheduling or scheme to extend relief locally. (King & Spalding) Watch-outs: Free-zone vs on-shore regimes; aligning milestones across forums.
E) Orderly winding-up with asset sales
When: Rescue isn’t viable; maximize net returns and stakeholder dignity. How: Liquidator appointment; data-room for asset auctions; employee and tax settlements staged. Watch-outs: Record preservation; priority disputes; auction value leakage.
Documentation you’ll need (and what “good” looks like)
Scheme/plan pack: valuation report, business plan with turnaround levers, class analysis, comparator (liquidation) outcomes, fairness memo; draft explanatory statement and notices.
Regulatory pack: Bangladesh Bank filings (if FX/external debt), BSEC/NBR touchpoints; board resolutions and delegated authority.
Timelines (indicative)
Out-of-court rescheduling: 6–12 weeks to heads; 8–16 weeks to full docs and CPs. Dhaka scheme (convening → sanction): 3–6 months depending on classes, objections, and regulatory consents. (International Bar Association) UK plan (convening → sanction): ~8–12 weeks for well-prepared cases (can be faster in urgent matters). (GOV.UK) UAE restructuring: still bedding in under the 2024 law; plan 3–6 months depending on court and creditor complexity. (King & Spalding)
Special sectors — nuances that change the game
Banks & NBFIs Mergers/amalgamations require Bangladesh Bank comfort before High Court sanction; prudential overlays control pace and structure. (BB)
Telco, energy, infra Public-sector counterparties and regulator consents (BTRC, power off-takers) can dominate feasibility. Build contract cure strategies into plans.
Exporters & importers LCs, customs, and dollar availability can trump everything. Cashflow triage must prioritize trade continuity.
FAQs we hear in Bangladesh restructurings
Q1. Can we stop a bank from filing Artha Rin during talks? You can negotiate forbearance tied to milestones; there’s no automatic bar unless you’re under a court moratorium/order. (Bangladesh Laws)
Q2. Is a Bangladesh scheme enough if most debt is English-law? Often no. You may need a UK scheme/plan to bind those lenders, then mirror outcomes locally. (Legislation.gov.uk)
Q3. How do UAE tools help a Bangladesh group? A UAE process can protect GCC assets/creditors, deliver new money, and create court-anchored leverage while Dhaka steps proceed. (King & Spalding)
Q4. What if there’s a genuine dispute about a creditor’s claim? A bona fide dispute can defeat a winding-up petition; document disputes thoroughly and propose escrow/ADR to keep rescue on track. (Tahmid Ur Rahman)
Q5. Can we restructure tax or government dues? Treatment is statute-driven; model scenarios transparently and engage early to avoid later sanction risks.
A Dhaka–Dubai–London case blueprint (illustrative)
Fact pattern:
Bangladesh opco with BDT and USD facilities (syndicated term + LC lines), English-law intercreditor, UAE receivables.
Liquidity crunch; Artha Rin threats; offshore parent holdco covenant breach.
TRW plan:
Standstill with banks (milestones for IBR, 13-week cash, data-room).
UK Part 26A plan to cram down English-law senior, convert mezz into PIK notes with warrants. (Legislation.gov.uk)
UAE preventive settlement to protect receivables and authorize DIP-style working capital. (King & Spalding)
FX approvals and post-closing governance (independent director, reporting covenants). (BB)
Outcome:
Stabilized supply chain; time-boxed court protections; harmonized documents; integrated communications to employees, suppliers, and regulators.
How TRW executes (and why it matters)
Integrated teams:Dhaka litigators (winding-up/Artha Rin), corporate (schemes/mergers), banking (security, intercreditor), regulatory (Bangladesh Bank/BSEC), plus Dubai & London restructuring counsel.
Process discipline: weekly war-room cadence; day-by-day CP tracker; valuation workstream governance; model audit; two-step disclosure process to pre-empt class challenges.
Negotiation leverage: credible litigation readiness (Artha Rin and winding-up defenses), plan comparators, and cross-border filings to neutralize hold-outs.
Bangladesh × Dubai × London — toolkits at a glance
Bangladesh ■ Companies Act, 1994 — Schemes (s.228–229); winding-up. (ICSI, International Bar Association) ■ Artha Rin Adalat Act, 2003 — bank/NBFI recovery fast track. (Bangladesh Laws) ■ Bangladesh Bank — rescheduling/FX approvals. (BB)
UAE (Dubai) ■ Federal Decree-Law 51/2023 — new restructuring & bankruptcy (effective 1 May 2024), enhanced tools; Bankruptcy Court operational momentum (2025). (King & Spalding, Charles Russell Speechlys) ■ ADGM/DIFC — separate insolvency regimes.
UK (London) ■ Part A1 moratorium (Insolvency Act 1986). (Legislation.gov.uk) ■ Part 26 scheme & Part 26A restructuring plan (Companies Act 2006) with cross-class cram-down. (Legislation.gov.uk)
Step-by-step: your first 30 days with TRW
Days 1–7: ■ Board workshop (solvency, duties, options). ■ Information ask & data-room build. ■ Stakeholder map (banks, trade, landlords, tax, employees). ■ Moratorium options assessed (UK; UAE) and Artha Rin risk modelled. (Legislation.gov.uk, King & Spalding)
Days 8–14: ■ 13-week cash + stabilization measures (vendor triage). ■ Restructuring term sheet v1; class architecture; valuation TOR. ■ Approach Bangladesh Bank (if FX/external debt). (BB)
Days 22–30: ■ File convening applications; UAE protective steps where relevant. (King & Spalding) ■ Communications: employees, key suppliers, and media holding lines.
Common pitfalls we fix early
■ Unregistered security or expired stamps that gut priority. ■ Loose intercreditor language that invites hold-outs. ■ FX assumptions without regulator dialogue. (BB) ■ Valuation that ignores Bangladesh auction outcomes or UAE/UK court standards. ■ Disclosure gaps that jeopardize sanction. ■ Segment-blind plans that ignore public-sector counterparty risks.
Short checklist (pin this)
■ Board minutes + solvency analysis every 2 weeks. ■ 13-week cash; vendor criticality map. ■ Security audit + perfection fixes. ■ Bangladesh Bank/FX roadmap; CPs tied to approvals. (BB) ■ Class analysis and creditor engagement plan. ■ Litigation plan for Artha Rin filings. (Bangladesh Laws) ■ Valuation & fairness narrative that stands up in Dhaka/London/UAE.
Closing thought
Restructuring is not just law; it’s orchestration. In Bangladesh the decisive advantages are: (1) credible litigation posture (Artha Rin and winding-up defenses), (2) regulatory choreography (Bangladesh Bank/BSEC), and (3) cross-border muscle (Dubai/UK) when lenders or suppliers sit offshore or documents are English-law. TRW is built exactly for this intersection.
This guide is high-level and for general information only; it is not legal advice. Outcomes turn on facts, evolving policies, and court practice. Please consult TRW for tailored advice on your situation.
If you’d like, we can map your capital stack and sketch a Dhaka–Dubai–London path today.
Project Finance in Bangladesh (2025): A Complete, Practitioner-Level Guide for Sponsors, Lenders, and Foreign Investors
By Tahmidur Remura Wahid (TRW) Law Firm — Dhaka • Dubai • London
1) Why Bangladesh, Why Now?
Bangladesh is entering its infrastructure decade. Power generation, transmission and distribution, roads and bridges, metro and BRT corridors, industrial and economic zones, ports and container terminals, water & waste, telecom/data centers, and social infrastructure are all scaling. The policy machinery for public-private partnerships (PPP) has matured; debt capacity is building across local banks, DFIs and ECAs; and sponsors increasingly structure bankable, non-recourse financings with robust security and step-in mechanics. The Bangladesh Public-Private Partnership Act, 2015 (the “PPP Act”) created a coherent institutional gateway and procurement framework, and the PPP Authority (PPPA) continues to publish guidelines (procurement, unsolicited proposals, VGF) that international lenders recognize in diligence.
At the same time, Bangladesh is a foreign-exchange controlled jurisdiction. All cross-border funding, hedging, security, and cash repatriation questions must be structured to pass Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET 2018, as updated), and to align with practical banking norms on the ground.
This guide distills how we at TRW structure bankable project financings in Bangladesh, and how we align with London (LMA-style) and Dubai (DIFC/UAE) market practice so that global credit committees can green-light Bangladesh risk with confidence.
2) Bangladesh’s Project Finance Architecture — The Laws & Institutions That Matter
Core PPP/Project Laws & Institutions
PPP Act 2015: Establishes the legal backbone, PPPA’s mandate, and the project lifecycle (screening → approval → procurement → contract management). The Procurement Guideline for PPP Projects (2018) and Guidelines for Unsolicited Proposals (2018) operationalize process and timelines; VGF rules address viability.
Sector Regulators: For energy and utilities, tariff/standards oversight sits with Bangladesh Energy Regulatory Commission (BERC); power off-take commonly runs through BPDB/DPDC/DESCO with Implementation Agreements (IAs) and PPAs forming the backbone of bankable revenue streams.
FX & Banking: Bangladesh Bank (BB) administers the GFET (2018; updated circulars), governs foreign loans, hedging, guarantees, securities flows, and repatriations (dividends/interest). Recent circulars and portals streamline profit/dividend repatriation, yet approvals, document completeness, and correct banking channels remain critical.
ESG: BB’s Environmental & Social Risk Management (ESRM) Guidelines (2022) require banks/FIs to integrate E\&S risk in credit approval; DFIs overlay IFC-like standards. This shapes E\&S deliverables (ESIA, RAPs, community engagement) and loan covenants.
Security, Perfection & Enforcement
Security Creation: Immovable mortgages (Transfer of Property Act 1882 + Registration Act 1908), movable security and assignments (including new secure-transactions reforms aimed at movables), share pledges, account charges, receivables/insurances assignments, and direct agreements with step-in rights.
Perfection/Registration:
Mortgages and certain instruments require registration with the local Sub-Registrar under the Registration Act 1908 (with specific fees and stamp requirements).
Corporate charges must be filed at the RJSC (Form XVIII for creation, Form XIX for modification, Form XXVIII for satisfaction) within statutory timelines (commonly 21 days).
Foreign Lenders & Enforcement: Foreign lenders typically appoint a Bangladeshi scheduled bank as security agent so enforcement proceeds through the Money Loan Court Act, 2003 (Artha Rin Adalat) for speed and practicality; foreign lenders themselves face constraints (e.g., they cannot hold title to land upon foreclosure; proceeds are realized via sale and repatriated).
Dispute Resolution: Arbitration Wins Over Judgments
Bangladesh is a New York Convention state; foreign arbitral awards are enforceable under the Arbitration Act. In contrast, foreign court judgments require navigating reciprocity and CPC formalities—time-consuming and uncertain. For bankability, international arbitration (e.g., LCIA/SIAC) seated in a neutral venue is standard, with onshore submissions for specific local-law security and land issues.
3) Typical Deal Anatomy — From Term Sheet to First Draw
i) SPV & Capital Stack
Project SPV (Bangladesh-incorporated), ring-fenced, with sponsor equity and quasi-equity/mezz; senior debt from a mix of local banks/NBFIs, DFIs/MDBs (IDCOL/BIFFL plus multilaterals), ECAs, and at times sukuk/green bonds. IDCOL (for renewables/infra) and BIFFL (public sector infra) remain key long-tenor lenders/investors.
Syndication/Club: Bangladesh banks often club into senior facilities; cross-border tranche is aligned on LMA-style documentation for international participants. London teams will benchmark to LMA precedents (terms, CPs, covenants, ICAs), which we adapt to local enforceability and stamping realities.
ii) Key Project Contracts
Revenue Contract: PPA/Concession/Availability-based O\&M; tariff regime must be stable (regulatory clarity, indexation/escalation).
Construction: EPC with performance LDs, tested completion regime, wrap or multi-package with robust interface risk management.
O\&M: SLA with KPIs, termination mechanics, replacements upon step-in.
For large utility projects, a Government Support/Implementation Agreement often addresses currency convertibility, change-in-law, political force majeure, and step-in—central to bankability and credit ratings.
iii) Security Package
Immovables: Registered mortgage over leasehold/freehold, with fixed charge.
Movables & Contracts: Hypothecation/assignment of plant, receivables, insurances, material contracts (including PPA/EPC/O\&M—subject to counterparty consents).
Shares: Pledge of SPV shares with power of attorney and blank transfers.
Accounts: Waterfall and blocked accounts (RA/DSRA/Major Maintenance/Insurance Proceeds/Retentions), with control agreements.
Direct Agreements: Lenders’ cure periods, step-in, novation rights.
iv) Local Perfection & Cross-Border Overlay
RJSC filings (Form XVIII/XIX/XXVIII), Sub-Registrar registrations, and stamping; security agent arrangements to Artha Rin standards; foreign lenders’ interests routed through the security agent to avoid title obstacles at enforcement.
4) Foreign Currency, Repatriation, and Hedging — What Global Credit Committees Ask First
A. Foreign Loan Approvals & Debt-to-Equity
Private-sector foreign loans to Bangladesh SPVs require approvals/clearances under GFET and often BIDA vetting (including debt-to-equity ratios by sector; e.g., power projects often accommodated at higher leverage). BB circulars clarify which guarantees require prior approval and which corporate guarantees may proceed once the external loan is approved.
B. Repatriation of Interest, Fees, Dividends
Dividends and interest can be repatriated through Authorized Dealers upon compliance with GFET Chapter 10 and relevant circulars; BB maintains a portal/guidance for profit & dividend repatriation. Documentation quality, tax clearance, and banking channel discipline are critical to avoid delays.
C. FX Convertibility & Hedging
Facilities in USD with onshore revenue in BDT require FX risk analysis; common mitigants include tariff indexation, convertibility undertakings in Implementation Agreements for strategic PPPs, and hedging (where available). BB’s guidance on FX risk management and prudent treasury controls informs loan covenants and CPs.
5) Dubai & London Context — Aligning Documentation and Enforcement
London (LMA) Perspective
Most global banks and funders benchmark LMA risk allocation: positive/negative covenants; completion tests; MAE; representations; Intercreditor Agreements (waterfalls, voting, enforcement standstill, hedging). For Bangladesh, we tailor LMA mechanics to local perfection (RJSC/Sub-Registrar/stamping) and Artha Rin enforcement architecture.
Dubai Perspective (DIFC/UAE Law & Islamic Finance)
For multi-jurisdictional deals, DIFC can serve as governing law or security-filing venue for certain offshore holding-company structures, taking comfort from DIFC’s new Law of Security (2024) modeled on UNCITRAL principles; UAE’s federal Movables Security Law (2020) modernized perfection and enforcement across movables. Sponsors with GCC banks often add Shariah-compliant tranches (Ijara, Istisna-Ijara, Musharaka) alongside conventional debt.
Bridging the Three Systems
Governing Law & Dispute Resolution: English law for finance documents; Bangladesh law for local security; international arbitration (LCIA/SIAC) for disputes; Bangladesh courts for security enforcement formalities.
Security Agent: Recognized onshore security agent (scheduled bank) for Bangladesh assets; offshore security over upstream shares/receivables can be DIFC/English-law governed.
6) Step-by-Step: What We Ask Clients to Prepare
A. Early Feasibility
Detailed feasibility and bank model with sensitivities (demand, tariff, FX, construction inflation, COD slippage).
Land/title pack (khatian chain, mutation, surveys), grid/water/gas interconnects, and E\&S baseline aligned with BB ESRM and DFI standards.
B. Bid/Concession Essentials (PPP or Regulated)
Bankable PPA/concession terms, concession period, termination payments, change-in-law, political force majeure, indexation, and receipt currency.
Implementation/Government Support where applicable (convertibility assurances, step-in, termination payment mechanics).
C. Finance Process
Term sheet (LMA-aligned), agreed risk matrix; parallel tracks for local and foreign tranches; CP/CS lists; KYC/beneficial ownership; sanctions & AML.
Foreign loan approvals pathway (BIDA+BB), account structure (RA/DSRA/Proceeds), and cash waterfall; tax and withholding analysis synced with fund flows.
D. Security & Perfection
Drafts of mortgage deeds, hypothecation/assignment, share pledge, account charge; registrar checklists (RJSC Form XVIII/XIX/XXVIII), stamping schedules; local security agent engagement for Artha Rin pathways.
E. Completion & Operations
COD tests (mechanical/electrical reliability), ramp-up covenants, DSCR/LLCR covenants, O\&M KPIs, consent mechanics for variations and refinancing.
7) Risk Allocation: What Foreign Sponsors & Lenders Must Be Careful About
1) FX, Convertibility, and Payment Timing Ensure the Implementation Agreement or off-take framework mitigates convertibility/transfer delays and sets a clear payment currency regime. Build DSRA buffers and reserve policies for FX cycles; confirm GFET compliance for interest/dividend remits.
2) Land & Permits Risk Title fragmentation and survey mismatches are common. Lock land earlier than peers, run double diligence (title + ground truth), and confirm Sub-Registrar capacity for timely registration of mortgages and long leases.
3) Security Enforcement Practicalities Assume local enforcement via an onshore scheduled bank security agent; foreign lenders should not expect to take title to land—sales are conducted locally and proceeds remitted. Draft remedies and step-in around Artha Rin timelines.
4) Force Majeure, Change-in-Law, and Tariff BERC frameworks and line-ministry policy updates matter. Hard-wiring change-in-law compensation, indexation, and escrows for arrears improves recoverability profiles.
5) ESG & Community Interface Bangladesh Bank’s ESRM imposes bank side checks; DFIs will insist on IFC-like compliance (stakeholder engagement, livelihood restoration where relevant). Build this into budget and CPs.
6) Insolvency & Restructuring Pathways The Bankruptcy Act 1997 and Companies Act 1994 provide liquidation and compromise mechanisms; formal corporate rehabilitation tools are evolving. Intercreditor and standstill mechanics should anticipate local court practice.
7) Withholding Taxes & Treaty Relief Interest, fees, and services may attract withholding; model net-of-tax flows and assess treaty positions. Align AD bank protocols with GFET for smooth remittance.
8) Funding Sources & Instruments — Building the Capital Stack
Local Banks & NBFIs Bangladeshi banks provide BDT tranches for construction and working capital, often clubbed; pricing references local base rates. Lenders apply BB ESRM and internal credit rating methodologies.
DFIs/ECAs/Multilaterals IDCOL and BIFFL are cornerstone institutions for longer tenors; global DFIs/ECAs (ADB/IFC/etc.) crowd in. ECAs support turbine, rail/port, grid and process equipment supply chains.
Islamic Finance / Sukuk Bangladesh increasingly contemplates asset-based sukuk for brownfield refinancings and capex; for regional syndicates, Ijara/Istisna-Ijara structures sit alongside conventional tranches.
Green & Sustainability-Linked Loans International standards (GLP/SLLP) can be overlaid with measurable KPIs (emissions intensity, water reuse, safety metrics). London credit committees benchmark to LMA and ELFA guidance for term sheet completeness.
9) Documentation Suite — What Makes a Bangladesh Deal “Bankable”
Finance Documents
Facilities Agreement (multi-tranche; LMA-style bespoke), Common Terms Agreement, Intercreditor Agreement, Security Trust/Agency, Account Control Agreements, Hedging.
Bangladesh law security documents: Mortgage Deed, Deed of Hypothecation, Deed of Assignment (receivables/insurances), Share Pledge, Power of Attorney, Account Charges.
Direct Agreements: with off-taker, EPC, O\&M, key suppliers.
Conditions Precedent: sector permits, land and ROW, E\&S approvals, corporate and foreign loan approvals, perfection evidence (RJSC/sub-registrar), insurance binders, financial model sign-off, fee letters, officer’s certs.
Government/Regulatory
PPP approvals chain; BERC/line ministry permits; BIDA/BB approvals for foreign loans; GFET compliance for cash movements; tax clearances for repatriations.
Governing Law & Disputes
English law for cross-border finance; Bangladesh law for security and land; international arbitration (LCIA/SIAC), with onshore filings limited to perfection/enforcement.
10) Execution Timeline — The Realistic Critical Path
Mandate & Term Sheet (4–8 weeks): Risk matrix, funding plan, role of DFIs/ECAs, preliminary foreign-loan pathfinding (BIDA/BB), and security map.
Use a Bangladesh scheduled bank as Security Agent from day one. It streamlines Artha Rin filings and enforcement, while keeping foreign lenders insulated from on-title constraints.
Right-size the FX risk: tie payment currency and indexation in the IA/PPA; pre-build hedging language and waterfall releases matched to GFET.
Register everything correctly and quickly: miss a 21-day RJSC deadline and you can undermine priority; synchronize stamping and registration calendars.
ESG isn’t a formality: BB’s ESRM + DFI covenants will drive cost and schedule—bake them into the base case, do not leave for post-FC closing.
Seat arbitration outside Bangladesh, keep security local: London/Singapore arbitration for disputes; Bangladesh law and courts for perfection/enforcement realities.
Leverage Dubai: GCC liquidity, Islamic windows, and DIFC-law security for upstream/holding structures; UAE movables law enables modern collateral approaches that credit committees recognize.
12) Sector Snapshots
Power (Thermal & Renewables)
PPA/IA precedents are well-trodden; lenders focus on fuel supply risk, dispatch/take-or-pay, curtailment compensation, and convertibility. IDCOL has deep renewables experience (utility solar, rooftop, biomass/biogas), often catalyzing co-lending.
Transport (Roads/Bridges/Rail/Ports)
Availability-based concessions and hybrid annuity models are gaining traction. For ports, link land/berth rights with tariff frameworks and throughput forecasts.
Economic Zones & Logistics
EZ concessions often blend real estate, utilities and industrial services; get land aggregation and utility interconnects de-risked before debt marketing.
Digital (Data Centers/Fiber/Towers)
Currency-mismatch risk is central; wrap long-term offtake (hyperscaler/anchor tenant) and capex flexibility to pass investment-committee thresholds.
13) The Foreign Investor’s Checklist (Bangladesh-Specific)
Corporate & Structuring
Incorporate the SPV, lock shareholder agreements, and file all charges (RJSC) on time.
Consider upstream holding in DIFC/English law for shareholder arrangements and fund flows.
Land & Permits
Secure clean title (khatian chain & mutation), registered long-term lease/mortgage, utility interconnections, and E\&S consents aligned with BB ESRM.
Finance & FX
Map BIDA/BB approvals for foreign loans; model withholding taxes; confirm GFET pathways for interest/dividend repatriation.
Bankability
Government Support/IA for convertibility and change-in-law; robust step-in via Direct Agreements; onshore scheduled bank security agent.
Disputes
International arbitration; local courts for security perfection/enforcement only.
14) How TRW Aligns Dhaka, Dubai, and London for You
From Dhaka, we quarterback land, permits, security, stamping, registrations, and BIDA/BB interactions. From Dubai, we layer Islamic structures and, where helpful, DIFC-law security/holding solutions recognized by GCC lenders. From London, we align to LMA standards, run intercreditor and DFI/ECA interfaces, and calibrate dispute resolution to your funders’ preferences.
For background on setting up the Bangladesh SPV itself, see our internal resource on Company Formation in Bangladesh (TRW site). 👉 Internal link:Company Formation in Bangladesh — step-by-step incorporation, directors, capital, and early compliance.
15) Frequently Asked Practical Questions
Q1: Can foreign lenders take security directly over land? They can take a mortgage granted by the Bangladeshi SPV, but foreign lenders cannot hold title to land on foreclosure. The usual path is appointing a Bangladesh scheduled bank as security agent to enforce and sell locally, with proceeds flowing to lenders.
Q2: Is repatriation of dividends and interest reliable? Yes—through Authorized Dealers under GFET and relevant BB circulars, if documentation and tax compliance are correct. Plan your AD and cash waterfall early.
Q3: What dispute mechanism do you recommend? International arbitration (e.g., LCIA/SIAC) for finance/major project disputes; Bangladesh law and courts only for security perfection/enforcement steps.
Q4: Which public institutions co-lend or catalyze infra debt locally? IDCOL (renewables/infra) and BIFFL (public sector infra), often alongside commercial banks and DFIs/ECAs.
Q5: How do we integrate Dubai/London investors? Use LMA-style documentation and Intercreditor structures; consider DIFC platforms for holding and security over certain upstream assets; add Islamic tranches for GCC banks.
16) Model Clauses & Term Sheet Flags (Abbreviated)
Change in Law — compensation and tariff reset triggers tied to regulator/Ministry orders.
Payment Currency — USD receivables or hard-currency index; convertibility assurance in IA (where applicable).
Completion Tests — output/efficiency tests with LDs and sponsor support during ramp-up.
Project finance in Bangladesh is no longer “frontier” — it is disciplined execution. Sponsors who internalize GFET pathways, RJSC/Registrar perfection, Artha Rin enforcement, and ESRM covenants can deliver bankable deals. Aligning Dhaka (local law & process) with Dubai (GCC liquidity/Islamic finance) and London (LMA standards & arbitration) is precisely where TRW operates, day in and day out.
Summary Table — Project Finance in Bangladesh (Quick Reference)
If you’d like, we can tailor a bankability audit for your specific project (PPP or merchant), mapping BIDA/BB pathways, security/perfection calendars, and a term-sheet redline aligned to your lenders’ London/Dubai expectations.
Trade Finance (LCs) in Bangladesh — The Complete, On-the-Ground Guide for Foreign and Domestic Companies
By Tahmidur Remura Wahid (TRW) Law Firm — Dhaka • Dubai • London
Why this guide
Bangladesh is a documentary-trade powerhouse. From ready-made garments and leather to power, machinery, grains and chemicals, a huge share of cross-border deals here still clears through letters of credit (LCs). If you’re exporting to, importing from, or financing a Bangladesh-linked supply chain—especially if your treasury sits in Dubai or London—you need a playbook that is equal parts legal, banking, logistics, tax and compliance. This TRW field guide gives you that playbook: the rules, the deal mechanics, the pitfalls, and the exact drafting choices that keep your cargo moving and your cash protected.
Snapshot: How an LC really works in Bangladesh (and why it’s different)
Risk allocation: An LC substitutes the issuing bank’s payment undertaking for the buyer’s, but only against compliant documents. Banks do not examine goods; they examine documents. That “independence principle” is why precise drafting matters.
Regulatory perimeter: LC transactions are governed contractually by UCP 600 (and, when digital, eUCP 2.1) and operationally by Bangladesh Bank’s foreign-exchange regime (GFET, circulars, and the 2025 Master Circular on Import Transactions). Incoterms 2020, customs and VAT rules layer on top. (BB)
Practice reality: LCs remain dominant for many categories (especially textiles and capital machinery), but supplier/buyer’s credit, UPAS LCs, back-to-back LCs, and SBLCs are widely used. Recent Bangladesh Bank guidance consolidates and clarifies many import processes, including reporting through the Online Import Monitoring System (OIMS) and provisions for inland foreign-currency LCs in defined scenarios.
The rulebook: what actually applies
UCP 600 (ICC) — the global rules for documentary credits. Among other things, they set the 21-day presentation default (if not otherwise stated) and the five banking days for a bank to examine documents. (Always restate these in your LC to avoid doubt.)
eUCP Version 2.1 (2023) — adds electronic presentation (including electronic transferable records like eB/Ls) and SWIFT field recommendations for MT700 when a credit is subject to eUCP 2.1. Use it for mixed paper-and-electronic flows or fully digital sets.
ISBP 821 (2023) — the latest “best practices” guide for how banks examine documents; essential for wording invoices, transport documents, certificates and the dreaded “not older than X days” clauses. (tradefinanceglobal.com)
Bangladesh Bank regime — GFET Volume 1 (especially Imports; LCAFs; HS codes; OIMS) + the 2025 Master Circular on Import Transactions. These govern LCAF/IMP usage, reporting, Incoterm preferences (CFR/CPT typically; FOB with special provisions), and who may import without an LC. (BB)
Incoterms® 2020 — align delivery, risk, insurance and cost obligations with your LC text to avoid mismatches (e.g., CIF insurance scope; FOB/FCA for containers).
Sanctions/Export controls — if your confirming bank sits in London (or your group treasury does), your transaction will be screened against the UK OFSI consolidated sanctions list. UAE banks (DIFC/ADGM) likewise apply UAE and UN lists. Build screening comfort into the timeline.
Digitisation in London — the UK’s Electronic Trade Documents Act 2023 gives eB/Ls and other electronic trade docs the same legal effect as paper, enabling faster, greener flows when paired with eUCP. If your confirming bank or law-governing nexus is English law, this is a major unlock.
Parties and promises (decoded)
Applicant/Buyer (Bangladesh importer) — requests the LC; provides cash margin or credit line and supports doc retirement at sight or maturity.
Issuing Bank (Bangladesh AD bank) — issues LC; pays if documents comply.
Advising/Confirming Bank (often in Dubai/London) — authenticates the LC; and, if confirming, adds its own irrevocable undertaking so the beneficiary holds London/Dubai bank risk, not Bangladesh bank/country risk.
Beneficiary/Seller — ships and presents documents strictly per LC.
The independence principle: the bank’s obligation is independent of the sales contract. Only the LC + documents matter. Draft your LC like a micro-contract with precise conditions you can actually meet.
LC types you’ll actually use (and why)
Sight LC — you present conforming docs; bank pays at sight (after document examination).
Usance/Deferred Payment LC — payment at maturity (e.g., 60/90/120 days from B/L date).
UPAS LC (Usance Payable at Sight) — bank discounts the usance bill and pays the exporter at sight; the importer repays at maturity. Excellent for exporter liquidity and importer cost smoothing. (2go.iccwbo.org)
Transferable LC — first beneficiary (trader) can transfer credits to second beneficiary (actual supplier).
Back-to-Back LC — exporter uses a master export LC to open an import LC to its input suppliers; common in apparel. Bangladesh’s GFET has a dedicated section on this. (BB)
Standby LC (SBLC) — a default-protection instrument governed by ISP98; often preferred by global banks for performance/payment security instead of demand guarantees. (aloqabank.uz)
Revolving LC — auto-replenishes for repetitive shipments (use cautiously; specify caps and dates).
Inland foreign-currency LCs — allowed in defined contexts (e.g., EPZ/EZ companies), but structure and eligibility are regulatory-sensitive; coordinate with your AD bank and counsel.
1) Pre-trade: compliance, capacity, and counterparty checks
Confirm the importer’s Importer Registration (IRC), BIN/VAT, and that the HS code is accurate and eligible. Under GFET, HS code accuracy is mandatory and misclassification risks penalties. (BB)
Sanctions/KYC: where confirmation sits in London or Dubai, factor the time your confirming bank needs to clear OFSI/UN/UAE checks.
Bank capacity: the applicant needs an LC credit limit or cash margin. In volatile FX periods, banks can ask for higher margins or collateral; budget for confirmation fees rising with perceived country/bank risk.
2) LC application & issuance (Bangladesh)
The applicant submits the LC draft, pro forma invoice/contract, and LCAF/IMP particulars. GFET prescribes OIMS reporting and endorsing the LCAF with value and exchange rate. (BB)
Choose UCP 600 or eUCP 2.1. If you want to use eB/Ls, explicitly state eUCP Version 2.1 and define the place for electronic presentation (URL/email server) and format.
Incoterms alignment: Bangladesh practice often prefers CFR/CPT; FOB needs extra steps (freight arrangements, endorsements). Ensure the LC text matches the contract Incoterm and that documents reflect the same. (BB)
The LC is advised to the exporter’s bank. If the exporter requires confirmation, your London/Dubai bank will price country/bank risk and compliance complexity (e.g., trans-shipment via sanctioned ports).
In Dubai, confirmation often routes through DIFC/ADGM entities; in London, confirmation engages English law for disputes over the confirmation undertaking, which many multinationals prefer.
4) Shipment & document preparation
Draft to ISBP 821 standards. Avoid “copy of signed B/L,” “charter party” by accident (unless allowed), or contradictory fields (e.g., “no transshipment” when your voyage obviously requires it). (tradefinanceglobal.com)
Insurance: If CIF/CIP, ensure the policy meets the LC’s cover scope (e.g., Institute Cargo Clauses, 110% value, currency). If FCA/FOB, clarify who purchases insurance and what evidence is required.
5) Presentation & examination
Unless stated otherwise, present within 21 days of shipment and before LC expiry; banks have five banking days to examine. State a precise place for presentation.
Under eUCP 2.1, electronic records can be presented in the agreed format and address; your LC should name the format, address, and notice of completeness mechanics.
6) Payment/acceptance & retirement (Bangladesh)
For sight: pay/negotiation occurs after compliance. For usance: acceptance + maturity payment; UPAS: exporter paid at sight, importer pays at maturity.
The importer arranges customs clearance and post-import compliance (e.g., documentation retention, OIMS reporting, and bank endorsements). GFET details endorsement and record-keeping obligations. (BB)
Transport document — clean on board B/L (or AWB), consignee/notify as per LC, no conflict on “freight prepaid/collect”; avoid stale B/L.
Packing list (weights, dimensions).
Certificate of origin (chamber or manufacturer as required).
Insurance (if required by term).
Inspection/certificates (quality, phytosanitary, fumigation, analysis) only if you actually can source them with exact LC phrasing.
Beneficiary’s certificate(s) — avoid vague or subjective statements (e.g., “goods are of best quality”); use objective facts with date anchors.
Killer drafting choices (that prevent 80% of discrepancies)
Description hierarchy: keep the LC description broad enough to fit the HS code and contract; push detailed spec to the invoice and technical annex referenced but not required for examination.
Dates: when you say “not older than 21 days,” specify from what date (e.g., “from shipment on board date”).
Partial shipments/transshipment: mirror logistics reality—Bangladesh inbound/outbound often transships via Colombo, Singapore, Jebel Ali.
Third-party docs: allow where market practice demands (inspection by independent inspector, insurance by broker).
eDocs: if using eB/L or mixed sets, adopt eUCP 2.1, define the format, address, and clarify “originals” (eUCP treats a single electronic record as original).
Presentation period: don’t rely on UCP defaults; set a practical number (often 14–21 days) and coordinate with feeder/transshipment schedules.
Back-to-Back and apparel reality
Bangladesh’s export engine uses back-to-back LCs to finance inputs against a master export LC. Align:
Expiry and shipment windows so the import LC matures after export proceeds arrive.
Document mirrors: the import LC’s technical description must actually match the upstream demand; avoid asking the input supplier for documents the exporter cannot pass along. GFET has a discrete “Back to Back LCs” section—treat it as required reading. (BB)
UPAS LCs: when cash flow trumps everything
UPAS structures fund the exporter at sight while giving the importer usance breathing room. Your cost stack: issuing/confirming fees + discount margin + confirmation country add-on + handling + swift + local taxes on bank charges. In Bangladesh, UPAS is mainstream for commodities and textiles; negotiate who bears the discount and how the rate floats (e.g., SOFR + spread) and record it in a side letter. (2go.iccwbo.org)
SBLCs, collections and open account (and when not to use them)
SBLC (ISP98) — ideal for performance or advance-payment security where a full documentary LC is overkill; English-law SBLCs confirmed in London travel well. (aloqabank.uz)
Documentary collections (URC 522) — cheaper, but no bank undertaking; use only with high trust and low country risk. (ICC Academy)
Open account + SCF — operationally simple but shifts risk to the seller unless paired with credit insurance, forfaiting, or receivables purchase.
FX, pricing and the new macro
Bangladesh’s exchange-rate framework has been evolving (including a crawling-peg style approach) to stabilise FX markets. Expect banks to change pricing, margins and eligibility lists as policy fine-tunes. Build forward cover/hedging into your term sheet where available, and reflect the applicable exchange rate on LC endorsement (GFET). (BB)
Margins & eligibility: earlier import curbs/margins imposed during FX stress have been rolled back or eased for most items, but banks still manage internal risk lists; check the current position during structuring. (BB)
Tax, customs and bank charges: what to budget
Customs & VAT: Import VAT (standard 15%) and duties apply per the annual Customs Tariff and NBR measures; some sectors enjoy exemptions/rebates. Advance income tax (AIT) at import fluctuates by policy; budgets must reflect the current Finance Act/budget cycle.
Bank charges: LC issuance, advising, amendment, confirmation, negotiation, discrepancy, and discounting fees typically attract VAT. Confirm your bank’s Schedule of Charges and ensure the LC allocates fees by party.
Stamp duty & instruments: Bills of exchange, B/Ls and related instruments carry stamp duty under the Stamp Act 1899 as amended—costs are modest but must be planned.
Sanctions, AML/CFT and trade-based money laundering (TBML)
Every LC chain (banks, carriers, insurers) will screen for sanctions and TBML red flags. Bangladesh’s BFIU has issued TBML guidance for banks; London and Dubai banks add their own layers. Expect queries on over/under-invoicing, phantom shipments, unusual routings, mismatched HS codes, and dual-use goods. Bake this into your timeline.
Dubai & London: what changes in practice
With a confirming bank in London
English law governs the confirmation undertaking; UK ETDA 2023 supports eB/Ls and eDocs, making eUCP 2.1 LCs smoother.
OFSI sanctions screening is strict and dynamic; expect deeper diligence on counterparties, vessels, and ports.
With a confirming bank in Dubai
DIFC/ADGM institutions provide English-law infrastructure in the UAE; screening covers UAE/UN/partner lists. Dubai’s centrality as a logistics hub (Jebel Ali) means trans-shipment language in your LC should allow what your route needs (i.e., do not ban trans-shipment if your feeder goes via Jebel Ali/Singapore/Colombo).
Digitalisation playbook: getting to “paper-less without pain”
Make your LC explicitly subject to eUCP Version 2.1; set:
the electronic address (place of presentation),
the format(s) (PDF/EDI/XML),
the notice of completeness method, and
accept electronic transferable records (eB/Ls) issued via an approved platform.
If your confirmation sits in London, the Electronic Trade Documents Act 2023 removes the legal uncertainty around “possession” of electronic bills and warehouse receipts—use it.
Twenty drafting tips that prevent expensive delays
State UCP 600 or eUCP 2.1 expressly; if eUCP, version 2.1 by name.
Align Incoterms 2020 with documentary requirements; never mix CIF with “freight collect.”
Use broad but accurate goods description; push granularity to the invoice/spec annex.
Allow trans-shipment if your route needs it.
Permit partial shipments only if your production schedule requires them.
Specify presentation period (e.g., “21 days from on-board date”) and avoid silence.
Require “clean on board” transport docs when needed; avoid subjective quality statements.
For CIF/CIP, define insurance clauses, amount (e.g., 110%), and currency.
If UPAS, define who bears the discount and the benchmark + spread. (2go.iccwbo.org)
For back-to-back, mirror dates and doc sets; ensure the import LC matures after export proceeds. (BB)
Insert tolerance (+/-5% quantity/value) where commodity weights vary.
Name the exact place of presentation (bank branch/URL/email gateway).
Allow third-party documents where common (inspection/insurance).
Avoid “latest shipment” dates that collide with known feeder schedules.
Provide expiry place consistent with who will examine (confirming or issuing bank).
Clarify freight terms (prepaid vs collect) to match Incoterm and B/L.
List HS code only if you’re certain; otherwise, require description matching the HS heading to avoid misclassification risk. (BB)
Keep original/copy language e-friendly; in eUCP, one e-record counts as an original.
Anticipate sanctions/TBML checks; avoid counterparties/vessels with red flags.
Build in amendment protocols (who bears fees; timeframes).
Sector spotlights
Textiles & leather: back-to-back LCs and UPAS dominate; synchronise export and import maturities and keep a laser focus on ISBP-compliant packing lists and origin evidence (buyers insist on ESG/traceability). (tradefinanceglobal.com)
Capital machinery & EPC: longer usance; insist on staggered shipment allowances and acceptance certificates; align with project LC (performance SBLC/retention bonds).
Agri/commodities: weight/quality/certificate language must be practicable; tolerate quantity variances; set inspection windows around harvest and port congestion.
Common discrepancy traps (and how to avoid them)
Inconsistent descriptions between LC, invoice, and B/L.
Wrong consignee/notify structure for title transfer.
Stale B/L or missing on-board notation.
Undated or mis-dated certificates.
Insurance scope too narrow (CIF/CIP).
Over-engineered clauses (“ISO-XYZ compliance certificate signed by the buyer”) that no neutral party can issue.
Electronic presentation missing the notice of completeness or wrong format/address under eUCP.
Fees, who pays what, and how to negotiate
Split charges clearly (Issuing/Advising/Confirmation/Negotiation/Discrepancy/Discounting). In Bangladesh, bank charges usually attract VAT, and schedules of charges are publicly posted—model your cost sheets on those.
Confirmation fee is your risk premium; shop it between London and Dubai desks (pricing can differ by bank appetite and compliance load).
Disputes and stress-events: your options
Discrepancy fight: push for waiver by the applicant; if refused, consider DOCDEX (ICC’s expedited expert rules) for pure rules-interpretation disputes.
Fraud exception: extremely narrow; banks honour compliant documents unless clear fraud is proven promptly in court.
Force majeure/cyber outages: eUCP includes additional disclaimers for electronic presentations; name backup addresses and extension mechanics in your LC.
How TRW Law Firm executes your transaction (Dhaka • Dubai • London)
Structuring & bank strategy — we map your options (sight/usance/UPAS, SBLC, back-to-back), select issuing/confirming banks and allocate fees for the lowest all-in landed cost.
Regulatory fit — we reconcile your deal against GFET, Master Circular, IPO/HS eligibility, and tax/VAT at import. (BB)
Drafting — LC text (UCP 600/eUCP 2.1) + contract + inspection/insurance clauses that logistics can satisfy, aligned with Incoterms 2020 and ISBP 821. (tradefinanceglobal.com)
Digitisation path — eUCP 2.1/eB-L roll-outs when your banks and carriers are ready; if confirmation is in London, we leverage the Electronic Trade Documents Act 2023.
Sanctions/TBML — pre-clearance of routing, vessels, and counterparties to avoid compliance stalls.
Execution & training — we run checklists with your suppliers and forwarders so first presentations are clean; we also train in-house teams on ISBP-quality documents.
Dispute support — discrepancy waivers, DOCDEX files, injunctions (where fraud alleged), and settlement pathways.
Frequently asked questions (fast but precise)
Q1: Can I import into Bangladesh without opening an LC? A: Yes—selected items can be imported against registered LCAFs without an LC, subject to IPO limits and OIMS reporting; many commercial deals still use LCs for risk allocation and bank financing. (BB)
Q2: Should I choose sight, usance or UPAS? A: If you need the exporter paid at shipment and your treasury wants time, UPAS can be optimal; otherwise, sight minimises bank/discount cost and dispute window. (2go.iccwbo.org)
Q3: Is electronic presentation (eUCP) really workable now? A: Yes—eUCP 2.1 aligns with electronic transferable records and provides SWIFT field guidance; with UK ETDA 2023, London confirmations are especially e-friendly.
Q4: What compliance checks slow deals most? A: Sanctions/TBML screening (ports, vessels, counterparties), HS misclassification, and over-engineered certificate clauses. Pre-clear routes and docs with TRW and your confirming bank.
Q5: What about LC margins? A: System-wide minimums imposed during 2022–23 FX stress have been largely relaxed, but each bank sets its own risk pricing; confirm current terms during structuring. (BB)
One-page action plan for foreign companies
Choose instrument (LC/SBLC/UPAS/back-to-back/collection) for your trade and risk profile.
Map banks (issuing in Bangladesh; confirming in Dubai/London).
Draft LC (UCP or eUCP 2.1) with realistic logistics, Incoterms 2020 and ISBP 821-quality doc list. (tradefinanceglobal.com)
Allocate bank fees by party; budget VAT and stamp duties on instruments.
Compliance
HS accuracy, OIMS reporting; TBML focus
OFSI/UAE sanctions lists; vessel/port checks
Sanctions clause; routing clarity; dual-use/ESG representations where relevant.
Work with TRW Law Firm
TRW is uniquely positioned across Dhaka, Dubai and London to structure, document and execute your LC stack from term sheet to first clean presentation—and to do it in a way your banks, carriers and customs actually accept. From negotiating confirmation fees and UPAS economics to training your suppliers on ISBP-grade documents and building eUCP 2.1 into your process, we help you ship faster, pay smarter and sleep better.
Notes for in-house and treasury teams (clip-and-use)
Always circulate a red-lined LC draft with banks and TRW before issuance.
Run a mock presentation on your first shipment to flush discrepancies.
If you are going digital, lock eUCP 2.1 mechanics and confirm eB/L platform acceptance with all banks early.
Citations (for your internal verification; remove when publishing): UCP/eUCP & ISBP; GFET & Master Circular; Incoterms; sanctions/ETDA; and bank schedules cited above. Key sources include ICC eUCP 2.1, Bangladesh Bank GFET & Master Circular, ICC/Incoterms 2020 materials, and UK OFSI / ETDA resources. (BB)
If you’d like, we can also turn this into your LC template pack (library of MT700 clauses for sight/usance/UPAS, red/green clause riders, SBLC text under ISP98, and eUCP schedules) and an ISBP-focused checklist tailored to your product and routing.
Secured Lending & Syndication in Bangladesh — A Complete Guide for Local and Foreign Lenders
Secured lending is the lifeblood of corporate growth in Bangladesh: from project-financing power plants and industrial parks to working-capital lines for manufacturers, traders, tech firms, and logistics operators. When deals scale beyond the appetite or limits of a single bank, syndicated loans step in—spreading risk among multiple lenders while delivering the tenor, pricing, and structuring sophistication borrowers need. But executing these transactions seamlessly in Bangladesh requires meticulous attention to local law, regulatory approvals, collateral perfection, tax, FX and remittance rules, intercreditor mechanics, and enforcement regimes—plus fluency with the language and standards of international finance used in London and Dubai.
This article distils the playbook we apply at Tahmidur Remura Wahid (TRW) Law Firm—Bangladesh’s leading cross-border firm with teams in Dhaka, Dubai and London—to help sponsors, borrowers, banks, funds, ECAs and multilaterals structure bankable secured and syndicated facilities that stand up both in calm markets and in a workout.
1) Secured lending in Bangladesh: the legal backbone
1.1 Primary statutes and regulators
Bangladesh does not have a single “secured transactions code.” Instead, secured credit is enabled by an interlocking framework:
Contract Act, 1872 — formation and enforceability of loan, guarantee, pledge, assignment and security documents.
Transfer of Property Act, 1882 (TPA) — mortgages over immovable property (land/buildings), assignment of actionable claims.
Registration Act, 1908 — registration at the Sub-Registrar for instruments creating interests in immovable property and certain other registrable documents.
Companies Act, 1994 — corporate borrowing powers, registration of charges created by companies with the Registrar of Joint Stock Companies & Firms (RJSC).
Stamp Act, 1899 — stamping of loan and security instruments (rate depends on instrument and location—ensure correct assessment early).
Banking Companies Act, 1991 & Financial Institutions Act, 1993 — prudential rules for banks and non-bank financial institutions (NBFIs).
Artha Rin Adalat Ain, 2003 (Money Loan Court Act) — expedited recovery forum for lenders.
Foreign Exchange Regulation Act, 1947 (FERA) & Bangladesh Bank circulars — FX borrowing, security in favour of non-residents, remittances of interest/principal, hedging.
Sectoral statutes — where the borrower is regulated (e.g., power, telecom, ports), consents can affect enforceability and step-in rights.
Bangladesh Bank (the central bank) supervises banks and foreign currency exposures; RJSC maintains corporate charge filings; Sub-Registrar offices record real estate mortgages and certain assignments; NBR oversees stamping and taxation.
1.2 Why perfection steps matter
Creating security is not enough. To stand in front rank at enforcement or in insolvency, the security must be perfected—typically via one or more of:
RJSC charge registration (for company charges—within the statutory period; late filings require condonation and may impair priority).
Land/Sub-Registrar registration (for mortgages/assignments of immovable property).
Possession or control (for pledges of negotiable instruments, share certificates; for bank account control, account-bank acknowledgments and blocked/controlled account mechanics).
Notices of assignment to contract counterparties (for receivables, project agreements, insurances).
CIB checks and updated KYC/BO forms to keep the facility compliant and drawable.
A failure or delay in any perfection step can subordinate a lender to judgment creditors, tax authorities or subsequent secured creditors—and in a syndicate, can breach agent responsibilities and expose the arranger to claims.
2) Collateral types and how they work in practice
2.1 Immovable property (land and buildings)
Usually a registered mortgage (often “equitable” by deposit of title deeds with a registered memorandum, or a legal mortgage under TPA).
Title diligence is granular: you verify chain of title across historical surveys (CS/SA/RS/BS etc.), mutation/namjari entries, khatian holdings, ground rent/tax receipts, encumbrance searches at the Sub-Registrar, building approvals (RAJUK/mongla/chittagong etc.), environmental clearance where relevant.
Common pitfall: gaps in mutation or historic survey inconsistencies. TRW runs a triangulated title check (surveys + mutation + encumbrance) to catch issues before term sheet signing.
2.2 Movables, inventory and equipment
Typically hypothecation (floating charge over stock/plant), combined with warehouse controls and insurance assignments.
For high-value equipment, lenders may require serial-number schedules and installation/affixation covenants to avoid fixtures disputes.
2.3 Receivables and contracts
Assignment of receivables and charge over contract rights (e.g., offtake, EPC, O\&M).
Notices and acknowledgments from counterparties are crucial; some government or state-linked contracts require prior consent for assignment.
2.4 Shares (private/public)
Pledge of shares with share certificates lodged; blank transfer forms; amendments to the company’s articles to relax pre-emption on enforcement; entries in register of members upon enforcement; RJSC filings for the pledge/charge when applicable.
For private companies, tighten covenants to avoid board/shareholder roadblocks at enforcement.
2.5 Bank accounts and cash
Account charge + Account Control Agreement (ACA) with waterfall and blocked/controlled features (escrow, DSRA, capex account, revenue account).
For project finance, the cash waterfall is the beating heart of lender control (O\&M → taxes → senior debt service → reserves → restricted distributions).
2.6 Insurance, IP and licenses
Assignment of insurance proceeds with loss-payee endorsements; step-in to claims.
IP charges for trademarks/patents where value justifies (file with RJSC and the IP registry as needed).
For licenses/concessions, use direct agreements with grantor/regulators for step-in/novation.
3) Syndicated loans: anatomy and workflow
3.1 Why syndicate?
Ticket size beyond single-bank limits;
Regulatory single-borrower exposure constraints;
Sector risk diversification;
Investor mix (banks, NBFIs, DFIs, ECAs) and tenor shaping;
Price discovery and secondary liquidity.
3.2 Key roles and documents
Mandated Lead Arranger/Bookrunner (MLA/MLB): structures, markets and allocates the syndicate.
Facility Agent: runs communications, drawdowns, payments and voting mechanics.
Security Trustee: holds collateral on trust for all lenders; enforces under a Security Trust Deed.
Lenders: banks/NBFIs/DFIs; Hedging Banks may be parties or “secured parties” under intercreditor.
Borrower & Sponsors: operating company, project company (SPV), holding company, and equity sponsors.
Document suite (LMA-inspired, adapted to Bangladesh):
Common Terms Agreement (CTA) — global definitions, reps, covenants, events of default.
4) Cross-border elements foreign lenders must get right
4.1 FX borrowing and approvals
Foreign currency loans to Bangladeshi corporates typically require Bangladesh Bank approval/registration under FERA and applicable circulars (in practice often referred to as “ECB” approvals, though local labels vary). Expect to file loan terms, purpose, tenor, pricing basis, amortisation, and hedging details. Do not disburse offshore until the documentary pathway for interest/principal remittance and withholding tax is clear.
4.2 Governing law and jurisdiction
Governing law: LMA-style facilities are often English-law governed; Bangladesh-law governs security over Bangladeshi assets. Split-governed document suites are normal.
Jurisdiction: English courts or international arbitration (e.g., SIAC, LCIA).
Enforcement:
Foreign judgments: Bangladesh requires a fresh suit on the judgment (limited reciprocal enforcement).
Arbitration awards: Enforceable under the Arbitration Act 2001 (Bangladesh is a New York Convention state), subject to public-policy carve-outs.
Include service of process mechanics and sovereign immunity waivers if a state-linked counterparty is involved.
4.3 Tax and withholding
Interest paid to non-residents: subject to withholding tax at domestic rates unless reduced under a double taxation treaty; relief typically requires procedural compliance (e.g., residency/treaty entitlement evidence).
Stamp duty: payable in Bangladesh on instruments executed in Bangladesh (and, in many cases, foreign-executed instruments when brought into Bangladesh). Plan stamping early to avoid penalties.
TP/related parties: Interest and fees to affiliates must be arm’s length under Bangladeshi transfer pricing rules; documentation is key.
4.4 Sanctions, AML/CFT, and KYC
Expect enhanced due diligence for cross-border syndicates. International lenders (especially London) will overlay UK Bribery Act, FCA/PRA expectations, and OFAC/UK/EU sanctions checks on top of Bangladeshi AML/CFT. Draft robust sanctions representations, use-of-proceeds covenants, and KYC undertakings, and keep a mechanism for de-risking a sanctioned lender (e.g., mandatory transfer).
5) Enforcement and workouts in Bangladesh
5.1 Court and non-court routes
Money Loan Courts (Artha Rin Adalat): streamlined for banks/NBFIs to recover debt and enforce mortgages/charges. Typically faster than ordinary civil courts, but success hinges on clean perfection, valuation, and process discipline.
Pledge enforcement: a pledgee can sell pledged goods/shares upon contractual notice if the pledge agreement allows; for listed shares, ensure broker mechanics are baked in.
Power of sale: Non-judicial sale of mortgaged property is far more limited than under English law; many cases still require court oversight. Plan for this in recovery timelines.
Receivership: A debenture holder/secured creditor may appoint a receiver under contract—coordinate with intercreditor standstills and agent instructions.
Insolvency/winding-up: Secured creditors have priority over secured assets (subject to certain preferential claims). Expect interplay with labour dues, tax, and insolvency costs.
5.2 Intercreditor discipline
In a syndicate, the Security Trustee controls enforcement (per Intercreditor). Majority-driven decisions, payment waterfalls, and turnover obligations prevent value leakage. Hard-wire release mechanics (automatic releases on full repayment, disposal in the ordinary course, or agreed enforcement sales).
5.3 Valuation and sale
Courts often require independent valuation and public auction. Build appraisal costs, auction notices, and reserve pricing into your enforcement model. Maintain insurance and site control to protect asset value pending sale.
6) How Dubai and London shape Bangladeshi deals
6.1 London (LMA playbook, SONIA era)
Documentation: English-law LMA templates anchor most cross-border term sheets; Bangladeshi security is dropped in through local-law schedules and mappings.
Reference rates: Post-LIBOR, loans price on SONIA (compounded in arrear) with day-count conventions; ensure the interest calculation agent and fallbacks are clear.
SLL/ESG: Sustainability-linked loans are now mainstream (KPI step-ups/downs). Establish auditable KPIs suitable for Bangladesh operations (energy efficiency, water recycling, gender diversity), and embed information undertakings that your borrower can realistically meet.
Workout culture: English intercreditor frameworks bring proven standstill and turnover logic—very helpful when navigating Artha Rin processes onshore.
6.2 Dubai (onshore UAE vs DIFC/ADGM)
Dubai loans frequently blend UAE domestic lenders and DIFC/ADGM institutions:
Onshore UAE: Modern secured transactions regime and movables collateral registry enhance pledges on receivables, equipment and bank accounts; notarisation and Arabic translation often required.
DIFC/ADGM: Common-law islands using English-style secured transactions statutes and registries; security trusts and parallel debt are familiar concepts.
Relevance to Bangladesh: When a Dubai lender joins a Bangladesh deal, the agency, intercreditor, and trust structures translate smoothly. But the Bangladeshi security still needs local perfection; onshore enforcement will follow Bangladeshi forums. Expect UAE lenders to require clear remittance routes, sanctions language, and governing law/arbitration comfort.
Where Shariah-compliant funding is desired, we structure:
Murabaha (cost-plus sale), Ijara (lease), Istisna’a (construction financing), or Wakala/Mudaraba hybrids for working capital.
Security is often substantively similar (charges over assets, receivables, accounts), but attention to asset-ownership flows and title/possession is critical—especially in Murabaha and Ijara.
Intercreditor arrangements in “dual-track” stacks (conventional + Islamic) require Shariah and conventional parity on voting and collateral sharing; “loss vs return” principles must be reflected with care.
8) Sector snapshots
8.1 Power & infrastructure (PPP, IPP)
Revenue certainty: PPA/TPA capacity payments and robust escrow waterfalls are central.
Direct agreements with utilities, fuel suppliers and EPC/O\&M counterparties deliver step-in.
Regulatory consents: energy approvals for assignment/pledge; land issues if in designated economic zones.
8.2 Telecom, technology, data centres
Licensing: regulator (e.g., BTRC) consent protocols for change of control/security assignment can be pivotal.
Assets: spectrum rights are public property—focus on receivables and account charges; equipment hypothecation, site leases, and data centre customer receivables become the anchor.
8.3 Industrial/manufacturing & logistics
Working capital against inventory + receivables with warehouse controls, periodic stock audits, and insurance.
Foreign lenders often seek a co-agency with an onshore bank for smooth disbursements and FX conversions.
9) Ten deal traps we routinely fix (so you don’t have to)
Late or defective charge filings at RJSC → priority risk.
Under-stamped or mis-stamped security → inadmissibility in evidence until duty/penalty paid.
Land title gaps (mutation/survey mismatches) → mortgage vulnerability.
No notices/acknowledgments on receivables assignments → third-party payments bypass the waterfall.
Private-company share pledge blocked by pre-emption/Articles → fix with tailored Articles and board/shareholder undertakings.
Account control too “soft” → revenue leakage; insist on lender-controlled waterfall logic.
Tenor: matching asset life and cash-flow profile; sculpting for project finance.
Hedging: interest rate swaps (where FX loan indexed to floating benchmark), commodity hedges; secure hedging liabilities within the security trust and intercreditor waterfall, with hedge close-out rules.
13) What happens if things go wrong? (Workouts 101)
14) How TRW makes Bangladesh–Dubai–London deals frictionless
Single front-door for cross-border deals: one integrated TRW team spanning Dhaka, Dubai, London.
LMA-native documentation in English with local-law security overlays that actually perfect.
Regulatory navigation: Bangladesh Bank pathways for FX loans and remittances; sector regulator consents; customs/port clearance for secured imported equipment.
Stamping & filing ops: playbooks to run stamping, RJSC and Sub-Registrar filings in step with closing—no last-minute scrambles.
Title intelligence: deep land and license diligence that anticipates litigation traps unique to Bangladesh.
Workout credibility: intercreditor discipline plus hands-on enforcement experience at Money Loan Courts—deterrence matters.
Islamic & conventional fluency: dual-track intercreditor frameworks that satisfy both stacks and the Shariah board.
If you are structuring a facility or joining a syndicate and want a clean, bankable path from term sheet to first draw (and a credible workout plan if needed), talk to us.
15) Practical scenarios & model structures (quick sketches)
A. Onshore working-capital syndicate for an exporter
Stress-test enforcement: assume Money Loan Court timelines; ensure valuation and receiver provisions; war-game share-pledge execution for private companies.
Stamping calendar: list every instrument and plan stamping logistics to avoid penalties.
Title depth: insist on survey/mutation/encumbrance triangulation—not just a glossy title certificate.
ESG/SLL realism: choose KPIs you can monitor in Bangladesh and audit credibly.
Sanctions hygiene: recognise UK/EU/US overlays if London/Dubai lenders participate; include “yank-the-bank” and mandatory transfer tools.
Keep an eye on FX: hedge policy, DSRA currency mix, and cash waterfall to mitigate FX squeeze.
17) FAQs (fast answers)
Q1. Can an offshore lender take security over Bangladeshi assets? Yes—Bangladesh-law security is taken and perfected locally (RJSC, Sub-Registrar, notices). Foreign lender participation may require Bangladesh Bank clearances and careful drafting to ensure recognition and remittance.
Q2. Do we need a security trustee? For any multi-lender deal: almost certainly. Bangladesh recognises trusts; a Security Trust Deed plus parallel debt where appropriate gives clean enforcement and release mechanics.
Q3. Can we do non-judicial enforcement like in England? Not typically. Expect to use the Money Loan Courts for mortgages and many charges. Pledges and some assignments allow more self-help, but notices and contract mechanics matter.
Q4. Is English law acceptable for the loan? Yes for the facility and intercreditor; security over Bangladeshi assets must follow Bangladesh law.
Q5. How long do perfection filings take? Plan them into closing: stamping, RJSC filings, land registration, and notices should be pre-scheduled. Missing statutory windows can hurt priority.
Q6. Can Islamic and conventional tranches share the same collateral? Yes, via a dual-track intercreditor with Shariah-compliant ranking and enforcement provisions.
18) The TRW advantage & how to engage
TRW runs secured and syndicated transactions end-to-end: structuring, document drafting, Bangladesh-law security overlays to LMA suites, perfection, regulatory approvals, intercreditor engineering, and—if ever needed—workouts and enforcement. We routinely bridge borrower, sponsors, local banks, Dubai lenders and London institutions under one cohesive process.
To explore your transaction with us, see TRW Law Firm.
Use English law for facilities; BD law for security; robust arbitration/jurisdiction clauses
Sectoral nuances
Power (PPAs, DSRA), telecom (regulator consents), industrial (stock/receivables), tech (IP/receivables)
Tailor direct agreements and assignment notices to sector regulators
Top pitfalls
Late filings, mis-stamping, title gaps, weak account control, missing acknowledgments
TRW runs triangulated title and perfection sprints to lock priority
Timeline
8–10 weeks typical from mandate to first draw (deal-dependent)
Start land due diligence and regulatory consents at term sheet stage
Final word
Whether you are a corporate treasury team, a sponsor group, a local bank, a Dubai lender, or a London institution, bankable secured lending in Bangladesh is absolutely achievable with the right structural choreography: precise security design, disciplined perfection, enforceable intercreditor mechanics, and realistic enforcement modelling. That is the difference between a facility that merely closes and a facility that truly works—in good times and in stress.
TRW is ready to help you build that difference into your next transaction.
