Regulatory (Bangladesh Bank)

by Tahmidur Remura Wahid | Sep 4, 2025 | Uncategorized | 0 comments

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)
Departments you’ll interact with:
BRPD (Banking Regulation & Policy); FEPD (Foreign Exchange Policy); FEID (Foreign Exchange Investment); PSD (Payment Systems); DFIM (Non-bank FIs); BFIU (AML/CFT).

What this means for you

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)

Licensing landscape: banks, NBFIs, fintechs & cross-border players

A. Banks and digital banks

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)
Back-to-back LC hygiene: Track master LC amendments, value-addition thresholds, and funding source conditions (EDF/NFCD). (BB)

Payments & fintech

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)

Infrastructure/project JV (with Dubai/London sponsors)

Expect FEID touchpoints (JVCA notification, potential overseas accounts by permission, repatriation approvals on exits). Throttle disbursements through bankable conditions precedent that mirror BB approvals. (BB)

Compliance calendar & deal room checklist

Quarterly

Update the BB Compliance Matrix (new FE/FEPD/FEID circulars; PSD notices).
Cross-check SMART trend and re-price facilities if needed. (BB)
Refresh AML risk assessments and sanctions lists per BFIU and group policy. (bfiu.org.bd)

Deal room (always-on)

Corporate: MoA/AoA, RJSC filings, board resolutions, BO registers.
FX/FDI: FDI encashment, share valuation files, FEID notifications, dividend packs, liquidation checklists. (BB)
Trade: LC files, shipment docs, insurance, EXP/IMP or Form-C/TM, overdue tracking. (BB)
Payments: License letters (PSP/PSO/MFS), safeguarding policies, audit reports, RTGS/BEFTN onboarding. (BB)

TRW’s cross-border approach (Bangladesh × Dubai × London)

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)

Explore our dedicated practice page for financing and regulatory mandates: Banking & Finance — TRW Law Firm (internal link).

FAQs we hear from foreign clients

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	Determine license category; build safeguarding & dispute processes	UAE SVF, UK PSRs/EMRs; align safeguarding & outages. (Bangladesh Laws, centralbank.ae, FCA)
Banks & digital banks	BCA 1991, Digital Bank Guidelines (v2, 2025)	Digital banks: Tk 300 crore capital, IPO in 5 years; bank-level governance	For bids/partnerships, adopt bank-grade risk & IT security	UK PRA bank rules; DIFC DFSA categories for prudential scope. (BB, Bank of England, Thomson Reuters)
Capital adequacy	RBCA (Basel III)	Pillar 1–3 compliance, disclosures	Stress tests in financing due diligence	UK PRA Rulebook methodology. (BB)
Large exposures	BRPD single borrower circulars	Caps on connected exposures & off-BS items	Pre-check guarantees & intra-group	UK/London also strict on connected lending. (BB)
Loan pricing	SMART reference rate	Floating curves affect covenants & costs	Bake SMART paths into models	UK base-rate/SONIA analogues in group treasury. (BB)
Export finance	EDF window	USD on-lending against export LC/contracts	Line up tenor & docs; watch rate changes	Parallel ECA/EXIM instruments at group level. (BB)
Green capex	GTF guidance	USD/EUR refinancing for sustainable tech	Use in decarbonisation plans	UAE/UK green taxonomies — align disclosures. (BB)
AML/CFT	BFIU guidance	Risk-based AML, sanctions, PEPs, testing	Localize global AML policies & training	Mirror FCA/CBUAE standards where stricter. (bfiu.org.bd)
Merchanting	Form-C/TM regime	Third-country trades allowed via same AD	Set SOPs, FATF-country counterparties	Treasury integrate with global trade desk. (BB)
Back-to-back LCs	GFET Ch. 7 + 2025 guidance	Value caps, master LC linkage, certain restrictions	Automate checks in trade ops	Group-level LC governance for consistency. (BB)
Dividends & exits	FEID portal rules	Dividends: no prior approval; exits via checklist	Pre-agree “repatriation pack”	UK/UAE capital controls differ — adapt. (BB)

How TRW delivers

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.

Talk to TRW

Tahmidur Remura Wahid (TRW) Law Firm
Contact Numbers: +8801708000660 · +8801847220062 · +8801708080817
Emails: [email protected] · [email protected] · [email protected]
Global Locations:

Dhaka: House 410, Road 29, Mohakhali DOHS
Dubai: Rolex Building, L-12 Sheikh Zayed Road.

Quick compliance table (print-ready)

Item	Key BB Source / Department	Practical Effect	Your Next Step
PSP or PSO?	PSD; Payment & Settlement System Act, 2024	Determines licensing, safeguarding, audits	Confirm scope; prepare license dossier. (Bangladesh Laws)
FX inflows/outflows	GFET; FEPD/FEID circulars	AD-driven documents & reporting	Build SOPs for forms & timelines. (BB)
Export working capital	EDF	Cheaper USD; strict tenor & linkage to exports	Align LC and production schedules. (BB)
Green capex funding	GTF	Refinance sustainability projects	Add to decarbonisation roadmap. (BB)
Loan pricing	SMART	Floating Taka rates	Treasury forecast and covenants. (BB)
Large exposures	BRPD	Caps limit group guarantees	Pre-clear with lenders. (BB)
Merchanting	FEPD; Form-C/TM	No EXP/IMP; same-AD routing	Update ERP & trade SOPs. (BB)
Dividends	FEID portal guidance	Remittable via AD, no prior approval	Prepare standing “dividend pack.” (BB)
AML/CFT	BFIU	Risk-based program; testing	Localize global AML policy. (bfiu.org.bd)
Digital bank option	Digital Bank Guidelines v2	Capital 300cr; IPO in 5 years	Evaluate license vs partner. (BB)

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.

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Loading… | 5 MIN READ | BY TAHMIDUR REMURA WAHID