Bangladesh Bank has introduced a new policy enabling individuals and businesses to secure local currency loans using foreign currency deposits held in Offshore Banking Units (OBUs) as collateral.

In a circular issued on Thursday, the central bank said the move aims to facilitate financing activities within the country. Under the new rules, domestic banking units (DBUs) may extend loans in Bangladeshi taka against foreign currency deposits belonging to non-resident account holders maintained in OBUs.

The facility, however, is subject to several conditions. Banks must verify the legitimacy of the relationship between the account holders and the borrowers. Examples include financial ties between non-resident Bangladeshis and their local beneficiaries, or foreign investors and the companies they have invested in.

The loans provided under this arrangement will be restricted to short-term working capital needs and will be denominated in local currency. The central bank has also clarified that no additional charges or fees will apply to the use of these deposits as collateral.

To manage currency risk, DBUs are required to apply margin requirements deemed appropriate to absorb potential exchange rate fluctuations.

The new measure is seen as part of Bangladesh Bank’s broader efforts to expand domestic liquidity sources amid tightening global financial conditions and support businesses in meeting their short-term funding needs.

Industry observers say the policy could encourage the utilisation of idle foreign currency deposits, particularly those belonging to non-resident Bangladeshis, and boost working capital support for local enterprises.