The Bangladesh Bank has authorized banks to extend loans of up to Tk 10 lakh to non-resident Bangladeshis (NRBs) working abroad during financial emergencies.

The decision announced through a circular issued today, aims to support migrant workers facing unexpected financial challenges, potentially hindering their ability to send remittances back home.

According to the central bank’s circular, these loans will be granted based on the established banker-customer relationship for genuine purposes. However, the loans will only be extended to NRBs who consistently send remittances through formal banking channels.

The repayment of the loans will be directly tied to the remittances sent by the borrowers, ensuring foreign exchange inflows back the loans. The circular emphasized that banks must follow existing credit norms and prudential regulations and conduct due diligence when processing these loans.

Central bank officials said the initiative is expected to encourage NRBs to continue using formal remittance channels, which are vital for sustaining Bangladesh’s foreign currency reserves. They also noted that if NRBs require loans exceeding Tk 10 lakh, banks would need prior approval from the central bank.

Bangladesh has experienced fluctuating remittance inflows in recent years, and this move is part of broader efforts to stabilize and increase foreign currency inflows.

According to Bangladesh Bank data, September saw a significant rise in remittance inflows, surging by over 80% year-on-year to $2.40 billion, compared to $1.33 billion in the same month last year.

The central bank’s initiative underscores the importance of formal channels in ensuring steady remittance flows, which are crucial to the nation’s economy.