On May 21, the Scrutiny Committee on Foreign Loan/Supplier’s Credit, chaired by Bangladesh Bank Governor Ahsan H Mansur, approved a proposal to ease the debt-to-equity ratio requirements for foreign and multinational companies operating in Bangladesh.
Under the new policy, foreign firms will be allowed to borrow local currency loans from domestic banks at the same debt-to-equity ratio as domestic private companies. Previously, foreign companies faced a cap limiting loans to 50% of their equity. Now, they can access loans up to around 80% of their equity, similar to domestic firms.
This change aims to support business expansion and BMRE (balancing, modernisation, rehabilitation, and expansion) activities of foreign companies, leveling the playing field and encouraging more foreign investment in Bangladesh.
The Bangladesh Investment Development Authority (Bida) and industry leaders advocated for this move, citing the need for fair and equitable treatment under the Foreign Private Investment Act of 1980 and international trade commitments.
Experts like Dr. Fahmida Khatun of the Centre for Policy Dialogue welcomed the decision, highlighting that foreign firms usually have stronger compliance and lower default rates. She noted that discriminatory policies will become untenable once Bangladesh graduates from Least Developed Country status.
The revised guidelines will soon be formalized by Bangladesh Bank, ensuring foreign firms can borrow in local currency on terms equal to domestic companies.
